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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

(AMENDMENT NO.    )

 

 

Filed by the Registrant                                   

Filed by a Party other than the Registrant  

Check the appropriate box:

 

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

ARISTA NETWORKS, INC.

(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check all boxes that apply):

 

  No fee required.
  Fee paid previously with preliminary materials.
  Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 


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 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

To Be Held at 11:00 a.m. Pacific Time on Tuesday, May 31, 2022

Dear Stockholders of Arista Networks, Inc.:

The 2022 annual meeting of stockholders of Arista Networks, Inc. (the “Company”), a Delaware corporation, and any postponements, adjournments or continuations thereof (the “Annual Meeting”), will be held on Tuesday, May 31, 2022 at 11:00 a.m. Pacific Time. Due to the COVID-19 pandemic and related public health concerns, the Annual Meeting will be conducted in a virtual format to provide a safe experience for our stockholders and employees. You will be able to attend the Annual Meeting online and submit your questions during the meeting at www.virtualshareholdermeeting.com/ANET2022. To access the virtual meeting, you will need to enter the control number included in your Notice of Internet Availability of Proxy Materials (the “Notice”), on your proxy card or on the instructions that accompanied your proxy materials.

Our board of directors has fixed the close of business on April 6, 2022 as the record date for the Annual Meeting. Only stockholders of record on April 6, 2022 are entitled to notice of and to vote at the Annual Meeting. Further information regarding voting rights and the matters to be voted upon is presented in the accompanying proxy statement. If you plan on attending this year’s annual meeting as a stockholder, you must follow the instructions set forth on page 61 of the accompanying proxy statement.

On or about April 20, 2022, we expect to mail to our stockholders the Notice, which provides instructions on how to access our proxy statement for the Annual Meeting and our annual report to stockholders, how to vote online or by telephone, and how to receive a paper copy of the proxy materials by mail. The accompanying proxy statement and our annual report can be accessed directly at the following Internet address: www.proxyvote.com. All you have to do is enter the control number located on your proxy card.

 

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We appreciate your continued support of Arista Networks, Inc. and look forward to either greeting you virtually at the Annual Meeting or receiving your proxy.

By order of the Board of Directors,

 

 

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JAYSHREE ULLAL

Chief Executive Officer, President and Director

Santa Clara, California

April 20, 2022


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 TABLE OF CONTENTS

 

 

2022 PROXY STATEMENT SUMMARY      1  
OUR COMMITMENT TO THE ENVIRONMENT SOCIAL RESPONSIBILITY AND GOVERNANCE      4  
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE      11  
Nominees for Director      15  
Continuing Directors      16  
Key Elements of Board Independence at Arista      19  
Director Commitments      19  
Board Leadership Structure      19  
Lead Independent Director      20  
Board Evaluation Process      20  
Board Meetings and Committees      21  
Compensation Committee Interlocks and Insider Participation      24  
Considerations in Evaluating Director Nominees      24  
Stockholder Recommendations for Nominations to the Board of Directors      24  
Stockholder Outreach      25  
Communications with the Board of Directors      25  
Risk Management      25  
Executive Talent Management and Succession Planning      27  
Director Compensation      27  
PROPOSAL NO. 1 ELECTION OF DIRECTORS      29  
Nominees      29  
Vote Required      29  
PROPOSAL NO. 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION      30  
Vote Required      30  
PROPOSAL NO. 3 ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION      31  
Vote Required      31  
PROPOSAL NO. 4 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      32  
Fees Paid to the Independent Registered Public Accounting Firm      32  
Auditor Independence      32  
Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm      33  
Vote Required      33  
REPORT OF THE AUDIT COMMITTEE      34  
EXECUTIVE OFFICERS      35  
EXECUTIVE COMPENSATION      37  
Compensation Discussion and Analysis      37  
Overview      38  
Effect of Most Recent Stockholder Advisory Vote on Executive Compensation      39  
Executive Compensation Philosophy and Objectives      39  
Executive Compensation Program Components      42  
Executive Officer Employment Arrangements      47  
Fiscal 2021 Summary Compensation Table      48  
Outstanding Equity Awards at 2021 Fiscal Year-End      49  
Fiscal 2021 Grants of Plan-Based Awards      52  
Fiscal 2021 Option Exercises and Stock Vested      53  
Pension Benefits      53  
Nonqualified Deferred Compensation      53  
Potential Payments Upon Termination or Change in Control      53  
Risk Assessment and Compensation Practices      54  
 

 

 

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 2022 PROXY STATEMENT SUMMARY

 

This proxy statement and the enclosed form of proxy are furnished in connection with the solicitation of proxies by our board of directors for use at the 2022 annual meeting of stockholders of Arista Networks, Inc. (the “Company” or “Arista”), a Delaware corporation, and any postponements, adjournments or continuations thereof (the “Annual Meeting”). This summary highlights information contained in this proxy statement. We encourage you to read the entire proxy statement for more information prior to voting.

Annual Meeting

 

 

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Proposals and Board Recommendations

 

 

1

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29

 

    

 

 

    

 

 

Proposal for your Vote:

Elect two Class II directors to serve until the 2025 annual meeting of stockholders

 

Board Voting Recommendation:

FOR the election of Charles Giancarlo and Daniel Scheinman

     

2

Page

30

       

Proposal for your Vote:

Advisory vote to approve named executive officer compensation

 

Board Voting Recommendation: FOR

     

3

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31

       

Proposal for your Vote:

Advisory vote on the frequency of future advisory votes on named executive officer compensation

 

Board Voting Recommendation:

FOR a frequency of every “ONE YEAR”

     

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32

       

Proposal for your Vote:

Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm

 

Board Voting Recommendation: FOR

Director Nominees

 

Name and Occupation

  Age   Director Since   Independent   Committees

Charles Giancarlo

Chief Executive Officer and Chairman of the Board of Directors of Pure Storage, Inc.

  64   2013   LOGO   Compensation

 

Nominating
and Corporate
Governance

Daniel Scheinman

Lead Independent Director

  59   2011   LOGO
  Compensation

 

Nominating
and Corporate
Governance

 

 

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2022 Proxy Statement Summary

 

 

2021 Business Highlights

 

     

REVENUE

 

$2.95B

    

GAAP GROSS MARGIN

 

63.8%

    

CUSTOMERS:

 

  Over 8,000 customers

 

Board of Directors Snapshot

 

 

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2022 Proxy Statement Summary

 

 

Corporate Governance Highlights

We are committed to having sound corporate governance principles that we believe serve the best interest of all our stockholders. Some highlights of our corporate governance practices are listed below. In addition, we regularly evaluate our practices against prevailing best practices and emerging and evolving topics identified through stockholder outreach, current literature and corporate governance organizations.

 

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Executive Compensation Highlights

 

 

 

 

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Annual review of our executive compensation program

 

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Performance-based equity for CEO and other senior officers

 

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Independent compensation consultant

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Stock Ownership Guidelines for CEO

 

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Clawback Policy for executive officers

 

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No executive-only retirement programs

 

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No excise tax gross-ups

 

 

 

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 OUR COMMITMENT TO THE ENVIRONMENT,


 SOCIAL RESPONSIBILITY AND GOVERNANCE

 

Arista is committed to transparency, engagement and consistent communication of our Environmental, Social & Governance (“ESG”) strategies and programs. While our core competency is designing, manufacturing and delivering leading software driven cloud networking solutions, Arista is dedicated to delivering a superior client experience, increasing shareholder value, serving our communities and creating a workplace where talent can thrive. We believe that sustainability and business growth are closely linked and delivering products that are sustainable truly enables our customers’ success. To maximize our efforts, we focus our sustainability program around environmental, social and governance programs, including:

 

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ESG Oversight

 

In 2021 and 2022, Arista continued to evolve our ESG strategy. Our executive leadership team and Board recognized the importance of these responsibilities, and our internal committee is tasked with driving additional progress in initiatives that promote sustainability, diversity, inclusion, equity and further transparency. Our sustainable governance structure begins at the very top. The core values of Arista reflect what is truly important to us as an organization. Arista was founded on the principle of doing things the “Arista Way,” which is to drive for customer success in every aspect of what we do. We build and deliver innovative, high-quality products and services through commitment, innovation and uncompromising focus on customer needs. This includes a commitment to designing, manufacturing and delivering leading software driven cloud networking solutions in an environmentally and socially sustainable manner.

 

  THE ARISTA WAY      
       
  1    

 

Drive for customer success in every aspect: support, quality, innovation and experience

 

  

6

  

 

Maintain the highest level of integrity in conduct

 

  2    

 

Do the right thing be it for products, quality, customers and daily interactions

 

  

7

  

 

Discuss, debate but quickly align to priorities

 

  3    

 

Challenge status quo, question traditional habits and be cost-effective

 

  

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Treat your peers, vendors, customers with respect and develop a win-win partnership

 

  4    

 

Develop alternative ways of achieving disruptive innovation in every function, preserving quality

 

  

9

  

 

Mentor individuals and develop teams for overall success, not personal, success

 

  5    

 

Develop agile and mobile teams that can respond to priorities (as opposed to fixed or top-down organizations)

 

 

  

10

  

 

Cultivate Arista pride but never ego or arrogance in our culture

 

 

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Our Commitment to The Environment, Social Responsibility and Governance

 

 

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ENVIRONMENT

 

Arista is committed to responsible ESG practices that include climate change resilience, conservation of natural resources, pollution prevention and reduction of waste. We are committed to creating environmental awareness with our employees and other partners and to engage them to reduce their footprint, manage waste properly and encourage reuse or recycling.

We recognize the need to comply with applicable environmental standards and an increasing number of applicable environmental laws and regulations. We are committed to making the necessary investments to ensure compliance. We are continuously researching innovative ways to boost efficiency in our offices, such as utilizing high-efficiency electrical equipment including LED and motion-detector lighting, solar panels and high-efficiency HVAC units.

We have implemented an Environmental Management System (EMS) that lays out our objectives for achieving pollution prevention, environmental protection and monitoring, and continual improvements in the environmental performance of our operations. Backed by our Environmental Policy, the EMS provides a framework for monitoring of progress, internal employee training to embed sustainability into our business, external stakeholder engagement, and setting measurable targets to drive performance.

In 2021, Arista amended its Audit Committee charter to provide that the Audit Committee has responsibility for reviewing and discussing with management Arista’s policies and practices relating to environmental and social responsibility matters.

 

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In addition, Arista created a Sustainability Committee that sets the direction and strategy on sustainability matters and oversees execution of sustainability initiatives including:

 

  LEED Gold Certification & Efficient Offices: When we select our office space, we ensure that we have an office that not only meets our needs, but also aids us in reducing our impact to the environment. Our Santa Clara headquarters and our San Francisco office are both LEED Gold certified. The certification, awarded by the U.S. Green Building Council, is based on the properties’ use of sustainable materials, water and energy efficiency, indoor environmental quality, location and transportation, and overall innovation. We also consider energy efficient real estate for our international operations and, accordingly, moved our Bangalore operations to a facility that was built according to LEED Gold Level rating benchmarks.

 

  We are committed to integrating sustainability in every aspect of our products’ life cycles, from the materials that make up our products, all the way to the end of life of the product, while meeting our customers’ requirements. For example, we implement Design for Environment principles in our development process with the goal of minimizing the overall adverse environmental impact of our products, with a focus on the reduction of material diversity and weight, selection of more environmentally friendly materials, ease of disassembly and recycling, energy efficiency, design for longevity and upgradeability, and design for efficient packaging.
 

 

 

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Our Commitment to The Environment, Social Responsibility and Governance

 

 

  Each new generation of our products demonstrates improved network capacity, and energy efficiency, which reduces overall greenhouse gas emissions and power consumption for our customers. In addition, our new products use power supplies that are rated 80-Plus Platinum or better, which helps reduce the total product power consumption and heat generated from the power supplies.

We believe that our focus on innovation, with the objective of reducing costs and improving sustainability of our operations, provides a strategic benefit through the ability to fund, develop and implement new technologies and quickly respond to changes in customer requirements and industry demands. We continue to look for opportunities to minimize our environmental impact and to support public and private organizations that advance sustainability initiatives by driving toward a more digital work environment, encouraging remote work practices and making investments to reduce waste at all of our office locations.

 

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SOCIAL RESPONSIBILITY

 

A great experience starts with a great team. We are focused on growing our team of employees and aiding in their professional development. We believe that our ongoing success depends upon a skilled, satisfied and valued workforce. As such, Arista provides opportunities for employees to gain the skills and knowledge they need to advance and fulfill personal career goals. In 2021, we began implementing Human Capital Management (HCM) reporting and practices to establish a foundation to enable leaders to better hire talent and manage teams, including setting goals, performance evaluations, succession planning, and learning and development.

We also offer competitive compensation and benefits packages that reflect the needs of our workforce. In the U.S., we offer:

 

  Medical, dental and vision benefits for employee, spouse and dependents

 

  Flexible spending accounts for both healthcare and dependent care

 

  Health savings accounts and health reimbursement accounts

 

  Wellness program with incentives for participants who meet certain criteria

 

  Life-, short- and long-term disability insurance

 

  Flexible time off for full and part-time associates

 

  Paid maternity and parental leave

 

  401(k) retirement savings program with company matching contributions

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  Day care and caregiver assistance

 

  Employee Assistance Program, including behavioral health and emotional support assistance

In addition to base salary and benefits, Arista’s employees participate in incentive plans that support our organizational philosophy of allowing employees to share in our performance and success. Our executive compensation program is designed to attract, retain, and reward performance and align incentives with achievement of the Arista’s strategic plan and both short- and long-term operating objectives. In accordance with our compensation philosophy established by the Compensation Committee Charter and the board, we believe our executive pay is well aligned with performance, creating a positive relationship between our operational performance and shareholder returns.

 

 

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Our Commitment to The Environment, Social Responsibility and Governance

 

 

Arista has never experienced a strike or similar work stoppage and we believe our employee relations are strong. We conduct employee engagement surveys globally on a regular basis to gather information and feedback on our team members. We will use a holistic organization-wide approach to respond to the results of the survey, analyzing the data for potential actions that can be taken in the areas of leadership, communication, culture, inclusion, growth and development, and other areas. Beyond the workplace, the health and wellbeing of our colleagues is our top priority and in recognition of this, Arista aims to support the wellness of all colleagues by:

 

  Possessing a diverse management team that includes our Chief Executive Officer, Chief Financial Officer and Group Vice President, Worldwide Human Resources and Operations all of whom are women, and our Chief Executive Officer and Chief Operating Officer, both of whom are people of color.

 

  Increasing recruitment and engagement efforts for women and members of underrepresented minorities, including by building programs to promote a broader and more diverse pool of candidates for job openings, providing top employees with career opportunities, maintaining pay equity among our employees and nurturing an inclusive community and mentorship opportunities facilitated by our Women@Arista employee resource group.

 

  Actively promoting the hiring of female engineers through special activities like our Arista India Recruit by Her event and through the efforts of our Women at Arista employee resource group. We also actively recruit from underrepresented universities and professional societies, including professional societies that support Black engineers, Latin Americans and veterans.

Arista is all about respect, integrity, innovation, passion, pride and trust. We strive to build an inclusive culture that encourages, supports and celebrates the diverse voices of our employees. It fuels our innovation and connects us closer to the customers

and communities we serve. We believe that the voices of our employees are the ultimate barometer in evaluating the success of our Diversity and Inclusion efforts. In a recently completed employee survey, Arista received our highest scores (very high, 90% percentile) from all demographic groups in the areas of fairness. Per Great Place To Work, the global authority on workplace culture, our scores were higher than the average of the top 100 overall performing companies in the US.

We are committed to developing a qualified and motivated workforce to power our continued evolution. We take the health and safety of our employees seriously. Our policy is to maintain our facilities and run our business operations in a manner that does not jeopardize the occupational health and safety of our employees. We expect each employee to follow our safety standards and protocols. Our Global Facilities team continues to proactively work to reduce and eliminate potential risks and ensures compliance with local laws and regulations. To evaluate performance, we regularly measure and monitor workplace safety.

