Nominees for Director
The names of each nominee for director, their ages as of October 25, 2019, after giving effect to the appointment of Mr. Pilette
as our CEO as of November 8, 2019, and other information about each nominee is shown below.
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Name
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Age
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Principal Occupation
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Director
Since
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Sue Barsamian
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60
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Director
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2019
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Frank E. Dangeard
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61
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Managing Partner, Harcourt
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2007
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Nora M. Denzel
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57
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Nominee
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n/a
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*
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Peter A. Feld
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40
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Managing Member and Head of Research, Starboard Value LP
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2018
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Kenneth Y. Hao
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51
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Managing Partner and Managing Director, Silver Lake Partners
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2016
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David W. Humphrey
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42
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Managing Director, Bain Capital
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2016
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Vincent Pilette
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47
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CEO
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n/a
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*
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V. Paul Unruh
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71
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Director
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2005
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17
Table of Contents
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Sue Barsamian
Director
Age: 60
Director Since:
2019
Proposed Committee Memberships:
Compensation
Nominating &
Governance
(Chair)
Other Current Public Boards:
Box, Inc.
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Ms. Barsamian has served as a member of our Board since January 2019.
Ms. Barsamian previously served as Executive Vice President, Chief Sales and Marketing Officer of Micro Focus International plc, an infrastructure software company, from September 2017 through April 2018 and as Executive Vice President,
Chief Sales and Marketing Officer of HPE Software at Hewlett Packard Enterprise from November 2016 until it was acquired by Micro Focus in September 2017. From 2006 to November 2016, Ms. Barsamian served in various executive roles at
Hewlett-Packard, including Senior Vice President and General Manager of Enterprise Security Products and Senior Vice President of Worldwide Indirect Sales. Prior to joining Hewlett-Packard, Ms. Barsamian was Vice President, Global Go-to-Market
at Mercury Interactive Corporation and held leadership positions at Critical Path, Inc. and Verity, Inc. Ms. Barsamian serves on the board of directors of Box, Inc. Ms. Barsamian served on the Board of the National Action
Council for Minorities in Engineering (NACME), and she served as Chairman of the Board of NACME from 2016 to 2017. She received a Bachelor of Science degree in electrical engineering from Kansas State University and completed her post-graduate
studies at the Swiss Federal Institute of Technology.
Director
Qualifications:
Industry and Technology Experience Executive Vice President, Chief Sales and Marketing Officer of Micro Focus International plc and Executive Vice President, Chief Sales and Marketing Officer, HPE
Software.
Global
Experience Executive Vice President, Chief Sales and Marketing Officer of Micro Focus International plc.
Leadership Experience
Executive Vice President, Chief Sales and Marketing Officer of Micro Focus International plc and Executive Vice President, Chief Sales and Marketing Officer, HPE Software.
Public Company Board Experience member of the board of directors of Box, Inc.
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Table of Contents
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Frank E. Dangeard
Managing Partner, Harcourt
Age: 61
Director Since:
2007
Proposed Committee Memberships:
Audit
Compensation
Nominating &
Governance
Other Current Public Boards:
RBS Group
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Mr. Dangeard has served as a member of our Board since 2007. He has
been the Managing Partner of Harcourt, an advisory firm, since 2008. Mr. Dangeard was Chairman and Chief Executive Officer of Thomson, a provider of digital video technologies, solutions and services, from 2004 to 2008. From 2002 to 2004, he was
Deputy Chief Executive Officer of France Telecom, a global telecommunications operator. From 1997 to 2002, Mr. Dangeard was Senior Executive Vice President of Thomson and served as its Vice Chairman in 2000. Prior to joining Thomson, he was
Managing Director of SG Warburg & Co. Ltd. from 1989 to 1997 in London, Paris and Madrid and Chairman of SG Warburg France from 1995 to 1997. Prior to that, Mr. Dangeard was a lawyer with Sullivan & Cromwell, in New
York and London. He serves on the board of directors of Arqiva PLC ("Arqiva"), The Royal Bank of Scotland Group plc ("RBS Group") and as chairman of the board of directors of Nat West Markets plc, the investment bank of the RBS Group
("NatWest Markets"), and on a number of advisory boards. Mr. Dangeard has previously served as a director of a variety of companies, including Crédit Agricole CIB, Eutelsat, Home Credit, SonaeCom, Thomson, Electricité de France and
Telenor. He graduated from the École des Hautes Études Commerciales, the Paris Institut d'Études Politiques and holds an LLM degree from Harvard Law School.
Director Qualifications:
Industry and Technology Experience former Chairman and Chief Executive Officer of Thomson; former Deputy Chief Executive
Officer of France Telecom; former Deputy Chairman of Telenor; and former member of the boards of directors of Eutelsat, SonaeCom and RPX Corporation.
Global Experience member
of the board of directors of RBS Group (UK) and Arqiva (UK) and chairman of NatWest Markets (UK); former Chairman and Chief Executive Officer of Thomson (France); former Deputy Chief Executive Officer of France Telecom (France); former Deputy
Chairman of Telenor (Norway); and former member of the boards of directors of Crédit Agricole CIB (France), Eutelsat (France), Home Credit (Czech Republic), Electricité de France (France) and SonaeCom (Portugal).
Leadership Experience managing partner of Harcourt; former Chairman and Chief Executive Officer of Thomson; former Deputy Chief Executive Officer of France Telecom; former Deputy Chairman of Telenor and former Chairman of SG Warburg France and Managing
Director of SG Warburg & Co. Ltd; and chairman of the board of directors of NatWest Markets.
Public Company Board Experience member of the board of directors of RBS Group; former Deputy Chairman of Telenor; and
former member of the boards of directors of Eutelsat, Electricité de France, Thomson, and SonaeCom.
Business Combinations and Partnerships Experience former Chairman and Chief Executive Officer of Thomson; former Deputy
Chief Executive Officer of France Telecom; former Deputy Chairman of Telenor; former Chairman of SG Warburg France; and former lawyer at Sullivan & Cromwell LLP.
Financial Experience
former Chairman and Chief Executive Officer of Thomson; former Deputy Chief Executive Officer of France Telecom; former Chairman of the Audit Committee of Electricité de France and former Deputy Chairman of Telenor; member of the board of RBS
Group; and Chairman of NatWest Markets.
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19
Table of Contents
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Nora M. Denzel
Director
Age: 57
Director Since:
N/A*
Proposed Committee Memberships:
Audit
Other Current Public Boards:
Advanced Micro
Devices, Inc.
Ericsson
Talend S.A.
*Director nominee.
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Ms. Denzel, a director nominee, previously served as interim Chief
Executive Officer of Outerwall Inc, an automated retail solutions provider, from January to August 2015. Prior to Outerwall, Ms. Denzel held various executive management positions from February 2008 through August 2012 at Intuit Inc., a
cloud financial management software company, including Senior Vice President of Big Data, Social Design and Marketing and Senior Vice President and General Manager of the QuickBooks Employee Management business unit. From 2000 to 2006,
Ms. Denzel held several executive level positions at HP Enterprise (formerly Hewlett-Packard Company), including Senior Vice President and General Manager, Software Global Business Unit from May 2002 to February 2006 and Vice President of
Storage Organization from August 2000 to May 2002. Prior to that, Ms. Denzel held executive positions at Legato Systems Inc. and IBM Corporation. Ms. Denzel serves on the board of directors of Advanced Micro Devices, Inc.,
Ericsson and Talend S.A. She holds a Master of Business Administration degree from Santa Clara University and a Bachelor of Science degree in Computer Science from the State University of New York.
Director Qualifications:
Industry and Technology Experience Interim Chief Executive Officer of Outerwall Inc., executive positions at Intuit, Inc. and HP Enterprise.
Global Experience Interim Chief Executive Officer of Outerwall Inc., executive positions
at Intuit, Inc. and HP Enterprise; member of the board of directors of Advanced Micro Devices, Inc., Ericsson and Talend S.A.
Leadership Experience
Interim Chief Executive Officer of Outerwall Inc., executive positions at Intuit, Inc. and HP Enterprise.
Public Company Board Experience member of the board of directors of Advanced Micro Devices, Inc.,
Ericsson and Talend S.A.
Business Combinations and Partnerships Experience Interim Chief Executive Officer of Outerwall Inc., executive positions at Intuit, Inc. and HP Enterprise; member of the board of directors of
Advanced Micro Devices, Inc., Ericsson and Talend S.A.
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Table of Contents
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Peter A. Feld
Managing Member and Head of Research, Starboard Value LP
Age: 40
Director Since:
2018
Proposed Committee Memberships:
Compensation
(Chair)
Nominating &
Governance
Other Current Public Boards:
Magellan
Health, Inc.
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Mr. Feld has served as a member of our Board since September 2018.
Mr. Feld has served as a Managing Member and Head of Research of Starboard Value LP since 2011. Mr. Feld has served on the board of directors of Magellan Health, Inc. since April 2019. Mr. Feld previously served on the boards
of directors of several companies, including Marvell Technology Group Ltd. from May 2016 to June 2018, The Brink's Company from January 2016 to November 2017, Insperity, Inc. from March 2015 to June 2017, Darden Restaurants, Inc. from
October 2014 to September 2015, Xperi Corporation from 2013 to April 2014, Integrated Device Technology, Inc. from 2012 to February 2014 and Unwired Planet, Inc. (n/k/a Great Elm Capital Group, Inc.) from 2011 to March 2014 and as
Chairman from 2011 to 2013. Mr. Feld received a Bachelor of Arts degree in economics from Tufts University.
Director Qualifications:
Industry and Technology Experience current or former member of the boards of directors of many public and private
technology companies.
Global Expertise Managing Member and the Head of Research of Starboard Value LP; former member of the boards of directors of Marvell Technology Group, Insperity, Inc., and Darden Restaurants,
Inc.
Leadership Experience Managing Member and the Head of Research of Starboard Value LP.
Public Company Board Experience member of the board of directors of Magellan Health Inc.;
and former member of the boards of directors of Marvell Technology Group, Insperity, Inc., and Darden Restaurants, Inc.
Business Combinations and Partnerships Experience Managing Member and the Head of Research of
Starboard Value LP.
Financial Experience over 10 years of capital markets and corporate governance experience.
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Table of Contents
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Kenneth Y. Hao
Managing Partner and Managing Director, Silver Lake Partners
Age: 51
Director Since:
2016
Proposed Committee Memberships:
None
Other Current Public Boards:
Smart Global
Holdings, Inc.
SolarWinds
Corporation
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Mr. Hao has served as a member of our Board since 2016. Mr. Hao
joined Silver Lake Partners in 2000 and currently serves Silver Lake as a Managing Partner and Managing Director. Mr. Hao also serves on the boards of directors of SMART Global Holdings, Inc. and SolarWinds Corporation, as well as on the
boards of directors of a number of private companies in Silver Lake's portfolio. Prior to joining Silver Lake, he was an investment banker with Hambrecht & Quist, where he served as a Managing Director in the Technology Investment Banking
group. He also serves on the Executive Council for UCSF Health. Mr. Hao graduated from Harvard University with a Bachelor's degree in economics.
Director Qualifications:
Industry and Technology Experience over 25 years of technology investment experience; member of the boards of
directors of many public and private technology companies.
Global Experience extensive experience investing in large global businesses and established Silver Lake's Asia business.
Leadership
Experience Managing Partner and Managing Director of Silver Lake and member of the boards of directors of numerous major technology companies.
Public Company Board Experience members of the board of directors of SMART Global Holdings, Inc. and SolarWinds Corporation; former board member of Broadcom Inc. and Netscout Systems, Inc.
Business Combinations and Partnerships
Experience Managing Partner and Managing Director of Silver Lake Partners and former investment banker with Hambrecht & Quist.
Financial Experience over
25 years of investment experience in complex transactions.
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22
Table of Contents
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David W. Humphrey
Managing Director, Bain Capital
Age: 42
Director Since:
2016
Proposed Committee Memberships:
None
Other Current Public Boards:
Genpact
Limited
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Mr. Humphrey has served as a member of our Board since August 2016
when he joined in connection with Bain Capital's investment in NortonLifeLock, prior to which he served on Blue Coat's board of directors since May 2015. He is a Managing Director of Bain Capital, a private equity firm, where he co-leads the firm's
investing efforts in technology, media and telecom investments and where he has worked since 2001. Prior to joining Bain Capital, Mr. Humphrey was an investment banker in the mergers and acquisitions group at Lehman Brothers from 1999 to 2001.
He serves on the board of directors of Genpact Limited and on the board of directors of a number of private companies in Bain Capital's portfolio. Mr. Humphrey previously served on the boards of directors of Bright Horizons Family Solutions,
Inc. Burlington Coat Factory Warehouse Corporation, Skillsoft PLC and Bloomin' Brands, Inc. He received a Master of Business Administration degree from Harvard Business School and a Bachelor's degree from Harvard University.
Director Qualifications:
Industry and Technology Experience former member of the board of directors of Blue Coat; Managing Director of Bain Capital; and member of the boards of directors of BMC Software, Inc., Viewpoint Construction Software, Waystar and Genpact Limited.
Global
Experience extensive experience investing in large global businesses.
Leadership Experience Managing Director of Bain Capital and leader of its technology, media and telecom vertical; and
member of the boards of directors of BMC Software, Inc., Viewpoint Construction Software, Waystar and Genpact Limited.
Public Company Board Experience member of the board of directors of BMC Software and Genpact Limited.
and former member of the boards of directors of Bright Horizons Family Solutions, Inc. Burlington Coat Factory Warehouse Corporation, Skillsoft PLC and Bloomin' Brands, Inc.
Business Combinations and Partnerships
Experience Managing Director of Bain Capital and former investment banker with Lehman Brothers.
Financial Experience Managing Director of Bain Capital and former investment banker with Lehman
Brothers.
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23
Table of Contents
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Vincent Pilette
Chief Executive Officer
Age: 47
Director Since:
N/A*
Proposed Committee Memberships:
None
Other Current Public Boards:
None
*Director nominee.
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Mr. Pilette has been appointed to serve as our Chief Executive Officer,
effective November 8, 2019. From May 2019 to November 2019, he served as our Chief Financial Officer. Prior to joining us, he served as Chief Financial Officer of Logitech International S.A. from September 2013 to May 2019 and from January
2011 through August 2013, he was Chief Financial Officer of Electronics for Imaging, Inc. Prior to that, he served in a variety of capacities at Hewlett-Packard Company from 1997 to December 2010, including Vice President of Finance for the
Enterprise Server, Storage and Networking and vice president of finance for the HP Software Group. Mr. Pilette received a Master of Business Administration degree from Kellogg School of Management at Northwestern University and Master's degree
in engineering and business from Université Catholique de Louvain.
Director
Qualifications:
Industry and Technology Experience former Chief Financial Officer of Logitech International S.A.; former Chief Financial Officer of Electronics for Imaging, Inc; served in a variety of capacities at
Hewlett-Packard Company, including Vice President of Finance for the Enterprise Server.
Global Experience former Chief Financial Officer of Logitech International S.A.; former Chief Financial Officer of Electronics for
Imaging, Inc; served in a variety of capacities at Hewlett-Packard Company, including Vice President of Finance for the Enterprise Server.
Leadership Experience former Chief Financial Officer of Logitech International S.A.;
former Chief Financial Officer of Electronics for Imaging, Inc; former Vice President of Finance for the Enterprise Server at Hewlett-Packard Company.
Business Combinations and Partnerships
Experience former Chief Financial Officer of Logitech International S.A.; former Chief Financial Officer of Electronics for Imaging, Inc; former Vice President of Finance for the Enterprise Server at
Hewlett-Packard Company.
Financial Experience former Chief Financial Officer of Logitech International S.A.; former Chief Financial Officer of Electronics for Imaging, Inc; former Vice President of Finance for the Enterprise
Server at Hewlett-Packard Company.
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Table of Contents
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V. Paul Unruh
Director
Age: 71
Director Since:
2005
Proposed Committee Memberships:
Audit (chair)
Other Current Public Boards:
None
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Mr. Unruh has served as a member of our Board since 2005 following the
acquisition of Veritas, where he had served on the board of directors since 2003. Mr. Unruh retired as Vice Chairman of Bechtel Group, Inc., a global engineering and construction services company, in 2003. During his 25-year tenure at
Bechtel Group, he held a number of management positions including Treasurer, Controller and Chief Financial Officer. Mr. Unruh also served as President of Bechtel Enterprises, the finance, development and ownership arm from 1997 to 2001. He is a
member of the board of directors of Aconex Ltd., which is traded on the Australian Stock Exchange, and a private company. Mr. Unruh is a Certified Public Accountant.
Director Qualifications:
Global Experience former Vice Chairman of and held various executive positions at Bechtel Group, Inc.; former
President of Bechtel Enterprises and member of the board of directors of Aconex Ltd. (Australia).
Leadership Experience former Vice Chairman of and held various executive positions at Bechtel Group, Inc. and former
President of Bechtel Enterprises.
Public Company Board Experience former member of the boards of directors of Heidrick & Struggles International Inc., Move, Inc., URS Corporation and Aconex Ltd.
(Australia).
Business Combinations and Partnerships Experience former member of the board of directors of Veritas Corporation, Move, Inc., and URS Corporation.
Financial Experience certified public accountant; former Chief Financial Officer, Treasurer and Controller of Bechtel Group, Inc.; former President of Bechtel Enterprises; served on the Audit Committees of Heidrick & Struggles International,
Inc. and Move, Inc.
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Table of Contents
Summary of Director Qualifications and Experience
Our Board is comprised of directors with complementary skills and qualifications needed to effectively oversee our business strategy. The
Nominating and Governance Committee annually reviews the skills and characteristics required of members of the Board in the context of the composition of the Board and the stage of the business of the
Company.
Director Compensation
The policy of the Board is that compensation for independent directors should be a mix of cash and equity-based compensation. NortonLifeLock
does not pay employee directors for Board service in addition to their regular employee compensation. Independent directors may not receive consulting, advisory or other compensatory fees from the
Company. The Compensation Committee, which consists solely of independent directors, has the primary responsibility to review and consider any revisions to director compensation.
Director Stock Ownership Guidelines: The Compensation Committee adopted the following stock ownership guidelines for our non-employee
directors to better align our directors' interests with those of our stockholders:
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Directors must maintain a minimum holding of Company stock with a fair market value equal to ten times (10x) such director's total annual cash
retainer;
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In the event the annual retainer (or any portion thereof) is paid to a non-employee director in equity instead of cash, the value of such
annual retainer for purposes of calculating the minimum holding requirement means the grant date fair value of the annual equity award (or applicable portion thereof);
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New directors will have three years to reach the minimum holding level; and
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Notwithstanding the foregoing, directors may sell enough shares to cover their income tax liability on vested grants.
NortonLifeLock
stock ownership information for each of our directors is shown under the heading "Security Ownership of Certain Beneficial Owners and Management" on page 35 of this
proxy statement. As of October 25, 2019, our all our directors had either met their stock ownership requirement or had remaining time to do so.
Annual Fees: In accordance with the recommendation of the Compensation Committee, the Board determined the non-employee directors'
compensation for fiscal 2019 as follows. In connection with its annual review of non-employee director fees, the Compensation Committee reduced the annual fee for Lead Independent Director/Independent
Chairman from $100,000 in fiscal 2019 to $75,000 effective fiscal 2020.
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$50,000 annual cash retainer;
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$15,000 annual fee for committee membership ($20,000 for Audit Committee membership);
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$25,000 annual fee for chairing a committee of the Board ($15,000 for chairing the Nominating and Governance Committee); and
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$100,000 (reduced to $75,000 effective fiscal 2020) annual fee for the Lead Independent Director/Independent Chairman.
The
payment of the annual cash retainer is subject to the terms of the 2000 Director Equity Incentive Plan, as amended, which allows directors to choose to receive common stock in lieu
of cash for all or a portion of the retainer payable to each director for serving as a member. We pay the annual retainer fee and any additional annual fees to each director at the beginning of the
fiscal year. Directors who join the Company after the beginning of the fiscal year receive a prorated cash payment in respect of their annual retainer fee and fees. These payments are considered
earned when paid. Accordingly, we do not require them to be repaid in the event a director ceases serving in the capacity for which he or she was compensated.
Annual Equity Awards. Pursuant to a Non-Employee Director Grant Policy adopted by our Board, each non-employee member of the Board
receives an annual award of fully-vested restricted stock units ("RSUs") under the 2013 Plan, having a fair market value on the grant date equal to a pre-determined dollar value, which was $275,000
for fiscal 2019.
26
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The
following table provides information for fiscal year 2019 compensation for all of our current and former non-employee directors:
Fiscal 2019 Director Compensation
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Name
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Fees Earned
or Paid in
Cash
($)(1)(2)
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Stock
Awards
($)(3)(4)
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Total
($)
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Susan P. Barsamian(5)
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3,383
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73,210
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(6)
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76,593
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Frank E. Dangeard
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85,018
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274,982
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360,000
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Peter A. Feld(7)
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16,071
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174,108
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(8)
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190,179
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Dale L. Fuller(7)
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34,821
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147,321
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182,142
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Kenneth Y. Hao
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21
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324,979
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(9)
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325,000
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Richard S. Hill(5)
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15,772
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61,948
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77,720
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David W. Humphrey
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21
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324,979
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(9)
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325,000
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Geraldine B. Laybourne(10)
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80,018
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274,982
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355,000
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David L. Mahoney
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105,024
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274,976
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380,000
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Robert S. Miller(10)(11)
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120,639
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124,635
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245,274
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Anita M. Sands
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70,018
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274,982
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345,000
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Daniel H. Schulman
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195,018
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274,982
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470,000
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V. Paul Unruh
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95,018
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274,982
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370,000
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Suzanne M. Vautrinot
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70,018
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274,982
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345,000
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(1)
Non-employee
directors receive an annual retainer fee of $50,000 plus an additional annual fee of $15,000 (Compensation Committee and Nominating and
Governance Committee) or $20,000 (Audit Committee) for membership on each committee. The chair of each committee receives an additional annual fee of $15,000 (Nominating and Governance Committee) or
$25,000 (Audit Committee and Compensation Committee). The Lead Independent Director/Independent Chairman receives an annual fee of $100,000 (reduced to $75,000 for 2020).
(2)
Includes
payments for fractional share(s) from stock awards granted to each non-employee director.
(3)
Amounts
shown in this column reflect the aggregate full grant date fair value calculated in accordance with Financial Accounting Standards Board
("FASB") Accounting Standards Codification ("ASC") Topic 718 for awards granted during FY19.
(4)
Each
non-employee director, other than Ms. Barsamian and Messrs. Feld, Fuller, Hill and Miller, was granted 12,320 RSUs on
May 17, 2018, with a per-share fair value of $22.32 and an aggregate grant date fair value of $274,982.40. Each such director's fees were paid in cash as reported in the "Fees Earned or Paid in
Cash" column in the table above. No non-employee director had any outstanding stock awards as of March 29, 2019.
