INFN Infinera Corporation

1

2

3

INFINERA CORPORATION

PROXY STATEMENT

2020 ANNUAL MEETING OF SHAREHOLDERS

OUR BOARD OF DIRECTORS

Proposal 1—Election of Directors

We have endeavored to summarize the accomplishments, attributes and experiences of the members of our Board in short bullets to make them easy to read because we think there is little that is more important to emphasize in this proxy statement than the caliber of our directors.

Our Board members have created and patented technologies, founded and grown companies, managed complex financial and accounting issues and spent significant time representing investors and shareholders. We believe that the caliber of our people and the breadth and complementary nature of their skills, attributes and experiences are among the most important aspects of our governance best practices.

WHO WE ARE

The director information we provide below includes their respective ages as of the Record Date, the periods during which they have served as a director, certain information as to their principal occupations, directorships they hold in corporations whose shares are publicly registered and qualifications for serving as a member of the Board, including the skills, qualities, attributes and experiences that led the Board to determine it is appropriate to nominate these directors.

Nominees for election as Class I Directors. If elected, the Class I Directors terms would expire at the 2023 Annual Meeting of Shareholders.

 

		Thomas J. Fallon   Age: 58   Chief Executive Officer of Infinera   Director since July 2009   Committees: None

Experience:

 

•

CEO of Infinera (January 2010 to present); President (January 2010 to June 2013); Chief Operating Officer (“COO”) (October 2006 to December 2009; Vice President of Engineering and Operations (April 2004 to September 2006)

 

•

Vice President, Corporate Quality and Development Operations at Cisco Systems, Inc., a networking and telecommunications company (August 2003 to March 2004); served in a variety of functions at Cisco, including General Manager of the Optical Transport Business Unit and Vice President of Service Provider Manufacturing (March 1991 to August 2003)

 

•

Served in various manufacturing roles at Sun Microsystems and Hewlett Packard

Other Boards:

 

•

Hercules Capital, Inc., a public specialty finance company (present)

 

•

Engineering Advisory Board of the Cockrell School at the University of Texas (present)

Qualifications:

 

•

Deep knowledge of Infinera and the industry

 

•

Critical strategic planning, executive management, leadership and director expertise

 

•

Technical expertise

 

4

		Kambiz Y. Hooshmand   Age: 58   Chairman of the Board since October 2010   Independent Director since December 2009   Committees: Audit; Nominating and Governance

Experience:

Other Boards:

Qualifications:

		Amy H. Rice   Age: 40   Independent Director since April 2020   Committees: Nominating and Governance

Experience:

Qualifications:

5

Incumbent Class II Directors whose terms expire at the 2021 Annual Meeting of Shareholders

		Gregory P. Dougherty   Age: 60   Independent Director since January 2019   Committees: Compensation

Experience:

Other Boards:

Qualifications:

6

		Paul J. Milbury   Age: 71   Independent Director since July 2010   Committees: Audit (Chair); Compensation

Experience:

Other Boards:

Qualifications:

7

		David F. Welch, Ph.D.   Age: 59   Director since October 2010; previously May 2001 to November 2006   Committees: None

Experience:

Other Boards:

Other:

Qualifications:

8

Incumbent Class III Directors whose terms expire at the 2022 Annual Meeting of Shareholders

		Sharon Holt   Age: 55   Independent Director since June 2019   Committees: Nominating and Governance (Chair)

Experience:

Other Boards:

Qualifications:

9

		Marcel Gani   Age: 67   Independent Director since June 2014   Committees: Compensation (Chair); Audit

Experience:

Other Boards:

Qualifications:

10

		Mark A. Wegleitner   Age: 69   Independent Director since May 2011   Committees: Nominating and Governance

Experience:

Qualifications:

11

Departing Director

Mr. Patel is not standing for election at the Annual meeting and will retire from the Board at the conclusion of the 2020 annual meeting. The Board thanks Mr. Patel for his distinguished service to our company and his many contributions as a director.

 

		Rajal M. Patel   Age: 51   Independent Director since September 2015   Committees: Nominating and Governance

Experience:

Vote Required

Directors are elected by a majority vote, which means that each of the three director nominees requires the affirmative vote of a majority of the votes cast in order to be elected. Abstentions will have the same effect as an “AGAINST” vote. Broker non-votes are not deemed to be votes cast and, therefore, are not included in the tabulation of the voting results on this proposal and will not affect the outcome of the vote.

Proposal 1—Recommendation of the Board

The Board unanimously recommends a vote “FOR” the election of each of the three Class I nominees listed above.

12

HOW WE ARE SELECTED AND ELECTED

Director Qualifications

The Nominating and Governance Committee reviews candidates for service on the Board and recommends nominees for election to fill vacancies on the Board, including nomination for re-election of directors whose terms are due to expire. In discharging its responsibilities to nominate candidates for election to the Board, the Nominating and Governance Committee endeavors to identify, recruit and nominate candidates characterized by wisdom, maturity, sound judgment, excellent business skills and high integrity. The Nominating and Governance Committee seeks to assure that the Board is composed of individuals of diverse backgrounds who have a variety of complementary experience, training, attributes and relationships relevant to our business. In nominating candidates to fill vacancies created by the expiration of the term of a director, the Nominating and Governance Committee determines whether the incumbent director is willing to stand for re-election. The Nominating and Governance Committee evaluates each director’s performance to determine suitability for re-election, taking into consideration, among other things, each director’s willingness to fully participate and contribute to the Board and its committees, ability to work constructively with the rest of the members of the Board, personal and professional integrity and familiarity with our business, operations and markets.

Each of the nominees to fill positions as Class I directors have consented to serve if elected. However, if any of the persons nominated by the Board subsequently declines to accept election, or is otherwise unavailable for election prior to the Annual Meeting, proxies solicited by the Board will be voted by the proxy holders for the election of any other person or persons as the Board may recommend, at its option, or may decide to further reduce the number of directors that constitute the entire Board.

The Board currently consists of ten directors and is divided into three classes. Each class of the Board serves a staggered three-year term. Our Class I directors, whose terms expire at the Annual Meeting, are Thomas J. Fallon, Kambiz Y. Hooshmand, Rajal M. Patel and Amy Rice. After the Annual Meeting, the Board will consist of nine members.

There are three nominees for election to Class I of the Board this year, Messrs. Fallon and Hooshmand and Ms. Rice. The nomination of these directors to stand for election at the Annual Meeting has been recommended by the Nominating and Governance Committee and has been approved by the Board. Each of the nominees for our Class I directors, if elected, will serve for a three-year term expiring at the 2023 Annual Meeting of Shareholders, or until his successor is duly elected and qualified, or until his earlier death, resignation or removal from the Board.

Our Amended and Restated Bylaws (“Bylaws”) provide that, in an election of directors where the number of nominees does not exceed the number of directors to be elected, each director nominee must receive a majority of votes cast with respect to that director nominee. Should one of the nominees up for election not receive a majority of votes cast, the Board, after taking into consideration the recommendation of the Nominating and Governance Committee, will determine whether or not to accept a pre-tendered resignation of such nominee. The Board will publicly disclose its decision and its rationale within 90 days of the certification of the election results. The director whose resignation is under consideration shall abstain from participating in any decision regarding that resignation.

We believe the current Board consists of a diverse group of professionals, including former CEOs, CFOs and industry leaders, who bring significant leadership and distinct qualities and skill sets to Infinera, including direct shareholder representation by our second largest shareholder. This group provides a diverse range of perspectives and experience to engage each other and management to effectively represent our shareholders. In addition, the Board added its first female director in June 2019, which further highlights our commitment to diversity. Any search firms retained to assist the Nominating and Governance Committee will be specifically advised to seek to include qualified, diverse candidates from traditional and nontraditional environments, including women and ethnically diverse minorities.

Independence of the Board

On an annual basis, in accordance with the current listing standards of Nasdaq, the Board affirmatively determines the independence of each director or nominee for election as a director. The Board has determined that eight out of ten of our directors (with the exception of Mr. Fallon and Dr. Welch, both of whom are employees

13

of Infinera) are “independent” in accordance with the rules and regulations of the SEC and the listing standards of Nasdaq. Also, all members of the Audit Committee, Compensation Committee and Nominating and Governance Committee, as more fully described below, are independent directors.

HOW WE GOVERN AND ARE GOVERNED

Although it is important and exciting to focus on opportunities and successes, we at Infinera believe it is also important to focus on responsible compliance, risk management, and governance structures and functions. Success in our sector in particular depends on maintaining an ability to identify challenges early, maintaining best-possible security and governance practices, and fostering an ability to pivot quickly and continually.