In response to the COVID-19 pandemic, we implemented standards to operate in accordance with social-distancing protocols and public health authority guidelines. We also offered extended benefits to employees, including increased sick pay and waived premium payments on healthcare benefits for furloughed employees. Furthermore, we formed an internal task force that developed policies, procedures, safety training and protocols for the safety of our employees and was one of the first Silicon Valley companies to provide drive-thru on-site COVID vaccinations as a benefit to our employees.

In response to increasing COVID cases in India in May 2021, we created a special India COVID Task Force to acquire and deploy oxygen concentrators and to build relationships and partnerships with hospitals and medical groups to provide access to hospital beds and vaccinations. We continue to be proud of our efforts, as we have had zero employee deaths or known cases of spread at Arista facilities through 2021.

 

 

 

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Our Commitment to The Environment, Social Responsibility and Governance

 

 

We are aware of how our presence and partnership can affect others. Therefore, we are consciously working to systemically create positive social change and are focused on supporting various organizations through fundraising efforts, educational sponsorship, community development efforts, charity drives, and partnerships. In 2021 and 2022, Arista is proud to:

 

  Give annually to select non-profit organizations. Arista Foundation’s giving priorities are generally to non-profits focused on education, hunger, environmental sustainability or disaster relief.

 

  Donated to Santa Clara University, HelpAge India, Code2040, Resource Area for Teaching, Roswell Park Hospital and Communities in Schools of Washington.

 

  Raised over $600,000 from employee donations, executive matching and Arista Foundation grants for India COVID relief with American India Foundation, SEWA International-AIMS, Save Life Foundation, Give India, PM Cares and One More Breath.

 

  Planted an additional 2,500 trees for a total of over 77,000 trees to-date worldwide through the personal efforts of Arista executive Pravin Bhagwat and India non-profit partner, 14 Trees Foundation.

 

  Continued our global employee fundraising event with the goal of providing food to people in need. Over 1.7 million meals were provided through a combination of employee donations and matching Arista Foundation funds through our partners, Second Harvest of Silicon Valley, Feeding America, New Hampshire Food Bank, Central Texas Food Bank, RISE Against Hunger, Greater Vancouver Food Bank, Peter McVerry Trust and Foodbank, Australia, in the largest Arista philanthropy event ever.

 

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Arista is passionate about being good corporate citizens in the communities where we live and work. Through strategic nonprofit partnerships, pro bono work, volunteerism and philanthropy, our corporate responsibility is focused on contributing to the creation of a better world. Going forward, Arista will continue to partner with nonprofit organizations that work to increase the number of individuals with financial literacy, decrease the number of individuals facing economic barriers and make our communities reflections of our commitments and values.

 

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Our Commitment to The Environment, Social Responsibility and Governance

 

 

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SUPPLY CHAIN

 

Manufacturing our products creates environmental and social impacts that extend far beyond the walls of Arista. We engage with suppliers throughout our global supply chain to manage and improve these impacts to conserve resources, save costs, and promote ethical social practices. Our Supply Chain Sustainability Expectations Policy initially sets forth the requirement to align with industry expectations. As a member of the Responsible Business Alliance (RBA), we support the RBA’s vision and mission, which strives to develop a global electronics industry supply chain that consistently operates with social, environmental and economic responsibility.

Arista takes steps to validate the absence of slavery, human trafficking and forced labor in our supply chain and therefore ensure compliance with the California Transparency in Supply Chains Act and the UK Modern Slavery Act. We perform supplier risk assessments of our suppliers and encourage them to adhere to the RBA Code of Conduct. Furthermore, we are a member of the Responsible Minerals Initiative (RMI) and have management systems in place to ensure that the components of our products are sourced responsibly.

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Arista’s website contains information on our environmental and social programs. We routinely engage with our shareholders to better understand their views, carefully considering the feedback we receive and acting when appropriate. Arista reviews the results of the annual advisory vote on executive compensation in making determinations about the structure of our pay programs. For more information, please visit our corporate website: arista.com

 

 

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GOVERNANCE

 

Arista is committed to achieving excellence in our governance practices and to establishing a strong foundation for our long-term success. We emphasize a culture of accountability and conduct our business in a manner that is fair, ethical, and responsible to earn the trust of our stakeholders, including customers, employees, investors, partners, and regulators. As a publicly traded company, it is incumbent upon us to ensure that our operations are conducted in a manner that is both consistent with environmental preservation and supportive of the entire community in which we operate.

Arista has adopted a culture of ethics. Our Code of Ethics and Business Conduct emphasizes the importance of honest business conduct and solid business ethics. Our Code applies to all personnel employed by or engaged to provide services to Arista including, but not limited to, our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer, and other executive and senior financial officers. Arista provides annual training on our Code. Our Code addresses, among other things, conflicts of interest, business practices, compliance with laws and regulations, and interacting fairly and

respectfully with each other, our customers, partners, suppliers and host communities. Furthermore:

 

  We are committed to complying with applicable international and domestic anti-corruption laws, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and applicable local laws. Our Anti-Corruption Compliance Policy & Guidelines outline the parameters of what is acceptable and what is not acceptable from an anti-corruption view. We have established procedures for conducting due diligence on our partners, manufacturers, suppliers, logistics providers and other third parties that may interact with foreign officials on our behalf.

 

  Our Whistleblower Policy further supports our stated goals with our governance structure while encouraging transparency, facilitating confidentiality, and providing multiple avenues for employees and non-employees to submit concerns about accounting, auditing or other matters.

 

  We are committed to maintaining the highest level of professional and ethical standards in the conduct of our business around the world. We believe our reputation for integrity and fair dealing is an important component of our success and the personal satisfaction of our employees.
 

 

 

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Our Commitment to The Environment, Social Responsibility and Governance

 

 

Our board of directors, consisting of 9 directors (7 of whom are independent), is responsible for oversight of the management of the company for the long-term benefit of our stakeholders. Our corporate governance policies and practices include evaluations of the board and its committees and continuing director education. Our Nominating and Corporate Governance Committee oversees corporate governance matters. Our Audit Committee reviews our policies and practices relating to financial, environmental and social responsibility, and monitors certain key risks including cybersecurity risks.

We believe that diversity with respect to tenure is important in order to provide for both fresh perspectives and deep experience and knowledge. Our Nominating and Corporate Governance Committee considers diversity and a broad range of backgrounds and experiences in making determinations regarding nominations of directors.

 

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Our internal risk management teams oversee compliance with applicable laws and regulations and coordinate with subject matter experts throughout our business to identify, monitor and mitigate risk including information security risk management and cyber defense programs. These teams maintain testing programs and provide updates to the Audit Committee and the board. Arista also has an information security program that incorporates multiple layers of physical, logical and written controls. Arista leverages encryption configurations and technologies on its systems, devices, and third-party connections.

Arista performs an enterprise risk assessment that is reviewed by the Audit Committee on an annual basis and monitored on a quarterly basis by the Audit Committee. The enterprise risk assessment is an assessment of key risks, including information security risks, data privacy, supply chain, human capital, and others.

Under Arista’s IT security program, our Cybersecurity Executive Committee and Information Security Steering Committee meet throughout the year to monitor and assess information security risks. Additionally, all employees receive annual Data Protection and Privacy training.

 

 

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 BOARD OF DIRECTORS & CORPORATE GOVERNANCE

 

Our business affairs are managed under the direction of our board of directors. Our board of directors is divided into three staggered classes of directors. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the same class whose term is then expiring. Our board of directors is committed to good corporate governance practices. These practices provide an important framework within which our board of directors and management can pursue our strategic objectives for the benefit of our stockholders. Our board of directors has adopted Corporate Governance Guidelines that address items such as the qualifications and responsibilities of our directors and director candidates and corporate governance policies and standards applicable to us in general. We believe that good governance leads to high board effectiveness, promotes the long-term interests of our stockholders, strengthens the accountability of the board of directors and management, and improves our standing as a trusted member of the communities we serve.

BOARD EFFECTIVENESS

 

Working Dynamics

 

 

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    Candid discussions

 

    Open access to management and information

 

    Established processes for director feedback

 

    Regular non-executive directors’ meetings

 

Board Structure

 

 

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    Strong lead independent director

 

    3 standing committees

 

    Separation of Chairman and CEO
 

 

 

Governance Practices

 

 

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    Oversight of CEO/management performance

 

    Board/management succession planning

 

    Code of Ethics and Business Conduct for our directors and
employees

 

    Stock ownership requirements for our directors and CEO  

 

    Clawback policy for our executives  

 

 

 

Board Composition

 

 

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    Broad range of skills and experiences

 

    7/9 directors are independent

 

    Our Chairman and CEO are the only non-independent directors

 

    4/9 directors are women and/or from underrepresented
communities
 

 

 

 

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Board of Directors and Corporate Governance

 

 

Board Composition Overview

Consistent with the Company’s Corporate Governance Guidelines, the Nominating and Corporate Governance Committee considers, among other factors, issues of character, integrity, judgment, diversity, independence, area of expertise such as appropriate financial and other expertise relevant to our business, corporate experience, length of service, potential conflicts of interest and other commitments when reviewing and making recommendations to the board of directors regarding the composition and size of the board. We believe that diversity with respect to tenure is important in order to provide for both fresh perspectives and deep experience and knowledge of the Company. Although we do not maintain a specific policy with respect to board diversity, our board of directors believes that it should be a diverse body and our Nominating and Corporate Governance Committee considers a broad range of backgrounds and experiences in making determinations regarding nominations of directors and in overseeing the annual board and committee evaluations.

 

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The following table sets forth information, as of April 6, 2022, for each of our directors with terms expiring at the Annual Meeting:

 

 

Directors with Terms Expiring at the Annual Meeting/Director Nominees

    
 

Name

   Class    Age    Director
Since
   Current Term
Expires
   Expiration of
Term for Which
Nominated
   Board Committees
   Audit    Comp.    Nom. &
Gov.
   Independent

Charles Giancarlo (Director Nominee)

   II    64    2013    2022    2025       CHAIR       LOGO

Ann Mather*

   II    61    2013    2022    N/A             LOGO

Daniel Scheinman (Director Nominee)

   II    59    2011    2022    2025            CHAIR    LOGO

 

*

Ms. Mather’s term of office will expire at the Annual Meeting. We are grateful for Ms. Mather’s distinguished service and leadership on the board and its committees throughout her tenure, including chairing the Audit Committee for over seven years.

 

 

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Board of Directors and Corporate Governance

 

 

The following table sets forth information, as of April 6, 2022, for each of the continuing members of our board of directors:

 

 

Continuing Directors

                                     Board Committees
Name    Class    Age    Director
Since
     Current Term
Expires
     Audit    Comp.    Nom. &
Gov.
   Independent

Kelly Battles

   I    55      2020            2024                          LOGO

Andreas Bechtolsheim

   I    66      2004            2024                         

Jayshree Ullal

   I    61      2008            2024                         

Lewis Chew

   III    59      2021            2023                 CHAIR          LOGO

Mark Templeton

   III    69      2017            2023                          LOGO

Nikos Theodosopoulos

   III    59      2014            2023                                  LOGO

 

 

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Board Skill Matrix

The following table summarizes the key qualifications, skills and attributes of our director nominees and the continuing members of our board of directors. A mark indicates a specific area of focus or expertise on which our board of directors particularly relies. Not having a mark does not mean the director does not possess that qualification or skill. Our directors’ biographies describe each director’s background and relevant experience in greater detail.

 

      LOGO       LOGO     LOGO     LOGO       LOGO       LOGO       LOGO       LOGO  

Industry Expertise

Insight in the cloud and software industry to oversee our business and the risks we face.

    LOGO       LOGO     LOGO             LOGO       LOGO       LOGO          

Senior Leadership

Experience in senior leadership positions to analyze, advise and oversee management in decision making, operations and policies.

    LOGO       LOGO     LOGO     LOGO       LOGO       LOGO       LOGO       LOGO  

Financial Knowledge and Expertise

Knowledge of financial markets, financing and accounting and financial reporting processes.

    LOGO             LOGO     LOGO       LOGO       LOGO       LOGO       LOGO  

Diverse Backgrounds

Diverse backgrounds and experiences that provide unique perspectives and enhance decision-making.

    LOGO             LOGO     LOGO                                  

Sales, Marketing and Brand Management

Sales, marketing and brand management experience to provide expertise and guidance to grow sales and enhance our brand.

                  LOGO             LOGO               LOGO          

Global/International

Experience and knowledge of global operations, business conditions and culture to advise and oversee our global business.

    LOGO       LOGO     LOGO     LOGO       LOGO               LOGO       LOGO  

Governance, Risk Oversight and Compliance

Experience in public company corporate governance, risk oversight and management, privacy, compliance, policy and creating long term sustainable value.

    LOGO       LOGO     LOGO     LOGO       LOGO       LOGO       LOGO       LOGO  

Emerging Technologies and Business Models

Experience identifying and developing emerging technologies and business models to advise, analyze and strategize regarding emerging technologies, business models and potential acquisitions disrupting our industry, business and company.

    LOGO       LOGO     LOGO             LOGO       LOGO       LOGO       LOGO  

Human Capital Management

Experience attracting and retaining top talent to advise and oversee our people and compensation policies.

    LOGO       LOGO     LOGO     LOGO       LOGO       LOGO       LOGO       LOGO  

Public Company Board

Experience to understand the dynamics and operation of a public company and the applicable legal and regulatory landscape and risks.

    LOGO       LOGO     LOGO     LOGO       LOGO       LOGO       LOGO       LOGO  

 

 

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Set forth below is biographical information for the nominees and for each of the continuing members of our board of directors. This includes information regarding each director’s experience, qualifications, attributes or skills that led our board of directors to recommend them for board service.

NOMINEES FOR DIRECTOR

 

LOGO

 

    

Charles Giancarlo

   Age: 64    Director Since: 2013

 

 

LOGO

 

Committees:

 

Compensation (Chair)

 

Nominating and Corporate Governance

       

Experience

 

Mr. Giancarlo has served as a member of our board of directors since April 2013. Mr. Giancarlo has been chief executive officer and a member of the board of directors of Pure Storage, Inc., a data storage solutions company, since August 2017, and Chairman of the board of directors of Pure Storage since September 2018. From 2008 through 2013, Mr. Giancarlo served as a managing director of Silver Lake Partners, a private investment firm and served as a senior advisor to the firm until 2015. From 1993 to 2007, Mr. Giancarlo served in various positions with Cisco Systems, Inc., a technology and networking company, most recently as executive vice president and chief development officer. Mr. Giancarlo has also served on the board of directors of Zscaler, Inc., a cloud-based information security company, since November 2016. He previously served as a director of Accenture plc, from November 2008 to February 2019, Avaya, Inc., from June 2008 to November 2017, ServiceNow, Inc., from November 2013 to September 2017, Tintri, Inc., from October 2016 to August 2017 and Imperva, Inc., from May 2013 to October 2017. Mr. Giancarlo holds a B.S. degree in Electrical Engineering from Brown University, an M.S. degree in Electrical Engineering from the University of California at Berkeley and an M.B.A. from Harvard University.

 

Qualifications

 

We believe Mr. Giancarlo possesses specific attributes that qualify him to serve as a member of our board of directors, including his extensive experience as a venture capital investor and as an executive and board member of companies in the technology industry.