(5)
Ms. Barsamian
and Mr. Hill were appointed to our Board on January 7, 2019 and received a pro-rated portion of non-employee
director fees from the date of such director's appointment on January 7, 2019 through the end of FY19. Ms. Barsamian and Mr. Hill were each granted 2,717 RSUs on
February 5, 2019, with a per-share fair value of $22.80 and an aggregate grant date fair value of $61,947.60. The balance of each such director's fees was paid in cash as reported in the "Fees
Earned or Paid in Cash" column in the table above.
(6)
In
lieu of cash, Ms. Barsamian elected to receive 100% of the pro-rated portion of her annual retainer fee of $50,000 in the form of our common
stock. Accordingly, pursuant to the terms of the 2000 Director Equity Incentive Plan, Ms. Barsamian was granted 494 shares at a per share fair value of $22.80 and an aggregate grant date fair
value of $11,263. The balance of Ms. Barsamian's fee was paid in cash as reported in the "Fees Earned or Paid in Cash" column in the table above.
(7)
Messrs. Feld
and Fuller were appointed to our Board on September 16, 2018 and each received pro-rated portions of such director's
non-employee director fees from the date of his appointment on September 16, 2018 through the end of FY19. Messrs. Feld and Fuller were granted 6,764 RSUs on December 7, 2018,
with a per-share fair value of $21.78 and an aggregate grant date fair value of $147,320. The balance of each such director's fees was paid in cash as reported in the "Fees Earned or Paid in Cash"
column in the table above.
(8)
In
lieu of cash, Mr. Feld elected to receive 100% of the pro-rated portion of his annual retainer fee of $50,000 in the form of our common
stock. Accordingly, pursuant to the terms of the 2000 Director Equity Incentive Plan, Mr. Feld was granted 1,229 shares at a per share fair value of $21.78 and an aggregate grant date fair
value of $26,767. The balance of Mr. Feld's fee was paid in cash as reported in the "Fees Earned or Paid in Cash" column in the table above.
(9)
In
lieu of cash, Messrs. Hao and Humphrey each received 100% of his respective annual retainer fee of $50,000 in the form of our common stock.
Accordingly, pursuant to the terms of the 2000 Director Equity Incentive Plan, each was granted 2,240 shares at a per share fair value of $22.32 and an aggregate grant date fair value of $49,997. The
balance of each such director's fee was paid in cash as reported in the "Fees Earned or Paid in Cash" column in the table above.
(10)
Ms. Laybourne
and Mr. Miller served on the Board through December 3, 2018, the date of the Company's 2019 Annual Meeting of
Stockholders.
(11)
Mr. Miller's
non-employee director fees were prorated through December 3, 2018, the date of the Company's 2019 Annual Meeting of
Stockholders. Mr. Miller was granted 5,584 RSUs on May 17, 2018, with a per-share fair value of $22.32 and an aggregate grant date fair value of $124,635. The balance in director's fees
was paid in cash as reported in the "Fees Earned or Paid in Cash" column in the table above.
THE BOARD RECOMMENDS A VOTE "FOR" ELECTION OF
EACH OF THE EIGHT NOMINATED DIRECTORS.
27
Table of Contents
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed KPMG LLP ("KPMG") as our principal independent registered public accounting firm to perform the audit
of our consolidated financial statements for fiscal 2020. As a matter of good corporate governance, the Audit Committee has decided to submit its selection of independent audit firm to stockholders
for ratification. In the event that this appointment of KPMG is not ratified by a majority of the shares of common stock present or represented at the Annual Meeting and entitled to vote on the
matter, the Audit Committee will review its future selection of KPMG as our independent registered public accounting firm.
The
Audit Committee first approved KPMG as our independent auditors in September 2002, and KPMG audited our financial statements for fiscal 2019. Representatives of KPMG are expected to
attend the meeting with the opportunity to make a statement and respond to appropriate questions from stockholders present at the meeting with respect to this proposal.
Principal Accountant Fees and Services
We regularly review the services and fees from our independent registered public accounting firm, KPMG. These services and fees are also
reviewed with the Audit Committee annually. In accordance with standard policy, KPMG periodically rotates the individuals who are responsible for our audit. Our Audit Committee has determined that the
providing of certain non-audit services, as described below, is compatible with maintaining the independence of KPMG.
In
addition to performing the audit of our consolidated financial statements, KPMG provided various other services during fiscal years 2019 and 2018. Our Audit Committee has determined
that KPMG's provisioning of these services, which are described below, does not impair KPMG's independence from NortonLifeLock. The aggregate fees billed for fiscal years 2019 and 2018 for each of the
following categories of services are as follows:
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Fees Billed to NortonLifeLock
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FY19
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FY18
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Audit fees(1)
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$
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12,464,329
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$
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11,370,525
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Audit related fees(2)
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1,142,383
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753,689
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Tax fees(3)
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161,685
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469,449
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All other fees(4)
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0
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311,000
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Total fees
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$
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13,768,398
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$
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12,904,663
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The categories in the above table have the definitions assigned under Item 9 of Schedule 14A promulgated under the Exchange Act, and
these categories include in particular the following components:
-
(1)
-
"Audit fees" include fees for audit services principally related to the year-end examination and the
quarterly reviews of our consolidated financial statements, consultation on matters that arise during a review or audit, review of SEC filings, audit services performed in connection with our
acquisitions and divestitures and statutory audit fees.
-
(2)
-
"Audit related fees" include fees which are for assurance and related services other than those included
in Audit fees.
-
(3)
-
"Tax fees" include fees for tax compliance and advice.
-
(4)
-
"All other fees" include fees for all other non-audit services, principally for services in relation to
certain information technology audits.
An accounting firm other than KPMG performs supplemental internal audit services for NortonLifeLock. Another accounting firm provides the majority
of NortonLifeLock's outside tax services.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
The Audit Committee's policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public
accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of services and
is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services
provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular
services on a case-by-case basis.
All
of the services relating to the fees described in the table above were approved by the Audit Committee.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL NO. 2
28
Table of Contents
PROPOSAL NO. 3
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
In accordance with Section 14A of the Exchange Act, stockholders are entitled to cast an advisory vote to approve the compensation of our
named executive officers, as disclosed in this proxy statement. Accordingly, you are being asked to vote on the following resolution at the Annual Meeting:
"RESOLVED,
that the compensation paid to NortonLifeLock Inc.'s named executive officers, as disclosed in this proxy statement pursuant to the SEC's compensation disclosure rules,
including the Compensation Discussion & Analysis, compensation tables and narrative discussion, is hereby approved."
As
described more fully in the Compensation Discussion & Analysis section of this proxy statement, our named executive officers are compensated in a manner consistent with our
pay-for-performance philosophy and corporate governance best practices. Our executive compensation programs for fiscal 2019 reflect these significant changes to our management team and to our business
while promoting our pay-for-performance philosophy and corporate governance best practices. A few highlights, which are discussed further in the Compensation Discussion & Analysis, are:
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Component
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Metric(1)
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Achievement (as a
percent of target)
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Funding
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FY19 Executive Annual
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FY19 Non-GAAP operating income
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87.5%
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0%
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Incentive Plan ("EAIP")
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FY19 Non-GAAP revenue
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97.2%
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71.2%
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FY19 EAIP Total
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35.6%
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FY19 Executive
Compensation
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FY19 Performance-based
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FY19 earnings per share ("EPS")
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88.3%
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50.6%
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Restricted Stock Units
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FY19 free cash flow
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90.7%
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91.2%
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FY18 Performance-based Restricted Stock Units
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2-year total shareholder return ("TSR") relative to Nasdaq 100
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-21.32%
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0%
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Fiscal 2017 ('FY17') Performance-based Restricted Stock Units
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FY18 Non-GAAP Operating Income
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109.29%
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268.2% (of which 250% vested and settled at the end of FY18, and the remaining 18.2% vested for eligible participants at the end of FY19).
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(1) Please see discussion below in Compensation Discussion and Analysis for more detail regarding how these metrics are
calculated.
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We
believe that our compensation program balances the interests of all of our constituencies our stockholders, our executive officers, the remainder of our employee
base, our business partners and our community by, among other things, focusing on achievement of corporate objectives, attracting and retaining highly-qualified executive
management and maximizing long-term stockholder value. We encourage you to read the Compensation Discussion & Analysis, compensation tables and narrative discussion related to executive
compensation in this proxy statement.
29
Table of Contents
The
vote to approve the compensation of our named executive officers is advisory and, therefore, not binding. Although the vote is non-binding, the Compensation Committee and the Board
value your opinion and will consider the outcome of the vote in establishing its compensation philosophy and making future compensation decisions. Our current policy is to hold such an advisory vote
each year, and we expect to hold another advisory vote with respect to approve to executive compensation at the 2020 annual meeting of stockholders.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL NO. 3
30
Table of Contents
PROPOSAL NO. 4
STOCKHOLDER PROPOSAL REGARDING INDEPENDENT BOARD CHAIRMAN
Proposal 4 is a stockholder proposal. If the stockholder proponent, or representative who is qualified under state law, is present at the Annual
Meeting and submits the proposal for a vote, then the proposal will be voted upon. The stockholder proposal is included in this proxy statement exactly as submitted by the stockholder proponent. The
Board's recommendation on the proposal is presented immediately following the proposal. We will promptly provide you with the name, address and, to NortonLifeLock's knowledge, the number of voting
securities held by the proponent of the stockholder proposal, upon receiving a written or oral request directed to: NortonLifeLock Inc., Attn: Scott C. Taylor, Corporate Secretary, 60 E. Rio
Salado Parkway, Suite 1000, Tempe, Arizona 85281, telephone: (650) 527-8000.
Proposal 4 Independent Board Chairman
Shareholders
request our Board of Directors to adopt as policy, and amend our governing documents as necessary, to require that the Chairman of the Board be an independent member of the
Board whenever possible. Although it would be better to have an immediate transition to an independent Board Chairman, the Board would have the discretion to phase in this policy for the next Chief
Executive Officer transition.
If
the Board determines that a Chairman who was independent when selected is no longer independent, the Board shall select a new Chairman who satisfies the requirements of the policy
within a reasonable amount of time. Compliance with this policy is waived in the unlikely event that no independent director is available and willing to serve as Chairman.
Shareholders
can vote in favor of this proposal to send a message that they are not satisfied with NortonLifeLock' s performance.
Shares
of NortonLifeLock fell 22% in May 2019, according to a Motley Fool article. NortonLifeLock stock sold off in the wake of disappointing earnings that were combined with the
announcement that CEO Greg Clark had stepped down.
Shares
traded down 15% on the day of the news, marking NortonLifeLock's worst daily performance in over a year. The company had yet to name a permanent replacement by early July.
Adjusted
earnings per share for the fourth quarter were $0.39 down significantly from $0.44 in the prior-year quarter. Adjusted sales were also lower, dropping 2% year over year to
$1.195 billion and missing the average analyst estimate for sales.
NortonLifeLock
shareholders have had to endure ups and downs tied to the 2018 audit and growth initiatives failing to live up to targets. In addition to this there was the uninspiring
quarterly performance combined with the unexpected news of Clark's departure that sent the shares tumbling.
The
price of NortonLifeLock stock was also flat for the 5-years leading up to July 2019.
This
proposal will cost NortonLifeLock virtually nothing to adopt -yet can create an important incentive for management to improve company performance.
Please vote to enhance the oversight of our CEO:
Independent Board Chairman Proposal 4
Our Board of Directors' Statement in Opposition to Proposal 4
NortonLifeLock's
Board of Directors unanimously recommends a vote "AGAINST" the stockholder proposal.
The
Board has considered the stockholder proposal and, for the reasons described below, believes that the proposal is not in the best interests of NortonLifeLock and its stockholders.
For nearly seven years, NortonLifeLock has had an independent Chairman of the Board who has provided strong independent oversight during the Company's most transformative events.
Since January 2013, Daniel H. Schulman, one of our independent directors, has served as non-executive Chairman of the Board. Prior to that, he
served as Lead Independent Director from July 2012 to December 2012 while our prior non-executive Chairman of the Board was transitioning into the CEO role. Mr. Schulman has demonstrated strong
leadership, independent thinking and a deep understanding of our business as a result of his tenure as an independent director since March 2000. Since being appointed as the Chairman of the Board,
Mr. Schulman has worked with the rest of the Board to oversee multiple significant strategic and leadership changes at the Company, including the transformative divestiture of
31
Table of Contents
Veritas
and acquisitions of Blue Coat and LifeLock. Although Mr. Schulman is not standing for re-election at the Annual Meeting, our board intends to nominate an independent member of our Board
to serve as our non-executive Chairman of the Board effective as of the Annual Meeting.
While our Board's longstanding Board leadership structure reflects separation in the roles of Chairman and CEO, the Board believes that it should ultimately have the flexibility to tailor its
Board leadership structure to fit NortonLifeLock's changing needs.
As discussed above under "Board Leadership Structure," our Board retains the flexibility to determine on a case-by-case basis whether the Chief
Executive Officer, or an independent director, should serve as Chairman. Our Board believes that it should retain the ability to choose the person best suited for the role at a particular time in
accordance with its fiduciary duty to act in the best interests of the Company and stockholders as circumstances warrant. This flexibility has been important to our Board from time to time in the past
and has increased importance today, as the Company is conducting a search for a permanent CEO while at the same time undergoing a major transition with the divestiture of its enterprise security
business.
Our
Board's decisions in connection with the appointment of Mr. Schulman as our Lead Independent Director and subsequent appointment as our Chairman illustrate why our Board
should retain flexibility to appoint the best person for the role. He was appointed to the position of non-executive Chairman after our prior non-executive Chairman served as both Chairman and CEO for
six months in connection with a prior CEO transition. At that time, our Board believed appointing Mr. Schulman Lead Independent Director while Mr. Schulman's predecessor served as
Chairman and CEO was in the best interest of our Company and stockholders since it provided independent Board leadership while providing the benefit of having our CEO chair regular Board meetings as
our Board and CEO developed NortonLifeLock's new strategy and addressed the key business and strategic issues at that time. Following the initial phase of CEO transition, NortonLifeLock entered a new
phase and the Board determined that Mr. Schulman's extensive management experience and deep knowledge of our company made him best-suited to lead our Board and provide independent oversight of
our senior management team while our CEO focused on executing our new strategic plan and managing our operations and performance.
The
Board believes that this flexibility benefits NortonLifeLock and our stockholders because the Board is in the best position to determine its leadership structure given its knowledge
of NortonLifeLock's leadership team, strategic goals, opportunities and challenges. Additionally, our Board believes limiting the Board's ability to determine the appropriate Board leadership
structure could be harmful to NortonLifeLock's long-term prospects as our Board is currently conducting a CEO search and may decide our next CEO should also serve as our Chairman. We cannot rule out
the possibility that our next CEO will also serve as Chairman as it does not serve the interests of the Company or its stockholders to limit the pool of CEO candidates based on this factor alone.
Importantly,
regardless of what leadership structure the Board may determine to adopt in the future, our Corporate Governance Guidelines provide for appointment of a Lead Independent
Director in situations where the Chairman of the Board is not independent. The Board commitment to independent Board oversight at all times does not end there. All the members of the Board of
Directors, other than the CEO, are independent. All the committees of the Board of Directors are composed entirely of independent directors. The Board also has been significantly refreshed as five of
the six independent directors standing for election at the annual meeting have served since 2016 or later. Our Board believes that eliminating flexibility in the structure of Board leadership as facts
and circumstances require, as the proponent requests, is unnecessary given the safeguards on Board independence already in place and could adversely impact our Company's ability to adapt to new
challenges and attract suitable CEO candidates.
Our corporate governance policies and practices further promote effective, independent Board oversight.
In addition to having an independent Chairman of the Board, our Board has adopted policies and practices that provide our stockholders with
meaningful rights and further promote Board independence and effective oversight of management.
As
mentioned above, all members of our Board (other than any person serving on our Board who also serves as our CEO) and its committees are independent and our Board has been
substantially refreshed in recent years. Additionally, if our Chairman is not independent in the future, the independent Directors of the Board will appoint a Lead Independent Director who will have
well-defined powers and duties. Our Corporate Governance Guidelines require that our key Board committees be composed entirely of independent directors and that the independent directors meet in
executive session without the presence of management for a portion of each regularly scheduled meeting of the Board.
To
ensure our Board remains robust and engaged, we engage in an annual self-evaluation process to determine whether the Board and its committees are functioning effectively. Our
Nominating and Governance Committee also annually evaluates each individual director and recommends to our Board whether each Director should be nominated for election to a
32
Table of Contents
further
one-year term. When nominated, our Directors are elected annually, with a majority voting standard for uncontested elections and a director resignation policy.
Stockholders
have meaningful proxy access and special meeting rights. We have no supermajority voting provisions. As evidenced by our discussions with stockholders representing
approximately 55% of our outstanding shares in 2019, we are deeply committed to ongoing engagement with our stockholders to gain valuable insight into the issues that matter most to them and to enable
our Company to address them effectively. We also enable increased stockholder attendance and participation by utilizing a virtual meeting format for our annual meetings of stockholders.
Vote Required
This Proposal No. 4 is advisory in nature and would constitute a recommendation to our Board if it is approved by stockholders. The
affirmative vote of a majority of the stock having voting power present in person or
represented by proxy and entitled to vote is required to approve this Proposal No. 4. Unless you indicate otherwise, your proxy will be voted "AGAINST" this proposal.
For
the foregoing reasons, the Board unanimously believes that this proposal is not in the best interests of NortonLifeLock or our stockholders, and recommends that you vote "AGAINST"
Proposal 4.
THE BOARD RECOMMENDS A VOTE "AGAINST" PROPOSAL NO. 4.
PROXIES RECEIVED BY THE COMPANY WILL BE VOTED "AGAINST"
THIS PROPOSAL UNLESS OTHERWISE INSTRUCTED.
33
Table of Contents
OUR EXECUTIVE OFFICERS
The names of our current executive officers, their ages as of October 25, 2019 and their positions, after giving effect to the
appointment of Mr. Pilette as our CEO, Mr. Kapuria as our President and Mr. Brown as our Interim Chief Financial Officer as of November 8, 2019, are shown below.
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Name
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Age
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Position
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Vincent Pilette
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47
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CEO
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Matthew Brown
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|
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39
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|
Interim Chief Financial Officer
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Amy L. Cappellanti-Wolf
|
|
|
54
|
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Senior Vice President and Chief Human Resources Officer
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Samir Kapuria
|
|
|
46
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President
|
Scott C. Taylor
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|
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55
|
|
Executive Vice President, General Counsel and Secretary
|
The
Board chooses executive officers, who then serve at the Board's discretion. There is no family relationship between any of the directors or executive officers and any other director
or executive officer of NortonLifeLock.
For
information regarding Mr. Pilette, please refer to Proposal No. 1, "Election of Directors" above.
Mr. Brown has been appointed to serve as our Interim Chief Financial Officer, effective November 8, 2019. From January 2019
to November 2019, he served as our Vice President of Finance and Chief Accounting Officer. Prior to that, he served as our Vice President, Finance from August 2016 to January 2019 and as Vice
President, Corporate Controller of Blue Coat, Inc. from October 2015 until we acquired that company in August 2016. Previously, he served in various positions at NETGEAR, Inc., a
computer networking hardware company, from 2010 to October 2015, most recently as Senior Director, Assistant Controller. Mr. Brown holds a Bachelor of Science degree in business administration
from the Walter A. Haas School of Business at U.C. Berkeley.
Ms. Cappellanti-Wolf has served as our Senior Vice President and Chief Human Resources Officer since July 2014. Prior to joining
us, she served as Chief Human Resources Officer at Silver Spring Networks, Inc., a smart grid products provider, from June 2009 to July 2014. From September 2001 to June 2009,
Ms. Cappellanti-Wolf served as Vice President, Human Resources of Cisco Systems, Inc. From 2000 to 2001, she served as a Human Resources Director at Sun Microsystems, Inc.
Ms. Cappellanti-Wolf served as Human Resources Director for The Walt Disney Company from 1995 to 2000 and held various roles in human resources with Frito-Lay, Inc., a division of
PepsiCo, Inc., from 1988 to 1995. She has a Bachelor's degree in journalism from West Virginia University and a Master's degree in industrial and labor relations from West Virginia University.
Mr. Kapuria has been appointed to serve as our President, effective November 8, 2019. From May 2018 to November 2019, he
served as our Executive Vice President, Consumer Business Unit and Cyber Security Services. Prior to that, he served as our Senior Vice President and General Manager, Cyber Security Services from
November 2014 to May
2018, as our Vice President, Products and Services from July 2012 to November 2014, and as our Vice President, Business Strategy and Security Intelligence from April 2011 to July 2012. From October
2004 to April 2011, Mr. Kapuria held numerous other director-level management positions with NortonLifeLock. Mr. Kapuria holds a Bachelor's degree in finance from the University of
Massachusetts.
Mr. Taylor has served as or Executive Vice President, General Counsel and Secretary since August 2008. From February 2007 to August
2008, he served as our Vice President, Legal. Prior to joining NortonLifeLock, Mr. Taylor held various legal and administrative positions at Phoenix Technologies Ltd., a provider of core
systems software, from January 2002 to February 2007, including most recently as Chief Administrative Officer, Senior Vice President and General Counsel. From May 2000 to September 2001, he was Vice
President and General Counsel at Narus, Inc., a venture-backed private company that designs IP network management software. Mr. Taylor is a director of Piper Jaffray Companies, a
national advisory board member of the Stanford University Center for Comparative Studies on Race and Ethnicity and serves on the board of trustees of Menlo School. He holds a Juris Doctorate from
George Washington University and a Bachelor's degree from Stanford University.
34
Table of Contents
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of October 25, 2019 with respect to the beneficial ownership of NortonLifeLock common
stock by (i) each stockholder known by NortonLifeLock to be the beneficial owner of more than 5% of NortonLifeLock common stock, (ii) each current member of the Board or director
nominee, (iii) the named executive officers of NortonLifeLock included in the Summary Compensation Table appearing on page 60 of this Proxy Statement and (iv) all current
executive officers and directors of NortonLifeLock as a group.
Beneficial
ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. Unless otherwise indicated below, the persons
and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Percentage ownership is
based on 622,918,522 shares of NortonLifeLock common stock outstanding as of October 25, 2019. Shares of common stock subject to stock options and restricted stock units vesting on or before
December 24, 2019 (within 60 days of October 25, 2019) are deemed to be outstanding and beneficially owned for purposes of computing the percentage ownership of such person but
are not treated as outstanding for purposes of computing the percentage ownership of others.
Unless
otherwise indicated, the address of each of the individuals and entities named below is c/o NortonLifeLock Inc., 60 E. Rio Salado Parkway, Suite 1000, Tempe, Arizona
85281.