Board Oversight of Risk

Risk is inherent with every business and the Board is responsible for overseeing our risk management function, including a regular review of our strategic plans and business objectives. Members of our senior management team are responsible for implementation of our day-to-day risk management processes, while the Board, as a whole and through its committees, has responsibility for the oversight of overall risk management. In addition, each of the committees of the Board considers any risks that may be within its area of responsibilities and Board members, or Board committee members, periodically engage in discussions with members of our senior management team as appropriate. Specifically, the Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls, key accounting and reporting policies, and cybersecurity, as well as meeting with the Head of Internal Audit and our external independent auditors. The Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The Nominating and Governance Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated with Board organization, membership and structure, succession planning for our directors and executive officers, and corporate governance. The Technology and Acquisition Committee assists the Board in fulfilling its oversight responsibilities with respect to managing the risks associated with technology development and smaller acquisitions and investments. Each of the committee chairs reports to the full Board at regular meetings concerning the activities of the committee, the significant issues it has discussed, and the actions taken by the committee.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics, most recently updated in March 2019, which applies to all of our employees, officers (including our principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions) and our directors. The Code of Business Conduct and Ethics reflects our policy of dealing honestly and with integrity with everyone, including our customers, employees, investors and suppliers. We require all employees to complete training on our Code of Business Conduct and Ethics.

Our Code of Business Conduct and Ethics is just one element of the many practices and procedures we utilize to try to create a diverse and inclusive culture that encourages helpful and honest communication both up and down reporting relationship chains. Our executive leaders set the tone for this culture at the top and our ability to maintain a positive and creative work environment depends on its success. Our annual Infinera Sustainability Report describes some of the additional programs and practices we maintain to protect our people and their productivity, health and well-being.

A copy of our Code of Business Conduct and Ethics is posted on our website at www.infinera.com in the Corporate Governance section on our Investors page. You may also obtain a copy of our Code of Business Conduct and Ethics without charge by writing to: Infinera Corporation, c/o Corporate Secretary, 140 Caspian Court, Sunnyvale, California 94089. We intend to disclose future amendments to certain provisions of our Code of Business Conduct and Ethics, or waivers of such provisions, applicable to any principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and our directors on our website identified above or on a Current Report on Form 8-K if required by the applicable listing standards.

14

Corporate Governance Guidelines

The letter from our Board Chair at the beginning of this proxy statement references some of our governance best practices. The Board has adopted Corporate Governance Guidelines which govern, among other things, Board composition, Board responsibilities, committee composition, management succession and shareholder communications. You can access these Corporate Governance Guidelines, along with other materials such as Board committee charters, on our website at www.infinera.com in the Corporate Governance section on our Investors page.

Stock Ownership Policy

The Board believes that it is important to link the interests of our directors and management to those of our shareholders. Accordingly, the Board has adopted a Stock Ownership Policy for our directors and executive officers who are designated as reporting officers under Section 16 (“Section 16 Officers”) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For additional information regarding our Stock Ownership Policy, please see the section entitled “Compensation Discussion and Analysis—Additional Information Regarding Our Compensation Practices—Stock Ownership Policy.”

Corporate Social Responsibility

We aim to create a corporation that strategically considers all choices in light of our role in the global community. As an established player in transport networking, we recognize that we have some level of influence in the communities where we operate and in the marketplace. We view this influence as a privilege that inspires us to lead with bold and intentional socially responsible practices. Whenever possible, our hope is to use that influence to drive new best practices and a sense of obligation to the world around us. Each year we summarize our sustainability program and activities in a report, the Infinera Sustainability Report.

These are not just words: we have the practices, metrics, targets and disclosures to back them up. Rather we encourage you to read the current Infinera Sustainability Report and watch for our updated one which we expect to post in the coming months.

In addition:

We are fortunate to operate in a sector that presents relatively few major environmental challenges while creating many opportunities to provide environmental and social benefits. In addition to the practices, targets, metrics and disclosures summarized above, our operations directly help people connect socially and professionally; run their businesses more efficiently, fairly and globally; and enable the management of risks that are created by living in a connected global economy.

15

HOW WE ARE ORGANIZED

Board Leadership Structure

The Board believes its current leadership structure best serves the objectives of the Board’s oversight of management, the Board’s ability to carry out its roles and responsibilities on behalf of our shareholders, and our overall corporate governance. Separating the positions of Chairman of the Board and CEO allows our CEO to focus on our day-to-day business, while allowing the Chairman of the Board to lead the Board in its fundamental role of providing advice to and independent oversight of management. While our Bylaws do not require that our Chairman of the Board and CEO positions be separate, the Board believes that having separate positions is the appropriate leadership structure for Infinera at this time and demonstrates our commitment to good corporate governance practices. The Board has assigned the Chairman of the Board responsibility for presiding over meetings of the Board, developing meeting agendas, facilitating communication between management and the Board, representing director views to management and improving meeting effectiveness, among other things. Mr. Hooshmand has served as Chairman of the Board since October 2010.

The Board also believes that the combination of an independent Chairman of the Board, all three of our current standing committees being comprised entirely of independent directors and the regular use of executive sessions of the independent directors enables the Board to maintain independent oversight of our strategies and activities.

Agreement with Oaktree Optical Holdings

In April 2020, we entered into a letter agreement with Oaktree Optical Holdings, L.P. (“Oaktree”) pursuant to which we agreed, among other things, to nominate and support Ms. Rice for election as a director at the Annual Meeting. Subject to certain exceptions set forth in the letter agreement, Oaktree and certain affiliates agreed to vote all of its shares at the Annual Meeting in a manner consistent with the recommendation of our board of directors. Oaktree also agreed to customary standstill restrictions.

Information Regarding the Board and its Committees

The Board met 12 times during fiscal 2019. The Board acted by written consent six times during fiscal 2019. During fiscal 2019, each director then in office attended 75% or more of the meetings of the Board other than Dr. Welch who attended 66% of the Board meetings. During fiscal 2019, each director then in office attended 75% or more of the meetings of the committees on which he or she served during the period for which he or she was a committee chairman or committee member, as applicable. Our independent directors meet in executive sessions, without management present, during most regular meetings of the Board. Directors are encouraged, but not required, to attend our annual meetings of shareholders. Two members of the Board attended our 2019 Annual Meeting of Shareholders. In addition, John P. Daane stepped down from the Board and did not stand for re-election to the Board in May 2019.

16

The Board had three standing committees as of the end of fiscal 2019: an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. The Board suspended the Technology and Acquisition Committee in June 2019 and determined not to reconstitute this ad hoc committee in March 2020. The Board also established an Integration Oversight Committee with a one-year term in October 2018 (as described in more detail below). Mr. Fallon and Dr. Welch do not currently serve on any committees of the Board.

C = Chairman; M = Member

Audit Committee

The Audit Committee reviews and monitors our financial statements, financial reporting process and our external audits, including, among other things, our internal controls and audit functions, the results and scope of the annual audit and other services provided by our independent registered public accounting firm as well as our compliance with legal matters that have a significant impact on our financial statements. The Audit Committee also consults with our management and our independent registered public accounting firm prior to the presentation of financial statements to shareholders and, as appropriate, initiates inquiries into aspects of our financial affairs. The Audit Committee is responsible for establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, and for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. In addition, the Audit Committee is directly responsible for the appointment, retention, compensation and oversight of the work of our independent registered public accounting firm, including approving services and fee arrangements. Any related party transactions are subject to approval by the Audit Committee. A more detailed description of the Audit Committee’s functions can be found in our Audit Committee charter. In addition, the Audit Committee meets in executive sessions, without management present and with the independent registered public accounting firm, during most regular meetings of the Audit Committee. A copy of the Audit Committee charter is available on our website at www.infinera.com in the Corporate Governance section on our Investors page.

The current members of the Audit Committee are Messrs. Gani, Hooshmand and Milbury. Mr. Milbury chairs the Audit Committee. Each current member of the Audit Committee served the entire fiscal year. The Audit Committee met eleven times during fiscal 2019. The Audit Committee acted by written consent once during fiscal 2019. Each member of the Audit Committee is independent for Audit Committee purposes under the rules and regulations of the SEC and the listing standards of Nasdaq. In addition to qualifying as independent under the Nasdaq rules, each member of the Audit Committee can read and understand fundamental financial statements in accordance with Nasdaq Audit Committee requirements. The Board has determined that Messrs. Gani and Milbury are each an “Audit Committee Financial Expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. The designation

17

does not impose on Messrs. Gani and Milbury any duties, obligations or liabilities that are greater than are generally imposed on them as members of the Audit Committee and the Board.

Compensation Committee

The Compensation Committee has the responsibility, authority and oversight relating to the development of our overall compensation strategy and compensation policies and programs. The Compensation Committee establishes our compensation philosophy and policies, administers all of our compensation plans for executive officers, and recommends the compensation for the non-employee directors of the Board. The Compensation Committee seeks to assure that our compensation policies and practices promote shareholder interests and support our compensation objectives and philosophy as described in more detail in the Compensation Discussion and Analysis section of this Proxy Statement.