 

LOGO

 

    

Daniel Scheinman

   Age: 59    Director Since: 2011

 

 

LOGO

 

Committees:

 

Compensation

 

Nominating and Corporate Governance (Chair)

 

Lead independent director

       

Experience

 

Mr. Scheinman has served as a member of our board of directors since October 2011. Since April 2011, Mr. Scheinman has been an angel investor. From January 1997 to April 2011, Mr. Scheinman served in various capacities with Cisco Systems, Inc., most recently as senior vice president, Cisco Media Solutions Group. Mr. Scheinman has served as a member of the board of directors of Zoom Video Communications, Inc., a cloud-based video communications company, since October 2011, where he is lead director, chair of the audit committee and a member of the compensation committee and SentinelOne, Inc., an autonomous AI endpoint security platform since September 2015, where he is lead independent director, chair of the nominating and corporate governance committee and a member of the compensation committee. He also currently serves on the board of directors of several private companies. Mr. Scheinman holds a B.A. degree in Politics from Brandeis University and a J.D. from the Duke University School of Law.

 

Qualifications

 

We believe Mr. Scheinman possesses specific attributes that qualify him to serve as a member of our board of directors, including his extensive experience in the legal industry and as an executive of companies in the technology industry.

 

 

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CONTINUING DIRECTORS

 

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   Kelly Battles

   Age: 55    Director Since: 2020

 

 

LOGO

 

Committees:

 

Audit

       

Experience

 

Ms. Battles has served as a member of our board of directors since July 2020. Ms. Battles has over 30 years of finance, strategy and operational leadership experience. From July 2020 to January 2022, Ms. Battles served as chief financial officer of Alpha Medical Group, a telemedicine provider, where she has served as a member of the board of directors since January 2022. From November 2016 to March 2020, Ms. Battles served as chief financial officer of Quora, a knowledge platform. Ms. Battles also previously served as chief financial officer of Bracket Computing, a cloud computing company, and Host Analytics, Inc., a cloud-based enterprise performance management solutions company. She served as vice president of finance of IronPort Systems, director of strategy and corporate development group of Hewlett-Packard Company, and as an associate at both McKinsey and Company and JPMorgan Chase and Company earlier in her career. Ms. Battles currently serves as an independent board member and audit committee chair of DataStax, Inc., Genesys Cloud Services, Inc., Clari, Inc. and Plex, Inc. Ms. Battles holds a B.S.E. degree in Operations Research / Systems Management from Princeton University and an M.B.A. from Harvard University.

 

Qualifications

 

We believe Ms. Battles possesses specific attributes that qualify her to serve as a member of our board of directors, including her extensive experience as a chief financial officer and as a board member of companies in the technology industry.

 

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   Andreas Bechtolsheim

   Age: 66    Director Since: 2004

 

 

LOGO

 

Committees:

 

N/A

       

Experience

 

Mr. Bechtolsheim is one of our founders and has served as our Chairman since 2004 and as our Chief Development Officer since 2008. In 1982, Mr. Bechtolsheim co-founded Sun Microsystems, Inc., a manufacturer and seller of computers and computer software, which was acquired by Oracle Corporation in January 2010. In 1995, Mr. Bechtolsheim co-founded and was president and chief executive officer of Granite Systems, Inc., a manufacturer of Gigabit Ethernet switches, which was acquired by Cisco Systems, Inc. in 1996, and then at Cisco, Mr. Bechtolsheim served in various positions including vice president and general manager of the Gigabit Systems Business Unit. In 2003, Mr. Bechtolsheim became the president of Kealia, Inc., a developer of servers, which was acquired by Sun Microsystems, Inc. in April 2004. From April 2004 to October 2008, Mr. Bechtolsheim served as senior vice president and chief systems architect at Sun Microsystems, Inc. Mr. Bechtolsheim holds an M.S. degree in Computer Engineering from Carnegie Mellon University and was a Ph.D. Student in Electrical Engineering and Computer Science at Stanford University from 1977 to 1982.

 

Qualifications

 

We believe Mr. Bechtolsheim possesses specific attributes that qualify him to serve as a member of our board of directors, including his extensive experience in the networking industry and the operational insight and expertise he has accumulated as one of our founders and as our Chief Development Officer.

 

 

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LOGO

 

    

   Jayshree Ullal

   Age: 61    Director Since: 2008

 

 

LOGO

 

Committees:

 

N/A

       

Experience

 

Ms. Ullal has served as our President, Chief Executive Officer and a member of our board of directors since October 2008. From September 1993 to May 2008, Ms. Ullal served in various positions at Cisco Systems, Inc., with her last position as senior vice president of data center, switching and services group. Prior to that, Ms. Ullal was a vice president of marketing at Crescendo Communications, Inc., Cisco’s first acquisition in 1993. She has also held various product and engineering positions at Ungermann-Bass, Advanced Micro Devices, Inc. and Fairchild Semiconductor. Ms. Ullal has served as a member of the board of directors of Snowflake, Inc., a cloud-based data-warehousing company since June 2020. Ms. Ullal holds a B.S. degree in Engineering (Electrical) from San Francisco State University and an M.S. degree in Engineering Management from Santa Clara University. She is a 2013 recipient of the Santa Clara University School of Engineering Distinguished Engineering Alumni Award.

 

Qualifications

 

We believe that Ms. Ullal possesses specific attributes that qualify her to serve as a member of our board of directors, including her extensive experience in the networking industry and the operational insight and expertise she has accumulated as our President and Chief Executive Officer.

 

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   Lewis Chew

   Age: 59    Director Since: 2021

 

 

LOGO

 

Committees:

 

Audit (Chair)

       

Experience

 

Mr. Chew has served as a member of our board of directors since July 2021. From June 2012 to October 2021, Mr. Chew served as executive vice president and chief financial officer of Dolby Laboratories, Inc., an audio, voice and imaging technology company. From 2001 to 2011, Mr. Chew served as senior vice president and chief financial officer of National Semiconductor Corporation, a designer and manufacturer of semiconductor components. Prior to joining National Semiconductor Corporation, Mr. Chew was a partner at KPMG LLP, an accounting firm. Since March 2020, Mr. Chew has served on the board of directors of Cadence Design Systems, Inc., a multinational computational software company, where he is chair of the audit committee. From 2009 to 2019, Mr. Chew served as a director of PG&E Corporation, an energy-based holding company, where he served as chair of both the public policy committee and the audit committee. Mr. Chew holds a B.S. degree in Accounting from the Leavey School of Business at Santa Clara University.

 

Qualifications

 

We believe Mr. Chew possesses specific attributes that qualify him to serve as a member of our board of directors, including his extensive experience as a senior executive of large technology companies and as a board member of two large public companies.

 

 

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LOGO

 

    

   Mark B. Templeton

   Age: 69    Director Since: 2017

 

 

LOGO

 

Committees:

 

Audit

 

Compensation

       

Experience

 

Mr. Templeton has served as a member of our board of directors since June 2017. Mr. Templeton served as the chief executive officer and a member of the board of directors of DigitalOcean, Inc., a cloud computing company from June 2018 to August 2019. Previously, he served as the president and/or chief executive officer and a member of the board of directors of Citrix Systems, Inc., a global provider of virtualization, mobility management, networking and software as service solutions, from January 1998 until his retirement in October 2015. Since July 2020, Mr. Templeton has served on the board of directors of Health Catalyst, Inc., a provider of data and analytics technology and services to health care organizations. Mr. Templeton served on the board of directors of Equifax, Inc. from February 2008 to November 2018 and Keysight Technologies, Inc. from November 2015 to July 2018. Mr. Templeton holds a B.A. degree in product design from North Carolina State University and an M.B.A. from the Darden School of Business at the University of Virginia.

 

Qualifications

 

We believe Mr. Templeton possesses specific attributes that qualify him to serve as a member of our board of directors, including his extensive experience in the networking industry and as chief executive officer and board member of companies in the technology industry.

 

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   Nikos Theodosopoulos

   Age: 59    Director Since: 2014

 

 

LOGO

 

Committees:

 

Audit

 

Nominating and Corporate Governance

       

Experience

 

Mr. Theodosopoulos has served as a member of our board of directors since March 2014. Since August 2012, Mr. Theodosopoulos has served as an independent director, advisor, and consultant to the technology industry through his advisory firm NT Advisors LLC. He has worked with numerous companies ranging from startups, private equity funds and publicly traded companies in the areas of strategy, M&A, and investor positioning. From August 1995 through July 2012, Mr. Theodosopoulos served in various capacities with UBS, a provider of financial services, most recently as managing director of technology equity research. From April 1994 to August 1995, he served as senior equity research analyst for Bear, Stearns & Co. Inc., an investment banking firm that was acquired in 2008 by JPMorgan Chase. From September 1985 to April 1994, Mr. Theodosopoulos served in various capacities at AT&T Bell Laboratories and AT&T Network Systems, a provider of communications equipment. Mr. Theodosopoulos also serves on the supervisory board of ADVA Optical Networking SE, a provider of optical transport and Ethernet access solutions since December 2014. Mr. Theodosopoulos has served on the board of directors of Harmonic, Inc., a provider of video delivery infrastructure for emerging television and video services since March 2015. Mr. Theodosopoulos holds a B.S. degree in Electrical Engineering from Columbia University, an M.S. degree in Electrical Engineering from Stanford University and an M.B.A. from NYU Stern School of Business.

 

Qualifications

 

We believe Mr. Theodosopoulos possesses specific attributes that qualify him to serve as a member of our board of directors, including his extensive experience as a consultant and advisor in the technology industry.

 

 

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Key Elements of Board Independence at Arista

Our board of directors’ independence enables it to be objective and critical in carrying out its oversight responsibilities. Our Corporate Governance Guidelines provide that a substantial majority of our directors will be independent.

Our board of directors has undertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment and affiliations, our board of directors has made the following determinations:

 

    7/9 of the directors are independent: We are committed to maintaining a substantial majority of directors who are independent of the Company and management. Except for our employee directors, all directors are independent.

 

    Committee independence: Only independent directors are members of board committees.

 

    Executive sessions: Our independent directors meet in executive session at each board and Audit Committee meeting.

 

    Lead independent director: Our lead independent director provides leadership to the board of directors and particularly to the independent directors.

 

    Independent compensation consultant: The compensation consultant retained by the Compensation Committee is independent of the Company and management.
 

 

In making the determination that Mr. Giancarlo is independent, the board of directors considered the fact that Mr. Giancarlo is chief executive officer and a member of the board of directors of Pure Storage, Inc., and we sell products to and purchase products from Pure Storage, Inc. in the ordinary course of business. The board of directors determined that Mr. Giancarlo did not have a direct or indirect material interest in these transactions. Furthermore, payments made to us by Pure Storage, Inc. pursuant to such transactions did not exceed the greater of $1 million or 2% of Pure Storage, Inc.’s consolidated gross revenues in any of the last three fiscal years. As a result, the board of directors concluded that these transactions would not affect Mr. Giancarlo’s independence.

Director Commitments

Our board of directors recognizes that all members of our board of directors should dedicate sufficient time and attention to fulfill the responsibilities required of directors. In assessing whether directors and nominees for director have sufficient time and attention to devote to board duties, our board of directors considers, among other things, whether directors may be “overboarded,” which refers to the situation where a director serves on an excessive number of boards. In addition, prior to recommending a candidate as a nominee for director, the Nominating and Corporate Governance Committee reviews the number of boards that the candidate serves on and considers whether those outside commitments may limit the ability of the candidate to devote sufficient time and attention to board duties.

Our board of directors believes that each of our directors, including each of our director nominees, has demonstrated the ability to devote sufficient time and attention to board duties and to otherwise fulfill the responsibilities required of directors.

Board Leadership Structure

We believe that the structure of our board of directors and its committees provides strong overall management of our Company and supports the risk oversight function of the board. While the Chairman of our board of directors and our Chief Executive Officer roles are separate, our current Chairman, Andreas Bechtolsheim, is not independent under the listing standards of the New York Stock Exchange as a result of his employment with us. Our board of directors believes that, given the perspective and experience Mr. Bechtolsheim brings as one of our founders, Mr. Bechtolsheim’s service as our Chairman is appropriate and is in the best interests of our board of directors, our Company and our stockholders.

 

 

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Our Chief Executive Officer is responsible for setting the strategic direction of our Company, the general management and operation of the business and the guidance and oversight of senior management. The Chairman of our board of directors monitors the content, quality and timeliness of information sent to our board of directors and is available for consultation with our board of directors regarding the oversight of our business affairs.

Lead Independent Director

Recognizing the importance of strong independent oversight, our board of directors has appointed Mr. Scheinman to serve as our lead independent director.

While the Chairman directs the operations of the board of directors and is responsible for the overall management and effective functioning of the board of directors, the lead independent director provides leadership to the board of directors and particularly to the independent directors.

The lead independent director communicates with the Chief Executive Officer, disseminates information to the rest of the board of directors in a timely manner, and raises issues with management on behalf of the outside directors when appropriate. In addition, the lead independent director’s responsibilities include the following:

 

    calling meetings of independent directors when necessary and appropriate;

 

    being available, when appropriate, for consultation and direct communication with the Company’s stockholders;

 

    building a productive relationship between the board of directors and the CEO;
    ensuring that the board of directors fulfills its oversight responsibilities in Company strategy, risk oversight and succession planning; and

 

    performing such other duties as the board of directors may from time to time designate.

 

 

 

Board Evaluation Process

Our board of directors seeks to operate with the highest degree of effectiveness, supporting a dynamic boardroom culture of independent thought and intelligent debate on critical matters. The Nominating and Corporate Governance Committee oversees this process, which is led by the chair of the committee. Our board and committee evaluation process allows for annual assessment of our board practices and the opportunity to identify areas for improvement.

The annual assessment includes an evaluation of:

 

   

Board structure and composition

 

   

Board culture and relationship with management

 

   

Information received by the board

 

   

Quality of board meetings, board responsibilities and performance

 

   

Current topics

 

 

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The following is an overview of the board evaluation process.

 

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Board Meetings and Committees

During our fiscal year ended December 31, 2021, each director attended at least 75% of the aggregate of (i) the total number of meetings of our board of directors held during the period for which he or she has been a director and (ii) the total number of meetings held by all committees of our board of directors on which he or she served during the periods that he or she served.

Our Corporate Governance Guidelines set out that the Company encourages, but does not require, our directors to attend the annual meeting of stockholders. All of our board members attended our 2021 annual meeting.

Number of board and committee meetings held in 2021

 

 

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Our board of directors has three standing committees. Charters describing the responsibilities of each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are available on the Governance section of our website at http://investors.arista.com. The composition and responsibilities of each of the committees of our board of directors is described below. Members will serve on these committees until their resignation or until as otherwise determined by our board of directors.