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Amount and
Nature of
Beneficial
Ownership
|
|
Percent
of Class
|
|
5% Beneficial Owners
|
|
|
|
|
|
|
|
Vanguard Group Inc.(1)
|
|
|
66,828,879
|
|
|
10.7
|
%
|
T. Rowe Price Associates, Inc.(2)
|
|
|
51,293,114
|
|
|
8.2
|
%
|
Starboard Value LP(3)
|
|
|
43,600,796
|
|
|
7.0
|
%
|
BlackRock, Inc.(4)
|
|
|
42,309,498
|
|
|
6.8
|
%
|
Capital World Investors(5)
|
|
|
41,378,550
|
|
|
6.6
|
%
|
|
|
|
|
|
|
|
|
Total
|
|
|
245,410,837
|
|
|
39.3
|
%
|
Directors and Named Executive Officers
|
|
|
|
|
|
|
|
Gregory S. Clark *(6)
|
|
|
5,964,117
|
|
|
1.0
|
%
|
Nicholas R. Noviello *(7)
|
|
|
1,347,260
|
|
|
**
|
|
Vincent Pilette(8)
|
|
|
785,906
|
|
|
**
|
|
Scott C. Taylor
|
|
|
408,724
|
|
|
**
|
|
Amy L. Cappellanti-Wolf
|
|
|
218,251
|
|
|
**
|
|
David L. Mahoney(9)
|
|
|
201,423
|
|
|
**
|
|
Samir Kapuria(10)
|
|
|
191,579
|
|
|
**
|
|
Daniel H. Schulman
|
|
|
170,989
|
|
|
**
|
|
Frank E. Dangeard
|
|
|
113,936
|
|
|
**
|
|
V. Paul Unruh(11)
|
|
|
101,711
|
|
|
**
|
|
Anita M. Sands
|
|
|
63,830
|
|
|
**
|
|
Kenneth Y. Hao(12)
|
|
|
60,670
|
|
|
**
|
|
David W. Humphrey
|
|
|
49,882
|
|
|
**
|
|
Dale L. Fuller
|
|
|
35,088
|
|
|
**
|
|
Suzanne M. Vautrinot(13)
|
|
|
32,269
|
|
|
**
|
|
Richard S. Hill(14)
|
|
|
32,072
|
|
|
**
|
|
Peter A. Feld(15)
|
|
|
24,685
|
|
|
**
|
|
Susan P. Barsamian(16)
|
|
|
19,903
|
|
|
**
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9,822,295
|
|
|
1.6
|
%
|
Current Directors and Executive Officers
|
|
|
|
|
|
|
|
As a group (18 people)(17)
|
|
|
2,542,151
|
|
|
0.4
|
%
|
-
*
-
Former
officer.
-
**
-
Less
than 1%.
35
Table of Contents
-
(1)
-
Based
solely on a Schedule 13G/A filing made by The Vanguard Group on February 13, 2019, The Vanguard Group has sole voting power over
736,173 shares, shared voting power over 135,657 shares, sole dispositive power over 65,971,054shares and shared dispositive power over 857,825 shares. This stockholder's address is 100 Vanguard
Blvd., Malvern, PA 19355.
-
(2)
-
Based
solely on a Schedule 13G/A filing made by T. Rowe Price Associates on October 10, 2019, T. Rowe Price Associates, Inc. has
sole voting over 18,962,995 shares and sole dispositive power over 51,293,114 shares. This stockholder's address is 100 E. Pratt Street, Baltimore, MD 21202
-
(3)
-
Based
solely on a Schedule 13D/A filing made by Starboard Value LP on August 15, 2019, Starboard Value LP has sole voting
and sole dispositive power over 43,600,796 shares. This stockholder's address is 777 Third Avenue, 18th Floor, New York, New York 10017. Mr. Feld is a Managing Member of
Starboard Value LP and may be deemed to share voting and dispositive power over these shares.
-
(4)
-
Based
solely on a Schedule 13G/A filing made by the BlackRock, Inc. on February 6, 2019, BlackRock, Inc. has sole voting
power over 37,349,816 and sole dispositive power over 42,309,498 shares. This stockholder's address is 55 East 52nd Street, New York, NY 10055.
-
(5)
-
Based
solely on a Schedule 13G/A filing made by Capital World Investors on February 14, 2019, Capital World Investors has sole voting
power over 41,358,274 shares and sole dispositive power over 41,378,550 shares. This stockholder's address is 333 South Hope Street, Los Angeles, CA 90071.
-
(6)
-
Beneficial
ownership data is current through Mr. Clark's departure date of May 9, 2019 and includes 1,122,938 shares held by the Gregory
S. Clark Living Trust for which Mr. Clark exercises voting and dispositive power and 3,604,101 shares subject to options that were fully exercisable as of his departure date.
-
(7)
-
Beneficial
ownership data is current through Mr. Noviello's departure date of May 24, 2019 and includes 775,028 shares subject to
options that were fully exercisable as of his departure date.
-
(8)
-
Includes
165,429 shares held by Vincent Pilette and 620,477 shares held by the VPJW Revocable Trust for which Mr. Pilette exercises voting and
dispositive power.
-
(9)
-
Includes
16,959 shares held by the Winnifred C. Ellis & David L. Mahoney Trust for which Mr. Mahoney exercises voting and dispositive
power.
-
(10)
-
Includes
4,844 shares issuable upon the settlement of RSUs as of December 1, 2019.
-
(11)
-
Shares
held by the Unruh Family Living Trust for which Mr. Unruh exercises voting and dispositive power.
-
(12)
-
These
securities are held by Mr. Hao for the benefit of Silver Lake Technology Management LLC, certain of its affiliates and certain of
the funds they manage ("Silver Lake") and pursuant to Mr. Hao's arrangement with Silver Lake, upon the sale of these securities, the proceeds are expected to be remitted to Silver Lake.
-
(13)
-
Shares
held by the William C. Keller and Suzanne Vautrinot Living Trust for which Ms. Vautrinot exercises voting and dispositive power.
-
(14)
-
Includes
3,953 shares issuable upon the settlement of RSUs as of November 1, 2019 and 3,953 shares as of December 1, 2019.
-
(15)
-
Excludes
43,600,796 shares of common stock beneficially owned by Starboard Value LP and its affiliates. Mr. Feld is a Managing Member
of Starboard Value LP and may be deemed to share voting and dispositive power over these shares.
-
(16)
-
Shares
held by the S. Barsamian and W. Romans Revocable Trust for which Ms. Barsamian exercises voting and dispositive power.
-
(17)
-
Includes
for Matthew C. Brown: 14,134 shares, 2,099 shares subject to RSUs that will vest on December 1, 2019, and 15,000 shares subject to
fully exercisable options.
NortonLifeLock
has adopted a policy that executive officers and members of the Board hold an equity stake in the Company. The policy requires each executive officer to hold a minimum
number of shares of NortonLifeLock common stock. Newly appointed executive officers are not required to immediately establish their position but are expected to make regular progress to achieve it.
The Nominating and Governance Committee reviews the minimum number of shares held by the executive officers and directors from time to time. The purpose of the policy is to more directly align the
interests of our executive officers and directors with our stockholders. See "Stock Ownership Requirements" under the Compensation Discussion & Analysis section for a description of the stock
ownership requirements applicable to our executive officers.
Delinquent Section 16(a) Reports
Section 16 of the Exchange Act requires NortonLifeLock's directors, executive officers and any persons who own more than 10% of
NortonLifeLock's common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulation to furnish NortonLifeLock with copies
of all Section 16(a) forms that they file.
Based
solely on its review of the copies of such forms furnished to NortonLifeLock and written representations from the directors and executive officers, NortonLifeLock believes that all
of its executive officers and directors filed the required reports on a timely basis under Section 16(a), except for (i) Mr. Schulman who did not timely report on a Form 4,
the distribution of shares held by DHS 2017 Annuity Trust Agreement II (for which Mr. Schulman exercises voting and dispositive power) to his individual account on April 19, 2019, which
transaction was reported on a Form 5 that was filed on May 10, 2019, and (ii) Mr. Brown, who inadvertently omitted ownership of 5,393 shares of common stock on a
Form 3 that was filed on February 7, 2019, which was subsequently amended on March 8, 2019 to include the correct number of shares.
36
Table of Contents
EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION DISCUSSION & ANALYSIS (CD&A)
This compensation discussion and analysis ("CD&A") summarizes our executive compensation philosophy, our fiscal 2019 ("FY19") executive
compensation program and the FY19 compensation decisions made by the Compensation Leadership and Development Committee (the "Compensation Committee") with respect to the following named executive
officers ("NEOs"):
-
-
Gregory S. Clark, Former President and Chief Executive Officer ("CEO");
-
-
Nicholas R. Noviello, Former Executive Vice President and Chief Financial Officer ("CFO");
-
-
Amy L. Cappellanti-Wolf, Senior Vice President and Chief Human Resources Officer;
-
-
Samir Kapuria, President (effective November 8, 2019); and
-
-
Scott C. Taylor, Executive Vice President, General Counsel and Secretary.
37
Table of Contents
FY19 Financial Results, Compensation and New Leadership
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except for per share amounts)
|
|
|
|
Fiscal 2019 ("FY19")
|
|
|
|
Fiscal 2018 ("FY18")
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
|
$4,731
|
|
|
|
$4,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY19 Financial Results
|
|
|
|
|
|
Operating income
|
|
|
|
380
|
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
31
|
|
|
|
1,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share diluted
|
|
|
|
0.05
|
|
|
|
1.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
1,495
|
|
|
|
950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY19 Challenges
|
|
|
|
While we saw improvements in some areas of our business, our overall performance and stock price was negatively impacted by several significant factors:
Revenue and business momentum in our former Enterprise Security segment
declined in FY19.
The Company
was subject to an internal investigation, which was commenced and completed by the Audit Committee of the Board (the "Audit Committee") in connection with concerns raised by a former employee.
We announced a restructuring plan pursuant to which we targeted
reductions of our global workforce of up to approximately 8%.
Our executive leadership team was in transition with announced executive officer departures in November 2018 and January 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitment to Pay-For-Performance
|
|
|
|
Mr. Clark, our former
CEO, did not receive a FY19 equity award.
None of our NEOs received an annual base salary increase for FY19, except for those executives who were promoted.
Our former CEO did not receive a payment under his annual cash incentive award.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Component
|
|
|
|
Metric(1)
|
|
|
|
Achievement (as a
percent of target)
|
|
|
|
Funding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY19 Executive Annual
|
|
|
|
FY19 Non-GAAP operating income
|
|
|
|
87.5%
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan ("EAIP")
|
|
|
|
FY19 Non-GAAP revenue
|
|
|
|
97.2%
|
|
|
|
71.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY19 EAIP Total
|
|
|
|
|
|
|
|
|
|
|
|
35.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY19 Executive Compensation
|
|
|
|
|
|
FY19 Performance-based
|
|
|
|
FY19 earnings per share ("EPS")
|
|
|
|
88.3%
|
|
|
|
50.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units
|
|
|
|
FY19 free cash flow
|
|
|
|
90.7%
|
|
|
|
91.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY18 Performance-based Restricted Stock Units
|
|
|
|
2-year total shareholder return ("TSR") relative to Nasdaq 100
|
|
|
|
-21.32%
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2017 ("FY17") Performance-based Restricted Stock Units
|
|
|
|
FY18 Non-GAAP Operating Income
|
|
|
|
109.29%
|
|
|
|
268.2% (of which 250% vested and settled at the end of FY18, and the remaining 18.2% vested for eligible participants at the end of FY19).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Please see discussion below for more detail regarding how these metrics are calculated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Leadership
|
|
|
|
The composition of our
Board changed materially with the appointment of four new independent directors, two of whom replaced long-tenured directors, and with the further changes reflected herein to occur at the Annual Meeting.
In November 2018, Michael Fey resigned as President and COO.
In May 2019, Richard S.
"Rick" Hill became our Interim President and CEO, replacing Gregory S. Clark.
In May 2019, Vincent Pilette became our CFO, replacing Nicholas R. Noviello.
In November 2019, Mr. Pilette was named our permanent CEO and
Samir Kapuria became our President, replacing our interim President and CEO, Mr. Hill.
In November 2019, Matthew Brown became our interim CFO.
|
|
|
|
|
|
|
|
|
|
|
|
38
Table of Contents
Despite
the challenges we faced in FY19, we remain confident in our business strategies and our competitive product portfolio. We will continue to execute on multiple initiatives to
drive revenue growth. With industry-leading solutions, we believe that we are well positioned to participate in a growing opportunity in the cyber defense market. We have an opportunity to enhance
stockholder value by building on the leadership and momentum of our business.
Our Compensation Philosophy and Practices
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drive Business Success
Our executive compensation program is designed to drive our success as a market leader in cybersecurity.
|
|
Pay for Performance
We believe that executive compensation should be tied to our short and long-term performance. It is important to reward
outstanding individual performance, team success, and Company-wide results.
|
|
|
|
|
Attract and Retain
We focus on corporate and individual performance objectives and aim to attract and retain highly-qualified executive officers
while maximizing long-term stockholder value.
|
|
Balancing and Aligning Interests with Stockholders
We are sensitive to our need to balance and align the interests of our executive officers with
those of our stockholders, especially when compensation decisions might increase our cost structure or stockholder dilution.
|
|
|
|
|
|
|
|
|
|
39
Table of Contents
Compensation Policies and Practices
Strong stockholder support on say-on-pay and Stockholder Engagement
At our 2018 annual meeting of stockholders, we requested that our stockholders cast a non-binding advisory vote on the compensation of our NEOs,
also known as "say-on-pay" vote. This proposal passed with approximately 90% of the votes cast in favor. In evaluating our compensation practices in FY19, the Compensation Committee was mindful of the
support our stockholders expressed for our philosophy of linking compensation to financial objectives and the enhancement of stockholder value. In addition, management met with or spoke to
institutional stockholders representing approximately 55% of outstanding shares and listened to any feedback regarding executive compensation program. As a result, the Compensation Committee retained
its general approach to executive compensation and continued to apply the same general philosophy and objectives as in the prior fiscal year in determining executive compensation.
40
Table of Contents
FY19 EXECUTIVE COMPENSATION
The total mix of our NEO compensation, including the portion at risk, is reflected in the graphs below. The major components of target
compensation for our NEOs during FY19 were: (i) base salary, (ii) target annual incentive awards and (iii) grant date fair value of long-term equity incentive awards, with the
exception of our CEO who did not receive any equity awards for FY19.
Analysis of Compensation Components
The elements of the FY19 compensation for our NEOs was as follows:
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|
|
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|
|
|
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|
|
Compensation Component
|
|
Form of Award
|
|
Percent at Risk
|
|
Performance vs
Time-Based
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
Cash
|
|
|
0
|
%
|
|
NA
|
|
|
|
|
Executive Annual Incentive Plan
|
|
Cash(1)
|
|
|
100
|
%
|
|
Performance-Based
|
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|
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|
Equity Incentive Awards Restricted Stock Units ("RSUs")
|
|
RSUs(2)
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|
|
100
|
%
|
|
Time-Based
|
|
|
|
|
Equity Incentive Awards Performance-based Restricted Stock Units ("PRUs")
|
|
PRUs(2)
|
|
|
100
|
%
|
|
Performance-Based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
For
FY19, except for Mr. Noviello, this award was payable in RSUs, which were granted on May 20, 2019 and vested June 1, 2019.
Beginning in fiscal 2020 ("FY20"), the award will be payable in cash.
-
(2)
-
For
FY19, our former CEO did not receive any equity awards.
I. Base Salary
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2019 Base Salary
|
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|
|
Philosophy
|
|
Considerations
|
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|
|
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|
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|
|
|
|
Provide fixed compensation
to attract and retain key executives.
|
|
Salary reviewed and set
annually.
The factors used to determine the amount of salaries include skill set, experience performance contribution levels, the executive officer's role, positioning relative to peer
group and market and our overall salary budget.
Recommendations of the CEO for other executive officers based upon his annual review of performance.
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41
Table of Contents
The
following table presents each NEO's base salary for FY19.
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NEO
|
|
|
FY18
Annual Salary ($)
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|
|
Change in
Salary (%)
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|
|
FY19
Annual Salary
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
Gregory S. Clark
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|
|
1,000,000
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|
|
|
|
|
1,000,000
|
|
|
|
|
Nicholas R. Noviello
|
|
|
650,000
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|
|
|
|
|
650,000
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|
|
|
|
Amy L. Cappellanti-Wolf
|
|
|
440,000
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|
|
|
|
|
440,000
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|
|
|
|
Samir Kapuria(1)
|
|
|
390,000
|
(1)
|
|
60,000
|
(1)
|
|
450,000
|
|
|
|
|
Scott C. Taylor
|
|
|
600,000
|
|
|
|
|
|
600,000
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Mr. Kapuria
was named an executive officer during FY19 and received a salary increase in connection with his promotion. His salary increased
from $390,000 to $440,000 effective May 8, 2018.
As
presented in the table above, our named executive officers did not receive an increase in annual base salary other than in connection with a promotion for Mr. Kapuria. Our
former CEO determined that none of our other NEOs would receive a base salary increase for FY19. In addition, our Board also determined that Mr. Clark would not receive a salary increase in
FY19.
II. Executive Annual Incentive Plan
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|
|
|
|
|
FY19 Annual Cash Incentive Awards
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|
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|
|
|
|
|
|
|
|
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|
|
|
|
Philosophy
|
|
Target Amount Considerations
|
|
Award Design Considerations
|
|
Performance Conditions
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
Establish appropriate
short-term performance measures that the Compensation Committee believes will drive our future growth and profitability.
Reward achievement of short-term performance measures.
Payout tied to Company performance consistent with FY19 financial plan.
Offer market competitive incentive
opportunities.
|
|
Factors used to determine
target amounts included: (i) relevant market data; (ii) internal pay equity; and (iii) desired market position role of each NEO.
|
|
Non-GAAP Operating Income
and Non-GAAP Revenue were the financial metrics selected because we believe: (i) they strongly correlate with stockholder value creation, are transparent to investors and are calculated on the same basis as described in our quarterly earnings
releases and supplemental materials, and balance growth and profitability, and (ii) our executive team can have a direct impact on these metrics through skillful management and oversight.
Metrics established based on a range of inputs, including external market economic conditions, growth outlooks for our product portfolio, the competitive environment, our
internal budgets and market expectations.
|
|
Non-GAAP Operating Income
Metric (50% weighing). Non-GAAP Operating Income is defined as GAAP operating income, adjusted, as applicable, to exclude, among other things, stock-based compensation expense, charges related to the amortization of intangible assets, restructuring,
separation, transition and other related expenses and contract liabilities fair value adjustment, calculated under 2019 plan exchange rates
Non-GAAP Revenue Metric (50% weighing). Non-GAAP Revenue is
defined as GAAP revenue adjusted to exclude contract liabilities fair value adjustment calculated under 2019 plan exchange rates.
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42
Table of Contents
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|
|
|
|
FY19 Annual Cash Incentive Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philosophy
|
|
Target Amount Considerations
|
|
Award Design Considerations
|
|
Performance Conditions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance payout curves
set to drive increased revenue and operating income and in accordance with our FY19 financial plan.
Goals established in first 90 days when performance is
indeterminable.
Payable in fully vested RSUs for FY19.
CEO performance should be completely tied to Company financial
performance.
|
|
Individual performance
assessment modifier (0-140%) except for CEO.
Employment through payout date.
See below for more information.
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|
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|
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|
|
|
|
|
|
Executive Annual Incentive Plan Target Opportunities: The following table presents each NEO's target incentive opportunity for FY19 under
the FY19 Executive Annual Incentive Plan (the "FY19 EAIP"):
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|
NEO
|
|
FY19 Individual
Annual
Incentive Target (%)
|
|
FY19
Target ($)
|
|
|
|
|
|
|
|
|
|
|
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|
Gregory S. Clark
|
|
|
150
|
|
|
1,500,000
|
|
|
|
|
Nicholas R. Noviello
|
|
|
100
|
|
|
650,000
|
|
|
|
|
Amy L. Cappellanti-Wolf
|
|
|
70
|
|
|
308,000
|
|
|
|
|
Samir Kapuria(1)
|
|
|
100
|
|
|
450,000
|
|
|
|
|
Scott C. Taylor
|
|
|
100
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
In
connection with Mr. Kapuria's promotion, his FY19 Individual Annual Incentive Target under the FY19 EAIP increased from 60% to 100%
effective May 8, 2018. Mr. Kapuria's prorated target annual incentive value for FY19 is $427,451.
FY19 EAIP Payout Formula: The determination of each NEO's payout amount under the FY19 EAIP is based on the following formula. The
Compensation Committee has discretion to adjust individual awards downward as appropriate by up to 25% of the amount of the incentive award that would otherwise be earned.
The
payout curves for each of our metrics for FY19 are set forth in the table below. The non-GAAP operating income and non-GAAP revenue metrics are funded independently of each other and
are weighted equally. Except for our CEO, the actual
43
Table of Contents
individual
payouts could be further modified based on an individual performance factor generally in the range of 0% to 140% based on performance achievement against pre-established individual goals
for FY19.
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|
|
Non-GAAP Operating
Income Metric
|
|
|
|
Non-GAAP Revenue
Metric
|
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|
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|
|
Non-GAAP
Operating Income
($ millions)
|
|
Funding
(%)
|
|
|
|
Non-GAAP
Revenue
($ millions)
|
|
Funding
(%)
|
|
|
|
Individual
Performance
Modifier (%)
|
|
Total Payout
as a Percentage
of Target (%)
|
|
|
Threshold
|
|
|
|
|
$
|
1,428
|
|
|
|
40
|
|
|
|
|
|
$
|
4,760
|
|
|
|
40
|
|
|
|
|
|
35
|
|
|
|
14
|
|
|
|
Target
|
|
|
|
|
$
|
1,630
|
|
|
|
100
|
|
|
|
|
|
$
|
4,943
|
|
|
|
100
|
|
|
|
|
|
100
|
|
|
|
100
|
|
|
|
Maximum
|
|
|
|
|
$
|
1,793
|
|
|
|
200
|
|
|
|
|
|
$
|
5,141
|
|
|
|
200
|
|
|
|
|
|
140
|
|
|
|
280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Performance Assessment
Individual performance is evaluated, and taken into account in determining the FY19 EAIP payout for NEOs other than the CEO based on both
quantitative and qualitative results in the following key areas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Performance Assessment Components
|
|
|
|
|
|
|
|
|
|
|
|
Financial and operational
goals for the executive's area of responsibility and the entire Company.
Leadership qualities as well as functional competencies and knowledge for the executive's area of responsibility.
|
|
Development and management
of the executive's team of employees.
|
|
|
|
|
|
|
|
|
|
Provided
the threshold performance levels for both Company performance metrics are achieved, the CEO evaluates the level of each NEO's individual performance against the pre-determined
goals at fiscal year-end and makes a recommendation to the Compensation Committee. The Compensation Committee makes the final determination with respect to each NEO's actual payout, which it did for
our NEOs in FY19.
