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Filed by the Registrant ý
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Filed by a Party other than the Registrant ¨
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¨
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Preliminary Proxy Statement
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¨
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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ý
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Definitive Proxy Statement
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¨
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Definitive Additional Materials
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¨
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Soliciting Material Pursuant to 240.14a-12
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8x8, Inc.
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(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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||
ý
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No fee required.
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¨
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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¨
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Fee paid previously with preliminary materials.
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¨
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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•
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I, our CEO, am a significant shareholder of 8x8’s equity. Over the past several years, I have invested meaningful amounts of my own money to become an owner and have never sold a share.
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•
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Perhaps even more remarkably, when we offered our employees-and not just our executive leaders!-an opportunity to take a larger percentage of their compensation in equity, nearly 50% elected to do so. We think each of these facts is exceptional, and even more so the combination of the two.
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•
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Of the eight members of our board of directors, three represent racial or ethnic minorities, two are women, two represent the customer purchasing perspective, four are leading technologists and two are career investors who bring the shareholder perspective into the boardroom.
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•
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In a world newly focused on diversity and inclusion, we lead in diversity from our board and CEO on down.
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TABLE OF CONTENTS
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Page
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PROXY SUMMARY
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•
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Service revenue increased 27% year-over-year to $414.1 million. Service revenue from mid-market and enterprise customers represented 43% of total service revenue and grew 51% over the prior year.
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•
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Supported the Jitsi open source video meetings platform and 8x8 free Video Meetings that surpassed 20 million monthly active users globally in May 2020.
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•
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Extended our cloud technology platform with acquisition of Wavecell, a global provider of communications platform-as-a-service ("CPaaS"), that enables businesses to directly integrate our platform services within their websites, mobile apps and business systems.
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•
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Launched 8x8 Express, our self-service eCommerce offering in the U.S. and UK.
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•
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Expanded our go-to-market reach with the channel community including partnering with value-added resellers (VARs) throughout the U.S. and Europe.
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•
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Net Promoter Score (NPS), reflecting customer satisfaction with our services, has increased dramatically and eclipsed the SaaS industry benchmark since the fall of 2019.
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•
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Named a Leader in the 2019 Gartner Magic Quadrant for Unified Communications as a Service, Worldwide for the eighth consecutive year and a Challenger in Magic Quadrant for Contact Center as a Service, North America for the fifth consecutive year.(1) (2)
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•
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Received the 2019 CRN Tech Innovator Award by CRN, a brand of The Channel Company, for 8x8 Contact Center.
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•
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Received the 2019 Unified Communications Excellence Award by CUSTOMER Magazine for 8x8 Contact Center.
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•
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Received the 2019 Customer Experience Innovation Award by Internet Telephony Magazine.
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•
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Awarded 41 new U.S. patents.
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8x8, Inc. 2020 Proxy Statement
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6
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Proposal
|
Description of Matter
|
Board Vote
Recommendation
|
ONE
|
To elect eight directors to hold office until the 2020 Annual Meeting of Stockholders and until their respective successors have been elected and qualified. The Company’s nominees are Bryan R. Martin, Vikram Verma, Eric Salzman, Jaswinder Pal Singh, Vladimir Jacimovic, Monique Bonner, Todd Ford and Elizabeth Theophille.
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FOR
(each Company
nominee)
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TWO
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To ratify the appointment of Moss Adams LLP as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2021.
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FOR
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THREE
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To approve amendments to the Company’s Amended and Restated 1996 Employee Stock Purchase Plan, including the reservation of 3,000,000 additional shares for issuance thereunder.
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FOR
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FOUR
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To hold an advisory vote to approve executive compensation for our fiscal year ended March 31, 2020.
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FOR
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8x8, Inc. 2020 Proxy Statement
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7
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Name
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Age
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Director Since
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Principal Occupation
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Independent?
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Committee Memberships(3)
|
|
|
|
|
|
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Bryan R. Martin(1)
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52
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2001
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Chairman of the Board and Chief Technology Officer, 8x8, Inc.
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No
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—
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Vikram Verma
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55
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2012
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Chief Executive Officer, 8x8, Inc.
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No
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—
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Eric Salzman
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53
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2012
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Managing Member, SarniHaan Capital Partners LLC
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Yes
|
Audit, Compensation, Nominating.
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|
|
|
|
|
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Jaswinder Pal Singh(2)
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55
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2013
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Professor of Computer Science, Princeton University
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Yes
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Compensation, Nominating.
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Vladimir Jacimovic
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56
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2014
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Managing Partner, Continuum Capital Partners
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Yes
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—
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Monique Bonner
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49
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2018
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Chief Marketing Officer, Akamai Technologies
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Yes
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Audit, Nominating.
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Todd Ford
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53
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2019
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Chief Financial Officer, Coupa Software, Inc.
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Yes
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Audit, Compensation.
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Elizabeth Theophille
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53
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2019
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Chief Technology and Digital Officer, Novartis AG
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Yes
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—
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(1)
|
Mr. Martin serves as Chairman of the Board.
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(2)
|
Dr. Singh serves as Lead Independent Director.
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(3)
|
‘‘Nominating’’ refers to the Governance and Nominating Committee of the Board.
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8x8, Inc. 2020 Proxy Statement
|
8
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Corporate Governance Highlights (page 15)
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Board and Committees
|
Management
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Stockholders Rights
|
|||
v
|
Six of our eight director nominees are independent, including all members of our three standing committees.
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v
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Robust executive stock ownership requirements, including a 6X ownership requirement for our CEO (ratio of value of stock, to base salary).
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v
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We have a single-class share capital structure. Each issued and outstanding share of our stock is entitled to one vote per share on all matters submitted to the stockholders for a vote.
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v
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Our Board and each of its three standing committees conducts a formal assessment of its performance on an annual basis.
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v
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Related party transactions involving management or a member of our Board require prior approval of the Audit Committee. There were no such transactions in F2020.
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v
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We do not have a classified board structure or multi-year directorships. All of our directors are elected on an annual basis.
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v
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Regular executive sessions are conducted by the independent directors, and the Board has appointed a lead independent director to preside over these meetings and perform other duties on behalf of the independent directors.
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v
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Executive compensation is reviewed by the Compensation Committee annually, with advice and data (including a benchmark analysis) provided by an independent compensation consultant.
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v
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None of our officers or directors (nor any of their affiliates) has a controlling interest in our stock. Our officers and directors as a group hold less than 5% of our outstanding common stock.
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v
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Board adopted a CEO Absence Event Management Process in 2016, which was reviewed by the Governance and Nominating Committee in 2020 as part of succession planning.
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v
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A significant portion of each executive’s annual compensation is ‘‘at risk’’ and a significant portion of the annual grant of long-term incentive compensation depends on our stock performance relative to a peer group.
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v
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Our capital structure and organizational documents do not reflect any ‘‘poison pill’’ provisions.
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v
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Director compensation is reviewed by our Compensation Committee at least once every two years as per our Corporate Governance Principles, with advice and data provided by an independent compensation consultant.
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v
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We have clawback rights under our 2012 equity incentive plan that permit us to recover long-term gains under specified circumstances.
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v
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We do not have a supermajority approval requirement to amend any of our organizational documents.
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v
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Board has adopted a majority voting policy requiring and each nominee for director has agreed that, if the nominee fails to receive more votes cast ‘‘FOR’’ his selection than ‘‘WITHHELD,’’ the nominee shall tender his or her resignation from the Board.
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8x8, Inc. 2020 Proxy Statement
|
9
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Executive Compensation Highlights (page 48)
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What We Have
|
What We Don’t Have
|
||
v
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An executive compensation program designed based on our ‘‘pay for performance’’ philosophy.
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v
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No pension arrangements or nonqualified deferred compensation plans for our executive officers.
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v
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A substantial portion of the total value of annual equity awards granted to our executives (including approximately 60% for our CEO and 50% for our other named officers) are in the form of performance share units.
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v
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No special health or welfare plans for our executive officers.
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v
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The long-term incentives granted to our named executive officers vest or are earned over multi- year periods, consistent with current market practice and our retention objectives.
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v
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No single-trigger benefits for our executive officers in connection with a change-in-control.
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v
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Minimum vesting period of 12 months for awards under our Amended and Restated 2012 Equity Incentive Plan (with limited exceptions).
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v
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No ‘‘evergreen’’ provision in our Amended and Restated 2012 Equity Incentive Plan.
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v
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No ‘‘gross-ups’’ or other tax reimbursement payments on any severance or change-in-control payments or benefits for our executives.
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8x8, Inc. 2020 Proxy Statement
|
10
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VOTING RIGHTS, QUORUM AND REQUIRED VOTE
|
8x8, Inc. 2020 Proxy Statement
|
11
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•
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by Internet at www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on August 9, 2020 (have your Notice or proxy card in hand when you visit the website);
|
•
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by toll-free telephone until 11:59 p.m. Eastern Time on August 9, 2020 at 1-800-690-6903 (be sure to have your Notice or proxy card in hand when you call);
|
•
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by completing and mailing your proxy card so it is received prior to the Annual Meeting (if you received printed proxy materials); or
|
•
|
by attending and voting at the virtual Annual Meeting by visiting www.virtualshareholdermeeting.com/8x82020, where stockholders may vote and submit questions (before and during) the Annual Meeting (have your Notice or proxy card in hand when you visit the website).
|
•
|
granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above, at any time before the deadline for submitting proxies under that method;
|
•
|
providing a written notice of revocation to 8x8, Inc., Attn: Secretary, 675 Creekside Way, Campbell, CA 95008, prior to your shares being voted; or
|
•
|
attending and voting at the virtual Annual Meeting (although attendance at the Annual Meeting will not, by itself, revoke a proxy).
|
12
|
8x8, Inc. 2020 Proxy Statement
|
PROPOSAL
|
|
VOTING REQUIREMENT
|
|
1.
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Election of eight directors to serve until 2021 Annual Meeting.
|
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The eight nominees receiving the most votes cast ‘‘FOR’’ their election shall be elected as directors.(1)
|
2.
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Ratification of appointment of Moss Adams LLP as independent registered public accounting firm for fiscal 2021.
|
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An affirmative vote of the holders of a majority of the shares present or represented by proxy and entitled to vote on this proposal at the Annual Meeting will constitute approval of this proposal.
|
3.
|
Amendments to the Amended and Restated 1996 Employee Stock Purchase Plan, including reservation of 3,000,000 additional shares thereunder.
|
|
An affirmative vote of the holders of a majority of the shares present or represented by proxy and entitled to vote on this proposal at the Annual Meeting will constitute approval of this proposal.
|
4.
|
Advisory vote to approve executive compensation for fiscal 2020.
|
|
An affirmative vote of the holders of a majority of the shares present or represented by proxy and entitled to vote on this proposal at the Annual Meeting will be considered approval of this proposal.(2)
|
(1)
|
Pursuant to a policy adopted by the Board, any director nominee who fails to receive more votes cast ‘‘FOR’’ his or her election than ‘‘WITHHELD’’ is expected to tender his or her resignation to the Governance and Nominating Committee of the Board, which is responsible for considering each resignation tendered under the policy and recommending to the Board whether or not to accept the resignation.
|
(2)
|
This is an advisory vote. Neither we nor the Board will be bound by the results of the vote on this proposal.
|
8x8, Inc. 2020 Proxy Statement
|
13
|
14
|
8x8, Inc. 2020 Proxy Statement
|
BOARD OF DIRECTORS
|
CORPORATE GOVERNANCE
|
•
|
provide effective oversight of the senior management team in connection with its conduct of the Company's business and affairs;
|
•
|
allow the Board to make decisions independent of management;
|
•
|
align the interests of the Board and management with those of our stockholders; and
|
•
|
maintain compliance with the requirements of the New York Stock Exchange (‘‘NYSE’’) and applicable law.
|
•
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knowledge, experience, skills, and expertise, particularly in areas critical to understanding the Company and its business;
|
•
|
diversity;
|
•
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personal and professional integrity and character;
|
•
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business judgment;
|
•
|
time availability in light of other commitments, particularly service on the boards of other publicly-held companies;
|
•
|
dedication; and
|
8x8, Inc. 2020 Proxy Statement
|
15
|
•
|
conflicts of interest.
|
•
|
have strong integrity;
|
•
|
have qualifications that will enhance the overall effectiveness of the Board;
|
•
|
have the highest professional and personal ethics and values, and will conduct themselves consistent with our Code of Business Conduct and Ethics;
|
•
|
will comply with our corporate governance, conflict of interest, confidentiality, stock ownership and insider trading policies and guidelines, and all other codes of conduct, policies and guidelines, as well as any relevant securities and other laws, rules, regulations and listing standards, in each case as applicable to members of the Board; and
|
•
|
satisfy other relevant standards that may be required by applicable rules and regulations, such as financial literacy or financial expertise with respect to prospective Audit Committee members.
