JNPR Juniper Networks Inc

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
 
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.   )

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Soliciting Material Pursuant to §240.14a-12

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Juniper Networks, Inc.

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To elect nine directors to hold office until the next annual meeting of stockholders and until their respective successors have been elected and qualified;

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To ratify the appointment of Ernst & Young LLP, as Juniper Networks, Inc.’s independent registered public accounting firm for the fiscal year ending December 31, 2018;

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To hold a non-binding advisory vote on executive compensation;

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To vote upon a proposal submitted by one of our stockholders regarding annual disclosure of EEO-1 data, if properly presented at the annual meeting; and

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To consider such other business as may properly come before the annual meeting.

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Postponements and Adjournments

Any action on the items of business described above may be considered at the annual meeting at the time and on the date specified above or at any time and date to which the annual meeting may be properly postponed or adjourned.

Record Date

You are entitled to notice of, and to vote at, the annual meeting only if you were a Juniper Networks stockholder as of the close of business on March 29, 2018.

Meeting Admission

You are invited to attend the annual meeting if you were a Juniper Networks stockholder as of the close of business on the record date. You should be prepared to present valid government-issued photo identification for admittance. In addition, if you are a stockholder of record, your ownership will be verified against the list of stockholders of record on the record date prior to being admitted to the meeting. If you are not a stockholder of record but hold shares through a broker or nominee (i.e., in street name), you should provide proof of beneficial ownership as of the record date, such as your account statement as of the record date, a copy of any voting instruction card provided by your broker, trustee or nominee, or other similar evidence of ownership. If you do not provide photo identification or comply with the other procedures outlined above upon request, you may not be admitted to the annual meeting.

The annual meeting will begin promptly at 9:00 a.m., Pacific Time. Check-in will begin at 8:30 a.m., Pacific Time, and you should allow ample time for the check-in procedures.

The Notice of Internet Availability of Proxy Materials is being mailed, and the attached proxy statement is being made available, to our stockholders on or about April 10, 2018.

Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    1 ​

Voting

Your vote is very important. Whether or not you plan to attend the annual meeting, we encourage you to read this proxy statement and vote your shares as soon as possible.

If you received notice of how to access the proxy materials over the Internet, you may vote by telephone, over the Internet, or by scanning the QR code below using your mobile device. If you received a proxy card or voting instruction card and other proxy materials by mail, you may submit your proxy card or voting instruction card for the annual meeting by completing, signing, dating and returning your proxy card or voting instruction card in the pre-addressed envelope provided, or by using the telephone or the Internet. For specific instructions on how to vote your shares, please refer to the section entitled “ General Information ” of this proxy statement and the instructions on the proxy card or voting instruction card or that are provided by email or over the Internet.

By Order of the Board of Directors,

Brian Michael Martin
Senior Vice President,
General Counsel and Secretary
 
April 10, 2018

2018 Annual Meeting of Stockholders
Notice of Annual Meeting and Proxy Statement

Table of Contents

 

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Active Stockholder Engagement

Since our 2017 annual meeting of stockholders, we proactively sought meetings with stockholders who hold over 70% of our shares outstanding, which resulted in Juniper Networks meeting with stockholders who hold approximately 40% of our shares outstanding. For more information on our stockholder engagement efforts, please see the “ Stockholder Engagement ” section of this proxy statement on page 12 .

Executive Compensation Highlights

Our executive compensation program is designed to hold our executives accountable for results over the long-term and reward them for consistent strong performance. Our Compensation Committee has strived to design a fair and balanced approach to our executive compensation programs by providing for short and long-term focused programs that emphasize a pay-for-performance philosophy.

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Juniper Networks, Inc., a Delaware corporation (“Juniper Networks,” the “Company,” “we” or “our”), is committed to having sound corporate governance principles. Having such principles is essential to running our business efficiently and maintaining our integrity in the marketplace. Our Corporate Governance Standards and Worldwide Code of Business Conduct and Ethics, applicable to all Juniper Networks employees, officers and directors, are available at http://investor.juniper.net/investor-relations/corporate-governance/default.aspx. Our Worldwide Code of Business Conduct and Ethics complies with the rules of the U.S. Securities and Exchange Commission (the “SEC”) and the listing standards of the New York Stock Exchange (“NYSE”). You may obtain free copies of these documents by contacting the Investor Relations Department at our corporate offices by calling 1-408-745-2000 or by sending an e-mail message to investor-relations@juniper.net. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to, or waiver from, a provision of our code of ethics by posting such information on our website, at the address and location specified above.