FY19 EAIP Payout Results:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Company Performance Funding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Performance Metric
|
|
|
Target ($)
(millions)
|
|
|
Threshold ($)
(millions)
|
|
|
Actual ($)
(millions)
|
|
|
Threshold
Funding (%)
|
|
|
Funding (%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating Income
|
|
|
1,630
|
|
|
1,428
|
|
|
1,427
|
(1)
|
|
40
|
|
|
0.0
|
|
|
|
|
Non-GAAP Revenue
|
|
|
4,943
|
|
|
4,760
|
|
|
4,804
|
(2)
|
|
40
|
|
|
71.2
|
|
|
|
|
FY19 Funding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Calculated
in FY19 plan exchange rates and excludes stock-based compensation expense, charges related to the amortization of intangible assets,
restructuring, separation, transition and other related expenses, contract liabilities fair value adjustment, acquisition-related costs and certain litigation settlement gains.
-
(2)
-
Calculated
in FY19 plan exchange rates and excludes contract liabilities fair value adjustment.
44
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY19 EAIP NEO Payout Amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
|
Base
Salary
|
|
|
Annual
Incentive
Target (%)
|
|
|
Company
Performance
Funding (%)
|
|
|
Individual
Performance
Factor (%)
|
|
|
Individual
Payout
Amount ($)(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory S. Clark(1)
|
|
|
1,000,000
|
|
|
150
|
|
|
n/a
|
|
|
n/a
|
|
|
0
|
|
|
|
|
Nicholas R. Noviello(2)
|
|
|
650,000
|
|
|
100
|
|
|
n/a
|
|
|
n/a
|
|
|
487,500
|
|
|
|
|
Amy L. Cappellanti-Wolf(3)
|
|
|
440,000
|
|
|
70
|
|
|
35.6
|
|
|
100
|
|
|
109,648
|
|
|
|
|
Samir Kapuria(3)
|
|
|
450,000
|
|
|
100
|
|
|
35.6
|
|
|
100
|
|
|
152,172
|
|
|
|
|
Scott C. Taylor(3)
|
|
|
600,000
|
|
|
100
|
|
|
35.6
|
|
|
100
|
|
|
213,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Mr. Clark
did not receive a FY19 EAIP payout.
-
(2)
-
Pursuant
to the terms of Mr. Noviello's Transition Services Agreement dated January 31, 2019 (the "Transition Services Agreement"),
Mr. Noviello received 75% of his target FY19 EAIP amount under the Company's Executive Severance Plan because it was greater than the amount that he would have earned under the FY19 EAIP
irrespective of individual performance.
-
(3)
-
Ms. Cappellanti-Wolf
and Messrs. Kapuria and Taylor each earned an individual performance factor of 100%. In determining the appropriate
individual performance factor for each of these executives, the Compensation Committee, with recommendation of the CEO, considered leadership, contributions to NortonLifeLock's achievement of its
goals, and strategic planning among other factors.
-
(4)
-
The
Compensation Committee did not exercise its discretion to reduce any payouts.
III. Equity Incentive Awards
In FY19, we granted our NEOs (other than Mr. Clark who did not receive equity awards in FY19) a mix of RSUs and PRUs ("FY19 RSUs" and "FY19 PRUs",
respectively). In FY19, Messrs. Taylor and Noviello, as FY18 NEOs, were granted a mix of PRUs and RSUs at 70% and 30%, respectively. All other executives, other than Mr. Clark, received
a mix of PRUs and RSUs at 50% and 50%, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive Awards
|
|
|
|
|
Philosophy
|
|
Grant Mix
|
|
Award Amount
Considerations
|
|
Award Design
Considerations
|
|
Vesting Conditions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Establish appropriate
performance measures that the Compensation Committee believes will drive our future growth and profitability.
|
|
Equity awards are a mix of
RSUs and PRUs.
|
|
NEOs' responsibilities and
anticipated future contributions.
|
|
Long-term payouts should
depend on NEOs' ability to drive financial performance, including share price appreciation.
|
|
RSUs are time-based and
vest over three years: (30%/ 30%/ 40%), except for 2019, where they vest 40%/ 30%/ 30% with the exception of FY18 NEOs whose RSUs grant vest 30%/30%/40%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive Awards
|
|
|
|
|
Philosophy
|
|
Grant Mix
|
|
Award Amount
Considerations
|
|
Award Design
Considerations
|
|
Vesting Conditions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provide meaningful and
appropriate incentives for achieving annual financial goals that the Compensation Committee believes are important for our short- and long-term success.
|
|
For our FY18 NEOs (Taylor
and Noviello), the mix was 70% PRUs and 30% RSUs.
|
|
NEOs' past grant amounts
and amount of unvested equity held by each NEO.
|
|
Metrics should align with
long-term goal of generating cash and operational execution and allow us to evaluate our short- term strategy while taking into account the performance of our peers.
|
|
PRU Metrics:
Achievement of FY19 non-GAAP free cash flow ("FCF"); non- GAAP FCF is cash from operating activities less capital expenditures, as reported in the Company's audited financial statements.
|
|
|
|
|
Equity awards should
attract and retain talent in a highly competitive market for talent.
|
|
For our other NEOs, the
mix was 50% PRUs and 50% RSUs.
|
|
Competitive market
assessment, including practices of peers and similarly situated companies.
|
|
Payout amounts should be
designed to promote retention for valuable NEOs.
|
|
FY19 Non-GAAP EPS;
non-GAAP EPS is non-GAAP net income (consistent with the Board approved plan) divided by 680 million fully diluted shares.
|
|
|
|
|
Reward NEOs for creating
stockholder value over long term.
|
|
Mr. Clark did not
receive FY19 equity awards.
|
|
Gains recognizable by the
NEO from equity awards made in prior years.
|
|
|
|
TSR over three years
measured against the Nasdaq 100.
See below for more information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units (RSUs): RSUs represent the right to receive one share of NortonLifeLock common stock for each vested RSU upon the
settlement
date, subject to continued employment through each vesting date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
|
FY19 RSU
Award Amount (#)(2)
|
|
|
Grant Date
Value ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory S. Clark(1)
|
|
|
0
|
|
|
0
|
|
|
|
|
Nicholas R. Noviello
|
|
|
95,416
|
|
|
2,106,785
|
|
|
|
|
Amy L. Cappellanti-Wolf
|
|
|
78,620
|
|
|
1,683,254
|
|
|
|
|
Samir Kapuria
|
|
|
238,243
|
|
|
5,100,783
|
|
|
|
|
Scott C. Taylor
|
|
|
61,339
|
|
|
1,354,365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Mr. Clark
did not receive an RSU award for FY19.
-
(2)
-
In
FY19, Messrs. Taylor and Noviello, as FY18 NEOs, were granted a mix of PRUs and RSUs at 70% and 30%, respectively. All other executives,
other than Mr. Clark, received a mix of PRUs and RSUs at 50% and 50%, respectively.
Performance-based Restricted Stock Units (PRUs): FY19 PRUs granted to our NEOs vest based on the achievement of three metrics: (1) FY19 FCF;
(2) FY19 EPS; and (3) three-year relative TSR at the end of fiscal 2021 as measured against the Nasdaq 100 and the completion of a service requirement. The Compensation Committee
believed that using independently-measured corporate metrics would motivate our executive team by providing distinct separate opportunities
46
Table of Contents
to
earn awards. The Compensation Committee also believed adding Free Cash Flow as an additional metric to those used in the FY18 PRUs aligned with the Company's priorities for FY19 of generating
strong free cash flow growth.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY19 PRU Performance Metrics Overview
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metric
|
|
Measurement Period
|
|
Metric Objectives
|
|
Vesting Conditions(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY19 Free Cash Flow
|
|
FY19
|
|
Aligns with our long-term goal of generating cash and operational execution.
|
|
Earned portion vests at end of FY20 for FY18 NEOs, and as to 60%/40% at end of FY19/FY20, respectively, for non FY18 NEOs.
|
|
|
|
|
FY19 Earnings Per Share
|
|
FY19
|
|
Provides evaluation of strategy execution.
|
|
Earned portion vests at end of FY20 for FY18 NEOs, and as to 60%/40% at end of FY19/FY20, respectively, for non FY18 NEOs.
|
|
|
|
|
3-Year Total Shareholder Return vs. Nasdaq 100
|
|
FY19 through the end of fiscal 2021
|
|
Provides balance to measure our longer-term performance against comparable companies.
|
|
Earned portion vests at end of FY21.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
In
addition to the vesting components, the Compensation Committee has broad negative discretion to reduce the amount of the award earned by up to 50%
as it determines reasonable and appropriate.
FY2019 PRU Design
47
Table of Contents
The
Compensation Committee certifies the amount of PRUs earned under each of the relevant metrics shortly after the completion of the performance period for each metric.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting of Earned FY19 PRU Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
FY19 FCF Metric
|
|
FY19 EPS Metric
|
|
3-Year TSR
Performance
Metric
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory S. Clark(1)
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
|
|
Nicholas R. Noviello(2)(3)
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
|
|
Amy L. Cappellanti-Wolf(4)
|
|
60% - 3/29/2019;
|
|
60% - 3/29/2019;
|
|
4/2/2021
|
|
|
|
|
|
|
40% - 4/3/2020
|
|
40% - 4/3/2020
|
|
|
|
|
|
|
Samir Kapuria(4)
|
|
60% - 3/29/2019;
|
|
60% - 3/29/2019;
|
|
4/2/2021
|
|
|
|
|
|
|
40% - 4/3/2020
|
|
40% - 4/3/2020
|
|
|
|
|
|
|
Scott C. Taylor(3)
|
|
100% - 4/3/2020
|
|
100% - 4/3/2020
|
|
4/2/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Mr. Clark
did not receive a PRU award for FY19.
-
(2)
-
Pursuant
to the terms of Mr. Noviello's Transition Services Agreement, he is entitled to vesting and settlement of a portion of his FY19 PRUs,
subject to the satisfaction of the applicable performance metrics, without having to satisfy any service requirement.
-
(3)
-
As
FY18 NEOs, the FCF and EPS metric components of these awards vest at the end of FY20.
-
(4)
-
Mr. Kapuria
and Ms. Cappellanti-Wolf were not NEOs in FY18. Non-NEOs' awards vest as to 60% of the FCF and EPS component at the end of
FY19, and as to 40% of the FCF and EPS component at the end of FY20.
FY19 Non-GAAP FCF Metric
33%
of the shares underlying the FY19 PRUs are eligible to be earned based on our achievement of non-GAAP FCF at the end of FY19. The following table presents threshold, target and
maximum performance levels and payouts of the relative FCF metric:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY19 FCF Performance Metric
|
|
|
|
|
|
|
FCF Performance
Goal (millions)*
|
|
|
Funding (%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Below Threshold
|
|
|
|
Less than $1,100
|
|
|
0
|
|
|
Threshold
|
|
|
|
$1,100
|
|
|
40
|
|
|
Target
|
|
|
|
$1,350
|
|
|
100
|
|
|
Maximum
|
|
|
|
$1,562 or more
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
-
*
-
To
the extent actual non-GAAP FCF performance falls between two discrete points in the chart above, linear interpolation will be used to determine funding.
FY19 Non-GAAP EPS Metric
33%
of the shares underlying the FY19 PRUs are eligible to be earned based on our achievement of non-GAAP EPS at the end of FY19. The following table presents threshold, target and
maximum performance levels and payouts of the relative EPS metric:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY19 EPS Performance Metric
|
|
|
|
|
|
|
EPS Performance
Goal*
|
|
|
Funding (%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Below Threshold
|
|
|
|
Less than $1.50
|
|
|
0
|
|
|
Threshold
|
|
|
|
$1.50
|
|
|
50
|
|
|
Target
|
|
|
|
$1.70
|
|
|
100
|
|
|
Maximum
|
|
|
|
$1.93 or more
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
-
*
-
To
the extent actual non-GAAP EPS falls between two discrete points in the chart above, linear interpolation will be used to determine funding.
48
Table of Contents
3-Year TSR Component
33%
of the shares underlying the FY19 PRUs are eligible to be earned based on our TSR performance relative to the TSR performance of companies comprising the Nasdaq 100 index over the
three-year performance period ending on the last day of FY21. The following table presents threshold, target and maximum performance levels and payouts of the relative TSR metric:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3-Year TSR Performance
|
|
|
|
|
|
|
TSR Performance vs.
Nasdaq 100*
|
|
|
Funding (%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Below Threshold
|
|
|
|
Below 25th percentile
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
|
|
25th percentile
|
|
|
50
|
|
|
Target
|
|
|
|
50th percentile
|
|
|
100
|
|
|
Maximum
|
|
|
|
75th percentile
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
-
*
-
To
the extent actual TSR performance falls between two discrete points in the chart above, linear interpolation will be used to determine funding.
FY19 PRU Award Summary: The following table summarizes the number of FY19 PRUs granted to each NEO, and the amounts earned and vested as of the end
of FY19, which are subject to change based on 3-year TSR component of the award and continued service requirements through the end of FY21. For the FY19 FCF metric, we achieved $1,288 million,
resulting in funding at 91.2% for this metric. For the FY19 EPS metric, we achieved just over the threshold performance goal of $1.50, resulting in funding at 50.6% for this metric.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY19 PRUs Granted, Earned and Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
|
Total FY19
PRUs
Granted (#)
|
|
|
Total FY19
PRU Value
at Grant ($)
|
|
|
Total FY19
FCF PRUs
Earned (#)
|
|
|
Total FY19
EPS PRUs
Earned (#)
|
|
|
Total
3-Year TSR
PRUs
Earned (#)
|
|
|
Total FY19
PRUs
Earned
|
|
|
Total FY19
PRUs
vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory S. Clark(1)
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
|
|
Nicholas R. Noviello(2)
|
|
|
222,636
|
|
|
4,825,264
|
|
|
40,608
|
|
|
22,530
|
|
|
n/a
|
|
|
63,138
|
|
|
63,138
|
|
|
|
|
Amy L. Cappellanti-Wolf
|
|
|
78,620
|
|
|
1,668,841
|
|
|
23,899
|
|
|
13,258
|
|
|
|
|
|
37,157
|
|
|
22,297
|
|
|
|
|
Samir Kapuria
|
|
|
238,242
|
|
|
5,057,084
|
|
|
72,424
|
|
|
40,182
|
|
|
|
|
|
112,606
|
|
|
67,566
|
|
|
|
|
Scott C. Taylor
|
|
|
143,123
|
|
|
3,101,953
|
|
|
43,508
|
|
|
24,138
|
|
|
|
|
|
67,646
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Mr. Clark
did not receive any FY19 equity awards.
-
(2)
-
Pursuant
to the terms of Mr. Noviello's Transition Services Agreement, he will be entitled to vesting and settlement of a portion of his FY19
PRUs, subject to the satisfaction of the applicable performance metrics, without having to satisfy any service requirement.
Previously Granted Long Term Incentive Pay Outcomes
FY17 PRU Achievement
FY2017 PRU Design
The
FY17 PRUs were designed with a performance metric that would focus our efforts on producing significantly increased profitability by the end of FY18. The Compensation Committee chose
FY18 non-GAAP operating income as the
49
Table of Contents
appropriate
metric for the FY17 PRUs because it provided a powerful incentive to both complete our business transformation goal while also requiring the executive team to deliver increased
profitability. Depending on our achievement of this metric, 0% to 300% of the target shares were eligible to be earned at the end of FY18, subject to additional vesting conditions in certain cases as
discussed below. To further encourage continued service to us and our stockholders, for any achievement above 250% of target to be earned, generally, the participant must have been employed by us
through the end of FY19 when the additional payout in excess of 250% was made.
Below
is the summary of FY18 non-GAAP operating income metric achievement for the FY17 PRUs as of the end of FY18.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY18
non-GAAP
Operating
Income
Target ($)
(millions)
|
|
|
FY18
non-GAAP
Operating
Income
Actual ($)
(millions)
|
|
|
FY18
Non-GAAP
Operating
Income
Performance
as a % of
Target
|
|
|
Vesting
Level
as a % of
Target
Award
|
|
|
Eligible
Shares
as a % of
Target
Shares
at end of
FY18
|
|
|
Eligible
Shares
as a % of
Target
Shares
at end of
FY19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY17 PRUs
|
|
|
1,560
|
|
|
1,705
|
(1)
|
|
109.29
|
|
|
268.2
|
|
|
250
|
|
|
18.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Defined
as our FY18 GAAP operating income, adjusted, as applicable, to exclude website security and PKI results included in our third quarter of FY18
results, stock-based compensation expense, charges related to the amortization of intangible assets, restructuring, separation, transition and other related expenses, acquisition and integration
expenses, certain gains or losses on litigation contingencies and settlements, the impact from deferred revenue and inventory fair value adjustments as part of business combination accounting entries
and certain other income and expense items that management and/or the Compensation Committee considers unrelated to NortonLifeLock's core operations. Non-GAAP operating income was adjusted under FY17
PRUs to (i) allow for the negative impact of up to $91 million of foreign exchange rates on revenue, with no limit on the positive foreign exchange impact, and (ii) adjusted
beneficially for changes to NortonLifeLock's capital structure that positively impacted NortonLifeLock's EPS on a non-GAAP Basis, such as cash interest expense savings due to prepayment of
indebtedness.
Below
is the summary of the FY17 PRUs vested and earned by each NEO.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
|
Total FY17 PRUs
Vested at end
of FY18
|
|
|
Total FY17 PRUs
vested at end
of FY19
|
|
|
Total FY17 PRUs
Earned and
Vested(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory S. Clark
|
|
|
2,404,175
|
|
|
175,023
|
|
|
2,579,198
|
|
|
|
|
Nicholas R. Noviello
|
|
|
606,935
|
|
|
44,184
|
|
|
651,119
|
|
|
|
|
Amy L. Cappellanti-Wolf
|
|
|
207,142
|
|
|
15,080
|
|
|
222,222
|
|
|
|
|
Samir Kapuria
|
|
|
148,322
|
|
|
10,798
|
|
|
159,120
|
|
|
|
|
Scott C. Taylor
|
|
|
414,287
|
|
|
30,160
|
|
|
444,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
Compensation Committee did not exercise its discretion to reduce any payouts.
FY2018 PRU Design
The
Compensation Committee chose FY18 EPS and relative 2- and 3-year TSR against the Nasdaq 100 index as the applicable performance metrics for the FY18 PRUs. The Compensation Committee
selected non-GAAP EPS because it believed this metric could be used to evaluate the execution of our short-term strategy. The one-year EPS metric is balanced by the 2- and 3-year relative TSR metrics,
which require us to match or exceed median market results to achieve a payout at target or greater, and provides alignment with stockholders over a more extended time period.
50
Table of Contents
Below
is the summary of the FY18 non-GAAP EPS metric performance metric achievement for the FY18 PRUs as of the end of FY18.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY18
non-GAAP EPS
Target
|
|
|
FY18
non-GAAP EPS
Actual(1)
|
|
|
Achievement
as a Percentage
of Target
|
|
Eligible Shares as a % of
Target Shares at end of FY18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY18 PRUs
|
|
$
|
1.64 per share
|
|
$
|
1.56 per share
|
|
|
95.20
|
%
|
50.5% of the FY18 EPS shares (25.25% of the total FY18 PRUs) became eligible to be earned at the end of FY20.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
We
define non-GAAP EPS as non-GAAP net income, calculated in the manner consistent with the annual financial plan presented to and approved by our
Board, divided by 675 million fully diluted shares. We calculate non-GAAP net income as GAAP profit before tax reflected in the Company's condensed consolidated statements of operations as
adjusted for the following items: the impact from business combination accounting entries (such as deferred revenue fair value adjustments, and inventory fair value adjustments), stock-based
compensation expense, restructuring, separation, transition and other related charges, integration and acquisition expenses, charges related to the amortization of intangible assets and acquired
product rights, impairments of assets, income or loss from discontinued operations, non-cash interest expense and amortization of debt issuance costs and certain other items that are not included in
the Company's non-GAAP results, further adjusted to reflect the Company's expected ongoing core tax rate, all calculated based on the applicable fiscal year plan level exchange rates.
Below
is the summary of FY18 non-GAAP EPS metric performance metric achievement for the FY18 PRUs as of the end of FY18.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2-Year Relative
TSR Target vs.
Nasdaq 100
|
|
2-Year Relative
TSR Actual vs.
Nasdaq 100
|
|
|
Achievement
as a Percentage
of Target
|
|
|
Eligible Shares as a % of Target
Shares at end of FY19 for
the 2-Year TSR Component(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY18 PRUs
|
|
50th Percentile
|
|
8th Percentile
|
|
|
0
|
%
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Under
the FY18 PRU plan, any unearned shares below the target level for the 2-Year Relative TSR are added to the FY18 3-Year Relative TSR Shares to be
earned.
IV. Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY19 Benefits
|
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Benefit
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Philosophy/Rationale
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401(k) plan and matching contributions, health and dental coverage, life insurance, disability insurance, paid time off, and paid holidays.
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Provide our NEOs with competitive broad-based employee benefits on the same terms as are available to all employees generally.
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Nonqualified deferred compensation plan.
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Provide a standard package of benefits necessary to attract and retain executives. two of our named executive officers participated in this plan during FY19. The plan is described further under "Non-Qualified Deferred
Compensation in Fiscal 2019," on page 65.
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Reimbursement for up to $10,000 for financial planning services.
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Provide financial planning assistance given the complexity of executive officer compensation and financial arrangements to allow executives to concentrate on responsibilities and our future success.
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Car service for our former CEO.
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Helps to ensure the security of our CEO, provides a more efficient means of transportation and allows him to concentrate on his responsibilities and our future success.
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Aircraft lease agreement with our former CEO for Company use of his aircraft.
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Helps to ensure the security of our CEO, provides a more efficient means of transportation and allows him to concentrate on his responsibilities and our future success.
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V. Severance and Change of Control Benefits
The following table provides information regarding the severance arrangements that we have with certain of our NEOs:
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FY19 Severance and Change of Control Protections
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Philosophy
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Considerations
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Terms
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Attract and Retain
Executives
Intended to ease an NEO's transition due to an unexpected employment termination or retain an NEO through a change in control event.
Align Interests with
Stockholders
Mitigate any potential employer liability and avoid future disputes or litigation; retain and encourage our NEOs to remain focused on our business and the interests of our stockholders when considering or implementing strategic
alternatives.
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The employment of our NEOs
is "at will," meaning we can terminate them at any time and they can terminate their employment with us at any time.
Severance arrangements should be
designed to: (i) provide reasonable compensation to executive officers who leave our Company under certain circumstances to facilitate their transition to new employment and (ii) require a departing executive officer to sign a separation
and release agreement acceptable to us as a condition to receiving post-employment compensation payments or benefits.
"Double-trigger" provisions
preserve morale and productivity, and encourage executive retention in the event of a change of control.
Transition or retention
arrangements should be designed retain and incentivize executive officers until a successor is found and to ensure a smooth transition.
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Executive Severance
Plan
Provides for cash severance and other benefits where the individual's employment is terminated without cause outside of the change in control context, contingent on a release.
Executive Retention
Plan
Provides for double trigger acceleration of vesting of equity awards and cash severance benefits where the individual's employment is terminated without cause, or is constructively terminated, within 12 months after a change in
control, contingent on a release; no "golden parachute" excise tax gross-ups.