|
16
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8x8, Inc. 2020 Proxy Statement
|
CHANGES SINCE 2018 ANNUAL MEETING
|
|
JUNE 19, 2019: Elizabeth Theophille appointed as a new director.
|
|
§
|
Ms. Theophille appointed to the Board, filling a vacancy left by Mr. Potter when he did not stand for re-election at the 2019 annual meeting.
|
§
|
Board size increased temporarily from eight to nine members and reverted to eight members concurrently with election of directors at the 2019 annual meeting.
|
JUNE 1, 2019: Todd Ford appointed as a new director, succeeding Gen. Hecker.
|
|
§
|
Mr. Ford appointed to the Audit Committee, filling a vacancy left by Gen. Hecker's departure, and named Chair of Audit Committee, succeeding Mr. Potter in that role.
|
§
|
Mr. Ford appointed as a member of the Compensation Committee, temporarily increasing its size from three to four members.
|
MAY 6, 2019: Major General Guy L. Hecker, Jr. retired from Board.
|
|
§
|
Dr. Singh appointed as Lead Independent Director, succeeding Gen. Hecker in that role.
|
§
|
Dr. Singh appointed a member of the Compensation Committee, filling a vacancy left by Gen. Hecker's departure.
|
§
|
Dr. Singh appointed a member of the Governance and Nominating Committee, filling a vacancy left by Gen. Hecker's departure.
|
§
|
Ms. Bonner was appointed Chair of the Governance and Nominating Committee, succeeding Gen. Hecker in that role.
|
OCTOBER 23, 2018: Monique Bonner appointed as a new director.
|
|
§
|
Board size increased from seven to eight directors.
|
§
|
Ms. Bonner also appointed as a member of the Audit Committee, replacing Jaswinder Pal Singh.
|
§
|
Ms. Bonner also appointed as a member of the Governance and Nominating Committee, increasing its size from two to three members.
|
§
|
Ian Potter appointed as Chair of the Audit Committee, succeeding Gen. Hecker in that role.
|
8x8, Inc. 2020 Proxy Statement
|
17
|
18
|
8x8, Inc. 2020 Proxy Statement
|
Lead Independent Director
|
|
|||
Purpose: The Board selects a Lead Independent Director from the independent directors if the positions of Chairman and Chief Executive Officer are held by the same person or if both are held by insiders.
|
|
Responsibilities: The lead independent director has the following responsibilities, among others:
|
||
|
§
|
Presides at executive sessions held by non-management directors as chair.
|
||
Currently Serving in Role:
Jaswinder Pal Singh
|
|
§
|
Responsible for establishing the agenda for the regularly scheduled executive sessions held by non-management directors.
|
|
§
|
Appointed lead independent director in May 2019.
|
|
§
|
Responsible for polling the other non-management directors for agenda items for regular Board meetings, and collaborates with the Chairman of the Board and Chief Executive Officer in preparing the agenda for those meetings.
|
§
|
Member of Board of Directors since 2013.
|
|
||
§
|
Also serves on Compensation Committee and Governance and Nominating Committee.
|
|
§
|
Oversees transition of leadership under the Company's policy and procedures governing the management of CEO absence events.
|
8x8, Inc. 2020 Proxy Statement
|
19
|
•
|
has no material relationship with 8x8, any of our subsidiaries, or any member of our management, either directly or indirectly (for example, as a partner, shareholder or officer of an organization that has a relationship with us); and
|
•
|
satisfies each of the requirements under Rule 303A.02(b) of the NYSE rules.
|
•
|
the source of compensation of the director, including any consulting, advisory or other compensatory fee paid by the listed company to such director; and
|
•
|
whether such director is affiliated with 8x8, a subsidiary of 8x8, or an affiliate of a subsidiary of 8x8.
|
Independent
|
|
Not Independent
|
Eric Salzman
|
|
Bryan R. Martin
|
Jaswinder Pal Singh
|
|
Vikram Verma
|
Vladimir Jacimovic
|
|
|
Monique Bonner
|
|
|
Todd Ford
|
|
|
Elizabeth Theophille
|
|
|
20
|
8x8, Inc. 2020 Proxy Statement
|
8x8, Inc. 2020 Proxy Statement
|
21
|
Director Independence, Meeting Attendance and Committee Service (1)
|
|||||||||
|
|
Committee Service
|
|
|
|||||
Director
|
Independent?
|
Audit
|
Compensation
|
Nominating
|
Other Role
|
Missed Meetings (2)
|
|||
Vikram Verma
|
No
|
|
|
|
|
|
|
|
None
|
Bryan R. Martin
|
No
|
|
|
|
|
|
|
Chair
|
None
|
Jaswinder Pal Singh
|
Yes
|
|
|
|
|
|
|
Lead
|
One (Board)
|
Eric Salzman
|
Yes
|
|
|
|
|
|
|
|
None
|
Vladimir Jacimovic
|
Yes
|
|
|
|
|
|
|
|
None
|
Monique Bonner
|
Yes
|
|
|
|
|
|
|
|
None
|
Todd Ford
|
Yes
|
|
|
|
|
|
|
|
None
|
Elizabeth Theophille
|
Yes
|
|
|
|
|
|
|
|
None
|
|
= Committee chairman
|
|
= Committee member
|
Chair = Chairman of the Board
|
Lead = Lead Independent Director
|
(1
|
)
|
The information presented in this table is as of the date of this proxy statement, unless stated otherwise. During fiscal 2020, Maj. Gen. Guy L. Hecker, Jr. (not listed above) served as a director, was a member of each of our three standing committees, and held the position of Lead Independent Director, retiring from the Board and each role on May 6, 2019. During fiscal 2020, Ian Potter (not listed above) served as Chair of the Audit Committee from October 23, 2018 until June 1, 2019, when Todd Ford succeeded him in that role. Mr. Potter did not stand for re-election in 2019.
|
(2
|
)
|
This column indicates whether the director failed to attend any meetings held during our 2020 fiscal year of the Board or of any committee on which the director then served and, if so, the number of meetings not attended.
|
22
|
8x8, Inc. 2020 Proxy Statement
|
Audit Committee
|
|
Responsibilities:
As specified in its charter, the Audit Committee has the following responsibilities:
|
|
Current Members:
|
v
|
Evaluates the performance of and assesses the qualifications of the independent auditors.
|
|
Todd Ford, Chair
|
|
|
|
Monique Bonner
|
|
v
|
Determines whether to retain or terminate the existing independent auditors or to appoint and engage new independent auditors. Reviews and approves the retention of the independent auditors to perform any proposed permissible non-audit services. Monitors the rotation of partners of the independent auditors on our audit engagement team as required by law.
|
Eric Salzman
|
|
|
|
|
|
||
|
|||
Former Members Who Served During F2020:
|
|
||
Ian Potter
|
|
||
Maj. Gen. Guy L. Hecker, Jr.
|
v
|
Confers with management and the independent auditors regarding the effectiveness of internal controls over financial reporting.
|
|
|
|
|
|
Fiscal 2020 Actions:
|
|
||
Meetings: Four
|
v
|
Discusses with management and the independent auditors the results of the annual audit and the results of the reviews of our quarterly financial statements.
|
|
|
|
|
|
|
v
|
Reviews and approves all business transactions between us and any director, officer, affiliate or related party, including transactions required to be reported in our proxy statement (of which there were none during fiscal 2020).
|
|
|
|
|
|
Purpose:
The Audit Committee oversees our corporate accounting and financial reporting process and performs several functions in the performance of this role.
|
|
||
v
|
Responsible for oversight of the Company’s internal audit function, risk management processes and system of internal controls.
|
||
|
|||
|
|
||
Independence:
|
|
|
|
The Board has determined that each of the current members meets the requirements for membership to the Audit Committee, including the independence requirements under NYSE Rules 303A.02 and SEC Rule 10A-3(b)(i) and is financially literate in accordance with the additional audit committee requirements of NYSE Rule 303A.07. The Board has identified Mr. Ford as an ‘‘audit committee financial expert’’ as defined under Item 407(d)(5)(ii) of Regulation S-K, but that status does not impose duties, liabilities or obligations that are greater than the duties, liabilities or obligations otherwise imposed on him as a member of our Audit Committee or our Board.
|
8x8, Inc. 2020 Proxy Statement
|
23
|
Compensation Committee
|
|
Responsibilities:
As specified in its charter, the Compensation Committee has the following responsibilities:
|
|
|
|||
Current Members:
|
v
|
Recommends the compensation of the Chief Executive Officer to the independent members of the Board for approval.
|
|
Eric Salzman, Chair
|
|
|
|
Jaswinder Pal Singh
|
|
v
|
Review and approve corporate goals and objectives relevant to CEO compensation and evaluates the CEO's performance in light of those goals and objectives.
|
Todd Ford
|
|
|
|
|
|
||
|
|
v
|
Approves, in consultation with the Chief Executive Officer, the compensation of other executives at the level of senior vice president and above.
|
Former Members Who Served During F2020:
|
|
||
Ian Potter
|
v
|
Administers our stock-based award and employee stock purchase plans, as well as our employee bonus plan.
|
|
Maj. Gen. Guy L. Hecker, Jr.
|
|
||
|
|
|
|
Fiscal 2020 Actions:
|
v
|
Responsible for reviewing and approving all employment, severance and change-in-control agreements, special or supplemental benefits applicable to executive officers.
|
|
Meetings: Eight
|
|
||
|
|
||
|
v
|
Engages independent compensation consulting firm to advise on executive compensation.
|
|
|
|
|
|
Purpose:
The Compensation Committee reviews and recommends compensation arrangements for the Chief Executive Officer for approval by the independent members of the Board and approves the compensation arrangements for all other executives at the level of senior vice president and above.
|
v
|
|
|
Independence
|
|
|
|
The Board has determined that each of the three current members meets the requirements for membership to the Compensation Committee, including the independence requirements of the SEC and the NYSE listing standards under Rule 303A.05.
|
24
|
8x8, Inc. 2020 Proxy Statement
|
Governance and Nominating Committee
|
|
Responsibilities:
As specified in its charter, the Governance and Nominating Committee has the following responsibilities:
|
|
Current Members:
|
v
|
Responsible for identifying, reviewing and evaluating candidates to serve as directors of the Company, consistent with criteria approved by the Board and set forth in the committee’s charter.
|
|
Monique Bonner, Chair
|
|
|
|
Eric Salzman
|
|
|
|
Jaswinder Pal Singh
|
|
v
|
Recommends to the Board candidates for election to the Board, making recommendations to the Board regarding the membership of the committees of the Board.
|
|
|
|
|
Former Members Who Served During F2020:
|
v
|
Reviews and evaluates the suitability of incumbent directors for continued service on the Board (including those recommended by stockholders).
|
|
Maj. Gen. Guy L. Hecker, Jr.
|
|
||
|
|
v
|
Responsible for developing and recommending to the Board for approval Corporate Governance Principles, and advising on succession plans for the CEO and other executive officers.
|
Fiscal 2020 Actions:
|
|
||
Meetings: Four
|
v
|
Responsible for reviewing and formalizing proposals to amend our certificate of incorporation and by-laws.
|
|
|
|
||
|
v
|
Responsible for adopting the procedures pursuant to which the Board and each Committee is to conduct an annual evaluation of its own performance, and for reviewing the results of these evaluations and making recommendations to the Board.
|
|
|
|
|
|
Purpose: The Governance and Nominating Committee identifies and recommends to the Board individuals qualified to serve as directors of the Company; advises the Board with respect to its committees' composition; oversees the evaluation of the Board; and other matters of corporate governance.
|
|
||
v
|
Responsible for director orientation programs and for director continuing education programs to assist directors in maintaining skills necessary or appropriate for the performance of their responsibilities.
|
||
|
|||
|
|||
|
|
v
|
Reviews CEO succession plan and unexpected absence event policy with CEO.
|
|
|
|
|
Independence:
|
|||
Pursuant to the charter of the Governance and Nominating Committee, all members of the Governance and Nominating Committee must be qualified to serve under the NYSE listing rules and any other applicable law, rule regulation and other additional requirements that the Board deems appropriate. The Board has determined that each of the three current members meet these requirements.
|
8x8, Inc. 2020 Proxy Statement
|
25
|
26
|
8x8, Inc. 2020 Proxy Statement
|
Our Environment
|
Our People
|
Our Ethics
|
|
We are committed to operating in an environmentally responsible manner by ensuring the safety and health of our employees, business partners, and the public - supporting energy conservation, recycling programs, and responsible practices in our own supply chain.
|
Our success to make an impact in the world is greatly dependent on our people. As such, we are strengthened by the cultural diversity of our workforce. People from diverse cultures bring unique language skills, new ways of thinking, creative solutions to difficult problems and global negotiating skills. Thanks to our cultural diversity, 8x8 is a much more interesting place to work.