The Compensation Committee also oversees, reviews and administers all of our material employee benefit plans, including our 401(k) plan, and reviews and approves various other compensation policies and matters. The Compensation Committee may form and delegate authority to one or more subcommittees as appropriate. A more detailed description of the Compensation Committee’s functions can be found in our Compensation Committee charter. A copy of the Compensation Committee charter is available on our website at www.infinera.com in the Corporate Governance section on our Investors page.

The current members of the Compensation Committee are Messrs. Dougherty, Gani and Milbury. Mr. Gani chairs the Compensation Committee. In addition, Mr. Dougherty replaced Mr. Daane on the Compensation Committee effective as of January 29, 2019. Other than Mr. Dougherty, each current member of the Compensation Committee served the entire fiscal year. The Compensation Committee met six times during fiscal 2019. The Compensation Committee acted by written consent three times during fiscal 2019. Each member of the Compensation Committee is a non-employee director, as defined in Rule 16b-3 promulgated under the Exchange Act, an outside director, as defined pursuant to Section 162(m) (“Section 162(m)”) of the Internal Revenue Code, as amended (the “Code”) and satisfies the director and compensation committee independence requirements under the listing standards of Nasdaq.

Non-Executive Equity Award Subcommittee

The guidelines for the size of new hire, promotional and annual retention equity awards for Section 16 Officers are reviewed and approved by the Compensation Committee. The Compensation Committee has delegated to the Non-Executive Equity Award Subcommittee (the “Subcommittee”) the authority to formally approve new hire, promotional and retention equity awards to certain employees pursuant to guidelines pre-approved from time to time by the Compensation Committee. The delegation to the Subcommittee does not include the authority to grant equity awards to new employees who are or are reasonably expected to become Section 16 Officers or to current Section 16 Officers. The delegation of authority to the Subcommittee is not exclusive and the Board and Compensation Committee have retained the right to approve any equity awards at their discretion. The Subcommittee acted by written consent fourteen times during fiscal 2019. This Subcommittee is currently comprised solely of our CEO (who is also a Board member).

Nominating and Governance Committee

The Nominating and Governance Committee reviews and recommends changes to corporate governance policies and practices applicable to Infinera. In addition, the Nominating and Governance Committee is responsible for identifying, evaluating and making recommendations of nominees to the Board and evaluating the performance of the Board and individual directors, including those eligible for re-election at the annual meeting of shareholders. The Nominating and Governance Committee also oversees an annual board evaluation process to determine whether the Board is functioning effectively. The Nominating and Governance Committee is also responsible for reviewing developments in corporate governance practices, and evaluating and making recommendations to the Board concerning corporate governance matters. In addition, the Nominating and Governance Committee oversees our succession planning process. A more detailed description of the Nominating and Governance Committee’s functions can be found in our Nominating and Governance Committee charter. A copy of the Nominating and Governance Committee charter is available on our website at www.infinera.com in the Corporate Governance section on our Investors page.

18

The current members of the Nominating and Governance Committee are Messrs. Hooshmand, Patel, and Wegleitner and Mses. Holt and Rice. In addition, Mr. Patel replaced Mr. Daane as Chairman on the Nominating and Governance Committee effective as of May 23, 2019 and Ms. Holt replaced Mr. Patel as Chairman of the Nominating and Governance Committee effective as of April 13, 2020. Other than Ms. Holt and Ms. Rice, each current member of the Nominating and Governance Committee served during the entire 2019 fiscal year. The Nominating and Governance Committee met five times during fiscal 2019. The Nominating and Governance Committee acted by written consent twice during fiscal 2019. Each member of the Nominating and Governance Committee satisfies the independence requirements under the listing standards of Nasdaq.

Board Nominees and Diversity

The Nominating and Governance Committee reviews and reports to the Board on a periodic basis with regard to matters of corporate governance, and reviews, assesses and makes recommendations on the effectiveness of our corporate governance policies. In addition, the Nominating and Governance Committee reviews and makes recommendations to the Board regarding the size and composition of the Board and the appropriate skills and characteristics required of our directors in the context of the then-current composition of the Board. This includes an assessment of each candidate’s independence, personal and professional integrity, financial literacy or other professional or business experience relevant to an understanding of our business, ability to think and act independently and with sound judgment, and ability to serve our shareholders’ long-term interests. The Board and the Nominating and Governance Committee follow a process that we consider best practices when reviewing the overall composition of the Board and considering the slate of nominees for annual election to the Board and the appointment of individual directors to the Board. The Board and Nominating and Governance Committee evaluates the skill sets needed to provide the right level of guidance and oversight to the management team. Within the context of evaluating the skills needed on the Board, the Nominating and Governance Committee also considers diversity attributes, including gender, race, orientation, ethnicity, specialized expertise and a range of insight gathered from relevant industries. These factors, and others considered useful by the Nominating and Governance Committee, are reviewed in the context of an assessment of the perceived needs of the Board at a particular point in time.

The Nominating and Governance Committee leads the search for, selects and recommends candidates for election to the Board. Consideration of new director candidates typically involves a series of committee discussions, review of information concerning candidates and interviews with selected candidates. From time to time, the Nominating and Governance Committee may engage the services of a search firm to identify director candidates. Any search firms retained to assist the Nominating and Governance Committee will be specifically advised to seek to include qualified, diverse candidates from traditional and nontraditional environments, including women and ethnically diverse minorities. The Nominating and Governance Committee will also consider candidates proposed in writing by shareholders, provided such proposal meets the eligibility requirements for submitting shareholder proposals for inclusion in our next proxy statement and is accompanied by the required information about the candidate specified in Section 2.4 of our Bylaws. Candidates proposed by shareholders are evaluated by the Nominating and Governance Committee using the same criteria as for all other candidates.

If a shareholder wishes to recommend a director candidate for consideration by the Nominating and Governance Committee, pursuant to our Corporate Governance Guidelines, the shareholder must have held at least 1,000 shares of our common stock for at least six months and must notify the Nominating and Governance Committee by writing to our Corporate Secretary at our principal executive offices, and must include the following information:

19

Technology and Acquisition Committee

At the time the Technology and Acquisition Committee was suspended in June 2019, this committee was comprised of Messrs. Hooshmand, Patel, Wegleitner and Dr. Welch. Mr. Wegleitner chaired the Technology and Acquisition Committee. The Technology and Acquisition Committee met once during fiscal 2019. The Technology and Acquisition Committee did not act by written consent during fiscal 2019.

The Board suspended the Technology and Acquisition Committee in June 2019 in order to re-evaluate its responsibilities. There were no further meetings after its initial meeting in February 2019. The Board finally determined not to reconstitute the Technology and Acquisition Committee in March 2020.

Integration Oversight Committee

In October 2018, the Board formed the Integration Oversight Committee to provide guidance to the management of Infinera in its integration of the business, personnel and infrastructure of Coriant with Infinera, and assist the Board in its oversight of the integration. The Integration Oversight Committee provided general oversight of all activities related to the integration, oversaw the formulation and implementation of a plan for the integration and oversaw the execution, performance and results of the integration. This committee had a one-year term which terminated in October 2019.

The Integration Oversight Committee consisted of Messrs. Dougherty, Hooshmand and Milbury at its termination. Mr. Dougherty had replaced Mr. Daane as a member of the Integration Oversight Committee effective as of March 1, 2019. The Integration Oversight Committee met twice during fiscal 2019. The Integration Oversight Committee did not act by written consent during fiscal 2019.

Communications are distributed to the Board or to any individual director, as appropriate, depending on the facts and circumstances outlined in the communication. At the direction of the Board, all mail received may be opened and screened for security purposes. Communications that are unduly hostile, threatening, illegal or similarly unsuitable will be excluded with the provision that any communication that is filtered out will be made available to any independent or non-employee director upon request.

HOW WE ARE PAID

Our compensation program for our non-employee directors is designed to attract and retain highly qualified, independent directors to represent shareholders on the Board and to act in their best interests. The Compensation Committee, which consists solely of independent directors, has the primary responsibility for reviewing and recommending any changes to our director compensation program, with compensation changes approved or ratified by the full Board. During fiscal 2019, the Compensation Committee engaged an outside advisor to provide relevant market data regarding our director compensation program in order to review the program. The Compensation Committee and Board determined that a mix of cash compensation and equity awards should continue to be used in our compensation program for our non-employee directors. Directors who are also employees of Infinera do not participate in our director compensation program, nor do they receive any additional compensation for their service as directors. The Compensation Committee did not recommend any changes to our director compensation program after its review during fiscal 2019. The full Board last approved changes to the director cash compensation program in December 2015 other than to approve fees for service on the Integration Oversight Committee, which has since ceased to exist.