 

AUDIT COMMITTEE

 

Chair

 

Lewis Chew (since November 2021)

 

Ann Mather (until November 2021)

 

Members

 

Kelly Battles

 

Mark Templeton

 

Nikos Theodosopoulos

 

Independence/Qualifications:

 

  All committee members are independent under the NYSE listing standards and the heightened independence requirements applicable to Audit Committee members under SEC rules

 

  All committee members are financially literate in accordance with NYSE listing standards and qualify as Audit Committee financial experts under SEC rules

  

 

Key Responsibilities

 

  Providing oversight of our accounting and financial reporting processes and the audit of our financial statements

 

  Assisting the board of directors in oversight of (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) the independent auditor’s qualifications, independence and performance, (iv) our internal accounting and financial controls, and (v) the organization and performance of our internal audit function

 

  Serving as the Qualified Legal Compliance Committee to receive, evaluate, investigate and recommend appropriate responses, as applicable, with respect to any reports of evidence of material violations with regards to us

 

  Providing to our board of directors such information and materials as it may deem necessary to make our board of directors aware of significant financial matters that require the attention of our board of directors

 

  Preparing the report required by the SEC rules to be included in our proxy statement for the annual meeting of stockholders

 

   Providing oversight and review of our risk management policies, including our investment policies

 

  Reviewing and discussing with our management the adequacy and monitoring of our compliance programs with respect to legal, ethical and regulatory requirements, including our Code of Ethics and Business Conduct, compliance with anti-bribery and anti-corruption laws, and compliance with export laws

 

  Reviewing reports from management on our internal compliance policies and procedures

 

  Reviewing and discussing with management the Company’s policies and practices relating to environmental and social responsibility matters

 

  Reviewing and discussing with management our information security policies and internal controls regarding information security

 

 

 

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COMPENSATION COMMITTEE

 

Chair

 

Charles Giancarlo

 

Members

 

Daniel Scheinman

 

Mark Templeton

 

Independence/Qualifications:

 

  All committee members are independent under the NYSE listing standards and the independence requirements applicable to Compensation Committee members under NYSE rules and the heightened independence requirements under SEC rules

  

 

Key Responsibilities

 

  Providing oversight of our compensation policies, plans, benefits programs and overall compensation philosophy

 

  Assisting our board of directors in discharging its responsibilities relating to (i) oversight of the compensation of our Chief Executive Officer and other executive officers, and (ii) approving and evaluating our executive officer compensation plans, policies and programs

 

  Administering our equity compensation plans for our employees

 

  Reviewing corporate goals and objectives relevant to the compensation of our executive officers, evaluating performance in light thereof, and considering factors related to our performance, including accomplishment of our long-term business and financial goals

 

  Evaluating our compensation policies and practices with management to review the relationship between risk management policies and compensation and evaluate compensation policies and practices that could mitigate any such risk

 

  Monitoring compliance with our stock ownership guidelines and clawback policy

 

 

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

 

Chair

 

Daniel Scheinman

 

Members

 

Charles Giancarlo

 

Nikos Theodosopoulos

 

Independence/Qualifications:

 

  All committee members are independent under the NYSE listing standards and SEC rules

  

 

Key Responsibilities

 

  Reviewing and making recommendations regarding corporate governance

 

  Reviewing and making recommendations regarding the composition and size of our board of directors and its committees and determining relevant criteria for board membership, including integrity, diversity, independence, skills, education and business experience

 

  Identifying, evaluating and nominating director candidates

 

  Reviewing conflicts of interest

 

  Reviewing and making recommendations regarding the education of our board of directors

 

  Leading the annual performance review of the board of directors, its committees and management

 

  Reviewing succession planning for our executive officers

 

 

 

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Compensation Committee Interlocks and Insider Participation

None of the members of our Compensation Committee is or has been an officer or employee of our Company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or Compensation Committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board) of any entity that has one or more of its executive officers serving on our board of directors or Compensation Committee.

Considerations in Evaluating Director Nominees

In accordance with the Company’s Corporate Governance Guidelines, in its evaluation of director candidates, including the members of the board of directors eligible for re-election, the Nominating and Corporate Governance Committee will consider: (a) the current size and composition of the board of directors, (b) the needs of the board of directors and the respective committees of the board of directors, (c) such factors as character, integrity, judgment, diversity of experience, independence, area of expertise, corporate experience, length of service, potential conflicts of interest, other commitments and the like, and (d) other factors that the Nominating and Corporate Governance Committee may consider appropriate. The Nominating and Corporate Governance Committee will also consider gender and ethnicity composition requirements in accordance with applicable law. The Nominating and Corporate Governance Committee evaluates these factors, among others, and does not assign any particular weighting or priority to any of these factors.

The Nominating and Corporate Governance Committee requires the following minimum qualifications to be satisfied by any nominee for a position on the board of directors: (a) the highest personal and professional ethics and integrity, (b) proven achievement and competence in the nominee’s field and the ability to exercise sound business judgment, (c) skills that are complementary to those of the existing board of directors, (d) the ability to assist and support management and make significant contributions to the Company’s success, and (e) an understanding of the fiduciary responsibilities that is required of a member of the board of directors and the commitment of time and energy necessary to diligently carry out those responsibilities.

Below is a graphic summarizing the process for our board of directors to identify and review director candidates to join our board:

 

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Mr. Chew, who was appointed to the board by our other directors in July 2021, was initially suggested to the Nominating and Corporate Governance Committee of the board for consideration as a potential director by a third party search firm retained by the Company to assist in identifying and evaluating potential director nominees for board membership.

Stockholder Recommendations for Nominations to the Board of Directors

The Nominating and Corporate Governance Committee will evaluate any recommendation for nominations to our board of directors in accordance with its charter, our amended and restated bylaws, our policies and procedures for director candidates, as well as the regular director nominee criteria described above. Under our Corporate Governance Guidelines, the Nominating and Corporate Governance Committee will consider candidates for our board of directors recommended by stockholders holding at least the minimum amount in market value of the Company’s securities entitled to vote on the election of directors as set forth in applicable SEC rules and regulations prior to the date of the submission of the recommendation so long as such recommendations and nominations comply with the certificate of incorporation and bylaws of the Company and applicable laws, including SEC rules and regulations. Such recommendations must include information about the candidate, including but not limited to, a statement of support by the recommending stockholder, evidence of the recommending stockholder’s ownership of our common stock and a signed letter from the candidate acknowledging that as a member of our board of directors, the candidate will owe fiduciary duties to us and the stockholders. Our Nominating and Corporate Governance Committee has discretion to decide which individuals to recommend for nomination as directors.

Any nomination should be sent in writing to our General Counsel or our Legal Department at Arista Networks, Inc., 5453 Great America Parkway, Santa Clara, California 95054. To be timely for our 2023 annual meeting of stockholders, our General Counsel or Legal Department must receive the nomination no earlier than February 4, 2023 and no later than March 6, 2023.

 

 

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Stockholder Outreach

We believe that effective corporate governance should include regular, constructive conversations with our stockholders. Over the past year, our board of directors engaged with stockholders, including seeking and encouraging feedback from stockholders about our corporate governance practices by conducting stockholder outreach and engagement throughout the year.

 

 

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Communications with the Board of Directors

Interested parties wishing to communicate with our board of directors or with an individual member or members of our board of directors may do so by writing to our board of directors or to the particular member or members of our board of directors, and mailing the correspondence to our General Counsel and Corporate Secretary at Arista Networks, Inc., 5453 Great America Parkway, Santa Clara, California 95054. Each communication should set forth (i) the name and address of the stockholder, as it appears on our books, and if the shares of our common stock are held by a nominee, the name and address of the beneficial owner of such shares, and (ii) the number of shares of our common stock that are owned of record by the record holder and beneficially by the beneficial owner.

Our General Counsel, in consultation with appropriate members of our board of directors as necessary, will review all incoming communications and, if appropriate, all such communications will be forwarded to the appropriate member or members of our board of directors, or if none is specified, to the Chairman of our board of directors.

Risk Management

Risk is inherent with every business and we face a number of risks, including strategic, financial, business and operational, legal and compliance, and reputational. We have designed and implemented processes to manage risk in our operations. Management is responsible for the day-to-day management of risks the Company faces while our board of directors has responsibility for the oversight of risk management. Our board committees assist our board of directors in fulfilling its oversight responsibilities in certain areas of risk.

Our Audit Committee reviews the Company’s risk management processes and procedures, including our internal controls and procedures on financial reporting, our investment policies, and our compliance programs with respect to legal, ethical and regulatory requirements. The management and internal audit teams provide periodic updates on cybersecurity risks and other risks to the Audit Committee. Further, the Audit Committee receives reports and presentations from management on the Company’s risk assessment and mitigation programs, compliance matters, and cybersecurity activities, and the results of various internal audit projects. Key information is shared with the board of directors by the Audit Committee.

 

 

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Board of Directors and Corporate Governance

 

 

The chart below illustrates the responsibilities of our board and board committees in overseeing risk in our operations.

 

 

BOARD OF DIRECTORS

 

  Meets with CEO and other members of the senior management team at quarterly meetings of our board of directors where they discuss strategy and risks facing the Company

 

  Confirms that the risk management processes designed and implemented by management are appropriate and functioning as designed

 

  Reviews strategic and operational risk in the context of reports from the management team, receives reports on all significant committee activities at each regular meeting, evaluates the risks inherent in significant transactions, and provides guidance to management

 

  u   

 

AUDIT COMMITTEE

 

  Assists in the areas of internal control over financial reporting and disclosure controls and procedures, legal and regulatory compliance

 

  Discusses with management and the independent auditor guidelines and policies with respect to risk assessment and risk management

 

  Reviews our major financial risk exposures and the steps management has taken to monitor and control these exposures

 

  Monitors certain key risks on a regular basis throughout the fiscal year, such as cybersecurity risk and risk associated with internal control over financial reporting and liquidity risk

 

  Reviews the adequacy and monitoring of our compliance programs for legal, ethical and regulatory requirements

 

  Reviews our risk management policies, including our investment policies

 

  Reviews management reports on internal compliance policies and procedures

 

  Reviews and discusses with management our policies and practices relating to environmental and social responsibility matters

 

  Reviews and discusses with management our information security policies and internal controls regarding information security

 

    
  u   

 

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

 

  Manages risks associated with board organization, membership and structure, corporate governance and succession planning

 

  Reviews any conflicts of interest

 

    
  u   

 

COMPENSATION COMMITTEE

 

  Assesses risks created by the incentives inherent in our compensation policies

 

  Evaluates compensation policies and practices that could mitigate risks

 

 

 

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Board of Directors and Corporate Governance

 

 

Executive Talent Management and Succession Planning

Our board of directors places a high priority on senior management development and succession planning and recognizes that thoughtful succession planning is critical to creating long-term shareholder value.

Pursuant to our Corporate Governance Guidelines, the Nominating and Corporate Governance Committee, in consultation with the full board of directors, is primarily responsible for succession planning for the role of chief executive officer. In addition, the Nominating and Corporate Governance Committee monitors management’s succession plans for other key executives.

The Nominating and Corporate Governance Committee evaluates our key executives, discusses their development and develops succession plans with the view of ensuring that a strong pipeline of talent is being developed for planned or unplanned events. In addition, our lead independent director facilitates discussions among independent directors about succession planning at executive sessions.

Director Compensation

The following table provides information regarding the total compensation of each of our non-employee directors in 2021. Directors who are also our employees do not receive additional compensation for their service as directors. In particular, Jayshree Ullal, a named executive officer, and Andreas Bechtolsheim, an executive officer, did not receive additional compensation for their service as directors.

 

Director

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

Kelly Battles

     85,000        232,400           317,400  

Lewis Chew(3)

     42,500        222,704           265,204  

Charles Giancarlo

     97,000                  97,000  

Ann Mather

     100,000                  100,000  

Daniel Scheinman

     142,000                  142,000  

Mark Templeton

     95,000        232,400           327,400  

Nikos Theodosopoulos

     95,000        232,400           327,400  

 

(1)

The amounts reported represent the fees earned for service on our board of directors and committees of our board of directors for 2021.

 

(2)

In accordance with SEC rules, the amounts shown reflect the aggregate grant date fair value of restricted stock units granted to non-employee directors during 2021, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC 718”). The grant date fair value for restricted stock units is measured based on the closing price of Arista’s common stock on the date of grant. Mr. Chew received an award of 2,460 restricted stock units on July 19, 2021, the effective date of his appointment to the board. Each of Ms. Battles and Messrs. Templeton and Theodosopoulos received an award of 2,776 restricted stock units on June 1, 2021. The number of shares subject to each of these restricted stock unit awards has been adjusted to reflect our four-for-one stock split that was effective November 11, 2021.

 

(3)

Mr. Chew was appointed to our board of directors and the Audit Committee on July 19, 2021. The amounts reported represent the pro-rated cash retainer and equity grant earned for a partial year of service on our board of directors and the Audit Committee.

 

 

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Board of Directors and Corporate Governance

 

 

The following table lists all outstanding equity awards held by our non-employee directors as of December 31, 2021.

 

Director

  Stock
Awards (#)
(1)(2)
    Option
Awards  (#)
(2)
 

Kelly Battles

    1,388        

Lewis Chew

    1,228        

Charles Giancarlo

    1,756        

Ann Mather

    1,756       1,668  

Daniel Scheinman

    1,756        

Mark Templeton

    1,388        

Nikos Theodosopoulos

    1,388        

 

(1)

Represents the number of restricted stock units unvested as of December 31, 2021.

 

(2)

The stock and option awards have been adjusted to reflect our four-for-one stock split that was effective November 11, 2021.

With respect to 2021 board service, our board of directors approved compensation to each of our non-employee directors as follows:

 

    a $75,000 cash retainer for general board service, except that our lead independent director received a $120,000 cash retainer;

 

    a $25,000 cash retainer for chairing the Audit Committee;

 

    a $12,000 cash retainer for chairing the Compensation Committee;

 

    a $12,000 cash retainer for chairing the Nominating and Corporate Governance Committee;

 

    a $10,000 cash retainer for non-chair service on each committee.
 

 

Prior to April 2020, under our outside director compensation policy, each non-employee director elected at an annual meeting was granted restricted stock units on the date of the annual meeting with a total value of $750,000 (based on the average closing stock price for the 30 trading day period ending on the applicable annual meeting) that vested quarterly over three years.

In April 2020, our Compensation Committee recommended, and our board of directors approved, a revised policy for annual equity grants to outside board members of restricted stock units with a total value of $225,000 (based on the average closing stock price for the 30 trading day period ending on the grant date) that vest quarterly (on each Company standard quarterly vesting date following the grant date) over one year and are subject to continued service on the board (the “Revised Director Equity Policy”). Grants under the Revised Director Equity Policy shall be automatic immediately following an applicable annual meeting. For our Class III non-employee directors, the annual equity grants began upon their election at the 2020 annual meeting; for our Class I non-employee directors, the annual equity grants began upon their election at the 2021 annual meeting; and for our Class II non-employee directors, the annual equity grants will begin upon their election at the Annual Meeting.

STOCK OWNERSHIP GUIDELINES

In April 2019, our board of directors adopted stock ownership guidelines that are designed to encourage our directors and our Chief Executive Officer to achieve and maintain a meaningful equity stake in our Company and more closely align their interests with those of our stockholders. The guidelines provide that our non-employee directors should accumulate and hold investment levels of three times the annual cash base retainer for service on the board of directors within five years from the later of the date of the adoption of the stock ownership guidelines or the date such director is appointed or elected.

All of our directors and our Chief Executive Officer are on track to meet these guidelines based on their current rate of stock accumulations in the time frames set out in the guidelines.

 

 

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 PROPOSAL NO. 1

  

      ELECTION OF DIRECTORS

  

Our board of directors is currently composed of nine members. However, our board of directors has resolved that the authorized number of directors will be decreased from nine to eight effective at the Annual Meeting in light of Ms. Mather’s term of office as a Class II director ending at the Annual Meeting. We are grateful for Ms. Mather’s distinguished service and leadership on the board and its committees throughout her tenure, including chairing the Audit Committee for over seven years.

In accordance with our amended and restated certificate of incorporation, our board of directors is divided into three staggered classes of directors. At the Annual Meeting, two Class II directors will be elected for a three-year term to succeed the same class whose term is then expiring.

Each director’s term continues until the election and qualification of his or her successor, or such director’s earlier death, resignation, or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of our directors. This classification of our board of directors may have the effect of delaying or preventing changes in control of our Company.

Nominees

Our Nominating and Corporate Governance Committee has recommended, and our board of directors has approved, Charles Giancarlo and Daniel Scheinman, as nominees for election as Class II directors at the Annual Meeting. If elected, each of Charles Giancarlo and Daniel Scheinman will serve as Class II directors until the 2025 annual meeting of stockholders and until their successors are duly elected and qualified. Each of the nominees is currently a director of our Company.

For information concerning the nominees, please see the section titled “Board of Directors and Corporate Governance.”

If you are a stockholder of record and you sign your proxy card or vote by telephone or over the Internet but do not give instructions with respect to the voting of directors, your shares will be voted “FOR” the election of:

 

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   Charles Giancarlo and Daniel Scheinman have each consented to being a nominee and to serving as a director, if elected; however, in the event that a director nominee is unable to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by our board of directors to fill such vacancy. If you are a street name stockholder and you do not give voting instructions to your broker or nominee, your broker will leave your shares unvoted on this matter.