|
We understand that part of our employee and customer success depends on our ability to manage our business ethically, transparently and responsibly. Our Board updated our Code of Ethics in March 2019 in order to, among other things, add new provisions that reflect our commitment to environmental stewardship, sustainability and human rights and fair labor practices.
|
|
8x8, Inc. 2020 Proxy Statement
|
27
|
COMPENSATION OF NON-EMPLOYEE DIRECTORS
|
•
|
annual payment of $40,000 for service on our board of directors;
|
•
|
annual payment for service as a committee member (other than in the chairman role) in the amounts of $12,500 for the Audit Committee, $7,500 for the Compensation Committee, and $5,000 for the Governance and Nominating Committee;
|
•
|
annual payment for service as the chairman of a committee in the amounts of $25,000 for the Audit Committee, $15,000 for the Compensation Committee and $10,000 for the Governance and Nominating Committee; and
|
•
|
annual payment of $35,000 to our lead director for service in that capacity.
|
•
|
upon a new director’s election or appointment to the Board, that director is granted:
|
◦
|
an initial award of RSUs equal in value to $100,000, vesting in equal annual installments over two years from the date of grant, subject to the director’s continued service on our Board; and
|
◦
|
an award of RSUs equal in value to $175,000 (or a pro-rated portion of that amount, based on the length of the remaining term of service, in the event the director is appointed on a date other than the annual meeting), vesting in full on the date of the next annual meeting, subject to the director’s continued service on our Board; and
|
•
|
upon re-election to the Board, a director is granted an award of RSUs equal in value to $175,000, vesting in full on the later of (a) the date of the director's completion of his or her year of Board service or (b) 12 months from the date of grant of such award, in each case subject to the director's completion of his or her year of Board service.
|
28
|
8x8, Inc. 2020 Proxy Statement
|
(1)
|
Includes only those columns relating to compensation awarded to, earned by, or paid to directors for their services in fiscal 2020. All other columns have been omitted. Vikram Verma and Bryan Martin do not receive any additional compensation for serving as members of the Board, and their compensation from 8x8 is fully reflected in the Summary Compensation Table.
|
Name
|
Stock Options
|
RSUs
|
Eric Salzman
|
75,000
|
7,424
|
Jaswinder Pal Singh
|
75,000
|
7,424
|
Vladimir Jacimovic
|
75,000
|
7,424
|
Monique Bonner
|
—
|
10,151
|
Todd Ford
|
—
|
11,568
|
Elizabeth Theophille
|
—
|
11,469
|
Ian Potter (8)
|
—
|
—
|
Maj. Gen. Guy L. Hecker, Jr. (9)
|
—
|
7,427
|
(3)
|
Fees earned in cash are pro-rated to reflect actual time spent on the Board and/or Board Committee.
|
(4)
|
On August 1, 2019, Mr. Ford, Mr. Salzman, Mr. Potter, Dr. Singh, Mr. Jacimovic, Ms. Bonner, and Ms. Theophille each received a grant of a stock award in the form of RSUs representing the right to receive 7,424 shares of common stock upon the completion of the director’s board service year, subject to his or her continued service through such date. Maj. Gen. Hecker retired from the Board in May 2019 and Mr. Potter did not stand for reelection in 2019 and so neither received a stock grant in fiscal 2020.
|
(5)
|
The amounts reported reflect the aggregate grant date fair value of the stock awards computed in accordance with FASB ASC Topic 718 based on the closing market price of our common stock on the grant date. For a more detailed discussion of the valuation model and assumptions used to calculate the fair value of our stock awards, refer to note 1 to the consolidated financial statements contained in our Annual Report on Form 10-K for our fiscal year ended March 31, 2020.
|
(6)
|
On June 1, 2019, upon his appointment to the Board, Mr. Ford received grants of (1) RSUs representing rights to receive 1,208 shares of common stock, vesting upon the completion of his then-current board service year, and (2) RSUs representing rights to receive 4,144 shares of common stock, vesting in two equal installments on the first and second anniversaries of the grant date, subject in each case to his continued service through such date.
|
(7)
|
On June 19, 2019, upon her appointment to the Board, Ms. Theophille received grants of (1) RSUs representing rights to receive 847 shares of common stock, vesting upon the completion of her then-current board service year, and (2) RSUs representing rights to receive 4,045 shares of common stock, vesting in two equal installments on the first and second anniversaries of the grant date, subject in each case to her continued service through such date.
|
8x8, Inc. 2020 Proxy Statement
|
29
|
(8)
|
Ian Potter did not stand for reelection in August 2019.
|
(9)
|
Maj. Gen. Hecker retired from the Board on May 6, 2019. After his retirement from the Board, on August 19, 2019, Maj. Gen. Hecker entered into a Consulting Agreement with the Company, under which, in consideration for advising the Company on matters that might arise related to the Company or its cloud services through May 6, 2020, Maj. Gen Hecker was entitled to the following consulting fees, which are included in the "All Other Compensation" column of the Fiscal 2020 Director Compensation Table: (1) 7,427 RSUs, which were granted on September 17, 2019 vesting in full on May 6, 2020, and were valued at $175,351 on the date of grant, and (2) $111,997 in consulting fees, payable in cash in three equal installments during the term of the Consulting Agreement within thirty days of August 30, 2019, December 6, 2019 and May 6, 2020. The amount reported for the RSUs reflects the aggregate grant date fair value of the stock awards computed in accordance with FASB ASC Topic 718 based on the closing market price of our common stock on the grant date.
|
30
|
8x8, Inc. 2020 Proxy Statement
|
PROPOSAL ONE — ELECTION OF DIRECTORS
|
Nominee
|
Professional and Academic Experience
|
Skills and Attributes
|
||
Bryan R. Martin
San Jose, California
|
§
|
Mr. Martin has served 8x8 for almost 30 years in a variety of supervisory, executive and operational roles, including:
|
We believe Mr. Martin’s qualifications to serve as a director include his 25 years of experience in senior management roles within 8x8, including over ten years as our Chief Executive Officer, during which period he led 8x8's transformation into a cloud-based provider of communications services sold and delivered under a Software-as-a-Service model. Mr. Martin has over 25 years of experience in the design, development, marketing and sale of communications solutions, and a proven track record of technical expertise and innovation. He also has extensive knowledge of the regulatory and competitive landscape in which we operate, which we believe gives him valuable perspective on industry trends and opportunities.
|
|
|
|
§
|
Chairman (2003 to present)
|
|
|
§
|
Chief Technology Officer (2013 to present)
|
||
|
§
|
Director (2001 to present)
|
||
|
§
|
Chief Executive Officer (2002 to 2013)
|
||
|
§
|
President (2007 to 2008; 2011)
|
||
|
§
|
Various engineering and operations positions (1990 to 2002), including Chief Operating Officer and Senior Vice President, Engineering Operation.
|
||
Age: 52
Director Since: 2001
Independent: No
Chairman of the Board
|
§
|
|
Mr. Martin has served on the California Emerging Technology Fund's Board of Expert Advisors, and he chaired the Emerging Technologies and New Applications Working Group of the California Broadband Task Force for the Business, Transportation and Housing Agency.
|
|
|
§
|
|
He is a named inventor in more than 65 U.S. patents in the fields of semiconductors, computer architecture, video processing algorithms, videophones and communications.
|
|
|
§
|
|
Mr. Martin received a B.S. and a M.S. in Electrical Engineering from Stanford University.
|
8x8, Inc. 2020 Proxy Statement
|
31
|
Nominee
|
Professional and Academic Experience
|
Skills and Attributes
|
|
Vikram Verma
San Jose, California
|
§
|
Mr. Verma has served as our Chief Executive Officer since September 2013, and as a member of our Board since 2012.
|
At Savi and Lockheed, Mr. Verma established himself as a leader with the vision to anticipate industry trends and the emergence of new markets for products and services, and the management skills required to execute upon market opportunities. We believe Mr. Verma’s qualifications to serve as a director, in addition to being our Chief Executive Officer for over six years, include his experience leading Savi Technology, Inc. through its growth and eventual sale to Lockheed Martin; his track record of successfully bringing advanced technology-based solutions to new domestic and international markets in a scalable manner; and his record of technical and business innovation, all of which are important components for our business success.
|
|
§
|
He has served on the board of directors of Cambium Networks, Inc., a leading global provider of wireless networking solutions, since January 2019.
|
|
§
|
From October 2008 to August 2013, he served as President of Strategic Venture Development at Lockheed Martin, where he was responsible for monetizing the company’s existing technologies in new global commercial markets through technology incubators, intellectual property licensing and international strategic partnerships.
|
||
Age: 55
Director Since: 2012
Independent: No
|
§
|
From 2006 to 2008, he served as President of IS&GS Savi Group, a Lockheed Martin technology and information services division providing real-time supply chain management and security solutions for government and commercial markets worldwide.
|
|
|
§
|
Prior to that, he served as Chairman and Chief Executive Officer of Savi Technology, Inc. (acquired by Lockheed Martin in 2006).
|
|
|
§
|
Mr. Verma was named a ‘‘Technology Pioneer’’ by the World Economic Forum in Davos, Switzerland, and was selected as a Tau Beta Pi—Williams Fellow. He is the named inventor in eight issued patents.
|
|
|
§
|
Mr. Verma received a B.S.E.E. degree from the Florida Institute of Technology, a M.S.E degree from University of Michigan and the graduate degree of Engineer in electrical engineering from Stanford University. He attended executive management programs at the Harvard Business School, Stanford Graduate School of Business and the University of California at Berkeley Haas School of Business.
|
32
|
8x8, Inc. 2020 Proxy Statement
|
Nominee
|
Professional and Academic Experience
|
Skills and Attributes
|
||
Eric Salzman
New York, New York
|
§
|
Mr. Salzman has nearly 20 years of experience investing in and advising technology companies with a focus on the communications and software sectors.
|
We believe Mr. Salzman’s qualifications to serve as a director include his 20 years investing in and advising high-growth technology companies, and his experience serving on the boards of directors of other public and private companies. We believe Mr. Salzman is well-positioned to provide strategic advice on all aspects of our business, as well as in corporate governance and executive compensation matters.
|
|
|
§
|
He has extensive M&A, capital markets, private equity and board experience, having served on the boards of 10 companies including as executive chairman, as well as chairman of the audit, compensation and strategic committees. He currently serves as a director for three private-equity-owned technology companies.
|
||
§
|
Since 2011, Mr. Salzman has been the Managing Member of SarniHaan Capital Partners LLC, a boutique consulting firm that provides high impact strategic advice to public and private technology companies.
|
|||
Age: 53
Director Since: 2012
Independent: Yes
Compensation Committee (Chair)
Audit Committee (Member)
Governance and Nominating Committee (Member)
|
§
|
Prior to SarniHaan, he was employed by Lehman Brothers Holdings as a Managing Director in the Private Equity and Principal Investing Group as well as in the Global Trading Strategies Division.
|
||
§
|
Prior to Lehman Brothers, he served as a senior research analyst covering the technology and communications sectors in the hedge fund industry and was a private equity investment professional at two communications- focused private equity funds.
|
|||
§
|
He began his career in the M&A Group at CS First Boston.
|
|||
§
|
Mr. Salzman holds a B.A. Honors from the University of Michigan and an MBA from Harvard University.
|
8x8, Inc. 2020 Proxy Statement
|
33
|
34
|
8x8, Inc. 2020 Proxy Statement
|
Nominee
|
Professional and Academic Experience
|
Skills and Attributes
|
|
Monique Bonner
Cambridge, Massachusetts
|
§
|
Ms. Bonner is Executive Vice President & Chief Marketing Officer at Akamai, where she leads Akamai’s marketing efforts globally including brand, communications, field and digital marketing, as well as the company’s sales and services training and enablement programs.
|
Monique Bonner is a global marketing executive with a track record of successfully building brands, developing customer-centric marketing strategies, driving strategic transformations, and motivating teams to exceptional performance. We believe that Ms. Bonner's extensive experience in leadership positions within the marketing functions of several large, public technology companies makes her uniquely positioned among our Board members to provide strategic and operational guidance at a time when we are looking to reinvigorate our sales and marketing function.
|
|
§
|
Prior to Akamai, Ms. Bonner spent 16 years at Dell Technologies in a variety of roles including sales, operations, strategy, and marketing. She led the company’s first global brand strategy work and designed and developed their digital innovation roadmap for marketing. She was also based in Europe for seven years.
|
|
§
|
Ms. Bonner serves on the Boards of Directors for the Akamai Foundation, and the Lake Champlain Maritime Museum.
|
||
§
|
She earned a Bachelor of Arts from Middlebury College and Master of Business from the University of Michigan.