We do not pay meeting fees for the Board or any of the committees of the Board. We pay the retainer fees set forth above in quarterly installments. Retainer fees are paid in arrears. In addition, we have a policy of reimbursing our non-employee directors for reasonable travel, lodging and other expenses incurred in connection with their attendance at Board and committee meetings.

Director Equity Awards

Non-employee directors are eligible to receive equity awards as follows:

21

Assuming a non-employee director is appointed to the Board at least six months prior to the next annual meeting of shareholders, such non-employee director will also be eligible for an RSU award covering a number of shares with an aggregate fair market value as reported on Nasdaq on the day prior to the grant date equal to approximately $165,000. The number of shares covering this RSU award will be prorated for the number of months remaining until the next scheduled annual meeting of shareholders.

For the Annual RSU Award in connection with the 2019 Annual Meeting of Shareholders, we granted RSU awards covering 53,745 shares of Infinera common stock to each non-employee director then in office. These RSU awards vest in full on May 21, 2020, subject to each non-employee director’s continued service to Infinera on the applicable vesting date.

23

OUR PAY

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis provides information related to the fiscal 2019 compensation program and related decisions for our NEOs identified below.

Executive Summary

Fiscal 2019 was a mixed year for Infinera. Although we had a very strong one-year total shareholder return (“TSR”) of 95%, this was largely due to a depressed share price at the beginning of the year. While we met our synergy targets as part of the integration of Infinera and Coriant and we achieved non-GAAP operating profitability in the fourth quarter of 2019, our financial performance for the full year did not meet our expectations set forth in our 2019 annual operating plan approved by the Board in the beginning of the year.

That mixed performance had a significant impact on our compensation structure and compensation outcomes in fiscal 2019. Last year, our CEO’s compensation reflected this year in many ways, including that:

We believe in strong pay and performance alignment, as these pay program decisions and outcomes demonstrate. The remainder of this executive summary will illustrate these various aspects of our compensation program.

Our Company

We are a global supplier of networking solutions comprised of networking equipment, software, and services. Our portfolio of solutions includes optical transport platforms, converged packet-optical transport platforms, optical line systems, disaggregated router platforms, a suite of networking and automation software offerings, and support and professional services. Our end-user’s services and applications include, but are not limited to, high-speed internet access, business Ethernet services, 4G/5G mobile broadband, cloud-based services, high-definition video streaming services, virtual and augmented reality, and the Internet of Things.

Our Named Executive Officers

For fiscal 2019, our NEOs were the following:

24

Fiscal 2019 Management Changes. In February 2019, the Compensation Committee established fiscal 2019 target compensation for our NEOs who were then employed with us. Mr. Feller resigned as CFO from Infinera effective as of August 26, 2019 and was replaced by Ms. Erba effective as of August 26, 2019. Ms. Erba originally joined Infinera on August 1, 2019 as the Senior Vice President, Strategic Finance until her appointment as CFO. Mr. Teichmann was appointed as our CLO and Corporate Secretary effective as of April 1, 2019. Mr. Jandro served in his role for the full fiscal year, but on January 3, 2020, Mr. Jandro informed us of his decision to retire from his position as our Senior Vice President, Worldwide Sales, effective immediately.

Fiscal 2019 Business Results

Our fiscal 2019 financial performance fell short of the expectations we established at the beginning of the year. In particular, our non-GAAP operating loss was $82.5 million compared to a target non-GAAP operating income loss of $45 million established at the beginning of the year in our 2019 bonus plan (the “2019 Bonus Plan”). However, this annualized view of performance could overshadow significant improvements during the year, including a significant drop in operating expenses as a percentage of revenue as we started to benefit from synergies related to reducing headcount, combining systems and decreasing our real estate footprint. It is noteworthy that our non-GAAP operating loss for the second half of the year of $9.7 million compared to a loss of $72.7 million in the first half of the year and included positive non-GAAP operating income of $8.8 million in the fourth quarter of 2019.

However, in spite of these financial outcomes, fiscal 2019 was also a year of significant accomplishment in establishing us as a leader in the optical networking market. Our progress is marked by achievements in four key areas:

25

The following table illustrates our GAAP revenue and non-GAAP operating loss over the last three fiscal years:

The following graph shows our 1-, 3- and 5-year TSR as compared to the Standard & Poor’s North American Technology Multimedia Networking Index (“S&P Networking Index”).

Fiscal 2019 Executive Compensation Program Overview

At the beginning of fiscal 2019, when a majority of executive compensation decisions were made, the Compensation Committee considered the performance of our company as we exited fiscal 2018 and the importance of achieving the successful integration of Infinera and the recently acquired Coriant. The decisions made reflected a continuing effort to maintain a strong pay-for-performance profile and supported accountability of our leadership team for our financial performance. The key elements of our executive compensation program include base salary, a cash bonus plan and long-term incentives in the form of performance shares and, for executives other than our CEO, time-based RSUs.

Our business is still in a period of transformation. We are making significant progress in this transformation. For example, we reached non-GAAP operating profitability in the fourth quarter of 2019, exited the fourth quarter of 2019 with positive cash flow and also logged significant bookings growth. We have a plan for continued technology innovation over the next several years, as we build on our existing technologies such as DRX/XTM and ICE6, as well as a roadmap for developing new products and technologies, such as XR Optics.

26

Our compensation plans have been designed to reward our executives, and our employees more broadly, as we make progress toward long-term sustainable profitability and growth. Because we are in this period of transition, our compensation program measures progress on similar metrics in the short- and long-term, and contains rewards for our executives that are earned when certain strategically important financial milestones are met and sustained. We believe this program is in the best interests of and aligned with our shareholders and maximizes the incentive for our employees and executive team to deliver shareholder value.

Due to rapidly evolving business developments, in August 2019, our Compensation Committee worked with Compensia to effect changes to our annual incentive program to ensure that the program retained a motivational value for our NEOs and employees throughout Infinera. The CEO was not included in this program modification; Mr. Fallon continued to be held accountable to goals set at the beginning of the year. As part of this modification for our NEOs, the award payout was capped at 75% of the target opportunity to account for the decreased targets; actual payouts were further modified in a downward fashion due to the exercise of negative Compensation Committee discretion to create better alignment with our financial outcomes.

date share price of performance share awards, which differs from the value reported in the Summary Compensation Table below. Actual realized compensation includes the base salary and cash annual incentive earned during the year plus the sum of any RSUs and performance shares that vested during the year, valued using the share price on the vesting date.

First, the Compensation Committee kept our CEO’s base salary the same as the prior fiscal year. In addition, target equity awards in fiscal 2019 were equal to the value of target grants in fiscal 2018, and took the form of two performance share awards for our CEO. The Compensation Committee believes keeping CEO pay in line with the prior fiscal year was consistent taking into consideration the performance of Infinera exiting fiscal 2018.

In addition, our CEO’s realized compensation is aligned with our shareholder return in 2019 and was significantly below target in 2017, 2018 and 2019. This relationship between realized pay and our total shareholder return continues a pattern from 2017 and demonstrates the alignment of pay and performance inherent in the design of our executive compensation programs. As the chart below illustrates, realized compensation for our CEO was approximately 70% to 80% below target in each of the most recent three fiscal years.

Our fiscal 2019 payouts reflect the alignment of our executive compensation program with the performance of Infinera. As indicated above, a significant portion of our executive compensation program was designed to align the compensation outcomes for our participating NEOs with performance against measurable objectives.

Bonuses under the amended 2019 Bonus Plan for participating NEOs were determined based on our performance against the achievement of financial targets. The financial performance targets for our participating NEOs under the amended 2019 Bonus Plan (as described in the section “Performance-Based Incentive Cash Compensation (2019 Bonus Plan)-Amended 2019 Bonus Plan”) were tied to non-GAAP operating income for fiscal 2019 and positive cash flow for the fourth quarter of 2019. We met our financial targets under the amended 2019 Bonus Plan, which (after negative Compensation Committee discretion) resulted in a payout at 55% for our participating NEOs. Our CEO was not eligible to participate in the amended 2019 Bonus Plan.

Portions of long-term performance share awards made in 2017 and 2018 were earned at the completion of fiscal 2019. Each of those portions was earned below target levels of performance and were based on two- and three-year performance objectives based on total shareholder return. More details on those payouts are located in the section “Long-term Incentive Compensation-Outstanding Performance Share Awards Granted in Prior Fiscal Years.”

During fiscal 2019, we granted performance share awards with a new type of performance goal related to the achievement of non-GAAP profitability. One hundred percent of the shares subject to the performance award would become eligible to vest based upon our achievement of positive non-GAAP operating income (that is,

28

greater than $0). We did not achieve positive non-GAAP operating income for fiscal 2019 and no shares have become eligible to vest.