Nicholas R. Noviello's
Transition Services Agreement
Provides for certain transition and severance benefits, including continued vesting and participation in FY19 EAIP and severance benefits in the event of an earlier termination of employment.
Broadcom Sale Severance and
Retention Arrangements
Provides for certain accelerated vesting and cash payments in the event the individual is employed through a transition period or is terminated without cause before the end of the transition period
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Details
of each individual NEO's severance payments and benefits and Nicholas R. Noviello's Transition Services Agreement, including estimates of amounts payable in specified
circumstances in effect as of the end of FY19, are disclosed under "Potential Payments Upon Termination or Change-in-Control" below.
Key Compensation and Governance Policies
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Policy
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Considerations
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Material Features
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Stock Ownership Guidelines
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Promote stock ownership in
the Company.
More closely
align the interests of our NEOs with those of our stockholders.
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6x base salary for CEO.
CFO and President, 3x base
salary.
Executive Vice
Presidents, 2x base salary.
4 years from executive officer designation to comply.
During 4-year transition period, must retain at least 50% of net-settled equity award shares until ownership requirement is met.
Includes shares owned outright, excludes stock options and unvested
RSUs and PRUs.
As of
October 18, 2019, three NEOs have reached ownership requirements.
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Anti-Hedging and Anti-Pledging Policies
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Permitting hedging is
viewed as a poor pay program practice, as it insulates executives from stock price movement and reduces alignment with stockholders.
Pledging raises potential risks to stockholder value, particularly if the pledge is significant.
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No employee, officer or
director may acquire, sell or trade in any interest or position relating to the future price of the Company's securities, such as a put option, a call option or a short sale.
Waiver granted for Mr. Feld to exercise forward contracts that
were in existence before he became a board member.
Covered persons are prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan.
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Insider Trading Policy
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Prohibit insiders from
taking advantage of material non-public information.
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Prohibits the purchase or
sale of securities while in possession of material non-public information.
Directors, CEO, President and CFO must conduct any open market sales of our securities only through use of Rule 10b5-1 stock trading plans.
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Clawback Policy
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Permit us to recoup
performance-based cash and equity awards when such awards were not properly earned or when executives have engaged in inappropriate actions
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Applies to all executive
officers.
Allows recoupment
of performance-based cash and equity awards if (i) we are required to restate our financial statements due to fraud or intentional misconduct or (ii) an executive officer violates certain Company policies
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General Approach to Determining Compensation
The Compensation Committee oversees the compensation of our NEOs and our executive compensation program and initiatives. The Compensation
Committee typically reviews executive officer compensation, including base salary, short-term incentives and long-term incentives, in the first half of each fiscal year, to understand competitive
market compensation levels and practices based on the most recently completed year. In connection with this review, the Compensation Committee considers any input it may receive from our CEO in
evaluating the performance of each executive officer and sets each executive officer's total target direct compensation for the current year based on this review and the other factors described below.
We
have based most, if not all, of our prior compensation determinations, including those made for FY19, on a variety of factors, including:
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A focus on pay-for-performance
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A total rewards approach
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An appropriate pay mix
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Avoidance of compensation arrangements that encourage excessive or inappropriate risk taking by our executives
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Appropriate market positioning
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In the case of equity awards, burn rate and dilution
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Company performance and individual performance
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The Company's financial condition and available resources
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The accounting and cash flow implications of various forms of executive compensation
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Our need for a particular position to be filled
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The recommendations of our CEO (other than with respect to his own compensation)
As
discussed under "Role of Compensation Consultant" below, for FY19, the Compensation Committee engaged a compensation consultant and once again conducted a formal benchmarking review.
In establishing compensation for executive officers other than our CEO, the Compensation Committee gives weight to the recommendations of our CEO, but final decisions about the compensation of our
NEOs are made by our Compensation Committee.
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From
time to time, special business conditions may warrant additional compensation, such as sign-on bonuses, or equity awards in connection with promotions or in recognition of
significant accomplishments, to attract, retain or motivate executive officers. In these situations, we consider our business needs and the potential costs and benefits of special rewards.
Role of Compensation Consultant
The Compensation Committee generally retains an independent compensation consultant to help understand competitive compensation levels and
incentive designs. The independent compensation consultant is solely hired by, and reports directly to, the Compensation Committee. The Compensation Committee has sole authority to retain and
terminate the independent compensation consultant. At the Compensation Committee's discretion, the independent compensation consultant:
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attends Compensation Committee meetings;
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assists the Compensation Committee in determining peer companies and evaluating compensation proposals;
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assists with the design of incentive compensation programs; and
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conducts compensation-related research.
In
January 2019, the Compensation Committee replaced Mercer with Compensia as its compensation consultant.
Competitive Market Assessments
Market competitiveness is one factor that the Compensation Committee considers each year in determining a NEO's overall compensation package,
including pay mix. The Compensation Committee relies on various data sources to evaluate the market competitiveness of each pay element, including publicly-disclosed data from a peer group of
companies and published survey data from both the peer group companies and a broader set of information technology companies that the Compensation Committee believes represent our competition in the
broader talent market, based on the advice of Mercer and Compensia, outside consulting firms engaged by the Compensation Committee during FY19. The proxy statements of peer group companies provide
detailed pay data for the highest-paid executives. Survey data, which we obtain from the Radford Global Technology Survey, provides compensation information on a broader group of executives, with
positions matched based on specific job scope and responsibilities. The Compensation Committee considers data from these sources as a framework for making compensation decisions for each NEO's
position.
The
Compensation Committee reviews our peer group on an annual basis, with input from its compensation consultants, and the group may be adjusted from time to time based on, among other
factors, a comparison of revenues, market capitalization, industry, peer group performance, merger and acquisition activity and stockholder input. The Compensation Committee evaluated our peer group
for FY19 and determined to keep the companies otherwise the same as the peer group for FY18. The following criteria were used to select our peer group for evaluating named executive officer pay levels
in connection with setting compensation for FY19:
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Business with software development focus including security related businesses where possible;
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Similar breadth, complexity and global reach as us; and
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Annual revenue 0.5x to 2.0x as a starting point but including companies based on an assessment of overlapping geography, engineering focus and
executive talent competition.
The
Compensation Committee selected the following companies as our FY19 peer group:
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FY19 NortonLifeLock Peer Group
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Activision Blizzard, Inc.
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eBay Inc.
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Red Hat Inc.
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Adobe Systems Incorporated
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Electronic Arts Inc.
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Salesforce.com, Inc.
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Autodesk, Inc.
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FireEye, Inc.
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Synopsys, Inc.
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Akamai Technologies Inc.
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Intuit Inc.
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VMware, Inc.
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CA, Inc.
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Palo Alto Networks Inc.
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Citrix Systems, Inc.
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PayPal Holdings, Inc.
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Toward
the end of FY19, the Compensation Committee again reviewed our peer group for FY20 and made certain changes based on the following
criteria:
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Focus on software development, or software and engineering-driven companies
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Compete with NortonLifeLock for talent
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Are generally comparable in terms of complexity and global reach
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Are generally comparable in terms of size (~0.3x 2.0x revenue, greater variability in market cap)
The
Compensation Committee selected the following companies as our FY20 peer group:
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FY20 NortonLifeLock Peer Group
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Akamai Technologies Inc.
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F5 Networks Inc.*
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Proofpoint Inc.*
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Autodesk, Inc.
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FireEye, Inc.
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Red Hat Inc.
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CA, Inc.
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Fortinet, Inc.*
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ServiceNow, Inc.*
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Cadence Design Systems Inc.*
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Intuit Inc.
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Splunk Inc.*
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Citrix Systems, Inc.
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Juniper Networks Inc.*
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Synopsys, Inc.
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eBay Inc.
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NetApp, Inc.*
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VMware, Inc.
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Electronic Arts Inc.
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Palo Alto Networks Inc.
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Activision
Blizzard, Adobe, PayPal Holdings and salesforce.com were also removed from our FY20 peer group to better align our peer group with the appropriate Company revenue and market
cap size.
Compensation Risk Assessment
The Compensation Committee, in consultation with Compensia, has conducted its annual risk analysis of NortonLifeLock's compensation policies and
practices, and does not believe that our compensation programs encourage excessive or inappropriate risk taking by our executives or are reasonably likely to have a material adverse effect on
NortonLifeLock.
We
believe that the design and objectives of our executive compensation program provide an appropriate balance of incentives for our NEOs, thereby discouraging them from taking
inappropriate risks. Among other things, our executive compensation program includes the following design features:
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A balanced mix of cash and equity; as well as appropriately balanced fixed (base salary) and variable compensation (cash incentives and
equity-based awards)
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A mix of short-term and long-term incentives, with short-term incentives currently representing a significantly lower proportion of the total
mix
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Cash and equity incentives solely based on achieving Company performance objectives and subject to our "claw-back" right under certain
circumstances
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Caps on annual cash incentive and PRU payouts
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Stock ownership guidelines which align the interests of our executive officers with those of our stockholders
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General alignment with prevalent low-risk pay practices
Burn Rate and Dilution
We closely manage how we use our equity to compensate employees. We think of "gross burn rate" as the total number of shares granted under all
of our equity incentive plans during a period divided by the weighted average number of shares of common stock outstanding during that period and expressed as a percentage. We think of "net burn rate"
as the total number of shares granted under all of our equity incentive plans during a period, minus the total number of shares returned to such plans through awards cancelled during that period,
divided by the weighted average number of shares of common stock outstanding during that period, and expressed as a percentage. "Overhang" we think of as the total number of shares underlying options
and awards outstanding plus shares available for issuance under all of our equity incentive plans at the end of a period divided by the weighted average number of shares of common stock outstanding
during that period and
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expressed
as a percentage. The Compensation Committee determines the percentage of equity to be made available for our equity programs with reference to the companies in our market composite. In
addition, the Compensation Committee considers the accounting costs that will be reflected in our financial statements when establishing the forms of equity to be granted and the size of the overall
pool available. For fiscal 2019, our gross burn rate was 3.08%, our net burn rate was 2.51% and our overhang was 9.97%. In fiscal 2019, our burn rate was significantly higher than prior years
primarily due to the lower stock prices used to convert the grant values into numbers of shares and the high number of shares vested and released under the FY17 PRU grants.
Independence of Compensation Consultants
We paid Mercer approximately $358,500 for executive compensation services in FY19 and Compensia approximately $124,920 for executive
compensation services in FY19. In addition, management engaged and NortonLifeLock paid Mercer and Compensia and its affiliates for other services, including approximately $3.592 million to
Mercer for other unrelated consulting and business services. We also reimbursed Mercer and Compensia and its affiliates for reasonable travel and business expenses. The Compensation Committee did not
review or approve the other services provided by Mercer or Compensia and its affiliates to NortonLifeLock, as those services were approved by management in the normal course of business within the
scope of the Compensation Committee's pre-authorization for such services. Based in part on policies and procedures implemented by Mercer and Compensia to ensure the
objectivity of its executive compensation consultants and the Compensation Committee's assessment of Mercer's independence pursuant to the SEC rules, the Compensation Committee concluded that the
consulting advice it receives from Mercer is objective and not influenced by Mercer and its affiliates' other relationships with NortonLifeLock and that no conflict of interest exists that will
prevent Mercer from being independent consultants to the Compensation Committee.
The
Compensation Committee establishes our compensation philosophy, approves our compensation programs and solicits input and advice from several of our executive officers and Mercer. As
mentioned above, our CEO provides the Board and the Compensation Committee with feedback on the performance of our executive officers and makes compensation recommendations (other than with respect to
his own compensation) that go to the Compensation Committee for their approval. Our CEO, Chief Human Resources Officer and General Counsel regularly attend the Compensation Committee's meetings to
provide their perspectives on competition in the industry, the needs of the business, information regarding NortonLifeLock's performance and other advice specific to their areas of expertise. In
addition, at the Compensation Committee's direction, Mercer works with our Chief Human Resources Officer and other members of management to obtain information necessary for Mercer to make their own
recommendations as to various matters as well as to evaluate management's recommendations.
Equity Grant Practices
The Compensation Committee generally approves grants to the named executive officers at its first meeting of each fiscal year, or shortly
thereafter through subsequent action. The grant date for all equity grants made to employees, including the named executive officers, is generally the 10th day of the month following the
applicable meeting. If the 10th day is not a business day, the grant is generally made on the previous business day. The Compensation Committee does not coordinate the timing of equity awards
with the release of material, nonpublic information. RSUs may be granted from time to time throughout the year, but all RSUs generally vest on either March 1, June 1, September 1
or December 1 for administrative reasons. We expect future PRUs will be granted once a year and, subject to certain exceptions, vesting occurs only after a two- or three-year performance
period.
SUPPLEMENTARY POLICIES AND CONSIDERATIONS
We use several additional policies to ensure that the overall compensation structure is responsive to stockholder interests and competitive with
the market. Specific policies include:
Stock Ownership Requirements
We believe that in order to align the interests of our executive officers with those of our stockholders, our executive officers should have a
financial stake in our Company. We have maintained stock ownership requirements for our executive officers since October 2005. For FY19, our executive officers were required to hold the following
minimum number of shares:
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CEO: 6x base salary;
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CFO, COO and President: 3x base salary; and
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Executive Vice Presidents: 2x base salary.
Stock
options and unvested RSUs and PRUs do not count toward stock ownership requirements.
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The executive officer is required to acquire and thereafter maintain the stock ownership required within four years of becoming an executive officer of
NortonLifeLock (or four years following the adoption date of these revised guidelines). During the four-year transitional period, each executive officer must retain at least 50% of all net (after-tax)
equity grants until the required stock ownership level has been met.
As
of October 25, 2019, Messrs. Kapuria, Pilette and Taylor reached the stated ownership requirements for FY19. Transitioning or former executive officers and non-executive
officers are not included in the table below. See the table below for individual ownership levels relative to the executive's ownership requirement.
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Executive Officer
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Ownership
Requirement(1)
(# of shares)
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Holdings as of
October 25, 2019
(# of shares)
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Samir Kapuria
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39,665
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186,735
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Vincent Pilette
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85,941
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785,906
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Scott C. Taylor
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52,887
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408,724
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(1)
Based
on the closing price for a share of our common stock of $22.69 on October 25, 2019.
Recoupment Policies (Clawback)
In 2017, we adopted a recoupment, or "clawback", policy applicable to all performance-based compensation granted to the Company's officers (even
after they leave NortonLifeLock). In August 2018, our Board further expanded this clawback policy to allow for recoupment for certain violations of the Company's policies. This updated policy
supplements the contractual clawback rights we have had in all of our executive compensation plans since fiscal 2009 (providing for the return of any excess compensation received by an executive
officer if our financial statements are the subject of a restatement due to error or misconduct).
Insider Trading, Hedging and Pledging Policies
Our Insider Trading Policy prohibits all directors and employees from short-selling NortonLifeLock stock or engaging in transactions involving
NortonLifeLock-based derivative securities, including, but not limited to, trading in NortonLifeLock-based option contracts (for example, buying and/or writing puts and calls). It also prohibits
pledging NortonLifeLock stock as collateral for a loan. In connection with our settlement with Starboard Value LP in September 2018, we agreed to waive these requirements with respect to
certain forward contracts held by Starboard and have since granted Starboard waivers for other forward contracts on a limited basis.
In
addition, our Insider Trading Policy prohibits our directors, officers, employees and contractors from purchasing or selling NortonLifeLock securities while in possession of material,
non-public information. It also requires that each of our directors, our Chief Executive Officer, our President, and our Chief Financial Officer conduct any open market sales of our securities only
through use of stock trading plans adopted pursuant to Rule 10b5-1 of the Exchange Act. Rule 10b5-1 allows insiders to sell and diversify their holdings in our stock over a designated
period by adopting pre-arranged stock trading plans at a time when they are not aware of material nonpublic information about us, and thereafter sell shares of our common stock in accordance with the
terms of their stock trading plans without regard to whether or not they are in possession of material nonpublic information about the Company at the time of the sale. All other executives are
strongly encouraged to trade using Exchange Act Rule 10b5-1 plans.
Tax and Accounting Considerations on Compensation
The financial reporting and income tax consequences to the Company of individual compensation elements are important considerations for the
Compensation Committee when it reviews compensation practices and makes compensation decisions. While structuring compensation programs that result in more favorable tax and financial reporting
treatment is a general principle, the Compensation Committee balances these goals with other business needs that may be inconsistent with obtaining the most favorable tax and accounting treatment for
each component of its compensation.
Deductibility by NortonLifeLock. Section 162(m) of the Code generally disallows public companies a tax deduction for federal income tax
purposes of remuneration in excess of $1 million paid to certain executive officers. While the Compensation Committee may consider the deductibility of awards as one factor in determining our
executive compensation, it also looks at other factors in making its executive compensation decisions and retains the flexibility to grant awards or pay compensation the Compensation Committee
determines to be consistent with its goals for NortonLifeLock's executive compensation program, even if the awards may not be deductible by NortonLifeLock for tax purposes.
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Recent
changes to Section 162(m) in connection with the passage of the Tax Cuts and Jobs Act repealed the exception to the deductibility limit that were previously available for
"qualified performance-based compensation" (including stock option grants, performance-based cash and equity awards, such as performance-based restricted stock units) effective for taxable years
beginning after December 31, 2017. Compensation paid to certain of our executive officers for taxable years beginning prior to December 31, 2017 remains deductible if such compensation
would otherwise be deductible for such taxable year. The Tax Cuts and Jobs Act also increased the number of executive officers who are affected by the loss of deductibility effective for taxable years
beginning after December 31, 2017. As a result, any compensation paid to certain of our executive officers for taxable years beginning after December 31, 2017 in excess of
$1 million will be non-deductible unless it qualifies for transition relief afforded by the Tax Cuts and Jobs Act to compensation payable pursuant to certain binding arrangements in effect on
November 2, 2017.
Tax Implications for Officers. Section 409A of the Code imposes additional income taxes on executive officers for certain types of deferred
compensation that do not comply with Section 409A. The Company attempts in good faith to structure compensation so that it either conforms with the requirements of or qualifies for an exception
under Code Section 409A. Sections 280G and 4999 of the Code imposes an excise tax on payments to executives of severance or change of control compensation that exceed the levels
specified in the Section 280G rules. Our named executive officers could receive the amounts shown in the section entitled "Potential Payments Upon Termination or Change-in-Control" (beginning
on page 65 below) as severance or change of control payments that could implicate this excise tax. As mentioned above, we do not offer our officers as part of their change of control benefits any
gross ups related to this excise tax under Code Section 4999.
Accounting Considerations. The Compensation Committee also considers the accounting and cash flow implications of various forms of executive
compensation. In its financial statements, the Company records salaries and cash-based performance-based compensation incentives as expenses in the amount paid, or estimated to be paid, to the named
executive officers. Accounting rules also require the Company to record an expense in its financial statements for equity awards, even though equity awards are not paid in cash to employees. The
accounting expense of equity awards to employees is calculated in accordance with the requirements of FASB Accounting Standards Codification Topic 718. The Compensation Committee believes, however,
that the many advantages of equity compensation, as discussed above, more than compensate for the non-cash accounting expense associated with them.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during FY19 were Sue Barsamian, Frank Dangeard, Peter Feld, Geraldine B. Laybourne, David L. Mahoney,
Robert S. Miller and Daniel H. Schulman. None of the members of the Compensation Committee in FY19 were at any time during FY19 or at any other time an officer or employee of NortonLifeLock or any of
its subsidiaries, and none had or have any relationships with NortonLifeLock that
are required to be disclosed under Item 404 of Regulation S-K. None of NortonLifeLock's executive officers has served as a member of the board of directors, or as a member of the
compensation or similar committee, of any entity that has one or more executive officers who served on our Board or Compensation Committee during FY19.
Compensation Committee Report
The information contained in the following report is not considered to be "soliciting material," "filed" or incorporated
by reference in any past or future filing by NortonLifeLock under the Exchange Act or the Securities Act of 1933 unless and only to the extent that NortonLifeLock specifically incorporates it by
reference.
The
Compensation Committee has reviewed and discussed with management the CD&A contained in this proxy statement. Based on this review and discussion, the Compensation Committee has
recommended to the Board that the CD&A be included in this proxy statement and our Annual Report on Form 10-K for the fiscal year ended March 29, 2019.
By:
The Compensation and Leadership Development Committee of the Board:
Peter A. Feld (Chair)
Sue Barsamian
Frank E. Dangeard
David Mahoney
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Summary of Compensation
The following table shows for the fiscal year ended March 29, 2019, compensation awarded to or paid to, or earned by our Chief Executive
Officer, our Chief Financial Officer and the three most highly compensated executive officers who were serving as executive officers (other than as our Chief Executive Officer or Chief Financial
Officer) at the end of FY19 (the "named executive officers").
Summary Compensation Table for Fiscal 2019
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Fiscal
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)(1)(2)(3)
|
|
Option
Awards
($)
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
All Other
Compensation
($)(4)
|
|
Total
($)
|
|
Gregory S. Clark
|
|
|
2019
|
|
|
1,000,000
|
|
|
|
|
|
|
(5)
|
|
|
|
|
|
|
|
1,921,039
|
|
|
2,921,038
|
|
Former President and CEO*
|
|
|
2018
|
|
|
1,000,000
|
|
|
|
|
|
15,982,645
|
|
|
|
|
|
|
|
|
364,936
|
|
|
17,347,581
|
|
|
|
|
2017
|
|
|
666,667
|
|
|
|
|
|
4,269,815
|
(6)
|
|
|
|
|
743,333
|
|
|
379,937
|
|
|
6,059,752
|
|
Nicholas R. Noviello
|
|
|
2019
|
|
|
650,000
|
|
|
1,000,000
|
|
|
10,706,470
|
(7)
|
|
|
|
|
|
|
|
943,325
|
|
|
13,299,795
|
|
Former Executive Vice President and
|
|
|
2018
|
|
|
650,000
|
|
|
|
|
|
7,458,549
|
|
|
|
|
|
|
|
|
47,606
|
|
|
8,156,155
|
|
CFO**
|
|
|
2017
|
|
|
433,333
|
|
|
|
|
|
1,077,917
|
(6)
|
|
|
|
|
479,673
|
|
|
172,740
|
|
|
2,163,663
|
|
Amy L. Cappellanti-Wolf
|
|
|
2019
|
|
|
440,000
|
|
|
|
|
|
3,462,911
|
|
|
|
|
|
|
|
|
558,163
|
|
|
4,461,075
|
|
Senior Vice President and CHRO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Samir Kapuria
|
|
|
2019
|
|
|
443,864
|
(8)
|
|
|
|
|
10,311,650
|
|
|
|
|
|
|
|
|
220,667
|
|
|
10,976,180
|
|
President (effective November 8, 2019)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott C. Taylor
|
|
|
2019
|
|
|
600,000
|
|
|
|
|
|
4,672,177
|
|
|
|
|
|
|
|
|
871,628
|
|
|
6,143,804
|
|
Executive Vice President, General Counsel
|
|
|
2018
|
|
|
600,000
|
|
|
|
|
|
4,794,772
|
|
|
|
|
|
|
|
|
621,788
|
|
|
6,016,560
|
|
and Secretary
|
|
|
2017
|
|
|
600,000
|
|
|
150,000
|
|
|
4,831,307
|
(6)
|
|
|
|
|
568,374
|
|
|
363,462
|
|
|
6,513,143
|
|
-
*
Mr. Clark
resigned from the Company, effective May 9, 2019.