|
||
Age: 49
Director Since: 2018
Independent: Yes
Audit Committee (Member)
Governance and Nominating Committee (Chair)
|
§
|
She was named 2018 Massachusetts Technology Leadership Council CMO of the Year.
|
|
|
|
||
|
|
8x8, Inc. 2020 Proxy Statement
|
35
|
Nominee
|
Professional and Academic Experience
|
Skills and Attributes
|
|
Todd Ford
San Francisco, California
|
§
|
Mr. Ford has been Chief Financial Officer at Coupa Software, Inc. since 2015.
|
We believe Mr. Ford’s qualifications to serve as a director include his 15+ years experience as chief financial officer and in other executive roles at public technology companies. Mr. Ford has been part of the leadership teams that guided the rapid growth and scaling of several successful SaaS businesses, including most recently as chief financial officer of Coupa Software, overseeing the company's expansion since its initial public offering. In light of his management experience, expertise with the SaaS business model and familiarity with go-to-market strategies used by companies in adjacent industries, we believe Mr. Ford can offer high-level strategic advice and day-to-day operational insights to help 8x8 manage our growth successfully.
|
|
§
|
Mr. Ford served as the Chief Financial Officer of MobileIron, Inc., a mobile IT platform company for enterprises, from December 2013 to May 2015.
|
|
§
|
From June 2012 to July 2013, Mr. Ford served as the co-Chief Executive Officer and Chief Operating Officer of Canara, Inc., a provider of power systems infrastructure and predictive services.
|
||
§
|
From July 2007 to December 2013, Mr. Ford also served as the Managing Director of Broken Arrow Capital, a venture capital firm he founded in July 2007.
|
||
Age: 53
Director Since: 2019
Independent: Yes
Audit Committee (Chair)
Compensation Committee (Member)
|
§
|
From April 2006 to May 2007, Mr. Ford served as President of Rackable Systems, Inc., a manufacturer of server and storage products for large-scale data center deployments (subsequently named Silicon Graphics International Corporation) and from December 2002 to April 2006, he served as Chief Financial Officer of Rackable Systems.
|
|
§
|
Mr. Ford has served on the board of directors of Performant Financial Corporation since October 2011. Mr. Ford holds a B.S. in Accounting from Santa Clara University.
|
36
|
8x8, Inc. 2020 Proxy Statement
|
Nominee
|
Professional and Academic Experience
|
Skills and Attributes
|
|||
Elizabeth Theophille
Basel, Switzerland
|
n
|
Ms. Theophille currently serves as Chief Technology and Digital Officer of Novartis AG, where she has worked since November 2016.
|
In various senior management roles within large multi-national enterprises, Ms. Theophille has long been an evangelist for cloud-based IT services and an early adopter of innovative technologies. She has overseen the digital transformation of IT systems, an important part of the messaging behind our marketing and sales efforts. We believe that her extensive operational experience with IT systems, her familiarity with the implementation of cloud -based solutions and migration from legacy IT systems, and her experience with European markets, give her a valuable and unique perspective among our Board members, particularly as we continue to hone our go-to-market strategies.
|
||
|
n
|
Prior to Novartis, Ms. Theophille worked at Alcatel-Lucent S.A. in France from 2011 to 2016, where she held several senior management positions, including:
|
|||
n
|
Group Chief Information Officer (2016)
|
||||
|
n
|
Chief Technology Officer (2013-2015)
|
|||
|
|
n
|
Vice President, Service Delivery (2011-2012)
|
||
Age: 53
Director Since: 2019
Independent: Yes
|
|
|
|
||
n
|
Prior to Alcatel-Lucent, Ms. Theophille served in management roles at Capgemini S.A. in Paris, France, B.P. International Ltd. in Uxbridge, UK, and Vivendi Universal S.A. and Seagram, both in Paris, France.
|
||||
n
|
Ms. Theophille received a B.A., Business Administration, from International Management Center, Buckingham, UK, and a Higher National Certificate, Computer Science, from Glasgow College of Commerce, Glasgow, Scotland.
|
||||
|
8x8, Inc. 2020 Proxy Statement
|
37
|
The Board unanimously recommends that the stockholders vote ‘‘FOR’’
the election of the nominees set forth above.
|
38
|
8x8, Inc. 2020 Proxy Statement
|
39
|
8x8, Inc. 2020 Proxy Statement
|
AUDIT MATTERS
|
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
|
PROPOSAL TWO RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
|
Service Categories
|
Fiscal 2020
|
Fiscal 2019
|
||||
Audit fees(1)
|
|
$1,088,000
|
|
|
$976,000
|
|
Audit-related fees(2)
|
|
$102,000
|
|
|
$85,000
|
|
Total
|
|
$1,190,000
|
|
|
$1,061,000
|
|
(1)
|
Audit fees consist of fees for professional services provided in connection with (i) the audit of our financial statements; (ii) audit of our internal control over financial reporting; (iii) reviews of our quarterly financial statements; and (iv) reviews in connection with our filing of Form S-8 registration statements with the SEC.
|
(2)
|
Audit-related fees consist of fees for professional services provided in conjunction with the audit of our employee benefit plan and issuance of comfort letters.
|
The Board unanimously recommends that the stockholders vote ‘‘FOR’’
the proposal to ratify our Audit Committee’s appointment of Moss Adams LLP
to serve as our independent registered public accounting firm for the
fiscal year ending March 31, 2021.
|
8x8, Inc. 2020 Proxy Statement
|
41
|
EQUITY COMPENSATION PLAN INFORMATION
|
•
|
8x8, Inc. Amended and Restated 2017 New Employee Inducement Incentive Plan;
|
•
|
8x8, Inc. Amended and Restated 2013 New Employee Inducement Incentive Plan;
|
•
|
8x8, Inc. Amended and Restated 2012 Equity Incentive Plan;
|
•
|
8x8, Inc. 2006 Stock Plan; and
|
As of May 31, 2020:
Plan Category
|
Number of
Securities to be
Issued upon
Exercise of
Outstanding
Options, Warrants,
and Rights
|
Weighted-
Average
Exercise Price
of Outstanding
Options
Warrants and
Rights
|
Number of
Securities
Remaining
Available for Future
Issuance Under
Equity
Compensation
Plans (Excluding
Securities Reflected
in the1st Column
of this Table)
|
||||
Equity Compensation plans approved by security holders (1)
|
1,858,319
|
|
|
$1.46
|
|
17,592,769
|
|
Equity Compensation plans not approved by security holders( 2)
|
401,360
|
|
|
$0.48
|
|
600,239
|
|
Total
|
2,259,679
|
|
|
$1.94
|
|
18,193,008
|
|
As of March 31, 2020:
Plan Category |
Number of
Securities to be
Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights
|
Weighted-
Average
Exercise Price
of Outstanding
Options
Warrants and
Rights
|
Number of
Securities
Remaining
Available for Future
Issuance Under
Equity
Compensation
Plans (Excluding
Securities Reflected
in the1st Column
of this Table)
|
||||
Equity Compensation plans approved by security holders (1)
|
1,858,819
|
|
|
$1.40
|
|
17,697,818
|
|
Equity Compensation plans not approved by security holders( 2)
|
415,444
|
|
|
$0.48
|
|
568,228
|
|
Total
|
2,274,263
|
|
|
$1.88
|
|
18,266,046
|
|
(1)
|
The amounts in this row reflect shares issuable pursuant to awards that have been or may be granted under the 8x8, Inc. Amended and Restated 2012 Equity Incentive Plan (the "2012 Plan"), the 8x8, Inc. 2006 Stock Plan (the "2006 Plan") or the 8x8, Inc. Amended and Restated 1996 Employee Stock Purchase Plan. We ceased granting awards under the 2006 Plan in 2012 and we are not authorized to grant any new awards under the 2006 Plan, although we may continue to issue shares pursuant to outstanding awards under that plan. Awards that may be granted under the 2012 Plan include stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and stock grants. Shares that are issuable pursuant to awards of restricted stock, RSUs, PSUs and stock grants made after August 1, 2019 are counted against the plan limit at the rate of one share for every one share issuable pursuant to any such award.
|
(2)
|
The amounts in this row reflect shares issuable pursuant to awards that have been or may be granted under the 8x8, Inc. Amended and Restated 2013 New Employee Inducement Incentive Plan (the "2013 Plan") or the 8x8, Inc. Amended and Restated 2017 New Employee Inducement Incentive Plan (the "2017 Plan). We ceased granting awards under the 2013 Plan in 2016 and we are not authorized to grant any new awards under the 2013 Plan, although we may continue to issue shares pursuant to outstanding awards under that plan.
|
8x8, Inc. 2020 Proxy Statement
|
42
|
PROPOSAL THREE — APPROVAL OF AMENDMENT TO THE AMENDED AND RESTATED 1996 EMPLOYEE STOCK PURCHASE PLAN OF 8X8, INC.
|
8x8, Inc. 2020 Proxy Statement
|
43
|
44
|
8x8, Inc. 2020 Proxy Statement
|
8x8, Inc. 2020 Proxy Statement
|
45
|
The Board of Directors Recommends a Vote ‘‘FOR’’ approval of the proposed amendments to the Amended & Restated 1996 Employee Stock Purchase Plan, including to increase the number of shares currently reserved for issuance by an additional 3,000,000 shares and elimination of the "evergreen" formula requiring all future share increases be approved by the Board and stockholders.
|
46
|
8x8, Inc. 2020 Proxy Statement
|
EXECUTIVE COMPENSATION
|
•
|
Vikram Verma, our Chief Executive Officer (our ‘‘CEO’’);
|
•
|
Steven Gatoff, our Chief Financial Officer (our ‘‘CFO’’)(1);
|
•
|
Bryan R. Martin, our Chairman of the Board and Chief Technology Officer (our "CTO");
|
•
|
Dejan Deklich, our Chief Product Officer; and
|
•
|
Matthew Zinn, our Senior Vice President, General Counsel, Secretary & Chief Privacy Officer (our "General Counsel").
|
•
|
Service revenue increased 27% year-over-year to $414.1 million. Service revenue from mid-market and enterprise customers represented 43% of total service revenue and grew 51% over the prior year.
|
•
|
Extended our cloud technology platform with the acquisition of Wavecell, global communications platform-as-a-service ("CPaaS") that enables businesses to directly integrate our platform services within their websites, mobile apps and business systems.
|
•
|
Launched 8x8 Express, our self-service eCommerce offering in the US and UK.
|
•
|
Expanded our go-to-market reach with the channel community including partnering with value-added resellers (VARs) throughout the U.S. and Europe.
|
8x8, Inc. 2020 Proxy Statement
|
47
|
•
|
Base Salary: After evaluating the competitive positioning of base salary for our NEOs in the context of our overall compensation philosophy, the Compensation Committee determined to adjust salaries for four of our NEOs to be in line with the market. These adjustments were made after not having made any base pay increases for over four years, for our CEO, and over two years for others.
|
•
|
Short-Term Incentive Payouts Below Target: We entered fiscal 2020 with expectations for strong growth, building on the investments in our business in the prior years. As such, the Compensation Committee set stretch objectives to drive greater levels of growth. Further, Service Revenue targets were adjusted upwards in July 2019 to account for increased revenues from the acquisition of Wavecell Pte. Ltd. While service revenue increased 27% year-over-year, our performance for the year was below the stretch targets we established in our fiscal 2020 Employee Bonus Plan ("EBP"). As a result, our NEOs earned half or less of their target incentive opportunities under the EBP. In accordance with the terms of the EBP, our NEOs elected to receive all or a portion of their earned EBP for fiscal 2020 performance in the form of vested shares.
|
•
|
Continued Emphasis on Performance-Based Long-Term Incentives: Our NEOs were granted long-term incentives in the form of time-vesting restricted stock units (‘‘RSUs’’) and performance-based stock units with vesting tied to our relative total shareholder return (referred to as "PSUs" or ‘‘TSR PSUs’’). This approach to long-term incentives is consistent with the compensation program applicable to our NEOs during our prior fiscal year. The Compensation Committee believes that a balance of time- and performance-vesting equity effectively balances the retention and motivational aspects of our compensation program. Approximately 60% of the total long-term incentive value awarded to our CEO was delivered in the form of TSR PSUs, and approximately 50% of the total long-term incentive value awarded to each of our other NEOs was delivered in the form of TSR PSUs.
|
8x8, Inc. 2020 Proxy Statement
|
48
|
(1)
|
Fiscal 2020 CEO Targeted Compensation Mix reflects Mr. Verma's annualized base salary, annual target bonus opportunity and equity awards granted in fiscal 2020. Mr. Verma's long-term equity is calculated using the stock price ($23.61) on the date of grant, which was September 17, 2019 for RSUs and PSUs. Achievement of PSUs will be measured based on relative TSR against the Russell 2000 Index (^RUT), as described in detail under "Long Term Incentive Compensation" below.