Governance of Executive Compensation

Our executive compensation program includes the following executive compensation governance policies and practices:

Advisory Vote on Fiscal 2018 Named Executive Officer Compensation—“Say-on-Pay” Vote

In calendar 2019, shareholders were provided with the opportunity to cast an advisory (non-binding) vote (a “say-on-pay” proposal) on the compensation of our NEOs for fiscal 2018. Our shareholders approved this say-on-pay proposal, with more than 96% of votes cast voting in favor of our executive compensation program. Noting the results of this vote, the Compensation Committee considered this when making compensation decisions for fiscal 2019.

In light of the 2019 say-on-pay vote, the Compensation Committee maintained a consistent general approach to our executive officer compensation program. This included a continued emphasis on pay-for-performance through the use of performance shares that reward executive officers only if they deliver value for our shareholders. For fiscal 2019, and as noted above, the Compensation Committee also approved no increases to the base salaries or target annual incentives of our CEO and COO when compensation decisions were made in February 2019. The 2019 Bonus Plan was modified for our NEOs, other than our CEO, and as modified enabled payout to our NEOs only if the financial performance objectives were met.

29

The Compensation Committee will continue to consider input from our shareholders as reflected in the outcome of our annual say-on-pay vote when making executive compensation program decisions.

Overview of our Executive Compensation Program Philosophy and Process

Compensation Objectives and Philosophy

Our executive compensation program is designed to attract, retain, and reward talented executive officers and to motivate them to pursue our corporate objectives, while fostering the creation of long-term value for our shareholders. To achieve this mission, we take a “pay-for-performance” approach that forms the foundation for the design of our executive compensation program. The Compensation Committee also designs the various components of our executive compensation program to support our company culture (i.e., increasing levels of accountability through the use of “at risk” pay for more senior level employees), the internal company environment relative to industry conditions, current business priorities, strategy and product development cycles, and current market practices of our peer group.

Compensation-Setting Process

Role and Authority of Compensation Committee. The Compensation Committee is responsible for our executive compensation program and all related policies and practices. The Compensation Committee has the responsibility to establish and approve the compensation of each of our executive officers, including our NEOs. In addition, the Compensation Committee reviews and administers our equity and employee benefit plans and programs, which are generally available to our employees, including our NEOs. The Compensation Committee also has the authority to engage its own advisors to assist it in carrying out its responsibilities, and the reasonable compensation for such advisor services is paid by Infinera.

Role of Compensation Consultant. During fiscal 2019, the Compensation Committee engaged the services of Compensia, Inc. (“Compensia”), a national compensation consulting firm, as its independent compensation consultant to provide advice on matters relating to the compensation of our executives and non-employee directors. Compensia provided the Compensation Committee with an analysis of industry sector competitive market data regarding NEO compensation, information on compensation trends, peer group and general market data, as well as assistance with the parameters used to determine the peer group, base salary, incentive plan design and the structure of our executive compensation program. During fiscal 2019, Compensia also provided general observations about our compensation programs and reviewed and provided input on the compensation discussion & analysis section of our Proxy Statement.

Compensia reports directly to the Compensation Committee. Compensia interacted with management at the direction of the Compensation Committee but did not provide any other services for Infinera or its management team in fiscal 2019. Compensia’s fees were paid by Infinera. The Compensation Committee annually reviews the independence of its compensation consultant and during fiscal 2019 determined that there were no conflicts of interest in connection with Compensia’s work.

Determination of CEO Compensation. Our compensation consultant provides market data and considerations for the Compensation Committee regarding the amount and form of our CEO’s compensation. As part of this process, the Compensation Committee considers input from the Board and feedback from the Chairman of the Board, in particular with respect to the performance of our CEO. After considering the feedback and recommendations received, all decisions regarding our CEO’s compensation are made by the Compensation Committee, based on its own judgment and after considering the interests of our shareholders, in executive sessions excluding our CEO.

Determination of non-CEO Compensation. As a result of his close working relationship with each of the other NEOs, our CEO is asked to provide his assessment of their performance to the Compensation Committee, including considerations regarding retention and importance of their contributions to Infinera. Our CEO is assisted by our Chief Human Resources Officer in making these assessments. Our CEO then presents his performance assessment of the other NEOs and makes formal recommendations to the Compensation Committee regarding adjustments to base salary, annual cash incentive award opportunities and equity awards for our NEOs (other than

30

himself). While the Compensation Committee considers the recommendations of our CEO in determining compensation for our other NEOs, ultimately its decisions are based on its own judgment and the interests of our shareholders. None of our NEOs makes any recommendations regarding his own compensation and none of our NEOs are present at meetings in which their compensation is determined. The Compensation Committee finalized compensation decisions for the CEO in executive session without management present.

Executive Compensation Elements

We provide base salaries to attract, retain and motivate our executive officers for their day-to-day contributions, annual incentive cash compensation to link payments to the achievement of our annual financial and/or operational objectives, and long-term incentive compensation delivered in the form of equity awards to align the interests of our executive officers with those of our shareholders and provide significant motivational and retention value to our executive officers. These are the key elements of our executive compensation program. We believe each is necessary to attract, retain and motivate our executive officers, on whom our success largely depends. In addition, we also provide employee benefits that are generally available to all our employees including our NEOs, and certain severance and “double-trigger” change of control payments and benefits as part of our executive compensation program as described further below.

Allocation of Compensation across Pay Elements

In determining how to allocate an NEO’s target total direct compensation opportunity among these various elements, the Compensation Committee seeks to take into account market competitive practices for companies of a similar size and with a comparable business focus. Individual retention considerations specific to the individual are also factored in the Compensation Committee’s final determination of target total direct compensation. Equity awards, which for fiscal 2019 consisted of awards of time-based RSUs (for our NEOs other than our CEO) and performance shares (for all NEOs), represented the largest component of our NEOs’ target total direct compensation opportunity. This approach was designed to encourage sustained, long-term performance and to ensure alignment of the interests of our NEOs with those of our shareholders. Consistent with our “pay-for-performance” philosophy, a significant portion of our NEOs’ fiscal 2019 target total direct compensation opportunity was completely “at risk,” including 87% of our CEO’s target total direct compensation opportunity as our CEO received all of his equity in performance shares. We define “at risk” compensation as opportunities for which vesting as well as the level of achievement is contingent upon achievement of specified performance conditions. In fiscal 2019, this included the amended 2019 Bonus Plan and performance share awards, where the value of performance shares is included based on the grant date target value of shares awarded.

The following charts show the target total direct compensation mix for fiscal 2019 for our CEO and our other NEOs then employed with us as a group (value of equity awards is determined using grant date fair value):

31

The foregoing chart for our other NEOs as a group does not take into account new hires during the year that included Ms. Erba and Mr. Teichmann, and reflects decisions made by the Compensation Committee in February 2019 (other than for the integration bonuses) as it related to our NEOs who were then employed with us, for our fiscal 2019 executive compensation program.

Role of Benchmarking and the Compensation Peer Group

In making compensation decisions for our executive officers, the Compensation Committee reviews and analyzes competitive market practices using data drawn from a group of peer companies and the Radford Global Technology survey.

In June 2018, the Compensation Committee reviewed the peer group used for executive compensation decision-making as part of its annual review of the peer group. The changes made in June 2018 were minimal and primarily to account for the recent acquisitions of two of the peer companies. However, in light of the impending acquisition of Coriant in October 2018, the Compensation Committee reviewed the peer group to account for the increased size of Infinera in terms of projected annual revenue and number of employees. The target selection criteria for the peer group identified in August 2018 and used for fiscal 2019 compensation planning were:

Based on this recalibration, the new peer group now consists of the following 16 companies:

Given that not all of the peer companies report data for a position comparable to each of our NEOs, the Compensation Committee also reviewed market data derived from the Radford Global Technology survey. In this discussion, where we refer to “market” levels of pay and the “market data,” we are referring to the combined compensation peer group and survey data described above that were then in effect and applicable to our NEOs. Data collected from this updated compensation peer group was considered in negotiating and determining Mr. Teichmann’s initial compensation in connection with his appointment as our CLO in April 2019 and Ms. Erba’s initial compensation in connection with her appointment as our CFO in August 2019.

Use of Market Data

For its fiscal 2019 compensation decisions, the Compensation Committee continued to maintain a holistic and flexible approach in its use of market data. The Compensation Committee’s goal is generally to set all elements of compensation within a competitive range, using a balanced approach that does not use rigid percentiles to target pay levels for each compensation element, but instead makes its compensation decisions based on a variety of relevant factors, including those listed below. While the Compensation Committee continues to review and reference market data, the data generally is used to inform the Compensation Committee of market practices to ensure that our executive compensation program remains within a generally competitive range of our peers. In

32

addition to the market data, several other factors are taken into account in setting the amount of each NEO’s target total direct compensation opportunity. These factors include:

Relevant Qualitative Factors

In addition to our uses of competitive market data as described above, the Compensation Committee considers a range of subjective and qualitative factors when making compensation decisions for our NEOs, including:

The Compensation Committee does not assign relative weights or rankings to any of these factors and does not solely use any quantitative formula, target percentile or multiple for establishing compensation among the executive officers or in relation to the market data. Instead, the Compensation Committee relies upon its members’ knowledge and judgment in assessing the various qualitative and quantitative inputs it receives regarding each individual and makes compensation decisions accordingly.