**
Mr. Noviello
resigned from the Company, effective May 24, 2019.
(1)
The
amounts shown in this column reflect the aggregate grant date fair value of RSUs and PRUs, calculated in accordance with Financial Accounting
Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718 and was determined based on the fair value of our common stock as of the service inception date or on the date of
modification. For details of the awards granted in FY19, see the table "Grants of Plan-Based Awards", below.
The
table below sets forth the service inception or grant date fair value (prior to any applicable modifications) determined in accordance with ASC Topic
718 principles for the performance-related components of these awards. Also set forth below are the service inception or grant date fair values pertaining to the market-related component or the TSR
adjustment, determined upon the service inception dates for FY19, and which are not subject to probable or maximum outcome assumptions. Additional details of assumptions used in the valuations of the
awards are included in Note 13 of our FY19 Annual Report on Form 10-K.
|
|
|
|
|
|
|
|
Name
|
|
Maximum Outcome of
Performance
Conditions Fair Value ($)
|
|
Market-Related Component
Fair Value ($)
|
|
Nicholas R. Noviello
|
|
|
6,554,404
|
|
|
1,548,062
|
|
Amy L. Cappellanti-Wolf
|
|
|
2,244,367
|
|
|
546,657
|
|
Samir Kapuria
|
|
|
6,801,015
|
|
|
1,656,576
|
|
Scott C. Taylor
|
|
|
4,213,571
|
|
|
995,168
|
|
-
(2)
-
The
FY19 PRUs are based on three different performance metrics with one- or three-year performance periods, depending on the metric. The PRUs with the
Earnings Per Share ("EPS") metric are eligible to be earned if we achieve at least the threshold level of the EPS performance goal for the one-year performance period ended March 29, 2019. The
PRUs with the Free Cash Flow ("FCF") metric are eligible to be earned if we achieve at least the threshold level of the FCF performance goal for the one-year performance period ended March 29,
2019. The PRUs with the TSR metric are eligible to be earned if we achieve at least the threshold level of the TSR performance goal for the three-year performance period ending April 2, 2021.
Depending on our achievement of the ESP metric, 0% to 200% of the target shares are eligible to be earned of which: (i) 60% is eligible for settlement at the end of FY19 and the remaining 40%
is eligible for settlement at the end of FY20 for Ms. Cappellanti-Wolf and Mr. Kapuria; or (ii) 100% is eligible for settlement at the end of FY20 for Messrs. Noviello and
Taylor. Depending on our achievement of the FCF metric, 0% to 200% of the target shares are eligible to be earned of which: (i) 60% is eligible for settlement at the end of FY19 and the
remaining 40% is eligible for settlement at the end of FY20 for Ms. Cappellanti-Wolf and Mr. Kapuria and (ii) 100% is eligible for settlement at the end of FY20 for
Messrs. Noviello and Taylor. Depending on our achievement of the TSR metric, 0% to 200% of the target shares are eligible to earned and settled at the end of fiscal year 2021.
Mr. Noviello's awards were subsequently modified based on the terms of the Transition Services Agreement dated January 31, 2019, and described more fully in footnote 7 below.
-
-
Additional
terms and conditions apply that may affect the actual number of shares that vest or are settled, which include, among other things, a change
in control of the Company, the named executive officer's termination of employment and the nature of such termination, the Compensation Committee's authority to exercise negative discretion to reduce
up to 50% of the number of shares to be delivered, and the Company's Compensation Recoupment Policy.
-
(3)
-
The
FY19 amounts represent the executive officer's annual cash incentive award under the FY19 Executive Annual Incentive Plan ("FY19 EAIP"), which was
earned in FY19 and paid in FY20. Ms. Cappellanti-Wolf and Messrs. Kapuria and Taylor's FY19 EAIP amounts were settled in RSUs with a grant date of May 20, 2019 and were fully
vested on June 1, 2019. Mr. Noviello received his FY19 EAIP payment in cash at 75% of target pursuant to the terms of the Transition Services Agreement (see page 67 for additional
information regarding this arrangement). Mr. Clark was not employed by us at the time the FY19 EAIP was paid out and did not receive any payout.
60
Table of Contents
-
(4)
-
The
FY19 amounts are comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Dividend
Equivalent
on Stock
Awards
($)
|
|
401(k)
Employer
Match
($)
|
|
Life &
Disability
Insurance
Premiums
($)
|
|
Tax
Planning
Services
($)
|
|
Car and
Driver
($)
|
|
Personal
Use of
Aircraft
($)
|
|
Patent
Award
($)
|
|
Company-
Sponsored
Events
($)
|
|
Severance
($)
|
|
Total
($)
|
|
Gregory S. Clark
|
|
|
1,706,830
|
|
|
6,000
|
|
|
3,002
|
|
|
|
|
|
200,446
|
|
|
4,761
|
|
|
|
|
|
|
|
|
|
|
|
1,921,039
|
|
Nicholas R. Noviello
|
|
|
441,435
|
|
|
6,000
|
|
|
3,390
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
487,500
|
|
|
943,325
|
|
Amy L. Cappellanti-Wolf
|
|
|
533,137
|
|
|
6,000
|
|
|
3,629
|
|
|
15,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
558,163
|
|
Samir Kapuria
|
|
|
181,735
|
|
|
6,525
|
|
|
1,467
|
|
|
1,040
|
|
|
|
|
|
|
|
|
2,000
|
|
|
27,900
|
|
|
|
|
|
220,667
|
|
Scott C. Taylor
|
|
|
856,724
|
|
|
4,875
|
|
|
4,704
|
|
|
5,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
871,628
|
|
-
(5)
-
Mr. Clark
did not receive a FY19 equity award as part his regular executive compensation package. Mr. Clark was not employed by us at
the time the FY19 EAIP was paid out and did not receive any payout.
-
(6)
-
We
adjusted the performance metrics under our FY17 PRU grants on March 8, 2017 to reflect both the impact of the acquisitions of Blue Coat and
LifeLock on the FY17 financial plan and to account for the transformational impact on our business of our cost and complexity reduction initiatives. The incremental modification charges were based on
the Company's stock price on the date of the modification ($29.60) multiplied by the incremental expected achievement percentage multiplied by the number of granted units. Volatility and interest rate
were not factors. As a result of these adjustments, incremental fair values of the modified awards are included in the Stock Awards column above and further described in the table below.
|
|
|
|
|
|
|
|
|
|
2017 PRU Stock Awards
|
|
Name
|
|
FY17 PRU
Modification
Charge
($)
|
|
FY17 PRU
Total (Without
Modification
Charges)
($)
|
|
Gregory S. Clark
|
|
|
4,269,815
|
|
|
|
|
Nicholas R. Noviello
|
|
|
1,077,917
|
|
|
|
|
Scott C. Taylor
|
|
|
735,775
|
|
|
3,602,644
|
|
-
-
For
Messrs. Clark and Noviello, these amounts represent the incremental fair values of modified PRUs that were granted prior to and assumed by us
at the closing of the Blue Coat acquisition. Under SEC rules, we are required to disclose in the Stock Awards column the grant date fair value of each equity award computed in accordance with ASC 718.
However, no grant date fair value was recorded by NortonLifeLock for these awards in accordance with ASC 718 because they were awarded by Blue Coat's board of directors prior to the closing of the
Blue Coat acquisition. As a result, the amounts reported in the Stock Awards column above may understate the compensation awarded to these executive officers for FY17 because they do not include any
grant date fair value for such awards.
-
(7)
-
On
January 31, 2019, the Company announced that Mr. Noviello was stepping down from his role as Executive Vice President and CFO and
entered into a Transition Services Agreement with Mr. Noviello pursuant to which Mr. Noviello would provide certain transition services to the Company. The agreement provided for, among
other things, a FY19 retention bonus of $1,000,000 and modified certain of his stock awards which resulted in incremental fair value of the modified stock awards. The following table includes the
incremental fair value of the stock awards modified by the Transition Service Agreement for FY19, calculated in accordance with FASB ASC Topic 718. For more information on the Transition Services
Agreement, see "Potential Payments Upon Termination or Change-In-Control," below.
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date
|
|
Award
Type
|
|
Modified
Stock Units (#)
|
|
Modification
Date Fair Value
per share ($)
|
|
Incremental
Fair Value on
Modification
Date ($)
|
|
12/10/2018
|
|
FY19 EPS
|
|
|
74,212
|
|
|
21.02
|
|
|
1,559,936
|
|
12/10/2018
|
|
FY19 FCF
|
|
|
74,212
|
|
|
21.02
|
|
|
1,559,936
|
|
6/9/2017
|
|
FY18 PRU
|
|
|
31,139
|
|
|
21.02
|
|
|
654,548
|
|
-
(8)
-
Mr. Kapuria's
base salary increased in FY19 from $390,000 to $440,000 in connection with his promotion.
In May 2019, we appointed Richard S. "Rick" Hill as our Interim President and CEO and Vincent Pilette as our Executive Vice President and CFO. In
August 2019, we agreed to sell certain assets of our Enterprise Security business to Broadcom Inc. Thereafter, we appointed Mr. Pilette to be our Chief Executive Officer, effective
November 8, 2019. Under his employment offer letter, dated April 26, 2019, Mr. Pilette's current annual base salary is $650,000, and he is eligible to participate in our FY20
Executive Annual Incentive Plan and has an annual bonus target of 100% of his annual base salary. We also granted Mr. Pilette 206,211 RSUs, 481,159 PRUs and 155,429 restricted shares.
Additionally, in connection with the Broadcom Sale, we agreed to provide Mr. Pilette and other executive officers enhanced severance and retention arrangements. See " FY20
Severance and Retention Arrangements" below.
During
his employment as our Interim President and CEO, Mr. Hill earned base salary of approximately $500,000 through his termination date. Additionally, pursuant to
Mr. Hill's September 2019 transition services agreement and conditioned upon his release of claims, we agreed to pay a pro-rated portion of his target bonus for fiscal 2020 (equal to 150% of
his base salary) and modify equity awards granted to him in connection with his appointment as our Interim President and CEO. Specifically, we accelerated the vesting of 50,051 RSUs and 650,000 of the
shares subject to Mr. Hill's performance-based stock option, and agreed that up to 975,000 shares subject to his performance-based stock option will vest and
61
Table of Contents
become
exercisable if the average closing price of our common stock reaches predetermined levels based 50% on each of (i) a 20 consecutive business day measurement during the period ending on
his resignation date and (ii) a 20 consecutive business day measurement during the period from July 1, 2020 through December 31, 2020.
The
following table shows for the fiscal year ended March 29, 2019, certain information regarding grants of plan-based awards to our named executive officers from our incentive
plans:
Grants of Plan-Based Awards in Fiscal 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
Date
Fair
Value
of Stock
and
Option
Awards(2)
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units(1)
(#)
|
|
All Other
Option
Awards:
Number
of Securities
Underlying
Options
(#)
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
|
|
Estimated Future Payouts
Under Equity Incentive Plan
Awards
|
|
|
|
|
|
|
|
Exercise or
Base Price
of Option
Awards
($/Sh)
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
Gregory S. Clark
|
|
|
6/28/18
|
(3)
|
|
|
|
|
|
|
|
|
|
|
27,573
|
|
|
68,933
|
|
|
137,867
|
|
|
|
|
|
|
|
|
|
|
|
1,500,000
|
|
Nicholas R. Noviello
|
|
|
6/28/18
|
(3)
|
|
|
|
|
|
|
|
|
|
|
4,181
|
|
|
29,871
|
|
|
83,639
|
|
|
|
|
|
|
|
|
|
|
|
650,000
|
|
|
|
|
12/10/18
|
(4)
|
|
|
|
|
|
|
|
|
|
|
103,897
|
|
|
222,636
|
|
|
445,272
|
|
|
95,416
|
|
|
|
|
|
|
|
|
6,932,047
|
|
|
|
|
1/31/19
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,774,420
|
|
Amy L. Cappellanti-Wolf
|
|
|
6/28/18
|
(3)
|
|
|
|
|
|
|
|
|
|
|
1,981
|
|
|
14,154
|
|
|
39,632
|
|
|
|
|
|
|
|
|
|
|
|
308,000
|
|
|
|
|
7/10/18
|
(4)
|
|
|
|
|
|
|
|
|
|
|
36,689
|
|
|
78,620
|
|
|
157,240
|
|
|
78,620
|
|
|
|
|
|
|
|
|
3,352,096
|
|
Samir Kapuria
|
|
|
6/28/18
|
(3)
|
|
|
|
|
|
|
|
|
|
|
2,750
|
|
|
19,643
|
|
|
55,002
|
|
|
|
|
|
|
|
|
|
|
|
427,451
|
|
|
|
|
7/10/18
|
(4)
|
|
|
|
|
|
|
|
|
|
|
111,180
|
|
|
238,242
|
|
|
476,484
|
|
|
238,243
|
|
|
|
|
|
|
|
|
10,157,867
|
|
Scott C. Taylor
|
|
|
6/28/18
|
(3)
|
|
|
|
|
|
|
|
|
|
|
3,860
|
|
|
27,573
|
|
|
77,205
|
|
|
|
|
|
|
|
|
|
|
|
600,000
|
|
|
|
|
12/10/18
|
(4)
|
|
|
|
|
|
|
|
|
|
|
66,791
|
|
|
143,123
|
|
|
286,246
|
|
|
61,339
|
|
|
|
|
|
|
|
|
4,456,317
|
|
-
(1)
-
Ms. Cappellanti-Wolf
and Mr. Kapuria's RSUs vest as to 40% on June 1, 2019, 30% on June 1, 2020, and 30% on June 1,
2021 and have a grant date fair value of $21.41. Messrs. Noveillo and Taylor's RSUs vest as to 30% on June 1, 2019, 30% on June 1, 2020, and 40% on June 1, 2021 and have a
grant date fair value of $22.08. Mr. Noviello's RSU was subsequently modified based on the terms of his Transition Service Agreement.
-
(2)
-
The
aggregate grant date fair value of the equity incentive plan awards is calculated to be the sum of (i) the target number of PRU shares
multiplied by the fair value of our common stock as of the service inception date, plus (ii) the number of RSU shares multiplied by the fair value on grant date, plus (iii) the number of
modified stock units multiplied by the incremental fair value of the stock award.
-
(3)
-
The
amounts shown in these rows reflect the threshold, target and maximum potential payouts with respect to each applicable metric under the FY19 EAIP
using the fair value of $21.76 on March June 28, 2018. The final payout was made in the form of RSUs with a grant date fair value of $20.05 on May 20, 2019 to all participants other than
(i) Mr. Noviello's payout, which was made pursuant to his Transition Services Agreement, and (ii) Mr. Clark, who was not employed by us at the time the FY19 EAIP was paid
out and did not receive any payout.
-
(4)
-
The
amounts shown in these rows reflect the threshold, target, and maximum potential eligible shares to be earned for the PRUs awarded during FY19 and
as further described in the CD&A section beginning on page 37.
-
(5)
-
On
January 31, 2019, the Company announced that Mr. Noviello was stepping down from his role as Executive Vice President and CFO and
entered into a Transition Services Agreement with Mr. Noviello pursuant to which Mr. Noviello would provide certain transition services to the Company. The agreement provided for, among
other things, modification to certain of his stock awards which resulted in incremental fair value of the modified stock awards. A table showing the incremental fair value of the stock awards modified
by the Transition Service Agreement, calculated in accordance with FASB ASC Topic 718, is included in the Summary Compensation Table footnotes above.
For
a summary of the terms of the FY19 Executive Annual Incentive Plan, see "Compensation Discussion & Analysis (CD&A) Compensation
Components Executive Annual Incentive Plans" above. For a summary of the circumstances in which the equity awards described above will accelerate, see "Compensation
Discussion & Analysis (CD&A) Health and Welfare Benefits; Perquisites Change in Control and Severance Arrangements" above and "Potential Payments Upon
Termination or Change-in-Control" below.
62
Table of Contents
The following table shows for the fiscal year ended March 29, 2019, certain information regarding outstanding equity awards at fiscal year-end for our
named executive officers.
Outstanding Equity Awards at Fiscal Year-End 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
|
Market Value
of Shares or
Units of
Stock That
Have Not
Vested
($)(1)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
that Have
Not Yet
Vested
(#)
|
|
Equity
Incentive
Plan
Awards:
Value of
Unearned
Shares,
Units or
Other
Rights
that Have
Not Yet
Vested
($)(1)
|
|
Gregory S. Clark
|
|
|
6/9/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
187,670
|
(2)(3)
|
|
4,314,526
|
|
|
84,919
|
(3)
|
|
1,952,276
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
164,857
|
(5)
|
|
3,790,062
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
3,665,271
|
|
|
|
|
|
6.73
|
|
|
9/9/25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nicholas R. Noviello
|
|
|
12/10/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,649
|
(6)(7)
|
|
4,612,912
|
|
|
37,106
|
(7)
|
|
853,067
|
|
|
|
|
6/9/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,579
|
(3)(8)
|
|
2,013,436
|
|
|
39,629
|
(3)
|
|
911,059
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,618
|
(5)
|
|
956,798
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
775,028
|
|
|
|
|
|
8.35
|
|
|
1/27/26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amy L. Cappellanti-Wolf
|
|
|
7/10/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,485
|
(7)(9)
|
|
2,149,209
|
|
|
13,103
|
(7)
|
|
301,238
|
|
|
|
|
6/9/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,789
|
(3)(10)
|
|
1,006,701
|
|
|
19,814
|
(3)
|
|
455,524
|
|
|
|
|
6/10/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,204
|
(11)
|
|
326,550
|
|
|
|
|
|
|
|
Samir Kapuria
|
|
|
7/10/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
283,286
|
(7)(12)
|
|
6,512,746
|
|
|
39,707
|
(7)
|
|
912,864
|
|
|
|
|
6/9/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,762
|
(3)(13)
|
|
316,383
|
|
|
6,227
|
(3)
|
|
143,159
|
|
|
|
|
11/10/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,844
|
(14)
|
|
111,364
|
|
|
|
|
|
|
|
|
|
|
6/10/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,326
|
(11)
|
|
122,445
|
|
|
|
|
|
|
|
Scott C. Taylor
|
|
|
12/10/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,989
|
(7)(15)
|
|
2,965,456
|
|
|
23,854
|
(7)
|
|
548,392
|
|
|
|
|
6/9/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,300
|
(3)(16)
|
|
1,294,343
|
|
|
25,476
|
(3)
|
|
585,682
|
|
|
|
|
6/10/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,408
|
(11)
|
|
653,100
|
|
|
|
|
|
|
|
-
(1)
-
The
market value of the equity awards that have not vested is calculated by multiplying the number of units that have not vested by the closing price
of the Company's stock on March 29, 2019, which was $22.99.
-
(2)
-
43,672
shares vest on June 1, 2019, 85,768 shares vest on April 3, 2020, and 58,230 shares vest on June 1, 2020. Mr. Clark
resigned from the Company, effective May 9, 2019.
-
(3)
-
These
FY18 PRUs are eligible to be earned at the end of FY20 and are based on the achievement of performance goals for adjusted non-GAAP EPS for the
one-year performance period ended March 30, 2018 and the relative TSR ranking for our Company as compared to the Nasdaq 100 index for the two- and three- year performance periods ended
March 29, 2019 and ending April 3, 2020, respectively. Based on our achievement of the EPS metric, 50.50% of the EPS target shares were earned, which are reflected in the "Number of
Shares or Units of Stock That Have Not Vested" and "Market Value of Shares or Units of Stock That Have Not Vested" columns. The achievement level of the two-year TSR metric was below the threshold,
therefore no two-year TSR target shares were earned. Depending on our achievement of the three-year TSR metric, 0% to 200% of the three-year TSR target shares are eligible to be earned and settled at
the end of FY20. The number of shares and the payout value set forth above in the "Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Yet Vested" and "Equity
Incentive Plan Awards: Value of Unearned Shares, Units or Other Rights that Have Not Yet Vested" columns reflect the threshold potential payout which represents 50.00% of the target number of PRUs.
The Compensation Committee must certify the number of shares earned under each PRU.
-
(4)
-
Represents
non-qualified stock options and RSU awards previously granted by Blue Coat and assumed by the Company upon the closing of the Blue Coat
acquisition. Upon assumption, by their terms, these awards converted into the right to receive shares of our common stock, subject to applicable service or performance-based vesting conditions.
-
(5)
-
These
RSUs vested in full on August 1, 2019.
-
(6)
-
28,625
shares vest on June 1, 2019, 105,233 shares on April 3, 2020, 28,625, shares vest on June 1, 2020, and 38,166 shares vest
on June 1, 2021. Mr. Noviello resigned from the Company, effective May 24, 2019. See "Potential Payments Upon Termination or Change-in-Control" below for additional details
regarding the Transition Services Agreement with Mr. Noviello.
-
(7)
-
These
FY19 PRUs are eligible to be earned at the end of FY19, FY20 and fiscal 2021, and are based on the achievement of three different performance
metrics with one- or three-year performance periods, depending on the metric. The PRUs with the EPS and FCF metrics are eligible to be earned if we achieve at least the threshold level of the
performance goals for the one-year performance period ended March 29, 2019. The PRUs with the TSR metric are eligible to be earned if we achieve at least the threshold level of the TSR
performance goal for the three-year performance period ending April 2, 2021. Based on our achievement of the ESP metric, 50.6% of the target shares were earned of which: (i) 60% was
settled at the end of FY19 and the remaining 40% will be settled at the end of FY20 for Ms. Cappellanti-Wolf and Mr. Kapuria; and (ii) 100% will be eligible for settlement at the
end of FY20 for Mr. Taylor. Based on our achievement of the FCF metric, 91.2% of the target shares were earned of which: (i) 60% was settled at
63
Table of Contents
the
end of FY19 and the remaining 40% will be settled at the end of FY20 for Ms. Cappellanti-Wolf and Mr. Kapuria and (ii) 100% will be eligible for settlement at the end of FY20
for Mr. Taylor. Depending on our achievement of the TSR metric, 0% to 200% of the target shares are eligible to earned and settled at the end of FY21. The shares which are earned but not vested
are reflected in the "Number of Shares or Units of Stock That Have Not Vested" and "Market Value of Shares or Units of Stock That Have Not Vested" columns. The number of shares and the payout value
set forth above in the "Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Yet Vested" and "Equity Incentive Plan Awards: Value of Unearned Shares, Units or
Other Rights that Have Not Yet Vested" columns reflect the threshold potential payout which represents 50.00% of the target number of PRUs. The Compensation Committee must certify the number of shares
earned under each PRU. The vesting for Mr. Noviello's grants are governed by his Transition Services Agreement.