|
(2)
|
Fiscal 2020 NEO average Targeted Compensation Mix reflects the average annual base salary, average annual target bonus opportunity and the average value of equity awards granted to our NEOs, other than the CEO, in fiscal 2020. The NEO long-term equity is calculated using the stock price ($23.61) on the date of grant, which was September 17, 2019 for RSUs and PSUs. Achievement of PSUs will be measured based on relative TSR against the Russell 2000 Index (^RUT), as described in detail under "Long Term Incentive Compensation" below.
|
(1)
|
The above chart illustrates CEO Total Pay for Mr. Verma. CEO Total Pay is comprised of salary earned, actual cash bonuses paid, all other compensation paid as reporting in the “Summary Compensation Table” below. Further, CEO Total Pay includes the "in- the-money" value of equity awards granted during each fiscal year, valued based on the closing market price of $13.86 per share of our common stock on the NYSE on March 31, 2020.
|
8x8, Inc. 2020 Proxy Statement
|
49
|
•
|
Independent Compensation Committee. The Compensation Committee is comprised solely of independent directors who have established effective means for communicating with stockholders regarding their executive compensation ideas and concerns.
|
•
|
Independent Compensation Committee Advisors. The Compensation Committee engaged its own compensation consultant to assist with its fiscal 2020 compensation reviews.
|
•
|
Annual Executive Compensation Review. The Compensation Committee conducts an annual review and approval of our compensation strategy, including a review of our compensation peer group used for comparative purposes and a review of our compensation-related risk profile to be certain that our compensation policies do not seem reasonably likely to promote conduct that could have a material adverse effect on the Company.
|
•
|
Other Executive Compensation Policies and Practices. Our compensation philosophy and related corporate governance policies and practices are complemented by several specific compensation practices that are designed to align our executive compensation with long-term stockholder interests, including the following:
|
8x8, Inc. 2020 Proxy Statement
|
50
|
v Compensation At-Risk. Our executive compensation program is designed so that a significant portion of our executive officers’ compensation is ‘‘at risk’’ based on corporate performance, as well as equity-based to align the interests of our executives and stockholders.
|
v No Special Retirement Plans. We do not currently offer, nor do we have plans to provide, pension arrangements, or nonqualified deferred compensation plans or arrangements to our executive officers, other than our 401(k) Plan, which is open to all United States salaried employees.
|
v Change-in-Control Arrangements. Under our Executive Change-in-Control and Severance Policy, our CEO, EVPs and SVPs are eligible to receive certain specified payments and benefits in the event of a constructive termination of employment in connection with a change-in-control of the Company (a double trigger arrangement).
|
v No Special Health or Welfare Benefits. Our named executive officers participate in broad-based company- sponsored health and welfare benefits programs on the same basis as our other full-time, salaried employees.
|
v Executive Officer Stock Ownership Requirement. Each of our named executive officers is required to acquire and retain an ownership interest in shares of our common stock, at least equal in value to six times his current base salary in the case of the CEO, and one times his or her initial base salary in the case of other named executive officers, by prescribed dates.
|
v No Perquisites. We generally do not provide any perquisites or other personal benefits to our named executive officers.
|
v Multi-Year Vesting Requirements. The annual equity awards granted to our named executive officers generally vest or are earned over multi-year periods, consistent with current market practice and our retention objectives.
|
v No Tax Reimbursements. We do not provide any tax reimbursement payments (including ‘‘gross-ups’’) on any severance or change-in-control payments or benefits.
|
v Clawback. Our 2012 equity incentive plan includes a clawback provision allowing for the repayment of award proceeds earned by a plan participant if the Compensation Committee determines that the participant has intentionally committed an act of embezzlement, fraud, dishonesty, or breach of fiduciary duty during the Participant’s employment that contributed to an obligation to restate the Company’s financial statements.
|
|
•
|
attract, develop, motivate, and retain top talent and focus our executive officers on key business goals that enhance stockholder value;
|
•
|
ensure executive compensation is aligned with our corporate strategies and business objectives;
|
•
|
provide meaningful equity ownership opportunities to our executives to align their incentives with the creation of stockholder value;
|
•
|
ensure fairness among our executives by recognizing the contributions each individual makes to our success, as well as the compensation history and prior experience of each executive officer; and
|
•
|
provide an incentive for long-term continued employment with us.
|
8x8, Inc. 2020 Proxy Statement
|
51
|
•
|
assisted in the review and updating of our compensation peer group;
|
8x8, Inc. 2020 Proxy Statement
|
52
|
•
|
analyzed the executive compensation levels and practices of the companies in our compensation peer group;
|
•
|
provided advice with respect to compensation best practices and market trends for named executive officers and directors;
|
•
|
assisted with the design of the short-term and long-term incentive compensation plans with appropriate performance goals and targets for our named executive officers and other executives; and
|
•
|
provided ad hoc advice and support throughout the year.
|
8x8, Inc. 2020 Proxy Statement
|
53
|
8x8, Inc. 2020 Proxy Statement
|
54
|
Named Executive Officer
|
Fiscal 2019
Base Salary
|
Fiscal 2020 Base Salary
|
Percentage Adjustment
|
Mr. Verma
|
$490,000
|
$525,000
|
7%
|
Mr. Gatoff
|
$375,000
|
$390,000
|
4%
|
Mr. Martin
|
$290,000
|
$300,000
|
3%
|
Mr. Deklich
|
$325,000
|
$380,000
|
17%
|
Mr. Zinn
|
$360,000
|
$360,000
|
0%
|
8x8, Inc. 2020 Proxy Statement
|
55
|
Named Executive Officer
|
Fiscal 2019 Target Bonus Opportunity
(as% of base salary)
|
Fiscal 2020 Target Bonus Opportunity
(as% of base salary)
|
Mr. Verma
|
100%
|
100%
|
Mr. Gatoff
|
60%
|
65%
|
Mr. Martin
|
60%
|
60%
|
Mr. Deklich
|
60%
|
65%
|
Mr. Zinn
|
50%
|
55%
|
Named Executive Officer
|
Fiscal 2020
Earned
Base Salary |
Fiscal 2020
Target Annual Cash Incentive Award Opportunity (as a percentage of base salary) |
Fiscal 2020
Target Annual Cash Incentive Award Opportunity (as a dollar amount) |
Mr. Verma
|
$513,333
|
100%
|
$513,333
|
Mr. Gatoff
|
$385,000
|
65%
|
$250,250
|
Mr. Martin
|
$296,667
|
60%
|
$178,000
|
Mr. Deklich
|
$361,667
|
65%
|
$235,084
|
Mr. Zinn
|
$360,000
|
55%
|
$198,000
|
8x8, Inc. 2020 Proxy Statement
|
56
|
Performance
Period
|
Service Revenue
(in millions)
|
||
Threshold
(95% of Target)
|
Target
(100% of Target)
|
Max
(110% of Target) (1)(2)
|
|
Q1
|
$89.3
|
$94.0
|
N/A
|
Q2
|
$102.0
|
$107.4
|
N/A
|
Q3
|
$109.8
|
$115.6
|
N/A
|
Q4
|
$116.0
|
$122.1
|
N/A
|
Fiscal 2020
|
$417.1
|
$439.1
|
$483.0
|
Performance Period
|
Service Revenue Target
(in millions)
|
Service Revenue Achievement
(in millions) (1)
|
Attainment
Score
|
Q1
|
$94.0
|
$92.4
|
98.30%
|
Q2
|
$107.4
|
$104.5
|
97.30%
|
Q3
|
$115.6
|
$113.6
|
98.27%
|
Q4
|
$122.1
|
$116.0
|
95.00%
|
Fiscal 2020
|
$439.1
|
$426.5
|
97.13%
|
8x8, Inc. 2020 Proxy Statement
|
57
|
Named Executive Officers
|
Target Annual
Incentive
Award
Opportunity
|
MBO
Achievement
Percentage (1)
|
Financial
Achievement
Percentage (2)
|
Actual F2020
Total Incentive
Award Payment
|
Actual F2020
Incentive Award
Payment as a
Percentage of the
Target Opportunity (3)
|
Mr. Verma
|
$513,333
|
N/A
|
44.3 %
|
$241,676
|
47.1%
|
Mr. Gatoff
|
$250,250
|
N/A
|
44.3%
|
$114,671
|
45.8%
|
Mr. Martin
|
$178,000
|
105.0%
|
44.3%
|
$84,284
|
47.4%
|
Mr. Deklich
|
$235,084
|
103.0%
|
44.3%
|
$105,906
|
45.1%
|
Mr. Zinn
|
$198,000
|
101.0%
|
44.3%
|
$88,920
|
44.9%
|
(1)
|
The amount shown in this column for each NEO is the average of his MBO Achievement Percentages for each of the four fiscal quarters. MBO Achievement percentages for our NEOs above 100% reflect the fact that MBO achievement of our NEOs was capped at 100% starting in Q2 of our fiscal 2020, at the same time the Committee increased service revenue targets due to the Wavecell acquisition as described above. During the first quarter of fiscal 2020, our NEOs were eligible for a MBO achievement up to a maximum of 120%. Details regarding the MBO calculation are discussed in pages 61 to 63 of the Proxy Statement for our 2019 Annual Meeting.
|
(2)
|
The percentage shown in this column is the average of the Company's financial achievement percentage over the performance period.
|
(3)
|
The difference between Messrs. Verma's and Gatoff's actual fiscal 2020 incentive award payment as a percentage of their target opportunity is due to their salary increases in July 2019 as well as the bonus target change for Mr. Gatoff, as noted above.
|
Named Executive Officers
|
Earned EBP Value Delivered
in Shares
|
Number of Shares of
Common Stock Issued
in Lieu of Cash Bonus Payment
|
Mr. Verma
|
$84,783
|
4,154
|
Mr. Martin
|
$29,063
|
1,424
|
Mr. Deklich
|
$105,880
|
4,834
|
8x8, Inc. 2020 Proxy Statement
|
58
|
Named Executive Officer
|
Restricted
Stock Unit Awards
(number of
shares granted) (1)
|
Performance
Stock Unit Awards - Relative
TSR Performance
(number of
shares granted at target)
|
Aggregate Grant Date
Fair Value of
Equity Awards (2)
|
Mr. Verma
|
83,022
|
124,533
|
$4,900,374
|
Mr. Gatoff
|
51,888
|
51,888
|
$2,450,151
|
Mr. Martin
|
10,377
|
10,377
|
$490,002
|
Mr. Deklich
|
51,888
|
51,888
|
$2,450,151
|
Mr. Zinn
|
14,528
|
14,528
|
$686,012
|
(1)
|
The number of RSUs in the table above excludes shares granted in lieu of cash incentives earned under the EBP.
|
(2)
|
The target aggregate grant date value of equity awards includes the value of relative TSR PSUs based on the closing price of our common stock on the date of grant. This value differs from the value reported in our Summary Compensation Table, which reflects the accounting grant date fair value of the award using the methodology required under FASB ASC 718 accounting standards.
|
•
|
50% of the shares covered by the PSU awards are eligible to be earned on September 17, 2021 and the other half are eligible to be earned on September 17, 2022, in each case subject to our TSR relative to the Russell 2000 Index during the period from the grant date through the respective performance dates. Shares earned are directly tied to TSR performance and have no additional time-based restrictions.
|
•
|
A 2x multiplier will be applied to the TSR for each percentage point of positive or negative relative TSR, such that the number of shares earned will increase or decrease by 2% of the target number of shares, subject to a maximum payout equal to 200% of the target number of shares granted. In the event our TSR is below negative 30% relative to the Russell 2000 Index, no shares will be earned for the applicable performance period.