Fiscal 2019 Compensation

Base Salaries

For fiscal 2019, the Compensation Committee reviewed the base salaries in February 2019 for each of our NEOs who were then employed with us. The Compensation Committee approved no changes to the base salaries

33

of our CEO and COO but did approve increases to such other NEOs after taking into consideration the market data provided by its independent compensation consultant and increased size of the company in terms of scale as well as the challenging integration tasks expected in fiscal 2019. Mr. Teichmann’s base salary was established at the time he joined us in April 2019 and Ms. Erba’s base salary was established at the time she joined us in August 2019, which salaries remained the same through fiscal 2019.

The following table shows the annual base salary for each of our NEOs for fiscal 2018 and fiscal 2019:

Performance-Based Incentive Cash Compensation (2019 Bonus Plan)

Target Bonus Opportunities. In February 2019, the Compensation Committee reviewed the target bonus opportunities (which are expressed as a percentage of base salary) for fiscal 2019 for each of our NEOs who were then employed with us, and determined that our CEO, CFO and COO would remain the same. After a review of the market data and in light of the increase to Mr. Jandro’s base salary, the Compensation Committee approved a decrease to Mr. Jandro’s target bonus opportunity as a percentage of his base salary. Mr. Teichmann’s target bonus opportunity as a percentage of base salary was established at the time he joined us in April 2019 and Ms. Erba’s target bonus opportunity as a percentage of base salary was established at the time she joined us in August 2019.

The following table shows the target bonus opportunities for each of our NEOs for fiscal 2018 and fiscal 2019.

34

2019 Bonus Plan Design. In February 2019, the Compensation Committee approved a 2019 Bonus Plan that was applicable to our NEOs who were then employed with us. Given the continued challenges facing us as we entered fiscal 2019 and the need to successfully integrate Infinera and Coriant, the Compensation Committee considered an emphasis on improved operating income as an important goal that would support alignment of the interests of our executive officers with those of our shareholders. In particular, the Compensation Committee believes that non-GAAP operating income continues to be a key metric for our shareholders that supports a balanced approach to near-term and long-term growth.

Taking these considerations into account, the 2019 Bonus Plan approved in February 2019 established an opportunity for a bonus between 75% and 100% of target for non-GAAP operating income losses of $45 million (threshold) and $35 million (target), respectively. No bonus would be earned for a non-GAAP operating income loss that exceeded $45 million, and the percentage of the target bonus earned would be interpolated on a linear basis for results between threshold and target. The Compensation Committee determined that there would be no opportunity for our NEOs to earn a bonus that exceeds their individual targets. This bonus plan design was intended to balance retention and motivational objectives and a desire to maintain alignment with shareholders with a reasonable profile of executive compensation as we worked to reestablish profitability.

Amended 2019 Bonus Plan. Following the approval of the 2019 Bonus Plan design described above, the Compensation Committee, with management’s assistance, reassessed the appropriateness of the initial non-GAAP operating loss targets and determined to amend the 2019 Bonus Plan. In deciding to revise the 2019 Bonus Plan, the Compensation Committee considered not only the importance of the successful completion of the integration but also the retention concerns of management while maintaining alignment with the interests of our shareholders.

In August 2019, in consultation with Compensia and management, the Compensation Committee approved the amended 2019 Bonus Plan to incorporate a mix of non-GAAP operating income and cash flow goals, weighted 75% and 25%, respectively, and adjusting overall funding thresholds based on non-GAAP operating loss for the full fiscal year and setting positive cash flow thresholds for the fourth quarter of 2019.

In order to maintain our emphasis on pay-for-performance while also recognizing the challenges facing our business, our CEO was excluded from the amended 2019 Bonus Plan and was only eligible to earn a bonus if we achieved the goals established at the beginning of the year. In addition, the maximum payout for our NEOs other than our CEO was reduced from 100% of target to 75% of target.

As a first step in determining fiscal 2019 bonuses becoming payable under the amended 2019 Bonus Plan, we were required to achieve as a precondition both of the following goals during the fourth quarter of 2019:

In the event both funding preconditions were met, the bonus would be determined based on the following financial performance objectives for non-GAAP operating loss (weighted 75%) and cash flow (weighted 25%):

For any result that falls between the threshold and target levels in the table above, the funding as a percent of target would be determined using straight-line interpolation. Although funding up to 90% of target for each of the operating loss and cash flow targets, the total payout for plan participants at or above SVP level and accordingly, for each of our NEOs (other than Mr. Fallon and Ms. Erba) was capped at 75% of target.

35

In addition to the minimum financial targets to fund the amended 2019 Bonus Plan, the bonus earned by our NEOs could be modified by an individual performance component that could be used to downward adjust the bonus. In the event that our financial performance was achieved at a level that would trigger a bonus, our CEO would be responsible for reviewing the performance of each NEO (other than himself) and recommending any changes to each NEO (other than himself). The individual performance factor was based on a qualitative assessment of the NEO’s contributions during 2019 and did not include specific, pre-established, individual performance targets. The Compensation Committee then had sole discretion to determine any downward adjustments for each NEO (including the CEO) and the final bonus payout for fiscal 2019.

For purposes of the amended 2019 Bonus Plan, “cash” is defined as non-GAAP cash from operations (excluding cash used to pay integration and restructuring costs), less budgeted capital expenditure for the period and any additional capital expenditure beyond such budgeted amount. For purposes of the amended 2019 Bonus Plan, “non-GAAP operating income” was calculated excluding acquisition-related deferred revenue and inventory adjustments, other customer related charges, non-cash stock-based compensation expenses, amortization of acquired intangible assets, acquisition and integration costs, restructuring and other related costs, litigation charges, intangible asset impairment, and certain purchase accounting adjustments related to Infinera’s acquisitions. For a reconciliation of GAAP to non-GAAP operating income for the fourth quarter and full fiscal year 2019, please see Appendix A to this Proxy Statement.

2019 Bonus Plan Results. Our non-GAAP operating income loss of $82.5 million fell below the threshold established under the original 2019 Bonus Plan in February 2019. As a result, our CEO did not earn a bonus for fiscal 2019 performance.

We did achieve both funding preconditions for the amended 2019 Bonus Plan, including non-GAAP profit of 2.3% for the fourth quarter of 2019 and $23.6 million of cash flow in the fourth quarter of 2019, and finished the year with a non-GAAP operating loss of $82.5 million. Overall, this resulted in bonus achievement of 77% for our NEOs other than our CEO. In light of our overall cash position, the Compensation Committee applied negative discretion and approved limited funding at 55% for our NEOs and limited funding at 70% for our VPs and below. Ms. Erba was paid out at 100% of her target bonus for fiscal 2019 prorated based on her length of service during fiscal 2019 as contractually agreed to as part of her new hire package. Our CEO was not eligible to receive a bonus under the amended 2019 Bonus Plan.

2019 Integration Bonus. In February 2019, the Compensation Committee also approved additional bonuses tied to the successful completion of the integration of Infinera and Coriant, a critical project to drive down costs and for the long-term success of Infinera. These integration bonuses were given to Messrs. Heard, Feller and Jandro and not our CEO. Mr. Feller’s opportunity to earn an integration bonus terminated upon his separation from Infinera. The Compensation Committee established performance goals for each participating NEO that were allocated different weightings in order to drive key integration activities. Full achievement of a performance goal resulted in payout of, and was capped at, 100% for that portion of the integration bonus.

The Compensation Committee approved a target integration bonus opportunity of $650,000 for Mr. Heard, which resulted in a payout of $552,500 upon the achievement of the integration goals set forth below. The following table sets forth the goals, weighting of each goal, resulting percentage of goal met and final payout.

36

The Compensation Committee approved a target integration bonus opportunity of $500,000 for Mr. Jandro, which resulted in a payout of $500,000 upon the achievement of the integration goals set forth below. The following table sets forth the goals, weighting of each goal, resulting percentage of goal met and final payout.

2019 Final Bonus Payouts. The following table sets forth the bonus payments earned for fiscal 2019 by our participating NEOs pursuant to the amended 2019 Bonus Plan and integration bonus plan.

Mr. Feller’s employment with us terminated as of September 30, 2019 and was not eligible in either of the two bonus programs. Mr. Feller received a separation payment of $1.5 million following his separation.

Long-Term Incentive Compensation

Our long-term incentive compensation opportunities are delivered in the form of equity awards. Annual equity awards for NEOs are generally approved by the Compensation Committee during the first open trading window of each new calendar year.