-
(8)
-
20,380
shares vest on June 1, 2019, 40,025 shares on April 3, 2020, and 27,174 shares vest on June 1, 2020.
-
(9)
-
31,448
shares vest on June 1, 2019, 14,865 shares on April 3, 2020, 23,586 shares vest on June 1, 2020, and 23,586 shares vest on
June 1, 2021.
-
(10)
-
10,190
shares vest on June 1, 2019, 20,013 shares on April 3, 2020, and 13,586 shares vest on June 1, 2020.
-
(11)
-
The
RSUs vest in full on June 1, 2019.
-
(12)
-
95,298
shares vest on June 1, 2019, 45,043 shares vest on April 3, 2020, 71,473 shares vest on June 1, 2020, and 71,472 shares
vest on June 1, 2021.
-
(13)
-
3,202
shares vest on June 1, 2019, 6,290 shares on April 3, 2020, and 4,270 shares vest on June 1, 2020.
-
(14)
-
100%
of the shares vest on December 1, 2019.
-
(15)
-
18,402
shares vest on June 1, 2019, 67,650 shares on April 3, 2020, 18,402 shares vest on June 1, 2020, and 24,535 shares vest
on June 1, 2021.
-
(16)
-
13,102
shares vest on June 1, 2019, 25,730 shares on April 3, 2020, and 17,468 shares vest on June 1, 2020.
The
following table shows for the fiscal year ended March 29, 2019, certain information regarding option exercises and stock vested during the last fiscal year with respect to our
named executive officers:
Option Exercises and Stock Vested in Fiscal 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired
on Exercise
(#)
|
|
Value Realized
on Exercise(1)
($)
|
|
Number of
Shares
Acquired
on Vesting(2)
(#)
|
|
Value Realized
on Vesting(3)
($)
|
|
Gregory S. Clark
|
|
|
|
|
|
|
|
|
342,338
|
|
|
7,467,791
|
|
Nicholas R. Noviello
|
|
|
332,155
|
|
|
4,699,993
|
|
|
111,855
|
|
|
2,419,818
|
|
Amy L. Cappellanti-Wolf
|
|
|
|
|
|
|
|
|
92,644
|
|
|
1,997,239
|
|
Samir Kapuria
|
|
|
|
|
|
|
|
|
112,125
|
|
|
2,497,640
|
|
Scott C. Taylor
|
|
|
|
|
|
|
|
|
103,798
|
|
|
2,216,595
|
|
-
(1)
The
value realized upon option exercises is based on the difference between the closing price of our common stock at exercise and the option exercise price.
(2)
The
number of shares and value realized for stock awards set forth above reflect (i) RSUs that vested and settled in FY19, (ii) RSUs granted under the
FY19 EAIP on 5/20/2019, which vested and settled on 6/1/2019, and (iii) PRUs that vested in FY19 and were settled in FY20.
(3)
The
value realized upon vesting is based on the closing price of our common stock upon vesting in the case of RSUs and the closing price of our common stock on
March 29, 2019 in the case of PRUs.
64
Table of Contents
Non-Qualified Deferred Compensation in Fiscal 2019
The table below provides information on the non-qualified deferred compensation of the named executive officers for the fiscal year ended
March 29, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Deferred Compensation
|
|
Name
|
|
Executive
Contributions in
Last Fiscal
Year
($)(1)
|
|
Registrant
Contributions in
Last Fiscal
Year
($)
|
|
Aggregate
Earnings in
Last Fiscal
Year
($)(2)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
Last Fiscal
Year-End
($)(3)
|
|
Gregory C. Clark
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nicholas R. Noviello
|
|
|
81,250
|
|
|
|
|
|
5,632
|
|
|
|
|
|
172,205
|
|
Amy L. Cappellanti-Wolf
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Samir Kapuria
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott C. Taylor
|
|
|
300,000
|
|
|
|
|
|
25,782
|
|
|
|
|
|
588,263
|
|
-
(1)
The
amounts reflected include FY19 salary and the value of annual cash incentives earned under the FY19 EAIP. The salary portion of the amounts reflected above is
included in the amount reported as "Salary" in the "Summary Compensation Table for FY19. The annual cash incentive portion of the amounts reflected above is included in the amount reported as
"Non-Equity Incentive Plan Compensation" in the Summary Compensation Table for FY19.
(2)
The
amounts reflected are not included in the Summary Compensation Table for FY19. These amounts consist of dividends, interest and change in market value attributed
to each executive officer's entire account balance during FY19, which balance may include deferred compensation from previous periods. The amounts do not include the deferred compensation themselves.
Such earnings were not preferential or above-market.
(3)
Includes
the following amounts which previously were reported as compensation to the named executive officer in our Summary Compensation Table for fiscal years prior
to FY19: Mr. Noviello: $81,250 and Mr. Taylor: $255,000.
In FY19, certain management employees on our U.S. payroll with a base salary of $180,000 or greater, including each of the named executive
officers, were eligible to participate in the NortonLifeLock Inc. Deferred Compensation Plan. The plan provides for the opportunity for participants to defer up to 75% of base salary and 100%
of variable pay each year and up to 100% of sales commissions as a separate election. Variable pay included annual incentive plan and commission payments. Deferral elections must be made prior to the
beginning of a calendar year and cannot be revoked as of the day immediately prior to commencement of that year. Participants have the opportunity to elect each year whether to receive that year's
deferrals upon a specified date or upon termination of employment, and the form of payment elected will be honored regardless of a participant's length of service.
The
plan is "unfunded" and all deferrals are general assets of NortonLifeLock. Amounts deferred by each participant under the plan are credited to a bookkeeping account maintained on
behalf of each participant. The bookkeeping account under the plan will then be adjusted based on the performance of the measurement funds that have been selected by the participant. The measurement
funds available under the plan include the investment funds available under our 401(k) plan as well as additional asset classes. Each participant may change their measurement fund selections on a
daily basis. The plan requires that benefits accumulated in the bookkeeping accounts for each participant not meeting a 5-year service requirement be distributed to the participant following his or
her termination of employment with us for any reason. If a 5-year service requirement is met, accumulated benefits in the participant's account will be distributed according to the participant's
designated payment election.
Beginning
January 1, 2018, upon first entering the Deferred Compensation Plan, a participant has the option to make a one-time election, which will apply to all future account
balances to determine how they will be paid in the event of a change in control. By making the one-time election a participant will receive all remaining account balances in a lump sum in the month
following the month of termination, if termination occurs within two (2) years following a change in control. If a participant's employment ended before the change in control, any remaining
balances will be distributed in a lump sum within 90 days of the change in control.
Potential Payments Upon Termination or Change-In-Control
Set forth below is a description of the plans and agreements (other than the Deferred Compensation Plan) that could result in potential payouts
to our named executive officers in the case of their termination of employment and/or a change in control of NortonLifeLock. For information regarding potential payouts upon termination under the
Deferred Compensation Plan, in which certain of executive officers participate, see "Non-Qualified Deferred Compensation in Fiscal 2019" above.
65
Table of Contents
In January 2001, the Board approved the NortonLifeLock Executive Retention Plan, to deal with employment termination resulting from a change in
control of the Company. The plan was modified by the Board in July 2002, April 2006, June 2007, April 2012, February 2016 and January 2018. Under the terms of the plan, all equity compensation awards
(including, among others, stock options, RSUs and PRUs) granted by the Company to the Company's Section 16(b) officers (including our named executive officers) would become fully vested (at
target or to the extent of achievement for PRUs) and, if applicable, exercisable following a change in control of the Company (as defined in the plan) after which the officer's employment is
terminated without cause or constructively terminated by the acquirer within 12 months after the change in control.
The
plan also provides for the payment of a cash severance benefit for our named executive officers equal to one times such officer's base salary and target payout under the Executive
Annual Incentive Plan applicable to such named executive officer in the circumstances described above (i.e., following a change in control of the Company after which the officer's employment is
terminated without cause or constructively terminated by the acquirer within 12 months after the change in control.)
In April 2012, the Compensation Committee adopted the NortonLifeLock Executive Severance Plan to provide severance benefits to specified
officers of NortonLifeLock, including our named executive officers and Messrs. Pilette and Brown, which was amended in fiscal 2016. The executive officers must meet certain criteria in order to
participate in the plan, including, among other criteria, (i) the executive officer was involuntarily terminated from active employment other than for cause (as defined in the plan);
(ii) the executive officer was not terminated due to the sale of a business, part of a business, divestiture or spin-off and offered employment upon terms and conditions substantially identical
to those in effect immediately prior to such sale, divestiture or spin-off; and (iii) the executive officer is not entitled to severance under any other plan, fund, program, policy, arrangement
or individualized written agreement providing for severance benefits that is sponsored or funded by NortonLifeLock.
Under
the terms of the plan, the executive officer will receive severance payments equal to one times the sum of his or her base salary in effect at the time of his or her involuntary
termination. The executive officer will also receive a one-time bonus of $15,000, minus taxes and other legally required deductions. The executive officer is also entitled to receive six months of
outplacement services, including counseling and guidance. The executive officer is solely responsible for all COBRA premiums for his or her continuation coverage. In addition, the executive officer
will receive an additional payment equivalent to 75% of the executive officer's prorated target cash incentive award under the Executive Annual Incentive Plan in effect for such fiscal year to the
executive officer who was terminated in the second half of such fiscal year and was employed in good standing for a minimum of six (6) months prior to his or her termination date. This payment
was added to standardize benefits to all our executive officers and to be competitive with overall market practices.
Payment
of severance payments, one-time bonus payment, outplacement services and 75% of the prorated target cash incentive award under the Executive Annual Incentive Plan pursuant to the
NortonLifeLock Executive Severance Plan is subject to the applicable executive officer returning a release of claims against NortonLifeLock.
Amy L. Cappellanti-Wolf
The following table summarizes the value of the payouts to Ms. Cappellanti-Wolf pursuant to the NortonLifeLock Executive Retention Plan
and the NortonLifeLock Executive Severance Plan, assuming a qualifying termination as of March 29, 2019 (intrinsic values of equity awards are based upon the closing price for a share of our
common stock of $22.90 on March 29, 2019 minus the exercise price):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
Pay ($)
|
|
Option
Vesting ($)
|
|
RSU Vesting ($)
|
|
PRU
Vesting ($)
|
|
Involuntary Termination Because of Market Conditions or Division Performance
|
|
|
689,836
|
|
|
|
|
|
|
|
|
1,859,826
|
|
Termination Without Cause or Constructive Termination Within 12 Months of a Change of Control
|
|
|
748,000
|
|
|
|
|
|
2,680,634
|
|
|
1,859,826
|
|
Termination Without Cause
|
|
|
689,836
|
|
|
|
|
|
2,680,634
|
|
|
1,859,826
|
|
Termination Due to Death or Disability
|
|
|
|
|
|
|
|
|
|
|
|
1,859,826
|
|
66
Table of Contents
Samir Kapuria
The following table summarizes the value of the payouts to Mr. Kapuria pursuant to the NortonLifeLock Executive Retention Plan and the
NortonLifeLock Executive Severance Plan, assuming a qualifying termination as of March 29, 2019 (intrinsic values of equity awards are based upon the closing price for a share of our common
stock of $22.90 on March 29, 2019 minus the exercise price):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
Pay ($)
|
|
Option
Vesting ($)
|
|
RSU Vesting ($)
|
|
PRU
Vesting ($)
|
|
Involuntary Termination Because of Market Conditions or Division Performance
|
|
|
789,906
|
|
|
|
|
|
|
|
|
3,149,028
|
|
Termination Without Cause or Constructive Termination Within 12 Months of a Change of Control
|
|
|
900,000
|
|
|
|
|
|
5,882,796
|
|
|
3,149,028
|
|
Termination Without Cause
|
|
|
789,906
|
|
|
|
|
|
5,882,796
|
|
|
3,149,028
|
|
Termination Due to Death or Disability
|
|
|
|
|
|
|
|
|
|
|
|
3,149,028
|
|
Scott C. Taylor
The following table summarizes the value of the payouts to Mr. Taylor pursuant to the NortonLifeLock Executive Retention Plan and the
NortonLifeLock Executive Severance Plan, assuming a qualifying termination as of March 29, 2019 (intrinsic values of equity awards are based upon the closing price for a share of our common
stock of $22.90 on March 29, 2019 minus the exercise price):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
Pay ($)
|
|
Option
Vesting ($)
|
|
RSU Vesting ($)
|
|
PRU
Vesting ($)
|
|
Involuntary Termination Because of Market Conditions or Division Performance
|
|
|
1,068,836
|
|
|
|
|
|
|
|
|
3,829,276
|
|
Termination Without Cause or Constructive Termination Within 12 Months of a Change of Control
|
|
|
1,200,000
|
|
|
|
|
|
2,766,088
|
|
|
3,829,276
|
|
Termination Without Cause
|
|
|
1,068,836
|
|
|
|
|
|
2,766,088
|
|
|
3,829,276
|
|
Termination Due to Death or Disability
|
|
|
|
|
|
|
|
|
|
|
|
3,829,276
|
|
Former Officers:
The following table summarizes the value of the payouts to Mr. Clark pursuant to Mr. Clark's Employment Agreement, assuming a
qualifying termination as of March 29, 2019 (intrinsic values of equity awards are based upon the closing price for a share of our common stock of $22.90 on March 29, 2019 minus the
exercise price).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
Pay ($)
|
|
COBRA
Premiums ($)
|
|
Option
Vesting ($)
|
|
RSU Vesting ($)
|
|
PRU
Vesting ($)
|
|
Involuntary Termination
|
|
|
2,000,000
|
|
|
20,031
|
|
|
|
|
|
3,790,062
|
|
|
|
|
Mr. Clark
served as our President and CEO through May 9, 2019. In connection with Mr. Clark's departure, he and the Company entered into a separation agreement dated
May 9, 2019. Pursuant to the separation agreement, Mr. Clark was not entitled to and did not receive any payouts under his employment agreement, the NortonLifeLock Executive Retention
Plan, the NortonLifeLock Executive Severance Plan or any other arrangement.
As discussed above, in connection with the CFO transition process announced in January 2019, we entered into the Transition Services Agreement
with Nicholas Noviello, which governed the payments Mr. Noviello would receive through the date of his departure, which was May 24, 2019. Under the Transition Services Agreement,
Mr. Noviello was entitled to receive his base salary, continue to participate in the Company's FY19 EAIP without regard to individual performance, continue to participate in Company benefit
programs, and continue to vest in his outstanding restricted stock unit awards through the end of his transition period. Mr. Noviello was also entitled to vesting and settlement of his
remaining 44,184 shares under his FY17 PRUs and was eligible to receive a portion of his awards under his FY18 PRUs and FY19 PRUs, subject to achievement of applicable performance metrics, upon the
completion of the transition period or upon an earlier involuntary termination without cause, a constructive termination or his termination due to his death or disability, as if services ended at the
end of the transition period, subject to a release of claims.
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Following
the completion of his transition period, or upon an earlier involuntary termination without cause, a constructive termination or termination due to death or disability, and
subject to delivery of a release of claims, Mr. Noviello was entitled to receive severance payments and benefits consistent with the Company's Executive Severance Plan, including a one-time
lump sum payment of $665,000, six months of outplacement services and a lump sum payment equal to 75% of Mr. Noviello's target cash incentive award under the FY19 EAIP payment, but only if it
would be greater than the amount paid in the ordinary course as described above.
The
following table summarizes the value of payments to Mr. Noviello in accordance with his Transition Services Agreement. The intrinsic values of equity awards set forth in the
table below are based upon the closing price for a share of our common stock of $22.90 on March 29, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
Pay ($)
|
|
Option
Vesting ($)
|
|
RSU Vesting ($)
|
|
PRU
Vesting ($)
|
|
Involuntary Termination
|
|
|
3,152,500
|
|
|
|
|
|
1,729,087
|
|
|
3,426,067
|
|
FY20 Severance and Retention Arrangements
In August 2019, the Compensation Committee approved enhanced severance and retention arrangements (the "Severance and Retention Arrangements")
for certain executives of the Company, including Amy L. Cappellanti-Wolf, Scott C. Taylor and Vincent Pilette in connection with the Broadcom Sale to incentivize them to continue to provide transition
services following the closing of the transaction. Pursuant to the Severance and Retention Arrangements, if the applicable executive is employed with the Company through the closing of the transaction
and (i) through a transition period (the "Transition Period"), or (ii) is terminated by the Company without cause prior to the end of the Transition Period, such executive will be
entitled to receive, effective as of the earlier of the executive's termination date or the end of the Transition Period (a) a cash payment equal to such executive's annual base salary,
(b) a cash payment equal to such executive's target bonus (increased pro rata for any additional period of service in the Transition Period), and (c) vesting as to 50% of such
executive's unvested equity as of the closing of the Broadcom Sale (the "Unvested Equity").
Such
executive will also be entitled to receive between 75% and 150% acceleration of the additional 50% Unvested Equity if the average closing price of the Company's common stock reaches
predetermined levels based 50% (y) during the Transition Period and (z) from July 1, 2020 through December 31, 2020.
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the ratio of the annual
total compensation of Mr. Clark, our former CEO, to the median of the annual total compensation of our employees. We believe that the pay ratio disclosed below is a reasonable estimate
calculated in a manner consistent with Item 402(u) of Regulation S-K. SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various
methodologies and apply various assumptions and, as result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies.
NortonLifeLock
is a global cybersecurity company and operates in 47 countries. As of the end of FY19, March 29, 2019, we employed 11,921 employees globally. Of our total
workforce, approximately 46% was based in the United States
and 54% was based outside of the United States as of the end of FY19. Our compensation programs and reward offerings are designed to reflect local market practices across our global operations.
Pay Ratio:
-
-
Mr. Clark's FY19 annual total compensation was $2,921,038, as reported in the "Total" column of the "2019 Summary Compensation Table" in
this proxy statement.
-
-
The FY19 annual total compensation of our median employee (other than our CEO) was $115,899.
-
-
Based on this information, the pay ratio of the annual total compensation our CEO to the median of the annual total compensation of our
employees is 25.2 to 1.
For purposes of identifying our median employee, we used our global employee population as of March 29, 2019, identified based on our
global human resources system of record, inclusive of all regular employees employed by the company as of that date. We used total direct compensation as our consistently applied compensation measure.
In this context, total direct compensation is the sum of the value of base salary or wages earned, which has been annualized with respect to permanent employees, the annual incentive target amount or
annual commission target amount in effect as of March 29, 2019, and the grant date fair value of all equity awards granted during FY19. Cash compensation figures were converted from local
currency to U.S. dollars using the exchange rate the Company used for 2019 internal budgeting purposes. NortonLifeLock did not utilize the de minimis exemption to eliminate countries representing no
more than 5% of our global population in the aggregate as allowed by SEC rules.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related-Person Transactions Policy and Procedure
NortonLifeLock has adopted a written related person transactions policy which provides for the Company's policies and procedures regarding the
identification, review, consideration and approval or ratification of "related person transactions." The Nominating and Governance Committee reviews transactions that may be "related person
transactions," which are transactions between NortonLifeLock and any related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000, and in which the related
person has or will have a direct or indirect material interest. For purposes of the policy, a related person is any NortonLifeLock executive officer, director, nominee for director, or stockholder
holding more than 5% of any class of NortonLifeLock's voting securities, in each case, since the beginning of the previous fiscal year, and their immediate family members.
Under
the policy, absent any facts or circumstances indicating special or unusual benefits to the related person, the following transactions are deemed not to be "related person
transactions" (meaning the related person is deemed to not have a direct or indirect material interest in the transaction):
-
-
compensation to executive officers determined by NortonLifeLock's Compensation Committee;
-
-
any transaction with another company at which a related person is a director or an employee (other than an executive officer) if the aggregate
amount involved does not exceed the greater of $2,000,000, or three percent of that company's total annual gross revenues, provided that the transaction involves the purchase of either company's goods
and services and the transaction is subject to usual trade terms and is in the ordinary course of business and the related person is not involved in the negotiation of the transaction;
-
-
any compensation paid to a director if the compensation is required to be reported in NortonLifeLock's proxy statement;
-
-
any transaction where the related person's interest arises solely from the ownership of the Company's common stock and all holders of the
Company's common stock received the same benefit on a pro rata basis;
-
-
any charitable contribution, grant or endowment by NortonLifeLock or the NortonLifeLock Foundation to a charitable organization, foundation or
university at which a related person's only relationship is as a director or an employee (other than an executive officer), if the aggregate amount involved does not exceed $120,000, or any
non-discretionary matching contribution, grant or endowment made pursuant to a matching gift program;
-
-
any transaction where the rates or charges involved are determined by competitive bids;
-
-
any transaction involving the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity
with law or governmental authority; or
-
-
any transaction involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar
services.
Under
the policy, members of NortonLifeLock's legal department review transactions involving related persons that do not fall into one of the above categories. If they determine that a
related person could have a significant interest in a transaction, the transaction is referred to the Nominating and Governance Committee. In addition, transactions may be identified through
NortonLifeLock's Code of Conduct or other NortonLifeLock policies and procedures, and reported to the Nominating and Governance Committee. The Nominating and Governance Committee determines whether
the related person has a material interest in a transaction and may approve, ratify, rescind or take other action with respect to the transaction.
Certain Related Person Transactions
On February 3, 2016, NortonLifeLock entered into an investment agreement with investment entities affiliated with Silver Lake, a private
equity firm, relating to the issuance to Silver Lake of $500 million principal amount of 2.5% convertible unsecured notes, due in 2021. In connection with the investment, Kenneth Y. Hao, a
managing partner and managing director of Silver Lake, was appointed to our Board.
On
June 12, 2016, NortonLifeLock entered into an investment agreement with investment entities affiliated with Silver Lake and Bain Capital relating to the issuance of
$1.25 billion aggregate principal amount of 2.0% convertible unsecured notes due in 2021. Pursuant to the investment agreement, Silver Lake has agreed to purchase $500 million aggregate
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Table of Contents
principal
amount of the notes, and Bain Capital, private equity firm of which David W. Humphrey is a managing director, has agreed to purchase $750 million aggregate principal amount of the
notes. The transactions contemplated by this investment agreement closed concurrently with the closing of the Blue Coat acquisition on August 1, 2016. In connection with the investment,
Mr. Humphrey was appointed to our Board.
The
2.5% convertible unsecured notes, due in 2021 (the "2.5% Notes"), bear interest at a rate of 2.5% per annum. The 2.0% convertible unsecured notes, due in 2021 (the "2.0% Notes" and,
together with the 2.5% Notes, collectively, the "Notes"), bear interest at a rate of 2.0% per annum. Interest is payable semiannually in cash under the Notes. The initial conversion rate for the 2.5%
Notes was 59.6341 shares of our common stock, and cash in lieu of fractional shares, per $1,000 principal amount of the 2.5% Notes, which was equivalent to an initial conversion price of approximately
$16.77 per share of common stock. The initial conversion rate for the 2.0% Notes was 48.9860 shares of our common stock, and cash in lieu of fractional shares, per $1,000 principal amount of the 2.0%
Notes, which was equivalent to an initial conversion price of approximately $20.41 per share of common stock. The conversion rates under the Notes are subject to customary anti-dilution adjustments.