|
8x8, Inc. 2020 Proxy Statement
|
59
|
NEO
|
Grant Date
|
Performance Period
|
Russell 2000 TSR
|
EGHT TSR
|
EGHT Outper-formance
|
Target Shares
|
Performance Achievement
|
Earned Shares
|
Vik Verma
|
9/19/2017
|
9/19/2017 - 9/19/2019
|
8.49%
|
78.73%
|
70.24%
|
73,848
|
200%
|
147,696
|
9/20/2016
|
9/20/2016 - 9/20/2019
|
22.55%
|
75.60%
|
53.05%
|
59,276
|
200%
|
118,552
|
|
Bryan R. Martin
|
9/19/2017
|
9/19/2017 - 9/19/2019
|
8.49%
|
78.73%
|
70.24%
|
7,694
|
200%
|
15,388
|
9/20/2016
|
9/20/2016 - 9/20/2019
|
22.55%
|
75.60%
|
53.05%
|
9,808
|
200%
|
19,616
|
|
Dejan Deklich
|
3/20/2017
|
3/20/2017 - 3/20/2020
|
4.70%
|
17.69%
|
12.99%
|
18,226
|
126%
|
22,961
|
9/19/2017
|
9/19/2017 - 9/19/2019
|
8.49%
|
78.73%
|
70.24%
|
11,540
|
200%
|
23,080
|
8x8, Inc. 2020 Proxy Statement
|
60
|
8x8, Inc. 2020 Proxy Statement
|
61
|
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
|
SUMMARY COMPENSATION TABLE
|
Name and Principal Position
|
Fiscal
Year
|
Salary(8) ($)
|
Bonus (1)(2) ($)
|
Stock
Awards(3)(4) ($)
|
Non-Equity
Incentive Plan
Compensation (3) ($)
|
All Other Compensation (7) ($)
|
Total ($)
|
||||||
Vikram Verma
|
2020
|
513,333
|
|
—
|
|
4,900,374
|
|
241,664
|
|
6,623
|
|
5,661,994
|
|
Chief Executive Officer
|
2019
|
490,000
|
|
—
|
|
4,492,628
|
|
101,490
|
|
4,538
|
|
5,088,656
|
|
|
2018
|
490,000
|
|
—
|
|
4,098,462
|
|
165,708
|
|
4,449
|
|
4,758,619
|
|
Steven Gatoff (5)
|
2020
|
385,000
|
|
—
|
|
2,450,151
|
|
114,671
|
|
4,685
|
|
2,954,507
|
|
Chief Financial Officer
|
2019
|
171,875
|
|
45,000
|
|
2,743,323
|
|
11,445
|
|
3,543
|
|
2,975,186
|
|
Bryan R. Martin
|
2020
|
296,667
|
|
—
|
|
490,002
|
|
84,275
|
|
4,478
|
|
875,421
|
|
Chairman, Chief
|
2019
|
290,000
|
|
—
|
|
449,232
|
|
53,224
|
|
4,328
|
|
796,784
|
|
Technology Officer
|
2018
|
290,000
|
|
82,374
|
|
512,410
|
|
74,124
|
|
4,449
|
|
963,357
|
|
Dejan Deklich
|
2020
|
361,667
|
|
—
|
|
2,450,151
|
|
105,880
|
|
3,829
|
|
2,921,527
|
|
Chief Product Officer
|
2019
|
325,000
|
|
—
|
|
1,617,329
|
|
56,382
|
|
3,578
|
|
2,002,289
|
|
|
2018
|
316,667
|
|
104,591
|
|
768,554
|
|
52,763
|
|
3,630
|
|
1,246,205
|
|
Matthew Zinn (6)
|
2020
|
360,000
|
|
—
|
|
686,012
|
|
88,920
|
|
6,021
|
|
1,140,953
|
|
SVP, General Counsel,
|
2019
|
186,923
|
|
—
|
|
1,297,231
|
|
27,996
|
|
874
|
|
1,510,790
|
|
Chief Privacy Officer & Secretary
|
|
|
|
|
|
|
|
(1)
|
The amounts listed in the "Bonus" column for fiscal year 2018 for Messrs. Martin and Deklich correspond to unearned bonuses paid under the fiscal year 2018 Management Incentive Bonus Plan. The rationale for, and special circumstances behind these payments are discussed in pages 41 to 45 of the Proxy Statement for our 2018 Annual Meeting.
|
(2)
|
The amount reported in this column for Mr. Gatoff in fiscal 2019 corresponds to a signing bonus.
|
(3)
|
During fiscal years 2018, 2019 and 2020, amounts earned under the MIP and EBP were in some cases settled by the issuance of fully-vested shares of our common stock rather than payment of cash to our NEO's. The number of shares of common stock was determined based on the per share closing price of our common stock on the payment date. Earned amounts paid to the NEOs under the MIP and EBP are reported under the "Non‐Equity Incentive Plan Compensation" column of this table, even if settled in stock.
|
(4)
|
The amounts reported in this column represent the aggregate grant date fair value of all stock awards computed in accordance with FASB ASC Topic 718, are based upon the probable outcome of any applicable performance conditions, exclude the impact of estimated forfeitures related to service-based vesting conditions and are 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. The stock awards may include for each NEO any or all of the following: (a) restricted stock unit (RSU) awards; and (b) performance unit (PSU) awards. For RSUs, PSUs and stock grants, fair value is computed by multiplying the total number of shares subject to the award (or target number, in the case of PSUs) by the closing price of our common stock on the date of the grant. For a more detailed discussion of the assumptions used to calculate the fair value of our stock awards, refer to note 1 to the consolidated financial statements contained in our 2020 Annual Report on Form 10‐K for our fiscal year ended March 31, 2020. The following sets forth the fair value in accordance with FASB ASC Topic 718 principles of performance stock units granted in fiscal 2020 based upon achieving the maximum level of performance as of the grant date: Mr. Verma-$5,880,448 ; Mr. Gatoff-$2,459,151; Mr. Martin-$490,002; Mr. Deklich-$2,450,151; and Mr. Zinn-$ 686,102. The actual value, if any, that an NEO may realize from an award is contingent upon the satisfaction of the conditions to vesting in that award and there is no assurance that the value, if any, eventually realized by the NEO will correspond to the actual amount reported.
|
(5)
|
Steven Gatoff began his employment with us on October 15, 2018 as Special Advisor to the CEO and became our Chief Financial Officer on November 1, 2018. The information in this table includes compensation earned by him prior to his appointment as CFO. Mr. Gatoff’s annualized salary for fiscal year 2019 was $375,000.
|
(6)
|
Matthew Zinn began his employment with us on September 24, 2018. Mr. Zinn’s annualized salary for fiscal year 2019 was $360,000.
|
(7)
|
"All Other Compensation" represents company contribution of 401(k) Match and Group Term Life Insurance benefits in fiscal 2020.
|
(8)
|
The salary amounts for fiscal year 2020 reflect a change in base salary for each executive during the fiscal year as follows: Mr. Verma's was changed to $525,000 from $490,000; Mr. Gatoff's was changed to $390,000 from $375,000; Mr. Deklich's was changed to $380,000 from $325,000; and Mr. Martin's was changed to $300,000 from $290,000.
|
63
|
8x8, Inc. 2020 Proxy Statement
|
FISCAL 2020 GRANTS OF PLAN-BASED AWARDS TABLE
|
|
|
|
|
|
|
|
|
All Other Stock Awards Number of shares of stock or Units(4)(#)
|
Grant Date Fair Value of Stock and Option Awards(5) ($)
|
||||||||
|
|
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)
|
Estimated Future Payouts Under Equity Incentive Plan Awards(2)
|
||||||||||||||
Name
|
Grant
Date (3)
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
||||||||||
Vikram Verma
|
—
|
—
|
|
513,333
|
|
770,000
|
|
|
|
|
|
|
|||||
|
9/17/2019
|
|
|
|
—
|
|
124,533
|
|
249,066
|
|
|
2,940,224
|
|
||||
|
9/17/2019
|
|
|
|
|
|
|
83,022
|
|
1,960,149
|
|
||||||
Steven Gatoff
|
—
|
—
|
|
250,250
|
|
375,375
|
|
|
|
|
|
|
|||||
|
9/17/2019
|
|
|
|
—
|
|
51,888
|
|
103,776
|
|
|
1,225,076
|
|
||||
|
9/17/2019
|
|
|
|
|
|
|
51,888
|
|
1,225,076
|
|
||||||
Bryan R. Martin
|
—
|
—
|
|
178,000
|
|
267,000
|
|
|
|
|
|
|
|||||
|
9/17/2019
|
|
|
|
—
|
|
10,377
|
|
20,754
|
|
|
245,001
|
|
||||
|
9/17/2019
|
|
|
|
|
|
|
10,377
|
|
245,001
|
|
||||||
Dejan Deklich
|
—
|
—
|
|
235,084
|
|
352,626
|
|
|
|
|
|
|
|||||
|
9/17/2019
|
|
|
|
—
|
|
51,888
|
|
103,776
|
|
|
1,225,076
|
|
||||
|
9/17/2019
|
|
|
|
|
|
|
51,888
|
|
1,225,076
|
|
||||||
Matthew Zinn
|
—
|
—
|
|
198,000
|
|
297,000
|
|
|
|
|
|
|
|||||
|
9/17/2019
|
|
|
|
—
|
|
14,528
|
|
29,056
|
|
|
343,006
|
|
||||
|
9/17/2019
|
|
|
|
|
|
|
14,528
|
|
343,006
|
|
(1)
|
The amounts reported in the ‘‘Estimated Possible Payouts under Non-Equity Incentive Plan Awards’’ column represent the total annual bonuses that could have been earned by each named executive officer under our Employee Bonus Plan, or EBP, for fiscal 2020, assuming payment in cash of all earned amounts. All amounts actually earned by each named executive officer with respect to fiscal 2020 have been paid out, either in cash or fully-vested shares of stock, at the NEO's election under the discretion of the Compensation Committee, in accordance with the EBP. Mr. Verma (on February 14, 2020), Mr. Martin (on February 14, 2020) and Mr. Deklich (on August 15, 2019, November 15, 2019, and February 14, 2020) received fully-vested shares of stock, issued as payment (in lieu of cash) of amounts earned under our EBP. For a more detailed discussion of the fiscal 2020 EBP, see ‘‘Compensation Discussion and Analysis -Annual Cash Incentive Awards’’ above.
|
(2)
|
The amounts reported in the ‘‘Estimated Future Payments under Equity Incentive Plan Awards’’ column represent the number of shares of our common stock subject to performance-based restricted stock unit awards, or PSUs, granted to the named executive officers during fiscal 2020. Such awards may, in the discretion of the Compensation Committee, include the right to the equivalent of any dividends on the shares of common stock covered by the award; provided, however, any such dividends would be paid only if and when the awards vest. The number of shares that can be earned pursuant to the awards ranges from zero to two times the number of shares listed in the ‘‘Target’’ column, depending on the performance of our common stock in relation to the Russell 2000 Index during the relevant performance period (which generally runs from the date of grant until the second or third anniversary of such date). The performance conditions and other terms applicable to these PSU awards are described in more detail under ‘‘Compensation Discussion and Analysis-Long-Term Incentive Compensation’’ above.
|
(3)
|
Awards granted on September 17, 2019 for each NEO include restricted stock units (reported under the "All Other Stock Awards--Number of shares of stock or units" column) and PSUs (reported under the "Estimated Future Payouts Under Equity Incentive Plan Awards (#)" column).
|
(4)
|
The amounts reported in this column for September 17, 2019 are for shares issuable upon vesting of time-based RSU awards that vest over a period of three years from the date of grant, with 33.3% of the shares vesting on the first anniversary of grant and the remaining 66.7% vesting in equal quarterly installments over the next two years, subject to the recipient’s continued employment or other qualifying association with the Company.
|
(5)
|
Represents the aggregate grant date fair value of the stock-based compensation awards granted to the named executive officers during fiscal 2020, excluding the impact of estimated forfeitures related to service-based vesting conditions, as computed in accordance with ASC 718. For PSUs, fair value is computed by multiplying the target number of shares subject to the award by the closing price of our common stock on the date of the grant, and assumes target performance is the probable outcome.