Juniper Networks has adopted procedures for raising concerns related to accounting and auditing matters in compliance with the listing standards of the NYSE. Concerns relating to accounting, legal, internal controls or auditing matters may be brought to the attention of either the Chief Compliance Officer, the Company’s Corporate Compliance Committee (comprised of the Company’s Chief Financial Officer, General Counsel, Chief Compliance Officer, Head of Human Resources, Chief Customer Officer, Chief Accounting Officer and the Head of Internal Audit), the Audit Committee directly or an anonymous reporting channel maintained by the Company. Concerns are handled in accordance with procedures established with respect to such matters under our Reporting Ethics Concerns Policy. For information on how to contact the Audit Committee directly, please see the section entitled “ Communications with the Board ” of this proxy statement.

Board Independence

The NYSE’s listing standards and our Corporate Governance Standards provide that a majority of our Board of Directors (the “Board”) must be “independent.” Under the NYSE’s listing standards, no director will be considered to be independent unless our Board affirmatively determines that such director has no material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company). Our Board reviews the independence of its members annually. Our Board has determined that, except for Rami Rahim who is an employee of the Company, (i) none of the current directors have a material relationship with Juniper Networks, and (ii) that each of the current directors is independent within the meaning of the NYSE director independence standards.

The Board has determined that each of the members of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee of the Board has no material relationship with Juniper Networks and is “independent” within the meaning of the NYSE director independence standards, including in the case of the members of the Audit Committee and the Compensation Committee, the heightened “independence” standard required for such committee members set forth in the applicable SEC and NYSE rules. The members of the Compensation Committee are also non-employee directors as defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the members of the Performance Award Subcommittee of the Compensation Committee (which was established in January 2016 and consists of at least two members of the Compensation Committee) are “outside directors” as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

 

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Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    5 ​

In making the determination of the independence of our directors, the Board considered relevant transactions between Juniper Networks and entities associated with our directors or members of their immediate families, including transactions involving Juniper Networks and payments made to or from companies and entities in the ordinary course of business where our directors or members of their immediate families serve as partners, directors or as a member of the executive management of the other party to the transaction, and determined that none of these relationships constitute material relationships that would impair the independence of our directors.

Board Structure and Committee Composition

Annual Election and Majority Voting Standard

Each director serves for a term expiring at the next annual meeting of stockholders and until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal.

Our bylaws provide that each director nominee must receive the majority of the votes cast with respect to his or her election (i.e., the number of shares voted “FOR” a director nominee must exceed the number of votes cast “AGAINST” that director nominee). However, in the event that a stockholder has properly nominated a person or persons for election to the board and such nomination is not timely withdrawn prior to the first mailing of our notice of a meeting where directors are to be elected, then each director nominee shall be elected by a plurality of the votes cast.

If a director nominee who is currently serving as a director is not re-elected at the annual meeting, under Delaware law the director will continue to serve on the Board as a “holdover director.” However, pursuant to our Corporate Governance Standards, as a condition to re-nomination, each incumbent director is required to submit a resignation from the Board in writing to the Chair of the Nominating and Corporate Governance Committee of the Board. If the director nominee fails to receive the requisite vote contemplated by our bylaws, the Nominating and Corporate Governance Committee will make a recommendation to the Board as to whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results. Thus, the resignation will become effective only if the director nominee fails to receive a majority of votes cast for re-election and the Board accepts the resignation.

Proxy Access

In November 2016, the Company amended its bylaws to provide that under certain circumstances, a stockholder, or group of up to 20 stockholders, who have maintained continuous ownership of at least three percent (3%) of our common stock for at least three years prior to such nomination may nominate and include a specified number of director nominees in our annual meeting proxy statement. The number of stockholder nominated candidates appearing in our proxy statement cannot exceed the greater of two or 20% of the aggregate number of directors then serving on the Board (rounding down). For a description of the process for nominating directors, see the information under the “ General Information — Stockholder Proposals and Nominations ” section of this proxy statement.