Vote Required

The election of directors is by plurality vote. “Plurality” means that the nominees who receive the largest number of votes cast “for” are elected as directors. As a result, any shares not voted “for” a particular nominee (whether as a result of a withheld vote or a broker non-vote) will not be counted in such nominee’s favor and will have no effect on the outcome of the election. You may vote “for” or “withhold” on each of the nominees for election as a director.

 

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THE BOARD OF DIRECTORS RECOMMENDS A VOTE

“FOR” EACH OF THE NOMINEES NAMED ABOVE.

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 PROPOSAL NO. 2

  

      ADVISORY VOTE ON EXECUTIVE

  

      COMPENSATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enables stockholders to approve, on an advisory or non-binding basis, the compensation of our named executive officers as disclosed pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all of our named executive officers and the philosophy, policies and practices described in this proxy statement.

The say-on-pay vote is advisory, and therefore not binding on us, the Compensation Committee or our board of directors. The say-on-pay vote will, however, provide information to us regarding investor sentiment about our executive compensation philosophy, policies and practices, which the Compensation Committee will be able to consider when determining executive compensation for the remainder of the current fiscal year and beyond. Our board of directors and our Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will communicate directly with stockholders to better understand the concerns that influenced the vote, consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.

We believe that the information provided in the “Executive Compensation” section of this proxy statement, and in particular the information discussed in “Executive Compensation—Compensation Discussion and Analysis—Executive Compensation Philosophy and Objectives” beginning on page 39 below, demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s interests are aligned with our stockholders’ interests to support long-term value creation. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that the stockholders approve, on an advisory basis, the compensation paid to the named executive officers, as disclosed in the proxy statement for the Annual Meeting pursuant to the compensation disclosure rules of the SEC, including the compensation tables and narrative discussion, and other related disclosure.”

Vote Required

The advisory vote on executive compensation requires the affirmative vote of a majority of the shares of our common stock present at the Annual Meeting (including by proxy) and entitled to vote thereon. Abstentions will have the effect of a vote AGAINST the proposal and broker non-votes will have no effect.

 

                 LOGO    THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION.   LOGO                 

 

 

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 PROPOSAL NO. 3

  

     ADVISORY VOTE ON THE FREQUENCY

  

     OF FUTURE ADVISORY VOTES ON

  

     NAMED EXECUTIVE OFFICER

  

     COMPENSATION

The Dodd-Frank Act and Section 14A of the Exchange Act also enable our stockholders to indicate their preference at least once every six years regarding how frequently we should solicit a non-binding advisory vote on the compensation of our named executive officers as disclosed in our proxy statement. Accordingly, we are asking our stockholders to indicate whether they would prefer an advisory vote every one, two or three years. Alternatively, stockholders may abstain from casting a vote.

After considering the benefits and consequences of each alternative, our board of directors recommends that the advisory vote on the compensation of our named executive officers be submitted to the stockholders each year. In formulating its recommendation, our board of directors considered that, while our compensation strategies are related to both short-term and longer-term business outcomes, compensation decisions are made annually and an annual advisory vote on executive compensation will allow stockholders to provide more frequent feedback on our compensation philosophy, policies and practices. We understand that our stockholders may have different views as to what is the best approach for the company, and we look forward to hearing from our stockholders on this proposal.

While our board of directors believes that its recommendation is appropriate at this time, the stockholders are not voting to approve or disapprove that recommendation, but are instead asked to indicate their preference, on an advisory basis, as to whether the non-binding advisory vote on the approval of our named executive officer compensation should be held every year, two years or three years.

Our board of directors and our Compensation Committee value the opinions of our stockholders in this matter and, to the extent there is any significant vote in favor of one time period over another, will take into account the outcome of this vote when making future decisions regarding the frequency of holding future advisory votes on the compensation of our named executive officers. However, because this is an advisory vote and therefore not binding on our board of directors or our company, our board of directors may decide that it is in the best interests of our stockholders that we hold an advisory vote on the compensation of our named executive officers more or less frequently than the option preferred by our stockholders. The results of the vote will not be construed to create or imply any change or addition to the fiduciary duties of our board of directors.

Vote Required

The alternative among one year, two years or three years that receives the highest number of votes from the holders of shares of our common stock present at the Annual Meeting (including by proxy) and entitled to vote thereon will be deemed to be the frequency preferred by our stockholders. Abstentions and broker non-votes will have no effect on this proposal.

 

                 LOGO    THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO HOLD FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION EVERY “ONE YEAR.”   LOGO                 

 

 

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 PROPOSAL NO. 4

  

      RATIFICATION OF APPOINTMENT

  

      OF INDEPENDENT REGISTERED

  

      PUBLIC ACCOUNTING FIRM

Our Audit Committee has appointed Ernst & Young LLP (“EY”), an independent registered public accounting firm, to audit our consolidated financial statements for our fiscal year ending December 31, 2022. During our fiscal years ended December 31, 2021 and 2020, EY served as our independent registered public accounting firm.

Notwithstanding the appointment of EY and even if our stockholders ratify the appointment, our Audit Committee, in its discretion, may appoint another independent registered public accounting firm at any time during our fiscal year if our Audit Committee believes that such a change would be in the best interests of our Company and stockholders. At the Annual Meeting, our stockholders are being asked to ratify the appointment of EY as our independent registered public accounting firm for our fiscal year ending December 31, 2022. Our Audit Committee is submitting the appointment of EY to our stockholders because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate governance. Representatives of EY are expected to attend the Annual Meeting virtually and they will have an opportunity to make a statement and will be available to respond to appropriate questions from our stockholders.

If our stockholders do not ratify the appointment of EY, our Audit Committee may reconsider the appointment of EY.

Fees Paid to the Independent Registered Public Accounting Firm

The following table presents fees for professional audit services and other services rendered to our Company by EY for our fiscal years ended December 31, 2020 and 2021.

 

 
  

 

  2020     2021  
 
  

 

  (in thousands)  

Audit Fees(1)

  $ 2,559     $ 2,748  

Audit-Related Fees(2)

           

Tax Compliance Fees(3)

    1,042       842  

Tax Advice and Planning Fees(4)

    577       469  

All Other Fees(5)

           

Total Fees

  $ 4,178     $ 4,059  

 

(1)

Audit Fees consist of professional services rendered in connection with the audit of our annual consolidated financial statements, including audited financial statements presented in our Annual Report on Form 10-K and services that are normally provided by the independent registered public accountants in connection with statutory and regulatory filings or engagements for those fiscal years.

 

(2)

Audit-Related Fees consist of fees for professional services for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services include accounting consultations concerning financial accounting and reporting standards.

 

(3)

Tax Compliance Fees consist of fees for tax compliance and the preparation of original and amended tax returns and refund claims.

 

(4)

Tax Advice and Planning Fees consist of fees for tax advice and tax planning assistance, including non-recurring tax assistance in connection with acquisitions and intellectual property alignment.

 

(5)

All Other Fees consist of fees billed for products and services provided by the independent registered public accountants other than those that meet the criteria above.

Auditor Independence

In our fiscal year ended December 31, 2021, there were no other professional services provided by EY, other than those listed above, that would have required our Audit Committee to consider their compatibility with maintaining the independence of EY.

 

 

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Proposal No. 4—Ratification of Appointment of Independent Registered Public Accounting Firm

 

 

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

Our Audit Committee has established a policy governing our use of the services of our independent registered public accounting firm. Under the policy, our Audit Committee is required to pre-approve all audit and non-audit services performed by our independent registered public accounting firm in order to ensure that the provision of such services does not impair the public accountants’ independence. All services and fees paid to EY for our fiscal years ended December 31, 2020 and 2021 were pre-approved by our Audit Committee.

Vote Required

The ratification of the appointment of EY requires the affirmative vote of a majority of the shares of our common stock present at the Annual Meeting (including by proxy) and entitled to vote thereon. Abstentions will have the effect of a vote AGAINST the proposal and broker non-votes will have no effect.

 

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THE BOARD OF DIRECTORS RECOMMENDS A VOTE

“FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP.

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 REPORT OF THE AUDIT COMMITTEE

 

The Audit Committee is a committee of the board of directors comprised solely of independent directors as required by the listing standards of the New York Stock Exchange and rules and regulations of the SEC. The Audit Committee operates under a written charter approved by the board of directors, which is available on the Governance section of our website at http://investors.arista.com. The composition of the Audit Committee, the attributes of its members and the responsibilities of the Audit Committee, as reflected in its charter, are intended to be in accordance with applicable requirements for corporate audit committees. The Audit Committee reviews and assesses the adequacy of its charter and the Audit Committee’s performance on an annual basis.

With respect to the Company’s financial reporting process, the management of the Company is responsible for (1) establishing and maintaining internal controls and (2) preparing the Company’s consolidated financial statements. Our independent registered public accounting firm, Ernst & Young LLP (“EY”), is responsible for auditing these financial statements. It is the responsibility of the Audit Committee to oversee these activities. It is not the responsibility of the Audit Committee to prepare our financial statements. These are the fundamental responsibilities of management. In the performance of its oversight function, the Audit Committee has:

 

    reviewed and discussed the audited financial statements with management and EY;

 

    discussed with EY the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC; and
    received the written disclosures and the letter from EY required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with EY its independence.
 

 

Based on the Audit Committee’s review and discussions with management and EY, the Audit Committee recommended to the board of directors that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for filing with the SEC.

Respectfully submitted by the members of the Audit Committee of the board of directors:

Lewis Chew (Chair)

Kelly Battles

Mark Templeton

Nikos Theodosopoulos

This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (“Securities Act”), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act.

 

 

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 EXECUTIVE OFFICERS

 

The following table identifies certain information about our executive officers as of April 6, 2022. Officers are appointed by our board of directors to hold office until their successors are appointed. There are no family relationships among any of our directors or executive officers.

 

 
Name   Age     Position

Jayshree Ullal

 

 

61

 

 

Chief Executive Officer, President and Director

Andreas Bechtolsheim

 

 

66

 

 

Founder, Chief Development Officer, Director and Chairman of the Board of Directors

Ita Brennan

 

 

55

 

 

Senior Vice President, Chief Financial Officer

Kenneth Duda

 

 

50

 

 

Founder, Chief Technology Officer and Senior Vice President, Software Engineering

John McCool

 

 

62

 

 

Chief Platform Officer, Senior Vice President of Engineering Operations

Anshul Sadana

 

 

45

 

 

Chief Operating Officer

Marc Taxay

 

 

53

 

 

Senior Vice President, General Counsel

For biographical information about Ms. Ullal and Mr. Bechtolsheim, please see “Board of Directors and Corporate Governance-Continuing Directors.”

 

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   Ita Brennan

     

 

 

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        Ms. Brennan joined Arista Networks, Inc. in May 2015 as Senior Vice President and Chief Financial Officer. From February 2014 to May 2015, Ms. Brennan served as chief financial officer of a stealth start up firm in the energy sector. Prior to that, Ms. Brennan held various roles at Infinera Corporation, an intelligent transport networking company, most recently as chief financial officer from July 2010 to February 2014 and vice president of finance and corporate controller from July 2006 to July 2010. From 1997 to 2006, Ms. Brennan held various roles at Maxtor Corporation, a multi-billion dollar information storage solutions company, including vice president of finance for the company’s worldwide operations. Ms. Brennan has been a member of the board of directors of Cadence Design Systems, Inc., a multinational computational software company, since March 2020, and a member of the board of directors of Planet Labs PBC, an Earth-imaging satellite company, since June 2021, where she also serves as chair of the audit committee. She previously served as a member of the board of directors of LogMeIn, Inc., a provider of web-based remote access software and services from November 2018 to August 2020. Ms. Brennan is a fellow of the Institute of Chartered Accountants and a public accounting alumna of Deloitte and Touche, having worked at the firm in both Ireland and the U.S.

 

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   Kenneth Duda

     

 

 

LOGO         Mr. Duda is one of our founders and has served in various roles with us from 2004 to present. Since September 2011, Mr. Duda has served as our Chief Technology Officer and Senior Vice President of Software Engineering. From April 1999 to October 2004, Mr. Duda served as chief technology officer of There, Inc., a virtual worlds company. From September 1996 to April 1999, Mr. Duda was leading the software development of the switch kernel for the Gigabit System Business Unit with Cisco Systems, Inc. Mr. Duda holds B.S. and M.S. degrees in Computer Science and Electrical Engineering from the Massachusetts Institute of Technology and a Ph.D. degree in Computer Science from Stanford University.

 

 

 

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Executive Officers

 

 

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   John McCool

     

 

 

LOGO         Mr. McCool joined Arista Networks, Inc. in March 2017 as Chief Platform Officer and Senior Vice President of Engineering and Operations. From 2014 to 2017, Mr. McCool served as senior vice president and general manager of DSDD, a DellEMC business, a products, services and solutions provider for information management and storage. From 2013 to 2014, Mr. McCool served as president and chief executive officer of Firetide, Inc., a provider of wireless mesh networks. From 1996 to 2013, Mr. McCool served in various positions at Cisco Systems, Inc., including senior vice president and general manager for the data center switching and services group with his last position as senior vice president—global sales, enterprise segment. Mr. McCool holds a B.S. degree in Electrical Engineering from Drexel University and an M.S. degree in Computer Engineering from Santa Clara University.

 

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   Anshul Sadana

     

 

 

LOGO         Mr. Sadana has served as our Chief Operating Officer since March 2019. He served as our Chief Customer Officer from October 2016 through February 2019. From January 2012 to September 2016, Mr. Sadana served as our Senior Vice President of Customer Engineering. From July 2007 to December 2011, Mr. Sadana served in various other positions with us including Vice President of Customer Engineering. From November 1999 to July 2007, Mr. Sadana was the senior engineering manager of Gigabit Switching Business Unit at Cisco Systems, Inc. Mr. Sadana holds a B.E. degree in Electronics from the University of Mumbai, an M.S. degree in Computer Science from the University of Illinois at Chicago and an executive M.B.A. degree from the Wharton School of Business.

 

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   Marc Taxay

     

 

 

LOGO         Mr. Taxay has served as our Senior Vice President, General Counsel since March 2016 and as our General Counsel since February 2013. From 2007 to 2013, Mr. Taxay served as the senior vice president and general counsel of MedeAnalytics, Inc., a healthcare analytics company. From 2006 to 2007, Mr. Taxay served as the assistant general counsel of Coremetrics, Inc. a digital marketing company. From 2002 to 2006, Mr. Taxay worked as a partner at Cohen & Grigsby. Mr. Taxay holds a B.A. degree in Political Science and a J.D. from The University of Michigan.

 

 

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 EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

The compensation provided to those individuals who are our named executive officers for our fiscal year ended December 31, 2021 (our “Named Executive Officers”) is set forth in detail in the Fiscal 2021 Summary Compensation Table and the other tables that follow this Compensation Discussion and Analysis. The following discussion provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program, and each component of compensation that we provide to our Named Executive Officers. In addition, we explain how and why the Compensation Committee of our board of directors arrived at the specific compensation policies and decisions for our Named Executive Officers. The following are the individuals who served as our Named Executive Officers for fiscal 2021:

 

    Jayshree Ullal, our President and Chief Executive Officer;

 

    Ita Brennan, our Chief Financial Officer;

 

    Kenneth Duda, our Chief Technology Officer and Senior Vice President of Software Engineering;
    Anshul Sadana, our Chief Operating Officer; and

 

    Marc Taxay, our Senior Vice President, General Counsel

 

 

Our board of directors has delegated to the Compensation Committee authority and responsibility for establishing and overseeing salaries, administering the incentive compensation programs, and establishing and overseeing other forms of compensation for our executive officers, general remuneration policies for the balance of our employee population and for overseeing and administering our equity incentive and benefits plans.

The following compensation governance standards in our executive compensation policies and practices are currently in effect:

 

What We Do                  What We Do Not Do

    

 

LOGO

    

LOGO    Annual Review. Annual review of our executive compensation program.