Holders may surrender their Notes for conversion at any time prior to the close of business on the business day immediately preceding the maturity date for the Notes.
As
of March 30, 2018, $1.75 billion in aggregate principal amount of the Notes was outstanding. During FY18, we paid an aggregate of $37.5 million in interest on the
Notes.
NortonLifeLock
also entered into a Registration Rights Agreement pursuant to which holders of the Notes have certain registration rights with respect to the Notes and the shares of our
common stock issuable upon conversion of the Notes.
On June 12, 2016, we entered into reinvestment agreements with our former CEO Mr. Clark and GSC-OZ Investment LLC, an
entity controlled by Mr. Clark, pursuant to which the parties agreed to purchase, in the aggregate, 2,329,520 shares our common stock for an aggregate purchase price of $40,300,696. On
August 1, 2016, we issued and sold these shares to Mr. Clark and GSC-OZ Investment LLC.
On
June 12, 2016, we entered into a reinvestment agreement with each of Mr. Fey, our former President and COO, and Mr. Noviello, our former CFO, pursuant to which
each of Mr. Fey and Mr. Noviello agreed not to transfer certain shares of common stock to be issued upon exercise of options held by Mr. Fey and Mr. Noviello. On
August 1, 2017 these shares were released from transfer restrictions when our common stock achieved the specified volume weighted average trading price over a defined period as set forth in the
agreements.
In September 2018, the Company entered into an agreement with Starboard Value LP and certain of its affiliates (collectively,
"Starboard") regarding, among other things, the membership and composition of the Board and committees thereof (the "Starboard Agreement"). Under the terms of the Starboard Agreement, the Company
appointed Peter A. Feld and Dale L. Fuller to serve on the Board and agreed to nominate them for election to the Board at the Annual Meeting. The Starboard Agreement also provided that Robert S.
Miller and Geraldine B. Laybourne would not stand for re-election as directors at the Annual Meeting and that, within 30 days after the Annual Meeting, the Company would appoint Richard S.
"Rick" Hill to the Board and an additional director to the Board who would be selected by the then-appointed Board from a list of candidates mutually agreed by the Company and Starboard pursuant to
the procedures described in the Starboard Agreement. On January 7, 2019, the Board appointed Mr. Hill and Sue Barsamian to the Board in accordance with this provision.
Pursuant
to the Starboard Agreement, if at any time Starboard beneficially owns less than 3.0% of the Company's then-outstanding common stock (the "Minimum Ownership Threshold"),
Mr. Feld (or, if Mr. Feld is no longer serving on the Board, the substitute Starboard employee director who replaced Mr. Feld) will immediately resign from the Board. Furthermore,
until the earlier of (x) 15 business days prior to the deadline for the submission of stockholder nominations for the 2019 Annual Meeting and (y) 90 days prior to the first
anniversary of the Annual Meeting, for so long as Starboard satisfies the Minimum Ownership Threshold, Starboard also has certain additional rights to recommend or select substitute directors as
provided in the Starboard Agreement.
On November 9, 2017, the Company and Mr. Clark, our former CEO, entered into an Aircraft Lease Agreement (the "Aircraft Lease
Agreement") for the occasional lease by the Company of an aircraft owned by Mr. Clark. Under the Aircraft Lease Agreement, the Company will reimburse Mr. Clark for business travel on his
aircraft at a rate of $2,500 per flight hour
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Table of Contents
plus
additional operating costs. The Nominating and Governance Committee of our Board of Directors approved the Aircraft Lease Agreement after completing a competitive analysis of comparable chartered
aircraft rates, which showed that the reimbursement rate is at or below market rates for the charter of similar aircraft. The Nominating and Governance Committee during FY18 also adopted a
Company-wide Aircraft Usage Policy, which governs the approved business usage of corporate aircraft, including Mr. Clark's, and set an annual cap on the amount of expenses to be incurred by the
Company under the policy at two million dollars. During FY19, we incurred approximately $2 million in fees for the aircraft owned by Mr. Clark. Please see "Executive Compensation and
Related Information Summary Compensation Table" on page 60 for more information.
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REPORT OF THE AUDIT COMMITTEE
The information contained in the following report of NortonLifeLock's Audit Committee is not considered to be
"soliciting material," "filed" or incorporated by reference in any past or future filing by NortonLifeLock under the Exchange Act or the Securities Act of 1933 unless and only to the extent that
NortonLifeLock specifically incorporates it by reference.
The
Audit Committee is comprised solely of independent directors, as defined by current Nasdaq listing standards, and operates under a written charter which was most recently amended by
the Board on January 29, 2018. The Audit Committee oversees NortonLifeLock's financial reporting process on behalf of the Board. Management has primary responsibility for the financial
statements and the reporting process, including the systems of internal controls. In
fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements that were included in NortonLifeLock's Annual Report on Form 10-K for the fiscal year
ended March 29, 2019 with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the
clarity of the disclosures in the financial statements.
The
Audit Committee reviewed with NortonLifeLock's independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, its judgments as to the quality, not just the acceptability, of NortonLifeLock's accounting principles and discussed with the
independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC. In addition, the Audit
Committee has received and reviewed the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the
registered public accounting firm's communications with the Audit Committee concerning independence from management and NortonLifeLock, and has discussed with the independent registered public
accounting firm the registered public accounting firm's independence from management and NortonLifeLock.
The
Audit Committee discussed with NortonLifeLock's internal accountants and independent registered public accounting firm the overall scope and plans for their respective audits. The
Audit Committee meets with the internal accountants and independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their
evaluations of NortonLifeLock's internal controls, and the overall quality of NortonLifeLock's financial reporting.
The
Audit Committee also received the report of management contained in NortonLifeLock's Annual Report on Form 10-K for the fiscal year ended March 29, 2019, as well as
KPMG's Report of Independent Registered Public Accounting Firm included in NortonLifeLock's Annual Report on Form 10-K related to its audit of (i) the consolidated financial statements
and financial statement schedule and (ii) the effectiveness of internal control over financial reporting. The Audit Committee continues to oversee NortonLifeLock's efforts related to its
internal control over financial reporting and management's preparations for the evaluation in fiscal 2019.
In
reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that the audited financial statements be included
in NortonLifeLock's Annual Report on Form 10-K for the fiscal year ended March 29, 2019 for filing with the SEC.
By:
The Audit Committee of the Board of Directors:
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NORTONLIFELOCK INC.
2019 ANNUAL MEETING OF STOCKHOLDERS
MEETING INFORMATION
Information About Solicitation and Voting
This proxy is solicited on behalf of the Board for use at the Annual Meeting, which will be conducted via live webcast on December 19,
2019, at 9:00 a.m. (Pacific Time), and any adjournment or postponement thereof. We will provide a re-playable webcast of the Annual Meeting, which will be available on the events section of our
investor relations website at investor.NortonLifeLock.com.
About the Annual Meeting
What is the purpose of the Annual Meeting?
At our Annual Meeting, stockholders will act upon the proposals described in this proxy statement. In addition, following the meeting,
management will report on the performance of NortonLifeLock and respond to questions from stockholders.
What proposals are scheduled to be voted on at the Annual Meeting?
Stockholders will be asked to vote on four proposals. The proposals are:
-
1.
-
Election
to the Board of the eight nominees named in this proxy statement;
-
2.
-
Ratification
of the appointment of KPMG as our independent registered public accounting firm for the 2020 fiscal year;
-
3.
-
An
advisory vote to approve executive compensation;
-
4.
-
Stockholder
proposal regarding independent board chairman; and
-
5.
-
To
transact such other business as may properly come before the meeting or any adjournment or postponement thereof.
What is the recommendation of the Board on each of the proposals scheduled to be voted on at the Annual Meeting?
The
Board recommends that you vote FOR each of the nominees to the Board (Proposal No. 1), FOR the ratification of the appointment of KPMG as our
independent registered public accounting firm for the 2020 fiscal year (Proposal No. 2); FOR the approval of compensation to our named executive officers (Proposal No. 3); and AGAINST
the stockholder proposal regarding independent board chairman (Proposal No. 4).
Could other matters be decided at the Annual Meeting?
Our Bylaws require that we receive advance notice of any proposal to be brought before the Annual Meeting by stockholders of NortonLifeLock, and
we have not received notice of any such proposals. If any other matter were to come before the Annual Meeting, the proxy holders appointed by the Board will have the discretion to vote on those
matters for you.
Who can vote at the Annual Meeting?
Stockholders as of the record date for the Annual Meeting, November 1, 2019, are entitled to vote at the Annual Meeting. At the close of
business on the record date, there were 623,246,880 shares of NortonLifeLock common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote on each matter properly
brought before the meeting.
If on November 1, 2019 your shares were registered directly in your name with our transfer agent, Computershare Investor Services, then
you are considered the stockholder of record with respect to those shares. As a stockholder of record, you may vote at the Annual Meeting or vote by proxy. Whether or not you plan to virtually attend
the Annual Meeting, we urge you to vote over the Internet or by telephone, or if you received paper proxy materials by mail, by filling out and returning the proxy card.
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For
questions regarding your stock ownership, you may contact our transfer agent, Computershare Investor Services, by email through their website at www.computershare.com/contactus or by phone at
(877) 282-1168 (within the U.S. and Canada) or (781) 575-2879 (outside the U.S. and
Canada).
If on November 1, 2019 your shares were held in an account with a brokerage firm, bank or other nominee, then you are the beneficial
owner of the shares held in street name. As a beneficial owner, you have the right to direct your nominee on how to vote the shares held in your account, and it has enclosed or provided voting
instructions for you to use in directing it on how to vote your shares. However, the organization that holds your shares is considered the stockholder of record for purposes of voting at the Annual
Meeting. Because you are not the stockholder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid proxy from the organization that holds your shares
giving you the right to vote the shares at the Annual Meeting.
How do I vote?
If you are a stockholder of record, you may:
-
-
vote at the virtual annual meeting to participate in and vote at the virtual annual meeting, you will need the 16-digit
control number included on your proxy card or on the instructions that accompanied your proxy materials;
-
-
vote via the Internet or via telephone instructions are shown on your Notice of Internet Availability or proxy card; or
-
-
vote by mail if you received a paper proxy card and voting instructions by mail, simply complete, sign and date the
enclosed proxy card and return it before the Annual Meeting in the envelope provided.
Votes
submitted via the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on December 18, 2019. Submitting your proxy, whether via the Internet, by
telephone or by mail if you received a paper proxy card, will not affect your right to vote at the Annual Meeting should you decide to virtually attend the meeting.
If
you are not the stockholder of record, please refer to the voting instructions provided by your nominee to direct it how to vote your shares.
Your
vote is important. Whether or not you plan to virtually attend the Annual Meeting, we urge you to vote by proxy to ensure that your vote is counted. You may still virtually attend
the Annual Meeting if you have already voted by proxy.
What is the quorum requirement for the Annual Meeting?
A majority of our outstanding shares as of the record date must be present at the Annual Meeting in order to hold the meeting and conduct
business. This presence is called a quorum. Your shares are counted as present at the Annual Meeting if you virtually attend and vote at the Annual Meeting or if you have properly submitted a proxy.
How are abstentions and broker non-votes treated?
Abstentions (shares present at the meeting and voted "abstain") are counted for purposes of determining whether a quorum is present, and have no
effect on the election of directors. For the purpose of determining whether the stockholders have approved all other matters, abstentions have the same effect as an "against" vote.
Broker
non-votes occur when shares held by a broker for a beneficial owner are not voted either because (i) the broker did not receive voting instructions from the beneficial
owner, or (ii) the broker lacked discretionary authority to vote the shares. Broker non-votes are counted for purposes of determining whether a quorum is present, and have no effect on the
matters voted upon. If you are a beneficial holder and do not provide specific voting instructions to your broker, the broker that holds your shares will not be authorized to vote your shares on any
of the proposals, except for Proposal
No. 2, ratification of the appointment of KPMG as our independent public accounting firm for the 2019 fiscal year. Accordingly, we encourage you to provide voting instructions to your broker,
whether or not you plan to virtually attend the Annual Meeting.
What is the vote required for each proposal?
The votes required to approve each proposal are as follows:
-
-
Proposal No. 1. Each director must be elected by a majority of the
votes cast, meaning the votes "FOR" a director must exceed the number of votes "AGAINST" a director.
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-
-
Proposal Nos. 2, 3, and 4. Approval of each of Proposals
Nos. 2, 3, and 4 requires the affirmative "FOR" vote of a majority of the shares entitled to vote on these proposals at the Annual Meeting and virtually attending the Annual Meeting or
represented by proxy.
What if I return a proxy card but do not make specific choices?
All proxies will be voted in accordance with the instructions specified on the proxy card. If you vote over the internet or by telephone, please
follow the instructions included on the Notice of Internet Availability, proxy card or proxy materials on how to vote over the Internet or by telephone. If you sign a physical proxy card and return it
without instructions as to how your shares should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our Board stated above.
If
you do not vote and you hold your shares in street name, and your broker does not have discretionary power to vote your shares, your shares may constitute "broker non-votes" (as
described above) and will not be counted in determining the number of shares necessary for approval of the proposals. However, shares that constitute broker non-votes
will be counted for the purpose of establishing a quorum for the Annual Meeting. Voting results will be tabulated and certified by the inspector of elections appointed for the Annual Meeting.
Who is paying for this proxy solicitation?
NortonLifeLock is paying the costs of the solicitation of proxies. We have retained D.F. King & Co., Inc. to help us
solicit proxies from brokers, bank nominees and other institutions for a fee of $10,000, plus reasonable out-of-pocket expenses. We will also reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation materials to such beneficial owners. In addition, our directors, officers, and other employees, without additional
compensation, may solicit proxies personally or in writing, by telephone, e-mail, or otherwise. If you choose to access the proxy materials and/or vote over the Internet, you are responsible for any
Internet access charges you may incur.
What does it mean if I receive more than one proxy card or Notice of Internet Availability?
If you receive more than one proxy card or Notice of Internet Availability, your shares are registered in more than one name or are registered
in different accounts. To make certain all of your shares are voted, please follow the instructions included on your proxy card or Notice of Internet Availability on how to access each proxy card and
vote each proxy card over the Internet or by telephone. If you received paper proxy materials by mail, you can also complete, sign and return each proxy card to ensure that all of your shares are
voted.
How can I change my vote after submitting my proxy?
You may change your vote or revoke your proxy at any time before your proxy is voted at the Annual Meeting. If you are a stockholder of record,
you may change your vote or revoke your proxy by:
-
-
delivering to the Corporate Secretary of NortonLifeLock (by any means, including facsimile) a written notice stating that the proxy is revoked;
-
-
signing and delivering a proxy bearing a later date;
-
-
voting again over the Internet or by telephone; or
-
-
virtually attending and voting at the Annual Meeting (although attendance at the meeting will not, by itself, revoke a proxy).
Please
note, however, that if you are a beneficial owner and you wish to change or revoke your proxy, you may change your vote by submitting new voting instructions to your broker, bank
or other nominee or, if you have obtained a legal proxy from your broker, bank or other nominee giving you the right to vote your shares at the Annual Meeting, by virtually attending and voting at the
Annual Meeting.
How can I attend the Annual Meeting and submit questions?
To attend the Annual Meeting and submit your questions prior to or during the Annual Meeting, please visit
www.virtualshareholdermeeting.com/NLOK2019. To participate in the Annual Meeting or to submit questions in advance of the meeting, you will need the 16-digit control number included with your proxy
materials, on your proxy card, Notice of Internet Availability or on the instructions that accompanied your proxy materials.
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What if during the check-in time or during the meeting I have technical difficulties or trouble accessing the virtual meeting website?
We
will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting
during the check-in or meeting time, please call:
1-855-449-0991
(U.S. Domestic Toll Free)
1-720-378-5962
(International)
Why are you not holding the Annual Meeting in a physical location?
We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings for our stockholders.
Hosting a virtual meeting will enable increased stockholder attendance and participation since stockholders can participate from any location around the world. In addition, the online format will
allow us to communicate more effectively with you via a pre-meeting forum that you can enter by visiting www.virtualshareholdermeeting.com/NLOK2019.
How can I get electronic access to the proxy materials?
The proxy materials will provide you with instructions regarding how to:
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view our proxy materials for the Annual Meeting over the Internet; and
-
-
instruct us to send our future proxy materials to you electronically by email.
Choosing
to receive your future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings of stockholders
on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting
site. Your election to receive proxy materials by email will remain in effect until you terminate it.
Where can I find the voting results?
The preliminary voting results will be announced at the Annual Meeting and posted on our website at investor.NortonLifeLock.com. The final
results will be tallied by the inspector of elections and filed with the U.S. Securities and Exchange Commission
in a current report on Form 8-K within four business days of the Annual Meeting.
ADDITIONAL INFORMATION
Stockholder Proposals for the 2020 Annual Meeting
Requirements for Stockholder Proposals to be Brought Before an Annual Meeting. NortonLifeLock's Bylaws provide that, for stockholder nominations to
the Board or other proposals to be considered at an annual meeting, the stockholder must give timely notice thereof in writing to the Corporate Secretary at NortonLifeLock Inc., 60 E. Rio
Salado Parkway, Suite 1000, Tempe, Arizona 85281, Attn: Corporate Secretary.
To
be timely for the 2020 annual meeting of stockholders, a stockholder's notice must be delivered to or mailed and received by our Corporate Secretary at our principal executive offices
between August 21, 2020 and September 20, 2020 (or, if the 2020 annual meeting is called for a date that is more than 30 calendar days before or more than 60 calendar days after the
anniversary of the date of the 2019 Annual Meeting, then by no later than 10 calendar days after our public announcement of the date of the 2020 annual meeting). A stockholder's notice to the
Corporate Secretary must set forth as to each matter the stockholder proposes to bring before the annual meeting the information required by NortonLifeLock's Bylaws.
Requirements for Stockholder Proposals to be Considered for Inclusion in Our Proxy Materials. Stockholder proposals submitted pursuant to
Rule 14a-8 under the Exchange Act and intended to be presented at NortonLifeLock's 2020
annual meeting must be received by us not later than July 10, 2020 in order to be considered for inclusion in NortonLifeLock's proxy materials for that meeting.
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Available Information
NortonLifeLock will mail without charge, upon written request, a copy of NortonLifeLock's Annual Report on Form 10-K for fiscal year
2019, including the financial statements, schedule and list of exhibits, and any exhibit specifically requested. Requests should be sent to:
NortonLifeLock Inc.
60 E. Rio Salado Parkway, Suite 1000
Tempe, Arizona 85281
Attn: Investor Relations
The Annual Report is also available at investor.NortonLifeLock.com.
"Householding" Stockholders Sharing the Same Last Name and Address
The SEC has adopted rules that permit companies and intermediaries (such as brokers) to implement a delivery procedure called "householding."
Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our annual report and proxy materials, unless the affected stockholder has provided contrary
instructions. This procedure reduces printing costs and postage fees, and helps protect the environment as well.
This
year, a number of brokers with account holders who are NortonLifeLock stockholders will be "householding" our annual report and proxy materials. A single set of annual report and
other proxy materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from
your broker that it will be "householding" communications to your address, "householding" will continue until you are notified otherwise or until you revoke your consent. Stockholders may revoke their
consent at any time by contacting Broadridge ICS, either by calling toll-free (800) 542-1061, or by writing to Broadridge ICS, Householding Department, 51 Mercedes Way, Edgewood, New York,
11717.
Upon
written or oral request, NortonLifeLock will promptly deliver a separate copy of the annual report and other proxy materials to any stockholder at a shared address to which a single
copy of any of those documents was delivered. To receive a separate copy of the annual report and other proxy materials, you may write or call NortonLifeLock's Investor Relations department at 60 E.
Rio Salado Parkway, Suite 1000, Tempe, Arizona 85281, Attn: Investor Relations, telephone number (650) 527-8020.
Any
stockholders who share the same address and currently receive multiple copies of NortonLifeLock's annual report and other proxy materials who wish to receive only one copy in the
future can contact their bank, broker or other holder of record to request information about householding or NortonLifeLock's Investor Relations department at the address or telephone number listed
above.
OTHER MATTERS
The Board does not presently intend to bring any other business before the meeting and, so far as is known to the Board, no matters are to be
brought before the meeting except as specified in the notice of the meeting. As to any business that may arise and properly come before the meeting, however, it is intended that proxies, in the form
enclosed, will be voted in respect thereof in accordance with the judgment of the persons voting such proxies.
77
VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. NORTONLIFELOCK INC. (FORMERLY SYMANTEC CORPORATION) 60 EAST RIO SALADO PARKWAY SUITE 1000 TEMPE, ARIZONA 85281 During The Meeting - Go to www.virtualshareholdermeeting.com/NLOK2019 You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E82515-P28869 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. NORTONLIFELOCK INC. The Board of Directors recommends that you vote FOR the following: 1. Election of Directors Nominees: For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! The Board of Directors recommends that you vote FOR proposals 2 and 3. 1a. Sue Barsamian For Against Abstain 2. Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2020 fiscal year. Advisory vote to approve executive compensation. ! ! For ! ! Against ! ! Abstain 1b. Frank E. Dangeard 1c. Nora M. Denzel 3. 1d. Peter A. Feld The Board of Directors recommends you vote AGAINST the following proposal: ! ! ! 1e. Kenneth Y. Hao 4. Stockholder proposal regarding independent board chairman. 1f. David W. Humphrey NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 1g. Vincent Pilette 1h. V. Paul Unruh Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. E82516-P28869 This Proxy is Solicited on Behalf of the Board of Directors of NortonLifeLock Inc. 2019 Annual Meeting of Stockholders The undersigned stockholder(s) appoint(s) Vincent Pilette, Matthew Brown, and Scott C. Taylor (the "Proxies") and each of them, with full power of substitution, as attorneys and proxies for and in the name and place of the undersigned, and hereby authorize(s) each of them to represent and to vote all of the shares of Common Stock of NortonLifeLock Inc. that are held of record by the undersigned as of November 1, 2019, which the undersigned is entitled to vote at the Annual Meeting of Stockholders of NortonLifeLock Inc. to be held on December 19, 2019 at 9:00 A.M. (Pacific Time), and at any adjournments or postponements thereof. THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER, WILL BE VOTED AT THE ANNUAL MEETING AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF IN THE MANNER DESCRIBED HEREIN. IF NO CONTRARY INDICATION IS MADE, THE PROXY WILL BE VOTED IN FAVOR OF ELECTING THE EIGHT NOMINEES IDENTIFIED HEREIN TO THE BOARD OF DIRECTORS, AND FOR PROPOSALS 2 AND 3 AND AGAINST PROPOSAL 4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. Continued and to be signed on reverse side
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