Board Committees

The Board has a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. The membership and principal function of each of these committees are described below. Each of these committees operates under a written charter adopted by the Board. The charters of these committees are available on Juniper Networks’ website at http://investor.juniper.net/investor-relations/corporate-governance/default.aspx.

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authority to obtain advice and assistance from, and receive appropriate funding from Juniper Networks for, outside legal, compensation consultants or other advisors as the Compensation Committee deems necessary to carry out its duties.

The report of the Compensation Committee is included herein on page 46.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee seeks and recommends the nomination of individuals qualified to become Board members, consistent with criteria approved by the Board; oversees the governance of the Board, including establishing and overseeing compliance with our Corporate Governance Standards; and identifies best practices and recommends corporate governance principles, including giving proper attention to and effectively responding to stockholder concerns regarding corporate governance.

Board Leadership Structure and Role of the Lead Independent Director

The Board’s leadership structure is comprised of an independent Chairman of the Board and a Lead Independent Director who is appointed, and at least annually reaffirmed, by at least a majority of Juniper Networks’ independent directors. Mr. Kriens has served as Chairman of the Board since 1996 and served as Chief Executive Officer of the Company from 1996 to 2008. Since March 2015, Mr. Daichendt has served as the Lead Independent Director.

The duties of the Chairman of the Board, Lead Independent Director and Chief Executive Officer are set forth in the table below:

The Board believes that this overall structure of a separate Chairman of the Board and Chief Executive Officer, combined with a Lead Independent Director, results in an effective balancing of responsibilities, experience and independent perspectives that meets the current corporate governance needs and oversight responsibilities of the Board. The Board also believes that this structure benefits the Company by enabling the Chief Executive Officer to focus on strategic matters while the Chairman of the Board focuses on Board process and governance matters, and allows the Company to benefit from Mr. Kriens’ experience as a former Chief Executive Officer of the Company.

The independent directors of the Company meet at least quarterly in executive sessions. Executive sessions of the independent directors are chaired by the Lead Independent Director (if and when the Chairman is not “independent” under applicable standards). The executive sessions include discussions and recommendations regarding guidance to be provided to the Chief Executive Officer and such topics as the independent directors may determine.

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 Corporate Governance Principles and Board Matters​

Identification and Evaluation of Nominees for Director

The Nominating and Corporate Governance Committee’s criteria and process for evaluating and identifying the candidates that it recommends to the full Board for selection as director nominees are as follows:

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The committee regularly, and at least annually, reviews the composition and size of the Board, and whether any vacancies on the Board are expected due to retirement or otherwise.

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The committee reviews the qualifications of any candidates who have been properly recommended or nominated by a stockholder other than through our proxy access bylaw, as well as those candidates who have been identified by management, individual members of the Board or, if the committee determines, a search firm. Such review may, in the committee’s discretion, include a review solely of information provided to the committee or may also include discussions with persons familiar with the candidate, an interview with the candidate or other actions that the committee deems proper. Please see the information under the “ General Meeting — Stockholder Proposals and Nominations ” section of this proxy statement for more information on stockholder recommendations and nominations of director candidates.

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The committee conducts an annual evaluation of the performance of individual directors, the Board as a whole, and each of the Board’s standing committees, including an evaluation of the qualifications of individual members of the Board and its committees. The evaluation is conducted via oral interviews by a third party legal advisor selected by the committee, using as a basis for discussion a list of questions that are provided to each director in advance. The results of the evaluation and any recommendations for improvement are provided orally to the committee by the third party legal advisor, and to the Board and the other standing committees of the Board either by the chair of the committee or the third party legal advisor.