 

LOGO    Performance-Based Equity. In 2020, we introduced performance-based equity as a significant part of our compensation program to our Chief Executive Officer, and in 2021, we expanded performance-based equity as a significant part of our compensation program for our other Named Executive Officers as well.

 

LOGO    Independence. Our Compensation Committee is made up solely of independent directors and makes all executive compensation decisions.

 

LOGO    Compensation Consultant. Our Compensation Committee engages its own independent compensation consultant to assist with its compensation reviews.

 

LOGO    Stock Ownership Guidelines. To align our Chief Executive Officer’s long-term interests with those of our stockholders, our Chief Executive Officer is required to own specified minimum levels of Company stock.

 

LOGO    Clawback Policy. We may seek the recovery of cash incentive compensation and performance-based equity compensation paid to our executive officers.

            

LOGO   No Executive-Only Retirement Programs. We do not offer pension arrangements, retirement plans, or nonqualified deferred compensation plans or arrangements to our executive officers, other than the plans generally available to all employees.

 

LOGO   No Excise Tax Gross-Ups. We do not offer golden parachute tax gross-ups to any of our Named Executive Officers or other executive officers.

 

LOGO   No “Single-Trigger” Benefits and Limited “Double-Trigger” Benefits. Potential change in control payments and benefits are limited in nature and are received only in connection with the termination of employment without cause or for good reason in connection with or following a change in control.

 

 

 

 

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Overview

FISCAL 2021 BUSINESS HIGHLIGHTS

Our executive compensation program is designed to align the compensation of our executives with our operating and financial performance and create value for our stockholders. Accordingly, you should consider our executive compensation decisions in the context of our financial and operational performance during fiscal 2021, including:

Revenue

 

 

LOGO

    Revenue for our fiscal 2021 was $2.95 billion, representing an increase of 27.2% compared to fiscal 2020, and 6.7% above our internal targets set at the beginning of the year. This outperformance reflected strong sales to our enterprise and other cloud and service provider customers throughout the year. In addition, we experienced healthy qualification and order activity with our cloud titan customers in the second half of 2021 as we ramped production of our next generation products. We exited the year with over 8,000 customers and continue to add new customers and expand and diversify our market position.

Operating Income

 

 

LOGO

    Our non-GAAP operating income for fiscal 2021 was $1.14 billion or 38.7% of revenue, representing a 30.3% increase compared to fiscal 2020 and 10.6% above our internal targets set at the beginning of the year. This outperformance reflected the benefit of increased revenue growth and careful expense management throughout the year. The ratio of non-GAAP operating income to revenue is a key metric for our stockholders as it provides a consistent measure of the profitability of our business and as a result we used non-GAAP operating income as a metric in our 2021 Bonus Plan (as defined below).

Product Innovations

 

 

LOGO

   

In 2021, Arista expanded the Arista EOS® network stack with the introduction of Network Data Lake (NetDLTM) for data-driven cloud networking. Arista introduced a new zero trust security framework, Multi-Domain Macro-Segmentation Service, a suite of capabilities for integrating security policy with the network through open and consistent network segmentation. Arista expanded its Cognitive Campus with the latest generation Wi-Fi 6E solution to meet enterprise IoT and collaborative applications requirements. Arista expanded 400G for enterprise and cloud customers with the next generation of the 7050X and 7060X Series; providing performance and cost benefits for customers of all sizes as they transition to 400G networks.

 

 

 

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FISCAL 2021 EXECUTIVE COMPENSATION HIGHLIGHTS

As reflected in our general compensation philosophy and objectives, our executive compensation program is intended to reward performance, attract and retain key personnel and increase stockholder value. In light of our financial performance as described in the “Fiscal 2021 Business Highlights” section above, our fiscal 2021 executive compensation program was intended to reward performance against our financial and key business objectives and incentivize successful performance in these areas. Accordingly, our key executive compensation actions in fiscal 2021 advanced these objectives:

 

    No Base Salary Increases—We did not increase base salaries for our Named Executive Officers.

 

    Annual Bonuses Reflecting Pay for Performance—As noted above, in fiscal 2021 we achieved revenue of approximately $2.95 billion representing an increase of 27.2% compared to fiscal 2020, and 6.7% above our internal targets, combined with Operating Income of $1.14 billion an increase of 30.3% from 2020 and 10.6% above our internal targets.

 

    

In addition to this financial performance, we made significant progress on our business diversification goals with strong growth in our enterprise and provider businesses. We demonstrated continued excellence in product quality, innovation and support as demonstrated by healthy new product qualification and order activity with

  our cloud titan customers. Performance across all of these metrics resulted in payments to our Named Executive Officers under the 2021 Bonus Plan.

 

    Equity Awards Promoting Our Stockholders Interests—Long-term equity incentives constitute a significant majority of compensation paid to Named Executive Officers in 2021. Long-term equity incentives align the interests of executives with those of our stockholders.

 

    Equity Awards Subject to Achievement—Performance-based equity was continued as an important portion of our executive compensation program for our Chief Executive Officer, and implemented for all of our other Named Executive Officers.
 

 

Effect of Most Recent Stockholder Advisory Vote on Executive Compensation

Our Compensation Committee considers the results of the annual stockholder advisory vote on the compensation of our Named Executive Officers and stockholder feedback on our executive compensation program as part of its annual executive compensation review. At our 2021 annual meeting of stockholders, approximately 90.4% of the votes cast approved the compensation program for our Named Executive Officers as described in our 2021 proxy statement. Based on this strong stockholder support, our Compensation Committee determined not to make significant changes to our existing executive compensation program and policies, except that our Compensation Committee extended the performance-based equity component of our executive compensation program in the form of performance-based restricted stock units (“PRSUs”) that was implemented for only our Chief Executive Officer in 2020 to all of our Named Executive Officers. Our Compensation Committee continues to evaluate the executive compensation program and policies to determine the most appropriate ways of effecting our executive compensation philosophy and objectives. Our Compensation Committee currently intends to continue to consider the results of the annual advisory vote on executive compensation and stockholder feedback as data points in making executive compensation decisions.

Executive Compensation Philosophy and Objectives

We operate in a highly competitive business environment, which is characterized by frequent technological advances. To successfully grow our business in this dynamic environment, we must continually develop and refine our products and services to stay ahead of our competitors. To achieve these objectives, we need a highly talented and seasoned team of technical, sales, marketing, operations, and other business professionals. We compete with other companies in our industry and other technology companies in the Silicon Valley to attract and retain a skilled management team. To attract and retain qualified executive candidates, our Compensation Committee recognizes that it needs to develop competitive compensation packages. At the same time, our Compensation Committee is sensitive to the need to integrate new Named Executive Officers into our executive compensation structure that we were seeking to develop, balancing both competitive and internal equity considerations. To meet this challenge, we have embraced a compensation philosophy of offering our Named Executive Officers a competitive total compensation program, which we view as the sum of base salary, cash performance-based incentives, equity compensation and employee benefits, each of which recognizes and rewards individual performance and contributions to our success, allowing us to attract, retain, and motivate talented executives with the skills and abilities needed to drive our desired business results.

 

 

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The specific objectives of our executive compensation program are to:

 

    reward the successful achievement of our financial growth objectives;

 

    drive the development of a successful and profitable business;

 

    attract, motivate, reward, and retain highly qualified executives who are important to our success;

 

    recognize strong performers by offering cash performance-based incentive compensation and equity awards that have the potential to reward individual achievement as well as contributions to our overall success; and

 

    create value for our stockholders.
 

 

COMPENSATION PROGRAM DESIGN

Our executive compensation program for fiscal 2021 reflected our stage of development as a growing publicly traded company. Accordingly, the compensation of our Named Executive Officers consisted of base salary, a short-term cash incentive compensation opportunity, long-term equity compensation in the form of PRSUs for our Chief Executive Officer and both PRSUs and time-based restricted stock units (“RSUs”) for our other Named Executive Officers, and certain employee health and welfare benefits.

We offer cash compensation in the form of base salaries and cash incentive compensation opportunities with an annual payment component. Typically, we have structured our annual cash incentive compensation opportunities to focus on the achievement of specific short-term financial and operational objectives that will further our longer-term growth objectives.

Additionally, equity awards for shares of our common stock serve as a key component of our executive compensation program. For 2021, we granted (i) PRSUs (which become eligible to vest only if the threshold performance is achieved) to all of our Named Executive Officers and (ii) RSUs (which provide certain value to recipients and limit dilution to our stockholders) to our Named Executive Officers other than our Chief Executive Officer. In the future, we may introduce other forms of equity awards, as we deem appropriate, into our executive compensation program to offer our Named Executive Officers additional types of long-term incentive compensation that further the objective of aligning the recipient’s interests with those of our stockholders.

Finally, we offer executives standard health and welfare benefits that are generally available to our other employees, including medical, dental, vision, flexible spending accounts, life insurance and 401(k) plans.

We have not adopted any formal policies or guidelines for allocating compensation between current and long-term compensation or between cash and non-cash compensation, although we use competitive market data to understand the competitive market framework for pay mix. Within this overall framework, our Compensation Committee reviews each component of executive compensation separately and also takes into consideration the value of each Named Executive Officer’s compensation package as a whole and its relative value in comparison to our other Named Executive Officers.

Our Compensation Committee evaluates our compensation philosophy and executive compensation program as circumstances require, and reviews executive compensation annually. As part of this review, we expect that our Compensation Committee will apply our philosophy and the objectives outlined above, together with consideration for the levels of compensation that we would be willing to pay to ensure that our executive compensation remains competitive and that we meet our retention objectives, as well as the cost to us if we were required to find a replacement for a key executive officer.

COMPENSATION-SETTING PROCESS

Role of our Compensation Committee

Compensation decisions for our executives are made by our Compensation Committee. Currently, our Compensation Committee is responsible for reviewing, evaluating and approving the compensation arrangements, plans, policies, and practices for our Named Executive Officers and overseeing and administering our cash-based and equity-based compensation plans.

Each fiscal year, our Compensation Committee, after consulting with our management team and its compensation consultant, establishes our corporate performance objectives and makes decisions with respect to any base salary adjustment, and approves the corporate performance objectives and target annual cash incentive compensation opportunities and equity awards for our executive officers, including our Named Executive Officers, for the upcoming fiscal year. With respect to (i) our cash incentive compensation plan and (ii) the performance-based equity grant to our Named Executive Officers in 2021, our Compensation Committee determines the applicable goals for each corporate performance objective used for the applicable year.

Our Compensation Committee reviews our executive compensation program from time to time, including any incentive compensation plans, to determine whether they are appropriate, properly coordinated, and achieve their intended purposes, and to make any modifications to existing plans and arrangements or to adopt new plans or arrangements.

 

 

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Role of Management

In carrying out its responsibilities, our Compensation Committee works with members of our management team, including our Chief Executive Officer and our Vice President, Global Human Resources. Typically, our management team (together with our compensation consultant) assists our Compensation Committee in the execution of its responsibilities by providing information on corporate and individual performance, market data, and management’s perspective and recommendations on compensation matters.

Typically, except with respect to her own compensation, our Chief Executive Officer will make recommendations to our Compensation Committee regarding compensation matters, including the compensation of our executive officers. Our Chief Executive Officer also participates in meetings of our Compensation Committee, except with respect to discussions involving her own compensation in which case she leaves the meeting.

While our Compensation Committee solicits the recommendations and proposals of our Chief Executive Officer with respect to compensation-related matters, these recommendations and proposals are only one factor in our Compensation Committee’s decision-making process.

Role of Compensation Consultant

Our Compensation Committee is authorized to retain the services of one or more executive compensation advisors from time to time, as it sees fit, in connection with carrying out its duties.

In fiscal 2021, our Compensation Committee continued to engage AON, a national compensation consulting firm, to assist us in executing our executive compensation strategy and guiding principles, assessing current executive total compensation levels against competitive market practices, developing a compensation peer group and advising on potential executive compensation decisions for fiscal 2021. Our Compensation Committee provided AON with instructions regarding the goals of our executive compensation program and the parameters of the competitive review of executive officer compensation packages that it was to conduct. In particular, the Compensation Committee instructed AON to analyze whether the compensation packages of our executive officers were consistent with our compensation philosophy and competitive relative to market comparables. The Compensation Committee further instructed AON to evaluate the following components to assist the Compensation Committee in establishing fiscal 2021 compensation: base salary; target and actual annual incentive compensation; target and actual total cash compensation (base salary and annual incentive compensation); long-term incentive compensation (equity awards); target and actual total direct compensation (base salary, annual incentive compensation and long-term incentive compensation); and beneficial ownership of our common stock.

AON does not provide any services to us other than the services provided to our Compensation Committee. Our Compensation Committee has assessed the independence of AON taking into account, among other things, the factors set forth in Exchange Act Rule 10C-1 and the listing standards of the New York Stock Exchange, and has concluded that no conflict of interest exists with respect to the work that AON performs for our Compensation Committee.

Use of Competitive Data

To assess the competitiveness of our executive compensation program and to assist in setting compensation levels, AON provided market data for the compensation peer group approved by our Compensation Committee.

Competitive Positioning

In fiscal 2021, our Compensation Committee continued to compare and analyze our executive compensation program with that of a formal compensation peer group of companies.

In fiscal 2020, our Compensation Committee reviewed our executive compensation peer group, highlighting potential outliers in the existing group and considering a broader screen of the technology market. In considering an updated peer group, our Compensation Committee considered the following criteria: (i) companies in the computer networking, communication products/services and software sectors with a focus on growing technology companies; (ii) companies with revenues between $1 billion to $5.5 billion (approximately 0.5x to 2.5x of our then-current trailing 12-month revenue); (iii) companies with market capitalization generally between $5 and $35 billion (approximately 0.3x to 2x of our then-current market capitalization); and (iv) companies with positive revenue growth. As a result, the following group was our executive compensation peer group for fiscal 2021 compensatory decisions made prior to July 19, 2021:

 

 

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Executive Compensation Peer Group from July 20, 2020 to July 18, 2021

 

Akamai Technologies    F5    Nutanix    Twitter
Autodesk    Fortinet    Palo Alto Networks    VMWare
Citrix Systems    Juniper Networks    ServiceNow    Workday
Dropbox    NetApp    Splunk   

 

With respect to fiscal 2021 executive compensation decisions made on and following July 19, 2021, our Compensation Committee reconsidered the peer group, highlighting potential outliers in the existing group and adjusting for changes in our market capitalization. In considering an updated peer group, our Compensation Committee considered the following criteria: (i) companies in the computer networking, communication products/services and software sectors with a focus on growing technology companies; (ii) companies with revenues between $1 billion to $5.5 billion (approximately 0.5x to 2.5x of our then-current trailing 12-month revenue); (iii) companies with market capitalization generally between $8 and $52 billion (approximately 0.3x to 2x of our then-current market capitalization); and (iv) companies with positive revenue growth, with a preference for companies at or above 10% revenue growth. As a result, the following group was our executive compensation peer group for fiscal 2021 compensatory decisions made on and following July 19, 2021:

Executive Compensation Peer Group on and following July 19, 2021

 

Akamai Technologies    F5    Nutanix    Twitter
Autodesk    Fortinet    Palo Alto Networks    VMWare
Citrix Systems    Juniper Networks    ServiceNow    Workday
Dropbox    NetApp    Splunk   

 

As a result of changes in our compensation peer group, we positioned at the 21st percentile in terms of revenue and the 53rd percentile in terms of market capitalization.

AON provides our Compensation Committee with market data from our compensation peer group regarding each element of our executive compensation program. However, our Compensation Committee does not benchmark in our compensation peer group with respect to any particular element of compensation.