Equity Compensation Design. Under the 2016 Plan, the Compensation Committee grants equity awards to eligible employees, including our NEOs. All awards to our NEOs were made pursuant to the 2016 other than Ms. Erba’s two awards, which were made under the 2019 Inducement Equity Incentive Plan. The Compensation Committee actively monitors our annual aggregate equity utilization as measured by our burn rate.

The Compensation Committee believes that it is in the best interests of Infinera and our shareholders to grant a combination of time-based and performance-based equity awards to senior level employees, including our NEOs. It also believes that our performance-based equity awards foster a “pay-for-performance” culture and multi-year vesting schedules create longer-term incentives that maintain alignment of the interests of our NEOs with those of our shareholders. Our NEOs benefit from these equity awards based on our sustained performance over time and the ability of our NEOs to create the results that drive shareholder value.

37

In determining the appropriate mix of such equity awards, the Compensation Committee considered how each equity vehicle supports our compensation strategy as follows:

In February 2019, the Compensation Committee granted annual equity awards for fiscal 2019 in the form of a time-based RSU award and a performance share award to each of our NEOs who were then employed with us, except our CEO. Our CEO was not awarded any time-based RSUs in fiscal 2019 and instead was awarded two performance share awards in March 2019. The Compensation Committee determined to move away performance awards based on TSR and instead focused on increasing revenue and reducing operating expenses as management undertook the task of integration of Infinera and Coriant during fiscal 2019. The Compensation Committee decided to focus on non-GAAP operating income and designed the award to reward sustained positive non-GAAP operating income over four consecutive quarters or a full fiscal year during the three-year performance period that began with fiscal 2019 and ended with fiscal 2021.

The grants made in fiscal 2019 were carefully considered and designed to work in concert with grants made in previous years that will have overlapping performance cycles. For instance, in fiscal 2018, the company made relative TSR performance awards to all our NEOs that will continue to have performance periods through the end of fiscal 2020. Fiscal 2019 awards were structured differently to encourage executives to accelerate our return to sustained profitability and, for our CEO, to make significant gains on our share price. We made this decision carefully, considering the context of overlapping programs from multiple years maintaining our executives’ attention on relative performance and long-term sustained value creation, while providing them with an incentive to deliver value to our shareholders quickly and efficiently.

In determining the size of these annual equity awards, the Compensation Committee considered the factors described above in the sections entitled “Use of Market Data” and “Relevant Qualitative Factors,” with particular attention to market data, internal equity considerations, the potential dilutive impact of the equity awards and the amount and value of unvested equity awards held by each of our NEOs. The Compensation Committee believed a combination of time-based and performance-based equity awards promote close alignment of the interests of our NEOs with those of our shareholders.

The Compensation Committee first determined the target value of long-term incentive compensation for each executive. The number of RSUs and performance shares granted to each executive was then determined based on an average stock price of $5.00 per share and assuming a 100% allocation of target value into performance shares for our CEO, a 50% allocation of target value into performance shares for our COO and a 40% allocation of target value into performance shares for our other NEOs who were then employed by us. Ms. Erba’s and Mr. Teichmann’s allocation were determined as part of their new hire package. The target value approved by the

38

Compensation Committee differs from the Summary Compensation Table reported value of equity below. The following table sets forth the equity awards granted to our NEOs in February 2019 unless otherwise noted.

The RSU awards in the table above for Messrs. Feller and Jandro vest in annual installments with one-fourth of the underlying shares of Infinera common stock vesting on May 5^th of each of 2020, 2021, 2022 and 2023, subject to the NEO’s continued service with Infinera through each applicable vesting date. Mr. Feller’s outstanding time-based RSUs that had not vested were cancelled upon his separation from Infinera.

In April 2019, Mr. Teichmann, in connection with his new hire, was granted a time-based RSU award covering 220,000 shares. These shares vest in annual installments with one-fourth of the underlying shares of Infinera common stock vesting on April 5^th of each of 2020, 2021, 2022 and 2023. In finalizing the terms of this grant, the Compensation Committee considered the scope of Mr. Teichmann’s new role with us as well as competitive market data provided by Compensia. Mr. Teichmann’s OI PSA is subject to the same non-GAAP operating income target granted to the other NEOs and described in more detail below.

In August 2019, Ms. Erba, in connection with her appointment as CFO, was granted a time-based RSU award covering 562,500 shares. These shares vest in annual installments with one-fourth of the underlying shares of Infinera common stock vesting on September 5^th of each of 2020, 2021, 2022 and 2023. In finalizing the terms of this grant, the Compensation Committee considered the scope of Ms. Erba’s new role with us as well as competitive market data provided by Compensia. Ms. Erba’s OI PSA is subject to the same non-GAAP operating income target granted to the other NEOs and described in more detail below. Ms. Erba’s two equity awards were granted under the 2019 Inducement Equity Incentive Plan.

Under the terms of the OI PSA for fiscal 2019, the Compensation Committee established a three-year performance period in which 100% of the shares subject to this award will become eligible to vest based upon our achievement of positive non-GAAP operating income (that is, greater than $0) (the “Profitability Goal”) for:

(i) Any of Fiscal Years 2019, 2020 or 2021 (the “Fiscal Year Period”); or

(ii) Each fiscal quarter of Infinera in four (4), consecutive fiscal quarters of Infinera completed during the performance period, excluding our four (4) consecutive fiscal quarters of any Fiscal Year Period (each fiscal quarter of the Company occurring during the Performance Period, a “Fiscal Quarter”).

The OI PSA shall only vest upon the determination by the Compensation Committee of the achievement of the performance metrics and are subject to each NEO’s continued service to Infinera through each applicable vesting date. The Profitability Goal will be measured on a non-GAAP basis, as reported in our earnings release as filed on Form 8-K with respect to any Fiscal Quarter or Fiscal Year Period, as applicable.

Any eligible shares (that is, eligible to vest as a result of performance achievement, as described above) that vest on or before fiscal 2021 shall also have a time-based component such that if the Profitability Goal is achieved

39

before the last day of fiscal 2021, then a number of eligible shares, equal to the product of (A) the number of performance shares that became eligible shares on the date of achievement of such goal, multiplied by (B) a fraction, the numerator of which is the number of whole calendar months within the performance period that was completed through the date of achievement of such goal, and the denominator of which is thirty-six (36) months (with any resulting fractional eligible shares rounded down to the nearest whole eligible share), will vest on the 5^th day of the month following the date of achievement, and the remainder will vest on January 5, 2020.

For fiscal 2019, a second performance share award was granted only to our CEO in lieu of time-based RSUs. This award will only vest if the stock price is equal to or greater than $10.00 per share for each trading day during a ninety-calendar day period occurring during a three-year performance period beginning on the grant date. The award is designed to be rigorous and require significant effort to achieve; the $10.00 per share target represents a premium of 232% above the closing share price on the date of grant. Mr. Fallon was not granted time-based RSUs in fiscal 2019. The mix of performance shares for our CEO that measured both non-GAAP operating income and shareholder value creation was intended to reinforce a strong pay-for-performance culture and a commitment to long-term growth in shareholder value. This award represented 25% of the target value of long-term incentives awarded to Mr. Fallon in fiscal 2019.

Results of Performance Shares Through Fiscal 2019. We did not achieve the Profitability Goal for fiscal 2019. Our non-GAAP operating loss for the fiscal year was $82.5 million. As a result, as of the end of fiscal 2019, the target number of shares subject to the OI PSAs granted to each NEO remained unearned and outstanding. These shares are eligible to be earned and vest if the Profitability Goal is achieved during the remainder of the performance period through the end of our fiscal 2021. The second performance award for our CEO was also not triggered in fiscal 2019.

Outstanding Performance Share Awards Granted in Prior Fiscal Years. The following table provides information regarding outstanding performance share awards granted prior to fiscal 2019 that were eligible to be earned in fiscal 2019 by our NEOs based on the achievement of performance with respect to relative TSR, including the performance requirements and number of shares of Infinera common stock earned through fiscal 2019. Mr. Feller’s outstanding equity awards were cancelled upon termination of his employment with us as of September 30, 2019.

40

Employee Benefits and Perquisites

Our NEOs are only eligible to receive the same benefits as our U.S. salaried employees except with respect to accrued paid time off as explained below. Infinera and the Compensation Committee believe this approach is reasonable and consistent with the overall compensation objectives to attract and retain employees. These benefits include medical, dental, vision and disability benefits, a Section 401(k) plan, and other plans and programs, including the 2007 ESPP, made available to other eligible employees in the applicable country of residence. We provide a matching contribution of up to $2,500 under the Section 401(k) plan that is applicable to all eligible participants, including our NEOs. Employee benefits and perquisites are reviewed periodically to ensure that benefit levels remain competitive, but are not included in the Compensation Committee’s annual determination of the total compensation for each of our NEOs.