|
8x8, Inc. 2020 Proxy Statement
|
64
|
FISCAL 2020 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
|
|
Option Awards
|
Stock Awards
|
Equity Incentive Plan Awards
|
|||||||||||
Name
|
No. of Securities Underlying Unexercised Options(#) (1)
|
Option Exercise Price ($)
|
Option Expiration Date
|
No. of Shares or Units of Stock That Have Not Vested (#)(2)
|
|
Market Value of Shares or Units of Stock That Have Not Vested ($)(3)
|
No. of Unearned Shares, Units or Other Rights of Stock That Have Not Vested (#)(2)
|
|
Market or Payout Value of Unearned Shares, Units or Other Rights of Stock That Have Not Vested ($)(3)
|
|||||
Vikram Verma
|
75,000
|
|
4.26
|
|
1/19/2022
|
|
|
|
|
|
|
|||
|
300,000
|
|
9.70
|
|
9/9/2023
|
|
|
|
|
|
|
|||
|
66,334
|
|
6.86
|
|
10/21/2024
|
|
|
|
|
|
|
|||
|
126,290
|
|
6.86
|
|
10/21/2024
|
|
|
|
|
|
|
|||
|
|
|
|
26,529
|
(4)
|
367,692
|
|
|
|
|
||||
|
|
|
|
60,062
|
(6)
|
832,459
|
|
|
|
|
||||
|
|
|
|
57,132
|
(8)
|
791,850
|
|
|
|
|
||||
|
|
|
|
83,022
|
(10)
|
1,150,685
|
|
|
|
|
||||
|
|
|
|
|
|
|
73,848
|
|
(5)
|
1,023,533
|
|
|||
|
|
|
|
|
|
|
147,058
|
|
(7)
|
2,038,224
|
|
|||
|
|
|
|
|
|
|
124,533
|
|
(11)
|
1,726,027
|
|
|||
Steven Gatoff
|
|
|
|
41,510
|
(8)
|
575,329
|
|
|
|
|
||||
|
|
|
|
51,888
|
(10)
|
719,168
|
|
|
|
|
||||
|
|
|
|
|
|
|
78,431
|
|
(7)
|
1,087,054
|
|
|||
|
|
|
|
|
|
|
51,888
|
|
(11)
|
719,168
|
|
|||
Bryan R. Martin
|
17,806
|
|
5.87
|
|
8/21/2022
|
|
|
|
|
|
|
|||
|
115,194
|
|
5.87
|
|
8/21/2022
|
|
|
|
|
|
|
|||
|
10,266
|
|
9.74
|
|
9/17/2023
|
|
|
|
|
|
|
|||
|
74,598
|
|
9.74
|
|
9/17/2023
|
|
|
|
|
|
|
|||
|
11,288
|
|
6.86
|
|
10/21/2024
|
|
|
|
|
|
|
|||
|
42,888
|
|
6.86
|
|
10/21/2024
|
|
|
|
|
|
|
|||
|
9,731
|
|
8.15
|
|
9/22/2025
|
|
|
|
|
|
|
|||
|
27,397
|
|
8.15
|
|
9/22/2025
|
|
|
|
|
|
|
|||
|
|
|
|
6,448
|
(4)
|
89,369
|
|
|
|
|
||||
|
|
|
|
9,386
|
(6)
|
130,090
|
|
|
|
|
||||
|
|
|
|
7,141
|
(8)
|
98,974
|
|
|
|
|
||||
|
|
|
|
10,377
|
(10)
|
143,825
|
|
|
|
|
||||
|
|
|
|
|
|
|
7,694
|
|
(5)
|
106,639
|
|
|||
|
|
|
|
|
|
|
12,254
|
|
(7)
|
169,840
|
|
|||
|
|
|
|
|
|
|
10,377
|
|
(11)
|
143,825
|
|
8x8, Inc. 2020 Proxy Statement
|
65
|
|
Option Awards
|
Stock Awards
|
Equity Incentive Plan Awards
|
|||||||||||
Name
|
No. of Securities Underlying Unexercised Options(#) (1)
|
Option Exercise Price ($)
|
Option Expiration Date
|
No. of Shares or Units of Stock That Have Not Vested (#)(2)
|
|
Market Value of Shares or Units of Stock That Have Not Vested ($)(3)
|
No. of Unearned Shares, Units or Other Rights of Stock That Have Not Vested (#)(2)
|
|
Market or Payout Value of Unearned Shares, Units or Other Rights of Stock That Have Not Vested ($)(3)
|
|||||
Dejan Deklich
|
|
|
|
51,888
|
(10)
|
719,168
|
|
|
|
|
||||
|
|
|
|
25,709
|
(8)
|
356,327
|
|
|
|
|
||||
|
|
|
|
14,078
|
(6)
|
195,121
|
|
|
|
|
||||
|
|
|
|
12,211
|
(9)
|
169,244
|
|
|
|
|
||||
|
|
|
|
|
|
|
11,540
|
|
(5)
|
159,944
|
|
|||
|
|
|
|
|
|
|
44,117
|
|
(7)
|
611,462
|
|
|||
|
|
|
|
|
|
|
51,888
|
|
(11)
|
719,168
|
|
|||
Matthew Zinn
|
|
|
|
14,528
|
(8)
|
201,358
|
|
|
|
|
||||
|
|
|
|
19,126
|
(10)
|
265,086
|
|
|
|
|
||||
|
|
|
|
|
|
|
34,313
|
|
(7)
|
475,578
|
|
|||
|
|
|
|
|
|
|
14,528
|
|
(11)
|
201,358
|
|
(1)
|
Each outstanding stock option has a 10-year term from the grant date.
|
||
(2)
|
The vesting of any unvested equity awards is subject to the recipient’s continuous service.
|
||
(3)
|
The market value of unvested stock awards is calculated by multiplying the number of unvested stock awards held by the applicable named executive officer by the closing market price of our common stock on the New York Stock Exchange on March 31, 2020.
|
||
(4)
|
RSU award granted September 20, 2016. 1/4th of the total number of shares vest annually on each grant date anniversary.
|
||
(5)
|
PSU awards granted September 19, 2017. Number of shares shown is the number that would be earned at target. Between 0% and 200% of the target number of shares may be earned, based on total shareholder return (TSR) of our stock over the performance periods ending September 19, 2019 and September 19, 2020 relative to the Russell 2000 Index (^RUT). The terms and conditions applicable to performance share unit awards of the type referenced in this footnote are described in more detail above under ‘‘Executive Compensation - Long-Term Incentive Compensation.’’
|
||
(6)
|
RSU award granted September 19, 2017. 1/4th of the total number of shares vest annually on each grant date anniversary
|
||
(7)
|
PSU award granted October 23, 2018. Number of shares shown is the number that would be earned at 100% of target. Between 0% and 200% of the target number of shares may be earned, based on total shareholder return (TSR) of our stock over performance periods ending October 23, 2020 and October 23, 2021 relative to the Russell 2000 Index (^RUT). The terms and conditions applicable to performance share unit awards of the type referenced in this footnote are described in more detail above under ‘‘Executive Compensation - Long-Term Incentive Compensation.’
|
||
(8)
|
RSU award granted October 23, 2018. Vests over three years, with 1/3rd of the total number of shares vesting on the grant date anniversary, and 1/8th of the remaining shares vesting quarterly thereafter.
|
||
(9)
|
RSU award granted March 20, 2017. 1/4th of the total number of shares vest annually on the grant date anniversary until all of the shares have vested.
|
||
(10)
|
RSU award granted September 17, 2019. 33% of the total number of shares vest on the one year anniversary of the date of grant, and quarterly thereafter.
|
||
(11)
|
PSU award granted September 17, 2019. Number of shares shown is the number that would be earned at 100%. Between 0% and 200% of the target number of shares may be earned, based on total shareholder return (TSR) of our stock over the performance periods ending September 20, 2021 and September 21, 2022 relative to the Russell 2000 Index (^RUT). The terms and conditions applicable to performance share unit awards of the type referenced in this footnote are described in more detail above under ‘‘Executive Compensation - Long-Term Incentive Compensation.’’
|
8x8, Inc. 2020 Proxy Statement
|
66
|
FISCAL 2020 OPTION EXERCISES AND STOCK VESTED TABLE
|
|
Option Awards
|
|
Stock Awards
|
||||
Number of
Shares Acquired
on Exercise
|
Value Realized
on Exercise
|
Number of
Shares Acquired
on Vesting
|
Value Realized
on Vesting
|
||||
Name
|
(#)
|
($)(1)
|
(#)
|
($)(2)
|
|||
Vikram Verma
|
—
|
—
|
|
|
408,600
|
9,469,984
|
|
Steven Gatoff
|
—
|
—
|
|
|
29,722
|
571,659
|
|
Bryan R. Martin
|
67,000
|
1,369,815
|
|
|
61,564
|
1,425,575
|
|
Dejan Deklich
|
—
|
—
|
|
|
88,534
|
1,756,880
|
|
Matthew Zinn
|
—
|
—
|
|
|
17,210
|
330,328
|
|
(1)
|
The value realized has been calculated by multiplying the number of shares acquired upon exercise by the difference between the exercise price and the closing market price of our common stock on the date of exercise.
|
(2)
|
The value reported is the closing market price of a share of our common stock on the NYSE on the date of vesting multiplied by the number of shares that vested on that date.
|
8x8, Inc. 2020 Proxy Statement
|
67
|
EMPLOYMENT ARRANGEMENTS
|
8x8, Inc. 2020 Proxy Statement
|
68
|
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE-IN-CONTROL
|
•
|
a change-in-control;
|
•
|
a constructive termination in connection with a change-in-control; and
|
•
|
a constructive termination not in connection with a change-in-control
|
|
Change-in-Control Benefits
|
Change-in-Control Severance Benefits
|
Severance Benefits
|
TSR Performance-Based Equity Awards
|
None(1)
|
100% acceleration for shares for which performance criteria are deemed satisfied as Change-in- Control benefit.
|
None.
|
Time-Based Equity
Awards
|
None.
|
100% acceleration.(2)
|
• CEO: 12 months
acceleration.
• EVPs & SVPs: None.
|
Cash
|
None.
|
• CEO: 100% of base salary
+ 100% target bonus.
• EVPs & SVPs: 100% of
base salary + 0% of target bonus.
|
Percentage indicated below of base salary + prorated % of earned bonus:
• CEO - 150%
• EVP - 100%
• SVP - 75%
|
Benefits
|
None.
|
Continuing medical and other benefits for 12 months after date of termination
|
Continuing medical, life insurance and other benefits for the
following post-termination periods:
• CEO - 18 months
• EVP - 12 months
• SVP - 9 months
|
(1)
|
The Policy provides for performance to be assessed at the time of the change-in-control (i.e., as if the date of the change-in-control were the last day of the performance period). Any time-based service vesting conditions continue to apply after the change-in-control.
|
8x8, Inc. 2020 Proxy Statement
|
69
|
(2)
|
The Policy provides that, in the event that the change-in-control occurs within 12 months of the executive’s employment start date, only 50% of the shares subject to the award shall vest. However, none of the named executive officers is subject to this limitation, due either to the NEO having been employed more than 12 months or the restriction having been expressly waived in the NEO's offer letter.
|
•
|
that the triggering event took place on March 31, 2020, the last business day of our last completed fiscal year, and
|
•
|
the closing price of our common stock on the NYSE as of March 31, 2020 was the value of the consideration paid for each share of our common stock in the change-in-control, which we refer to as the "Transaction Price," for purposes of determining the satisfaction of performance requirements under their outstanding PSU awards.
|
Name
|
Cash
Severance
Payment
|
Bonus
Payment
|
Value of
Accelerated Stock Awards(1)
|
Health Care
and
Miscellaneous
Benefits(2)
|
Total
Payout
|
||||||||||
|
|
|
|
|
|
||||||||||
Vikram Verma
|
$
|
525,000
|
|
$
|
525,000
|
|
$
|
9,619,062
|
|
$
|
156,833
|
|
$
|
10,825,895
|
|
|
|
|
|
|
|
||||||||||
Steven Gatoff
|
$
|
390,000
|
|
$
|
—
|
|
$
|
3,758,957
|
|
$
|
101,427
|
|
$
|
4,250,384
|
|
|
|
|
|
|
|
||||||||||
Bryan R. Martin
|
$
|
300,000
|
|
$
|
—
|
|
$
|
1,035,605
|
|
$
|
55,440
|
|
$
|
1,391,045
|
|
|
|
|
|
|
|
||||||||||
Dejan Deklich
|
$
|
380,000
|
|
$
|
—
|
|
$
|
3,278,209
|
|
$
|
75,382
|
|
$
|
3,733,591
|
|
|
|
|
|
|
|
||||||||||
Matthew Zinn
|
$
|
360,000
|
|
$
|
—
|
|
$
|
1,472,764
|
|
$
|
99,191
|
|
$
|
1,931,955
|
|
(1)
|
Represents the value of unvested stock awards held by each name executive officer on March 31, 2020, the vesting of which would be accelerated by the applicable triggering event, based on the closing market price of $13.86 per share of our common stock on the NYSE on March 31, 2020.
|
(2)
|
The value represented in this column includes the estimated costs of extending medical, dental and life benefits (including converting group to individual policies, where applicable) for the period of time specified in the Executive Change-in-Control and Severance Policy for the tier of benefits corresponding to the named executive officer.
|
8x8, Inc. 2020 Proxy Statement
|
70
|
Name
|
Cash
Severance
Payment
|
Bonus
Payment (1)
|
Value of
Accelerated
Stock
Awards(2)
|
Health Care
and
Miscellaneous
Benefits(3)
|
Total
Payout
|
|
|
|
|
|
|
Vikram Verma
|
$787,500
|
$—
|
$5,663,196
|
$235,250
|
$6,685,946
|
|
|
|
|
|
|
Steven Gatoff
|
$390,000
|
$—
|
$—
|
$101,427
|
$491,427
|
|
|
|
|
|
|
Bryan R. Martin
|
$225,000
|
$—
|
$—
|
$41,580
|
$266,580
|
|
|
|
|
|
|
Dejan Deklich
|
$380,000
|
$—
|
$—
|
$75,382
|
$455,382
|
|
|
|
|
|
|
Matthew Zinn
|
$270,000
|
$—
|
$—
|
$74,393
|
$344,393
|
(1)
|
Bonuses for the named executive officers under our employee bonus plan for fiscal 2020 had not yet been paid or earned as of March 31, 2020.