Executive Compensation Program Components

For 2021, the portion of our Named Executive Officers’ actual total direct compensation (which consists of the base salaries and annual cash incentive plan compensation paid to our Named Executive Officers with respect to 2021 and the grant-date fair values of the equity awards granted to our Named Executive Officers in 2021, with each such value calculated in the same manner as set forth in our Fiscal 2021 Summary Compensation Table below) represented by each material component of our executive compensation program was as follows:

 

 

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The following describes each component of our executive compensation program, the rationale for each, and how the compensation amounts and awards were determined for fiscal 2021.

Base Salary. Base salary is the primary fixed component of our executive compensation program. We use base salary to compensate our Named Executive Officers for services rendered during the fiscal year and to ensure that we remain competitive in attracting and retaining executive talent.

Our Compensation Committee reviews the base salaries of each Named Executive Officer annually and makes adjustments as it determines to be reasonable and necessary to reflect the scope of a Named Executive Officer’s performance, contributions, responsibilities, experience, prior salary level, position (in the case of a promotion), and market conditions. We typically establish the initial base salary of a Named Executive Officer through arm’s-length negotiation at the time, after taking into consideration his or her position, qualifications, experience, salary expectations, and the base salaries of our other executives.

For fiscal 2021, our Compensation Committee determined not to make any changes to the base salaries of our Named Executive Officers (which were generally below the market 25th percentile in our compensation peer group) as it thought the base salary levels continued to be appropriate.

Our Named Executive Officers’ base salaries for fiscal 2021 were as follows:

 

 
Named Executive Officer   Base Salary
through 2021
 

Jayshree Ullal

 

 

$300,000  

Ita Brennan

 

 

$300,000  

Kenneth Duda

 

 

$300,000  

Anshul Sadana

 

 

$300,000  

Marc Taxay

 

 

$300,000  

Annual Cash Incentive Compensation; 2021 Bonus Plan

We use cash incentive compensation under our omnibus Employee Incentive Plan to motivate our executive officers, including our Named Executive Officers, to achieve our annual financial and key operational objectives, while making progress towards our longer-term strategic goals. Each fiscal year, our Compensation Committee sets the terms and conditions of the Employee Incentive Plan for that fiscal year, which identifies the plan participants and establishes the target cash incentive opportunity for each participant, the performance measures to be used to determine whether to make payouts related to the fiscal year and the associated target levels for each measure, and the potential payouts based on actual performance for the fiscal year. Typically, cash incentive payouts have been determined after the end of the applicable performance period based on our performance against one or more financial and operational performance objectives for the performance period as set forth in our annual operating plan.

In February 2021, our Compensation Committee set the terms and conditions of the Employee Incentive Plan for fiscal 2021 (the “2021 Bonus Plan”). The 2021 Bonus Plan included financial performance metrics for revenue and non-GAAP operating income for the year. These two financial metrics determine the funding of the overall bonus pool available for distribution. No payout would be made under the plan if achievement of the revenue metric was below 85% of target.

Once the overall funding level of the 2021 Bonus Plan was determined as outlined above, our Compensation Committee would evaluate performance for each of our Named Executive Officers. In determining the payout for each Named Executive Officer, our Compensation Committee would consider factors including: (A) contribution of the individual to the achievement of the quantitative financial measures set forth above regarding the funding of the overall bonus pool; (B) achievement against additional objectives related to the future growth of our business, including ability to diversify and deliver in new markets; (C) consistent execution on product quality, innovation and support; and (D) overall individual performance. The 2021 Bonus Plan provided for a single annual payout to each participant following the end of fiscal 2021 after our Compensation Committee evaluated corporate and individual performance as outlined above.

For purposes of our 2021 Bonus Plan, we define revenue in accordance with GAAP, and non-GAAP operating income as GAAP operating income, less stock-based compensation expenses, other non-recurring items, one time acquisition related costs and the amortization of intangible assets. A reconciliation of the non-GAAP financial metrics to the related GAAP financial measure is set forth in our quarterly and annual press release announcing our financial results for the fourth quarter and fiscal 2021.

Our Compensation Committee approved the following preliminary targets for the 2021 annual cash incentive compensation of our Named Executive Officers (which provided each of our Named Executive Officers with target total cash compensation around or below

 

 

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the market 25th percentile in our compensation peer group). For our Chief Executive Officer, this target was 100% of base salary, while the targets for our other Named Executive Officers was 60% of base salary. These targets are not strict targets and merely inform the aggregate of bonuses that will be accrued for financial accounting purposes. Once a total incentive pool is accrued for all participants in the 2021 Bonus Plan, our Compensation Committee looks at the performance for the year across the key metrics discussed above and factors in individual performance and market comparable compensation in our peer group in determining a total incentive paid to each Named Executive Officer.

For fiscal 2021, we achieved revenue of approximately $2.95 billion (an increase of 27.2% from 2020, and above our plan target by 6.7%). In addition, we achieved non-GAAP operating income of approximately $1.14 billion (an increase of 30.3% from 2020, and above our plan target by 10.6%). Our Compensation Committee considered our overall achievement against these key metrics and determined it was appropriate to fund the 2021 Bonus Plan at a level of 122% resulting in an increased bonus accrual of $10 million, the accrual of which is included in the above financial results.

Following the funding of the 2021 Bonus Plan based on the financial metrics outlined above, our Compensation Committee looked at performance with respect to the other key metrics including diversification and delivery into new markets, product quality, innovation and support, and individual performance. Our Compensation Committee considered that we made significant progress against our business diversification goals during the year with strong growth in our enterprise and provider businesses. We also demonstrated continued excellence in product quality, innovation and support as demonstrated by healthy new product qualification and order activity with our cloud titan customers in the second half of 2021.

Given our overall financial performance for the year and the significant progress made against our non-financial objectives for the year combined with our Compensation Committee’s determination of individual performance for each of our Named Executive Officers and including consideration of our total cash compensation being around or below the 25th percentile of compensation of our peer group, the total payouts to our Named Executive Officers under the 2021 Bonus Plan were made as set forth below.

 

 
Named Executive Officer  

Actual Incentive    

Compensation    

 

Jayshree Ullal

 

 

$300,000    

 

Ita Brennan

 

 

$250,000    

 

Kenneth Duda

 

 

$225,000    

 

Anshul Sadana

 

 

$400,000    

 

Marc Taxay

 

 

$220,000    

 

Equity Compensation

We use equity awards to incentivize and reward our executives (including our Named Executive Officers) for long-term corporate performance based on the value of our common stock and, thereby, to align the interests of our executives with those of our stockholders. We grant stock options covering shares of our common stock and full value awards for shares of our common stock, or awards without a purchase price, such as RSU awards.

New hire, or initial, equity awards for our executives are established through arm’s-length negotiations at the time the individual executive is hired. In making these awards, we consider, among other things, the prospective role and responsibility of the individual executive, competitive factors, the expectations concerning the size of the equity award, the cash compensation to be received by the executive, and the need to create a meaningful opportunity for reward predicated on the creation of long-term stockholder value.

In addition, we grant equity awards to our executives when our Compensation Committee determines that such awards are necessary or appropriate to recognize corporate and individual performance, in recognition of a promotion, or to achieve our retention objectives. To date, we have not applied a rigid formula in determining the size of these equity awards. Instead, our Compensation Committee has determined the size of such equity awards for an individual executive after taking into consideration market data compiled from our compensation peer group, a compensation analysis performed by AON, the equity award recommendations of our Chief Executive Officer, the scope of an executive’s performance, contributions, responsibilities, and experience, and the amount of equity compensation held by the executive, including the current economic value of his outstanding unvested equity awards and the ability of this equity to satisfy our retention objectives, market conditions, and internal equity considerations. In making its award decisions, our Compensation Committee has exercised its judgment and discretion to set the size of each award at a level it considered appropriate to create a meaningful opportunity for reward predicated on the creation of long-term stockholder value. Equity awards to our named executive officers typically have multi-year vesting periods of four or more years.

 

 

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In fiscal years prior to 2020, we provided equity compensation to our Named Executive Officers in a mix of options and RSUs. In fiscal 2020, we provided equity compensation to our Chief Executive Officer in PRSUs only, and to our Named Executive Officers other than our Chief Executive Officer in RSUs only.

For fiscal 2021, our Compensation Committee again provided equity compensation to our Chief Executive Officer in PRSUs only, but provided a mix of PRSUs and RSUs to our Named Executive Officers other than our Chief Executive Officer. Our Compensation Committee determined that this program would best incentivize our Named Executive Officers to drive stockholder value creation, while also satisfying the need to deliver certain value to our Named Executive Officers other than our Chief Executive Officer. The mix between PRSUs and RSUs was approximately 40% PRSUs and 60% RSUs, which our Compensation Committee determined were proportions that provide appropriate incentives to retain and motivate our Named Executive Officers other than our Chief Executive Officer and help to achieve success in our business. In determining the size of awards to our Named Executive Officers, our Compensation Committee considered market compensation data from our peer group, the unvested equity held by each of these Named Executive Officers and the Named Executive Officer’s expected future contributions to the Company and towards growing stockholder value.

2021 Performance-Based Awards Grant and Achievement

In February 2021, we granted performance-based awards of PRSUs to our Named Executive Officers to incentivize our Named Executive Officers and drive stockholder value creation. The table below describes the PRSUs granted to our Named Executive Officers (as adjusted to reflect our four-for-one stock split that was effective November 11, 2021). The intended value was converted into a target number of PRSUs using a 30-day average trading price in accordance with our standard practices.

 

 
Named Executive Officer   Target Number of
PRSUs
    Intended
Value
 

Jayshree Ullal

    200,000     $ 14,900,000  

Ita Brennan

    13,080     $ 1,000,000  

Kenneth Duda

    9,160     $ 700,000  

Anshul Sadana

    22,840     $ 1,750,000  

Marc Taxay

    9,160     $ 700,000  

The metrics, targets, and actual performance and resulting payout for our Named Executive Officers’ fiscal 2021 PRSUs are shown in the following table:

 

 

Performance Period: January 1, 2021 – December 31, 2021

 
 
Metrics   Weight     Performance Range     Payout     Results  
    Minimum:   $ 2.6 billion       50  

Revenue

    50   Target:   $ 2.76 billion       100   $ 2.95 billion  

 

 

 

 

 

  Maximum:   $ 3.0 billion       200  

 

 

 

    Minimum:   $ 900 million       50  

Non-GAAP Operating Income

    50   Target:   $ 1.0 billion       100   $ 1.14 billion  
 

 

   

 

 

 

 

 

  Maximum:       $ 1.1 billion       200    

 

 

 

 

 

The number of PRSUs determined based on actual achievement as described above became eligible to vest upon determination of achievement. In the case of our Chief Executive Officer, 25% of PRSUs that became eligible to vest vested on the first quarterly vesting date after the date the level of achievement of the performance goals was determined, and the remainder of the PRSUs that become eligible to vest will vest in equal quarterly installments over an additional 3 years. In the case of our other Named Executive Officers, 33% of the PRSUs that became eligible to vest vested on the first quarterly vesting date after the date the level of achievement of the performance goals was determined, and the remainder of the PRSUs that become eligible to vest will vest in equal quarterly installments over an additional 2 years.

 

 

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For fiscal 2021, our revenue was $2.95 billion, above the target goal but below the maximum goal. Our non-GAAP operating income was $1.14 billion, above the maximum goal. As a result of this achievement, PRSUs became eligible to vest as follows:

 

 
     Number of PRSUs Eligible to Vest  
 
Named Executive Officer   Revenue PRSUs     Non-GAAP
Operating
Income
PRSUs
 

Jayshree Ullal

 

 

178,400

 

 

 

200,000

 

Ita Brennan

 

 

11,667

 

 

 

13,080

 

Kenneth Duda

    8,170       9,160  

Anshul Sadana

 

 

20,373

 

 

 

22,840

 

Marc Taxay

 

 

8,170

 

 

 

9,160

 

2021 Time-Based Awards Grant

In February 2021, we also granted RSUs to our Named Executive Officers other than our Chief Executive Officer. To promote retention, the awards vest in equal quarterly installments over a period of approximately 4 years beginning February 2022.

The numbers of shares of our common stock covered by each RSU award granted to our Named Executive Officers in 2021 were as set forth in the chart below (as adjusted to reflect our four-for-one stock split that was effective November 11, 2021). The intended value was converted into RSUs using a 30-day average trading price in accordance with our standard practices.

 

 
Named Executive Officer   RSUs     Intended Value  

Ita Brennan

 

 

29,360

 

 

 

$2,250,000

 

Kenneth Duda

 

 

22,840

 

 

 

$1,750,000

 

Anshul Sadana

 

 

52,200

 

 

 

$4,000,000

 

Marc Taxay

 

 

20,880

 

 

 

$1,600,000

 

WELFARE AND OTHER EMPLOYEE BENEFITS

We have established a tax-qualified Section 401(k) retirement plan for all employees who satisfy certain eligibility requirements, including requirements relating to age and length of service. In 2021, we made matching contributions for the contributions made to the 401(k) plan by our employees, including our Named Executive Officers. We intend for the plan to qualify under Section 401(a) of the Internal Revenue Code (the “Code”), so that contributions by employees to the plan, and income earned on plan contributions, are not taxable to employees until withdrawn from the plan.

In addition, we provide other benefits to our Named Executive Officers on the same basis as all of our full-time employees. These benefits include standard health, vacation and other benefits offered to our employees.

PERQUISITES AND OTHER PERSONAL BENEFITS

We generally do not provide perquisites to our Named Executive Officers or other personal benefits beyond what is provided to employees on a broad basis.

 

 

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Executive Compensation

 

 

Executive Officer Employment Arrangements

JAYSHREE ULLAL OFFER LETTER

We have entered into an offer letter with Jayshree Ullal, our President and Chief Executive Officer, pursuant to which Ms. Ullal is an at-will employee. Ms. Ullal’s current annual base salary is $300,000 per year, and her target annual bonus is targeted at $300,000. Ms. Ullal is also eligible to participate in all of our standard health, vacation and other benefits offered to our employees.

ITA BRENNAN OFFER LETTER & SEVERANCE AGREEMENT

Ms. Brennan joined us as our new Chief Financial Officer in May 2015. We have entered into an offer letter with Ms. Brennan that provides that she is an at-will employee. Ms. Brennan currently receives a base salary of $300,000 per year, and her annual bonus is targeted at $180,000. Ms. Brennan is also eligible to participate in all of our standard health, vacation and other benefits offered to our employees.

In addition, we entered into a severance agreement with Ms. Brennan, effective May 2015. The severance agreement provides that if Ms. Brennan’s employment is involuntarily terminated other than for “cause” (as generally defined below) or if Ms. Brennan resigns for “good reason” (as generally defined below) then, subject to her execution of a release of claims, Ms. Brennan will receive continuing payments of her base salary for 12 months and accelerated vesting of time-based equity awards that would have vested had Ms. Brennan remained employed with us for 12 months following her termination of employment date. If the qualified termination of employment occurred during the period beginning on, and for 12 months following a change in control, then the equity acceleration benefit would be 50% of the then-unvested equity awards (and for any equity awards that vest based on the achievement of performance criteria, assuming the performance criteria had been achieved at target levels for the relevant performance periods), if greater than the acceleration benefit described in the previous sentence.

For purposes of the severance agreement with Ms. Brennan, “cause” means generally:

 

    an act of dishonesty made by her in connection with her responsibilities as an employee;

 

    her conviction of, or plea of nolo contendere to, a felony or any crime involving fraud, embezzlement or any other act of moral turpitude;

 

    her gross misconduct;

 

    her unauthorized use or disclosure of any proprietary information or trade secrets of ours or any other party to
   

whom she owes a duty of non-disclosure as a result of her relationship with us;

 

    her willful breach of any obligations under any written agreement or covenant with us; or

 

    her continued failure to perform her duties after a demand from us setting the basis of our belief and failure to cure within 10 business days after receiving such notice.
 