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The committee considers the suitability of each director candidate, including the current members of the Board, in light of the current size and composition of the Board. Although the committee does not have a specific policy on diversity, in evaluating the qualifications of the candidates, the committee considers many factors, including issues of character, judgment, independence, age, education, expertise, diversity of experience, length of service, other commitments and ability to serve on committees of the Board, as well as other individual qualities and attributes that contribute to board heterogeneity, including characteristics such as race, gender, cultural background and national origin. The committee believes that diversity is important as a variety of points of view can help contribute to a more effective decision-making process. When recommending candidates, the committee strives to select candidates that have diverse perspectives, experiences and expertise such that the skillset of each candidate compliments those of other directors and nominees to create a balanced Board with diverse viewpoints and expertise, which together will contribute to the Board’s effectiveness as a whole. The committee evaluates the factors discussed above, among others, and does not assign any particular weighting or priority to any of these factors. The committee considers each individual candidate in the context of the current perceived needs of the Board as a whole. While the committee has not established specific minimum qualifications for director candidates, the committee believes that candidates and director nominees must reflect a Board that is comprised of directors who (i) are predominantly independent, (ii) possess high personal and professional ethics and integrity, (iii) have qualifications that will increase overall Board effectiveness, (iv) meet requirements of applicable rules and regulations, such as financial literacy or financial expertise with respect to Audit Committee members, and (v) have a willingness to represent the best interests of all stockholders of the Company.

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The committee also considers the interests and plans of individual directors and their interest in continuing as members of the Board.

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In evaluating and identifying candidates, the committee has the authority to retain and terminate any third party search firm that is used to identify director candidates, and has the authority to approve the fees and retention terms of any search firm.

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After such review and consideration, the committee recommends to the Board director candidates to be nominated by the Board for election to the Board. The Board reviews the committee’s recommendations and approves final nominations.

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In addition to the foregoing process, the Company also takes into consideration the perspectives of major stockholders regarding Board composition and corporate governance matters and incorporates those perspectives into its overall identification and selection process.

 

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Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    9 ​

Management Succession Planning

Our Board believes that the directors and the Chief Executive Officer should collaborate on management succession planning and that the entire Board should be involved in the critical aspects of the succession planning process for our Chief Executive Officer, including establishing selection criteria that reflect our business strategies, identifying and evaluating potential internal candidates, and making key management succession decisions. Management succession is regularly discussed by the directors in Board meetings and in executive sessions of the Board. In addition, our Board annually conducts a detailed review of the Company’s leadership pipeline, talent strategies and succession plans for key executive positions. Directors become familiar with potential successors for key management positions through various means, including the comprehensive annual talent review, Board dinners and presentations and informal meetings.

Board’s Role in Risk Oversight

The Board recognizes that risk is inherent in the Company’s pursuit and achievement of our strategic and operating objectives. The Board has oversight responsibility for the Company’s risk management framework, which is designed to identify, assess, prioritize, manage and communicate risks to which the Company is exposed in our business, and foster a corporate culture of integrity. Consistent with this approach, the Board regularly reviews and consults and discusses with management on strategic direction, challenges and risks faced by the Company, and annual and quarterly financial results and forecasts.

In addition, the Board has tasked designated committees of the Board with oversight of certain categories of risk management. The Audit Committee oversees management of financial risks and reviews and provides oversight of the Company’s risk management program and compliance and financial risks. The Audit Committee further oversees the Company’s initiatives related to cybersecurity, including prevention and monitoring, as well as oversight of our enterprise-risk management program. The Compensation Committee is responsible for overseeing the management of risks relating to and arising from the Company’s executive compensation plans and arrangements. The Nominating and Corporate Governance Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated with Board organization, membership and structure, succession planning for our directors and executive officers, and corporate governance. These committees provide regular reports on the Company’s risk management efforts to the full Board.

Management is responsible for the direct management and oversight of strategic, operational, legal/compliance, cybersecurity and financial risks and the Company’s formal program to continually and proactively identify, assess, prioritize and mitigate enterprise risk. Critical risks are managed through cross-functional participation in senior level corporate compliance and risk management committees. The corporate compliance committee focuses on legal and regulatory compliance risks, and the risk management committee focuses on operational and strategic risks.

Annually, management reviews with the Board a comprehensive assessment of risks for the Company based upon the COSO Enterprise Risk Management — Integrated Framework methodology. In addition, throughout the year, the Chief Executive Officer and other members of senior management, including our Chief Financial Officer, Chief Compliance Officer and General Counsel, regularly review with the Board key strategic and operational issues, opportunities, and risks. The General Counsel provides regular reports of legal risks to the Audit Committee and the Board. The Chief Compliance Officer, Chief Financial Officer, Chief Accounting Officer and the Vice President of Internal Audit provide regular reports to the Audit Committee concerning compliance, financial, tax and audit related risks. In addition, the Chief Information Officer provides regular updates on cybersecurity risks to the Audit Committee. Further, both the Board and the Audit Committee receive reports and presentations from management on the Company’s risk mitigation programs and efforts, cybersecurity programs, compliance programs and efforts, investment policy and practices and the results of various internal audit projects. Management and the Compensation Committee’s compensation consultant provide analysis of risks related to the Company’s compensation programs and practices to the Compensation Committee.