All exempt U.S. employees, at any U.S. work location, participate in our “As Needed” FTO Program (“Flexible Time Off”). Under this program, these employees may schedule FTO as they see fit and as business necessity allows, although they must continue to meet all job expectations and remain responsible for ensuring appropriate coverage for the time they will be out of the office. Under this program, FTO does not accrue for these employees.

Additional Information Regarding Our Compensation Practices

Change of Control Payments and Benefits

The Compensation Committee considers maintaining a stable and effective management team to be essential to protecting the best interests of Infinera and its shareholders. Accordingly, Infinera has entered into Change of Control Agreements (the “COC Agreements”) with each of our NEOs to encourage their continued attention, dedication and continuity with respect to their roles and responsibilities without the distraction that may arise from the possibility or occurrence of a change of control of Infinera. The current terms of these COC Agreements are included below.

An NEO will receive payments and benefits under the COC Agreement only if his or her employment is terminated without “cause,” or by him or her as a result of a “constructive termination” (as more fully described in the section entitled “Estimated Payments and Benefits upon Termination, Change of Control or Death/Disability” below), beginning on the date three (3) months prior to the first change of control to occur following the effective date of the COC Agreement and ending on the date eighteen (18) months following a change of control of Infinera. The Compensation Committee believes that this “double-trigger” structure provides an appropriate balance between the corporate objectives described above and the potential compensation payable to each NEO upon a change of control. The Compensation Committee also believes that should Infinera engage in any discussions or negotiations relating to a change of control that the Board believes is in the best interests of our shareholders, these COC Agreements will help to ensure that our NEOs remain focused on the consummation of such potential transaction, without significant distraction or concern regarding their personal circumstances, such as continued employment.

The following terms apply with respect to each of the NEOs if Infinera undergoes a change of control and the NEO’s employment is terminated without cause or as a result of a constructive termination during the Change of Control Period, subject to such individual entering into and not revoking a release of claims in our favor within 60 days of the termination date:

41

Each COC Agreement will have an initial term of three years commencing on the effective date of such COC Agreement. On the third anniversary of the effective date, such COC Agreement will renew automatically for an additional, one-year term unless either party provides the other party with written notice of nonrenewal at least one year prior to the date of automatic renewal.

Executive Severance Policy

In addition to the change of control-related payments and benefits discussed above, the Compensation Committee has taken appropriate steps to provide competitive post-employment compensation arrangements that promote the continued attention, dedication and continuity of the members of our senior management team, including our NEOs, and enable us to continue to recruit talented senior executive officers. Accordingly, the Compensation Committee has adopted an executive severance policy, under which the following severance payments and benefits will become payable if the employment of one of our NEOs is terminated by us without “cause” (as defined in the policy) subject to such individual entering into and not revoking a release of claims in our favor:

If an NEO’s employment with Infinera is less than one year, the amount of severance payable to such individual will be equal to the lesser of (x) the base salary paid to such individual during his or her period of employment, or (y) the severance amount set forth above.

Acceleration of Equity Awards upon Death or Disability. In addition, all awards granted under our equity incentive plans permit accelerated vesting in the event of an employee’s death or terminal illness (with exceptions in certain circumstances). Because we do not have any policy with respect to severance payments or benefits in the event of an employee’s death or disability other than certain disability and life insurance benefits generally available to our employees, the Compensation Committee believes that in the event of an employee’s death or terminal illness, it would be appropriate to provide the accelerated vesting of his or her RSU awards, performance share awards and stock options.

The estimated payments and benefits that would be received by each NEO in connection with a qualifying termination of employment are presented in the section entitled “Estimated Payments and Benefits upon Termination, Change of Control or Death/Disability” below.

Equity Grant Policy

Under our Equity Grant Policy, the Compensation Committee has delegated to a Subcommittee the authority to grant new hire, promotional and retention equity awards to non-executive employees pursuant to certain pre-approved guidelines. This Subcommittee is currently comprised of our CEO.

The Subcommittee approves the award by written consent on the second Monday of each month to approve new hire, promotional and retention equity awards. Annual focal equity awards are approved by the Compensation

42

Committee. The delegation to the Subcommittee does not include the authority to grant equity awards to new employees who are or are reasonably expected to become Section 16 Officers or to current Section 16 Officers.

Executive Clawback Policy

We maintain an Executive Clawback Policy that applies to our Section 16 Officers (which includes each of our NEOs) and directors. Pursuant to this policy, the Compensation Committee has the authority to seek:

where such payments, equity awards and/or compensation earned on previously exercised or released cash incentive payments and equity awards was predicated on financial results that were augmented by fraud, embezzlement, gross negligence or deliberate disregard of applicable rules resulting in significant monetary loss, damage or injury to Infinera (the “Excess Compensation”), whether or not such activity resulted in a financial restatement. The Compensation Committee shall have sole discretion under this policy, consistent with any applicable statutory requirements, to seek reimbursement for any Excess Compensation paid or received by a Section 16 Officer or director for up to a 12-month period prior to the date of the Compensation Committee action to require reimbursement of the Excess Compensation. Further, following a restatement of our financial statements, we will recover any compensation received by our CEO and CFO that is required to be recovered by Section 304 of the Sarbanes-Oxley Act of 2002.

For purposes of this policy, Excess Compensation will be measured as the positive difference, if any, between the compensation earned by a Section 16 Officer or director and the compensation that would have been earned by a Section 16 Officer or director had the fraud, embezzlement, gross negligence or deliberate disregard of applicable rules resulting in significant monetary loss, damage or injury to Infinera not occurred.

Stock Ownership Policy

The Board believes that it is important to link the interests of our NEOs to those of our shareholders. Our Stock Ownership Policy requires our non-employee directors and Section 16 Officers (which includes each of our NEOs) to accumulate and hold a minimum number of shares of Infinera common stock within three years of the later of (i) the effective date of the policy or (ii) the date of appointment of the director or appointment/promotion of the Section 16 Officer. As of the Record Date, each of our Section 16 Officers and the non-employee members of the Board has either satisfied these ownership guidelines or had time remaining to do so. The specific Infinera stock ownership requirements for our Section 16 Officers and non-employee directors are as follows:

Shares of Infinera common stock that count towards satisfaction of this policy include: (i) shares owned outright by the Section 16 Officer or non-employee director or his or her immediate family members residing in the same household; (ii) shares held in trust for the benefit of the Section 16 Officer or non-employee director or his or her family; and (iii) shares subject to vested, unexercised, in-the-money stock options (the “spread” or “intrinsic value” of options). The value of a share of Infinera common stock is measured on the last day of the fiscal year as the greater of (i) the closing price on the date of calculation or (ii) the purchase price actually paid by the person for such share of Infinera common stock (for the avoidance of doubt, the purchase price for shares of Infinera common stock subject to RSU awards, performance share awards and other similar full value awards is zero).

Anti-hedging Policy

Under our Insider Trading Policy, we prohibit our employees, including our NEOs, and Board members, from hedging the risk associated with ownership of shares of Infinera common stock and other securities.

43

Anti-pledging Policy

Under our Insider Trading Policy, we prohibit our NEOs and directors from pledging any Infinera securities as collateral for a loan.

Tax and Accounting Treatment of Compensation

Prior to 2018, Section 162(m) of the Code generally limited the tax deductibility of compensation paid to the CEO and each of the next three most highly compensated executive officers (excluding the CFO) that exceeded $1 million in any taxable year unless the compensation over $1 million qualified as “performance-based” within the meaning of Section 162(m).

The ability to rely on the “performance-based” compensation exception under Section 162(m) was eliminated in 2017 and the $1 million limitation on deductibility generally was expanded to include any individuals serving as the CEO or CFO during the tax year, the next three most highly compensated executive officers during the tax year and any other individual who was considered a covered employee for any prior tax year beginning after 2016. Thus, we generally will not be able to take a deduction for any compensation paid to our NEOs in excess of $1 million unless the compensation qualifies for transition relief applicable to certain arrangements in place on November 2, 2017. We cannot guarantee that any compensation payable to our NEOs will qualify for the transition relief or that the compensation will ultimately be deductible. Historically, the Compensation Committee had not adopted a formal policy regarding tax deductibility of compensation paid to our CEO and other senior executive officers. Nonetheless, the Compensation Committee intends to maintain an approach to executive compensation that strongly links pay to performance.

We account for the equity compensation awarded to our executive officers and other employees under ASC 718, which requires us to estimate and record an expense for each award of equity compensation over the service period of the award. Accounting rules also require us to record cash compensation as an expense at the time the obligation is incurred.

EXECUTIVE COMPENSATION TABLES

The following tabular information and accompanying narratives and footnotes provide all of the compensation awarded to, earned by, or paid to the individuals who served as our principal executive officer, principal financial officer and our three other highest paid executive officers during fiscal 2019. The tables also include Brad D. Feller who served as our principal financial office until August 26, 2019. As previously noted, we refer to these executive officers as our NEOs.

45