 

For purposes of the severance agreement with Ms. Brennan, “good reason” means generally a resignation within 30 days following the expiration of any cure period following the occurrence of one or more of the following, without her consent:

 

    a material diminution of her authority, duties or responsibilities (which includes a reduction in authority, duties or responsibilities in connection with our being acquired and made part of a larger entity);

 

    a material reduction of her base salary (which excludes a reduction in her base salary of 15% or less in any one
   

year) other than a reduction applied to management generally; or

 

    a material change in the geographic location of her primary work facility or location (which excludes a relocation of less than 50 miles from her then-present location).
 

 

Ms. Brennan must provide written notice within 90 days of the initial existence of good reason and provide a cure period of 30 days following the date of such notice.

ANSHUL SADANA OFFER LETTER

We have entered into an offer letter with Anshul Sadana, our Chief Operating Officer, pursuant to which Mr. Sadana is an at-will employee. Mr. Sadana’s current annual base salary is $300,000 per year, and his annual bonus is targeted at $180,000, which does not consider the over-performance pool. Mr. Sadana is also eligible to participate in all of our standard health, vacation and other benefits offered to our employees.

 

 

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Executive Compensation

 

 

KENNETH DUDA OFFER LETTER

We have entered into an offer letter with Kenneth Duda, our Chief Technology Officer and Senior Vice President, Software Engineering, pursuant to which Mr. Duda is an at-will employee. Mr. Duda’s current annual base salary is $300,000 per year, and his annual bonus is targeted at $180,000. Mr. Duda is also eligible to participate in all of our standard health, vacation and other benefits offered to our employees.

MARC TAXAY OFFER LETTER & SEVERANCE AGREEMENT

We have entered into an offer letter with Marc Taxay, our Senior Vice President, General Counsel, pursuant to which Mr. Taxay is an at-will employee. Mr. Taxay’s current annual base salary is $300,000 per year and he is eligible for an annual bonus targeted at $180,000. Mr. Taxay is also eligible to participate in all of our standard health, vacation and other benefits offered to our employees.

In addition, we entered into a severance agreement with Mr. Taxay, effective March 2015. The severance agreement provides that if Mr. Taxay’s employment is involuntarily terminated other than for “cause” (as generally defined below) or if Mr. Taxay resigns for “good reason” (as generally defined below) then, subject to his execution of a release of claims, Mr. Taxay will receive continuing payments of his base salary for 12 months and accelerated vesting of time-based equity awards that would have vested had Mr. Taxay remained employed with us for 12 months following his termination of employment date. If the qualified termination of employment occurred during the period beginning on, and for 12 months following a change in control, then the equity acceleration benefit would be 50% of the then-unvested equity awards, if greater than the acceleration benefit described in the previous sentence.

For purposes of the severance agreement with Mr. Taxay, “cause” and “good reason” have the same general meanings as set forth in Ms. Brennan’s severance agreement.

Fiscal 2021 Summary Compensation Table

The following table provides information regarding the total compensation for services rendered in all capacities that was earned by our Named Executive Officers.

 

 

Name and

Principal
Position

  Year      

Salary    

($)    

 

Bonus    

($)    

  Stock
Awards
($)
(1)
  Option
Awards
($)
(1)
  Non-Equity
Incentive Plan
Compensation
($)
  All Other
Compensation
($)
  Total
($)

Jayshree Ullal

Chief Executive

Officer

 

 

2021

     

 

 

300,000

     

 

 

     

 

 

15,384,500

 

 

 

     

 

 

300,000

 

 

 

9,132

(2) 

 

 

15,993,632

 

 

 

2020

 

 

 

300,000

 

 

 

 

 

 

6,033,690

 

 

 

 

 

 

     

 

 

9,282

 

 

 

6,342,972

 

 

 

2019

 

 

 

300,000

 

 

 

 

 

 

 

 

 

1,075,639

 

 

 

 

 

 

8,532

 

 

 

1,384,171

 

Ita Brennan

Chief Financial

Officer

 

 

2021

 

 

 

300,000

 

 

 

 

 

 

3,379,242

 

 

 

 

 

 

250,000

 

 

 

9,132

(2) 

 

 

3,938,374

 

 

 

2020

 

 

 

300,000

 

 

 

 

 

 

3,169,865

 

 

 

 

 

 

140,000

 

 

 

9,282

 

 

 

3,619,147

 

 

 

2019

 

 

 

300,000

 

 

 

 

 

 

1,651,375

 

 

 

537,820

 

 

 

150,000

 

 

 

8,532

 

 

 

2,647,727

 

Kenneth Duda

Chief Technology

Officer

 

 

2021

 

 

 

300,000

 

 

 

 

 

 

2,550,710

 

 

 

 

 

 

225,000

 

 

 

9,132

(2) 

 

 

3,084,842

 

 

 

2020

 

 

 

300,000

 

 

 

5,800

 

 

 

2,323,987

 

 

 

 

 

 

125,000

 

 

 

9,282

 

 

 

2,764,069

 

 

 

2019

 

 

 

300,000

 

 

 

5,800

 

 

 

1,849,540

 

 

 

1,075,639

 

 

 

160,000

 

 

 

8,532

 

 

 

3,399,511

 

Anshul Sadana

Chief Operating

Officer

 

 

2021

 

 

 

300,000

 

 

 

600

(3) 

 

 

5,976,105

 

 

 

 

 

 

400,000

 

 

 

9,132

(2) 

 

 

6,685,837

 

 

 

2020

 

 

 

300,000

 

 

 

 

 

 

5,282,382

 

 

 

 

 

 

160,000

 

 

 

9,282

 

 

 

5,751,664

 

 

 

2019

 

 

 

300,000

 

 

 

 

 

 

5,284,400

 

 

 

1,738,477

 

 

 

220,000

 

 

 

8,532

 

 

 

7,551,409

 

Marc Taxay

Senior Vice President,

General Counsel

 

 

2021

 

 

 

300,000

 

 

 

 

 

 

2,392,288

 

 

 

 

 

 

220,000

 

 

 

6,905

(2) 

 

 

2,919,193

 

 

 

2020

 

 

 

300,000

 

 

 

 

 

 

2,219,342

 

 

 

 

 

 

140,000

 

 

 

2,809

 

 

 

2,662,151

 

 

 

2019

 

 

 

300,000

 

 

 

 

 

1,651,375

 

 

 

537,820

 

 

 

150,000

 

 

 

8,532

 

 

2,647,727

 

                                                               

 

 

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Executive Compensation

 

 

(1)

The amounts reported include the aggregate grant-date fair value of restricted stock units or stock options awarded to the Named Executive Officer, calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 718 (“ASC Topic 718”). The assumptions used in calculating the grant-date fair value of these awards are set forth in the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K, as filed with the SEC on February 15, 2022. For performance-based restricted stock units, the amount reported represents the grant-date fair value based upon the probable outcome of the performance conditions for such awards, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. If maximum performance were deemed achieved for the performance-based restricted stock unit awards in fiscal 2021, the grant-date fair value of such awards would be $30,769,000 for Ms. Ullal, $2,012,293 for Ms. Brennan, $1,409,220 for Mr. Duda, $3,513,820 for Mr. Sadana, and $1,409,220 for Mr. Taxay. Based on actual achievement for fiscal 2021, 189.2% of the PRSUs became eligible to vest, and the balance of the PRSUs have already been forfeited. The fair value as of the grant date of those PRSUs that were not forfeited was approximately $29,107,474 for Ms. Ullal, $1,903,629 for Ms. Brennan, $1,333,122 for Mr. Duda, $3,324,074 for Mr. Sadana, and $1,333,122 for Mr. Taxay.

 

(2)

The amounts reported for fiscal 2021 include matching contributions from the Company for the contributions made to the 401(k) plan by the Named Executive Officer and a life insurance premium paid on the Named Executive Officer’s behalf.

 

(3)

The amount reported for fiscal 2021 represents a patent bonus award paid by the Company to Mr. Sadana.

Outstanding Equity Awards at 2021 Fiscal Year-End

The following table sets forth information regarding outstanding stock options and stock awards held by our Named Executive Officers as of December 31, 2021.

 

 
  

 

   

 

    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
(#)
(1)
    Market
Value
of Shares or
Units of
Stock
That Have
Not Vested
($)
(2)
 
 

Jayshree Ullal

 

 

1/13/2014

(3) 

 

 

5,332

 

 

 

 

 

 

5.6225

 

 

 

1/12/2024

 

 

 

  

 

 

 

 

 

 

     

 
   

 

2/12/2016

(4) 

 

 

26,668

 

 

 

 

 

 

14.06

 

 

 

2/11/2026

 

         

 

 

 

 

 

 
   

 

2/6/2017

(5) 

 

 

27,500

 

 

 

11,000

 

 

 

23.8775

 

 

 

2/5/2027

 

         

 

 

 

 

 

 
   

 

3/9/2018

(6) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

25,000

 

 

 

3,593,750

 

 
   

 

4/13/2018

(7) 

 

 

2,668

 

 

 

19,332

 

 

 

61.05

 

 

 

4/12/2028

 

         

 

 

 

 

 

 
   

 

2/8/2019

(8) 

 

 

3,332

 

 

 

29,168

 

 

 

56.585

 

 

 

2/7/2029

 

         

 

 

 

 

 

 
   

 

2/14/2020

(9) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

9,392

 

 

 

1,350,100

 

 
   

 

2/12/2021

(10) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

200,000

 

 

 

28,750,000

 

Ita Brennan

 

 

9/11/2015

(3) 

 

 

4,864

 

 

 

 

 

 

16.115

 

 

 

9/10/2025

 

         

 

 

 

 

 

 

 

2/12/2016

(11) 

 

 

20,736

 

 

 

4,000

 

 

 

14,06

 

 

 

2/11/2026

 

         

 

 

 

 

 

 

 

3/10/2017

(12) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

9,600

 

 

 

1,380,000

 

 

 

3/9/2018

(6) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

6,248

 

 

 

898,150

 

 

 

4/13/2018

(7) 

 

 

7,916

 

 

 

12,084

 

 

 

61.05

 

 

 

4/12/2028

 

         

 

 

 

 

 

 

 

11/9/2018

(8) 

 

 

2,708

 

 

 

7,292

 

 

 

61.1075

 

 

 

11/8/2028

 

         

 

 

 

 

 

 

 

11/9/2018

(13) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

9,624

 

 

 

1,383,450

 

 

 

2/8/2019

(8) 

 

 

5,416

 

 

 

14,584

 

 

 

56.585

 

 

 

2/7/2029

 

         

 

 

 

 

 

 

 

5/10/2019

(13) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

17,188

 

 

 

2,470,775

 

 

 

5/8/2020

(14) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

47,256

 

 

 

6,793,050

 

 

 

2/12/2021

(15) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

13,080

 

 

 

1,880,250

 

   

 

2/12/2021

(16) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

29,360

 

 

 

4,220,500

 

 

 

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Table of Contents

Executive Compensation

 

 

 
  

 

   

 

    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
(#)
(1)
    Market
Value
of Shares or
Units of
Stock
That Have
Not Vested
($)
(2)
 
 

Kenneth Duda

 

 

3/11/2013

(17) 

 

 

80,000

 

 

 

 

 

 

1.94

 

 

 

3/10/2023

 

         

 

 

 

 

 

 
   

 

1/13/2014

(3) 

 

 

80,000

 

 

 

 

 

 

5.6225

 

 

 

1/12/2024

 

         

 

 

 

 

 

 
   

 

2/11/2014

(18)(21) 

 

 

400,000

 

 

 

80,000

 

 

 

7.6675

 

 

 

2/10/2024

 

         

 

 

 

 

 

 
   

 

12/16/2014

(3) 

 

 

200,000

 

         

 

17.085

 

 

 

12/15/2024

 

         

 

 

 

 

 

 
   

 

9/11/2015

(3) 

 

 

80,000

 

         

 

16.115

 

 

 

9/10/2025

 

         

 

 

 

 

 

 
   

 

2/12/2016

(11) 

 

 

95,000

 

 

 

5,000

 

 

 

14.06

 

 

 

2/11/2026

 

         

 

 

 

 

 

 
   

 

3/10/2017

(12) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

16,000

 

 

 

2,300,000

 

 
   

 

3/9/2018

(6) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

7,500

 

 

 

1,078,125

 

 
   

 

4/13/2018

(7) 

 

 

12,668

 

 

 

19,332

 

 

 

61.05

 

 

 

4/12/2028

 

         

 

 

 

 

 

 
   

 

11/9/2018

(8) 

 

 

3,252

 

 

 

8,748

 

 

 

61.1075

 

 

 

11/8/2028

 

         

 

 

 

 

 

 
   

 

11/9/2018

(13) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

13,748

 

 

 

1,976,275

 

 
   

 

2/8/2019

(8) 

 

 

10,832

 

 

 

29,168

 

 

 

56.585

 

 

 

2/7/2029

 

         

 

 

 

 

 

 
   

 

5/10/2019

(13) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

19,248

 

 

 

2,766,900

 

 
   

 

5/8/2020

(14) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

34,644

 

 

 

4,980,075

 

 
   

 

2/12/2021

(15) 

 

 

 

 

 

 

 

 

 

 

 

 

         

 

9,160

 

 

 

1,316,750

 

 
   

 

2/12/2021

(16) 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

22,840

 

 

 

3,283,250

 

Anshul Sadana

 

 

2/11/2014

(18)(22) 

 

 

80,000    

 

 

80,000    

 

 

7.6675    

 

 

2/10/2024    

         

 

—    

 

 

 

—    

 

 

 

2/12/2016

(11) 

 

 

—    

 

 

 

5,000    

 

 

14.06    

 

 

2/11/2026    

         

 

—    

 

 

 

—    

 

 

 

3/10/2017

(12) 

 

 

—    

 

 

 

—    

 

 

 

—    

 

 

 

—    

 

         

 

16,000    

 

 

2,300,000    

 

 

3/9/2018

(6) 

 

 

—    

 

 

 

—    

 

 

 

—    

 

 

 

—    

 

         

 

8,748    

 

 

1,257,525    

 

 

4/13/2018

(7) 

 

 

4    

 

 

19,332    

 

 

61.05    

 

 

4/12/2028    

         

 

—    

 

 

 

—    

 

 

 

11/9/2018

(8) 

 

 

—    

 

 

 

11,668    

 

 

61.1075    

 

 

11/8/2028    

         

 

—    

 

 

 

—    

 

 

 

11/9/2018

(13) 

 

 

—    

 

 

 

—    

 

 

 

—    

 

 

 

—    

 

         

 

16,500    

 

 

2,371,875    

 

 

2/8/2019

(8) 

 

 

    

 

 

 

40,832    

 

 

56,585    

 

 

2/7/2029    

         

 

—    

 

 

 

—    

 

 

 

5/10/2019

(19) 

 

 

168    

 

 

2,832    

 

 

66.055    

 

 

5/9/2029    

         

 

—    

 

 

 

—    

 

 

 

5/10/2019

(20) 

 

 

—    

 

 

 

—    

 

 

 

—    

 

 

 

—    

 

         

 

21,600    

 

 

3,105,000    

 

 

5/10/2019

(13) 

 

 

—    

 

 

 

—    

 

 

 

—    

 

 

 

—    

 

         

 

22,000    

 

 

3,162,500    

 

 

5/8/2020

(14) 

 

 

—    

 

 

 

—    

 

 

 

—    

 

 

 

—    

 

         

 

78,748    

 

 

11,320,025    

 

 

2/12/2021

(15) 

 

 

—    

 

 

 

—    

 

 

 

—    

 

 

 

—    

 

         

 

22,840    

 

 

3,283,250    

 

 

2/12/2021

(16) 

 

 

—    

 

 

 

—    

 

 

 

—    

 

 

 

—    

 

         

 

52,200    

 

 

7,503,750    

 
Marc Taxay  

 

2/12/2016

(11) 

 

 

—    

 

 

 

2,000    

 

 

14.06    

 

 

2/11/2026    

         

 

—    

 

 

 

—    

 

 
   

 

3/10/2017

(12)