|
(2)
|
Represents the value of unvested stock awards held by the respective Named Executive Officer on March 31, 2020, the vesting of which would be accelerated by the applicable triggering event, based on the closing market price of $13.86 per share of our common stock on the NYSE on March 31, 2020.
|
(3)
|
Includes employer and employee share of medical insurance premiums, 401k match, and other miscellaneous employer provided benefits.
|
8x8, Inc. 2020 Proxy Statement
|
71
|
(A)
|
Annual Total Compensation of Mr. Verma
|
$5,661,994
|
(B)
|
Annual Total Compensation of Median 8x8 Employee
|
$136,806
|
(C)
|
Ratio of A/B
|
41 to 1
|
•
|
We determined the pool of qualifying employees (i.e., employees whose compensation data would be considered in our analysis) by identifying each individual who was a full-time, part-time, seasonal or temporary worker for 8x8, Inc. or any of our consolidated subsidiaries as of March 31, 2019. We identified 1,466 such qualifying employees, of which 983 were based in the United States, 259 in the United Kingdom, 203 in Romania, and the remainder in Australia, Canada and elsewhere. For purposes of this analysis, we excluded consultants and other service-providers who were employed by an unaffiliated third party as of March 31, 2019.
|
•
|
We calculated their total target compensation by combining their annual base salary as of March 31, 2019 plus their annual variable compensation target as of April 1, 2019 plus the fair value of their fiscal 2019 stock based compensation as of the date of grant.
|
•
|
For employees who were paid in currency other than U.S. dollars, we converted the cash portion of their compensation into U.S. dollars based on the average (mean) exchange rate during the period from April 1, 2018 until March 31, 2019.
|
•
|
We did not make any cost-of-living adjustments.
|
8x8, Inc. 2020 Proxy Statement
|
72
|
PROPOSAL FOUR — ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
|
•
|
Our CEO’s compensation was adjusted to be in closer alignment to our market competitors.
|
•
|
We paid our CEO below 50% of target under our annual cash incentive compensation program. The low payment (in relation to target) was largely attributable to our inability to achieve the financial performance target established at the beginning of the fiscal year by our Board.
|
•
|
Our CEO's compensation in fiscal 2020 was weighted heavily to performance-based incentives with approximately 57% of our CEO’s total compensation deemed at-risk - with 48% in the form of equity with long- term vesting requirements tied to our total shareholder return, or TSR, during the performance period, and 9% tied to our annual cash incentive compensation program.
|
The Board unanimously recommends that the stockholders vote ‘‘FOR’’
approval of our executive compensation as expressed in the foregoing resolution.
|
8x8, Inc. 2020 Proxy Statement
|
73
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
•
|
each person (or group of affiliated persons) who is known by us to own beneficially 5% or more of our common stock;
|
•
|
each of our directors and nominees for election as directors;
|
•
|
each of the named executive officers; and
|
•
|
all directors and officers as a group.
|
Name of Beneficial Owner
|
Amount and
Nature of
Beneficial Ownership
|
Percent of
Class
|
|
||
Named Executive Officers & Directors(1):
|
|
|
|
||
Vikram Verma(2)
|
1,673,588
|
|
1.6
|
%
|
|
Steven Gatoff
|
30,872
|
|
*
|
|
|
Bryan R. Martin(3)
|
762,950
|
|
*
|
|
|
Dejan Deklich
|
47,525
|
|
*
|
|
|
Matt Zinn
|
4,518
|
|
*
|
|
|
Eric Salzman
|
204,677
|
|
*
|
|
|
Jaswinder Pal Singh
|
163,053
|
|
*
|
|
|
Vladimir Jacimovic
|
168,316
|
|
*
|
|
|
Monique Bonner
|
10,286
|
|
*
|
|
|
Todd Ford
|
1,208
|
|
*
|
|
|
Elizabeth Theophille
|
2,023
|
|
*
|
|
|
All officers and directors as a group (11 persons)(4)
|
3,069,016
|
|
3.0
|
%
|
|
|
|
|
|
||
5% Stockholders:
|
|
|
|
||
BlackRock, Inc.(5)
|
14,890,687
|
|
14.4
|
%
|
|
The Vanguard Group(6)
|
10,354,211
|
|
10.0
|
%
|
|
Sylebra Capital Ltd.(7)
|
8,996,695
|
|
8.7
|
%
|
|
8x8, Inc. 2020 Proxy Statement
|
74
|
Vikram Verma
|
575,785
|
|
|
Eric Salzman
|
75,000
|
|
Steven Gatoff
|
5,930
|
|
|
Jaswinder Pal Singh
|
75,000
|
|
Bryan R. Martin
|
310,188
|
|
|
Vladimir Jacimovic
|
75,000
|
|
Dejan Deklich
|
3,672
|
|
|
Monique Bonner
|
—
|
|
Matt Zinn
|
2,732
|
|
|
|
|
|
Todd Ford
|
2,072
|
|
|
|
|
|
Elizabeth Theophille
|
2,023
|
|
|
All officers and directors as a group (11 persons) (4)
|
1,136,583
|
|
(2)
|
Of these shares, 1,094,976 are held by the Vikram and Sandra Verma 2005 Trust, U/A/D March 20, 2005, as amended, over which Mr. Verma has investment control.
|
(4)
|
Includes (a) each of the directors listed in this table and (b) each of the named executive officers as of May 31, 2020.
|
(5)
|
This information is based solely on Schedule 13G/A filed with the SEC by BlackRock, Inc. on February 10, 2020 reporting share ownership as of December 31, 2019. Blackrock reported that it had sole dispositive power over all of the shares beneficially owned and sole voting power over 14,736,737 of the shares beneficially owned. BlackRock further reported that iShares Core S&P Small-Cap ETF had the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, a portion of these shares of common stock representing more than five percent of the total outstanding common stock. The principal business address of BlackRock is 55 East 52nd Street, New York, New York 10055.
|
(6)
|
This information is based solely on Schedule 13G/A filed with the SEC by The Vanguard Group on February 12, 2020 reporting share ownership as of December 31, 2019. Vanguard reported that it had sole voting power over 200,086 shares of the shares beneficially owned; shared voting power over 22,373 of such shares; sole dispositive power over 10,145,944 of such shares; and shared dispositive power over 208,267 of such shares. Vanguard further reported that (a) Vanguard Fiduciary Trust Company ("VFTC"), a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 185,894 of the beneficially owned shares as a result of its serving as investment manager of collective trust accounts and (b) Vanguard Investments Australia, Ltd. ("VIA"), a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 36,565 of the beneficially owned shares as a result of its serving as investment manager of Australian investment offerings. The principal business address of Vanguard is 100 Vanguard Blvd., Malvern, PA 19355.
|
(7)
|
This information is based solely on Form 13F-HR filed with the SEC by Sylebra Capital Ltd on May 18, 2020 reporting share ownership as of March 31, 2020. Sylebra reported that it had sole investment discretion and sole voting authority with respect to all 8,996,695 of the shares beneficially owned. The principal business address of Sylebra is 28 Hennessy Road, 20th Floor, Wan Chai, Hong Kong, K3 00000.
|
8x8, Inc. 2020 Proxy Statement
|
75
|
STOCKHOLDERS PROPOSALS FOR 2021 ANNUAL MEETING
|
8x8, Inc. 2020 Proxy Statement
|
76
|
OTHER MATTERS
|
8x8, Inc. 2020 Proxy Statement
|
77
|
APPENDIX A
|
1.
|
Purpose. The purpose of the Plan is to provide employees of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock of the Company through accumulated payroll deductions. Except as otherwise provided in Section 13(b) of the Plan, it is the intention of the Company to have the Offerings under the Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). The provisions of the Plan, accordingly, shall be construed so as to extend and limit participation in a manner consistent with the requirements of Section 423 of the Code.
|
2.
|
Definitions.
|
8x8, Inc. 2020 Proxy Statement
|
A-1
|
i.
|
If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq Global Market or The Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable, or;
|
ii.
|
If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean of the closing bid and asked prices for the Common Stock on the date of such determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable, or;
|
iii.
|
In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.
|
A-2
|
8x8, Inc. 2020 Proxy Statement
|
3.
|
Eligibility.
|
4.
|
Offerings. Unless otherwise determined by the Administrator, the Plan shall be implemented by consecutive, overlapping Offerings. The Administrator shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future Offerings without stockholder approval if such change is announced at least two (2) days prior to the scheduled beginning of the first Offering Period to be affected thereafter. After the Restatement Date, the Administrator shall have the power to establish the terms and conditions of each subsequent Offering including the participating entities (Company and or one or more Designated Subsidiaries), duration of the Offering Period (subject to the twenty-seven (27) month limit established in Section 2(n)), number and frequency of Purchase Periods, Purchase Price (provided that the Purchase Price shall not be lower than eighty-five percent (85%) of the Fair Market Value of a share of Common Stock on the Enrollment Date or on the Exercise Date, whichever is lower) and maximum shares available per eligible Employee (which may not exceed the amounts calculated by Section 6(d) and Section 7 hereof), in each case subject to compliance with the terms and conditions of the Plan (which may be incorporated by reference) and the requirements of Section 423 of the Code, including the requirement that all eligible Employees have the same rights and privileges. The Administrator shall specify the terms and conditions of each Offering prior to the commencement of the Offering, which terms and conditions need not be identical and shall be deemed incorporated by reference and made a part of the Plan.
|
5.
|
Participation.
|
6.
|
Payroll Deductions.
|
8x8, Inc. 2020 Proxy Statement
|
A-3
|
7.
|
Grant of Option. On the Enrollment Date of each Offering Period, each eligible Employee participating in such Offering shall be granted an option to purchase on each Exercise Date during such Offering (at the applicable Purchase Price) up to a number of shares of the Company's Common Stock determined by dividing such Employee's payroll deductions accumulated prior to such Exercise Date and retained in the participant's account as of the Exercise Date by the applicable Purchase Price; provided that in no event shall an Employee be permitted to purchase during each Purchase Period more than a number of shares determined by dividing twenty-five thousand dollars ($25,000) by the Fair Market Value of a share of the Company's Common Stock on the Enrollment Date, and provided further that such purchase shall be subject to the limitations set forth in Sections 3(b) and 12 hereof and in Code Section 423(b)(8). Exercise of the option shall occur as provided in Section 8 hereof, unless the participant has withdrawn pursuant to Section 10 hereof. The option shall expire on the last day of the Offering.
|
8.
|
Exercise of Option. Unless a participant withdraws from the Plan as provided in Section 10 hereof, his or her option for the purchase of shares shall be exercised automatically on the Exercise Date, and the maximum number of full shares subject to option shall be purchased for such participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares shall be purchased; any payroll deductions accumulated in a participant's account which are not sufficient to purchase a full share shall be retained in the participant's account for the subsequent Purchase Period or Offering Period, subject to earlier withdrawal by the participant as provided in Section 10 hereof. Any other monies left over in a participant's account after the Exercise Date shall be returned to the participant. During a participant's lifetime, a participant's option to purchase shares hereunder is exercisable only by him or her.
|
A-4
|
8x8, Inc. 2020 Proxy Statement
|
9.
|
Delivery. As promptly as practicable after each Exercise Date on which a purchase of shares occurs, the Company shall arrange the delivery to each participant, as appropriate, of a certificate representing the shares purchased upon exercise of his or her option or shall cause an appropriate entry to be made in such participant's brokerage account reflecting the shares purchased.
|
10.
|
Withdrawal; Termination of Employment.
|
11.
|
Interest. No interest shall accrue on the payroll deductions of a participant in the Plan.
|
12.
|
Stock.
|
13.
|
Administration.
|
8x8, Inc. 2020 Proxy Statement
|
A-5
|
14.
|
Designation of Beneficiary.
|
15.
|
Transferability. Neither payroll deductions credited to a participant's account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 14 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering in accordance with Section 10 hereof.
|
16.
|
Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.
|
17.
|
Reports. Individual accounts shall be maintained for each participant in the Plan. Statements of account shall be given to participating Employees at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any.
|
18.
|
Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Merger or Asset Sale.
|
A-6
|
8x8, Inc. 2020 Proxy Statement
|
19.
|
Amendment or Termination.
|
i.
|
altering the Purchase Price for any Offering including an Offering underway at the time of the change in Purchase Price;
|
ii.
|
shortening any Offering Period so that Offering Period ends on a New Exercise Date, including an
|
8x8, Inc. 2020 Proxy Statement
|
A-7
|
iii.
|
allocating shares.
|
20.
|
Notices. All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
|
21.
|
Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.
|
22.
|
Information to Employees. The Company shall provide to each Employee who acquires shares pursuant to the Plan, not less frequently than annually during the period such individual owns such shares, copies of annual financial statements. The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information.
|
A-8
|
8x8, Inc. 2020 Proxy Statement
|