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 Corporate Governance Principles and Board Matters​

Corporate Citizenship and Sustainability

Juniper Networks believes in building more than a network. We are focused on improving the quality of life for the next generation by strengthening the communities where we live and work. We are committed to being responsible corporate citizens and encouraging responsible practices in our operations and throughout our worldwide supply chain — ensuring that working conditions are safe, workers are treated with respect and dignity, and that processes and products are environmentally responsible. We believe in conducting business ethically, with integrity and good corporate governance, wherever we do business. We also strive to positively affect and contribute to the global community of customers, partners, employees, emerging markets, and areas in need.

Our CCS strategy focuses on those areas where we believe we can have a meaningful impact — Product Sustainability, Supply Chain, Operational Excellence, and People and Communities — and include those issues that are most relevant to our business operations and stakeholders. Our commitments to and expectations of our employees and business partners are articulated through our Worldwide Code of Business Conduct and Ethics and our Business Partner Code of Conduct, respectively.

Responsible Choices in Our Operations

As part of our corporate citizenship and sustainability strategy, our environmental policy outlines our commitment to conducting business in an environmentally responsible way. We are committed to:

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Complying with applicable environmental regulations and requirements to meet customer and community needs and expectations.

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Fostering pollution prevention and sustainable use of the earth’s resources as it relates to our products, services, and activities, and to those of our suppliers and customers.

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Promoting employee involvement at every level of the organization.

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Monitoring performance and continually improving.

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Providing the appropriate resources to honor our commitment.

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Responsible Choices for the Global Community

We strive to enrich lives across the globe. Our charitable efforts are closely aligned with our mission to connect everything and empower everyone. Juniper Networks is a company built on innovation, and we believe in supporting innovative philanthropic programs that create a network of opportunities for future generations. Our giving is focused on the Juniper Networks Foundation Fund, employee volunteer programs, matching gifts, and disaster relief.

The Juniper Networks Foundation Fund inspires the next generation of engineers, critical thinkers, and technical thought leaders. Through it, we support K-12 science, technology, engineering, and mathematics (STEM) programs, targeted especially at girls, the underprivileged, and underrepresented students. Aiming to make lasting, meaningful differences in the world, Juniper Networks has granted more than $13 million to deserving STEM-focused non-profits and other NGOs since it was formed more than a decade ago.

Responsible Choices for the Environment

We believe our products meet some of the strictest environmental standards in the industry. We continue to innovate and look at new technology that can help minimize the impact of our products on the environment. Our greatest impact on the environment is through our products, so we’re focused on designing products that are environmentally responsible in all phases of their life cycles, a complex challenge that demonstrates our commitment to protecting the environment.

 

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Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    11 ​

We monitor compliance with local and international laws in all of our locations worldwide, and work with governments, industry partners, and consortia, to harmonize regulations with innovation. We collaborate with governments, industry vendors, and customers, to develop and implement energy metrics that measure the efficiency of networks. In addition, Juniper Networks voluntarily participates in CDP climate and water disclosures and is a member of the Responsible Business Alliance, Responsible Minerals Initiatives, and CDP Supply Chain.

2017 CCS Progress and Achievements

We are pleased to share the strides we have made in our CCS priorities in our Corporate Citizenship and Sustainability Report, which is available at https://www.juniper.net/us/en/company/corporate-responsibility. Our Corporate Citizenship and Sustainability Report has been prepared using guidance from the Global Reporting Initiative G4 Sustainability Reporting Guidelines ‘Core’ option. We are also proud to be recognized as one of Fortune World’s Most Admired Companies in 2017 and America’s Most JUST Companies of 2017, and to be awarded a position on the 2018 CDP Supplier Engagement leader board.

Stockholder Engagement

The perspectives, insights and feedback of our stockholders are important to our Board and management, which is why we proactively engage on a regular basis with our stockholders throughout the year. Throughout 2017, members of our management team, and in certain instances our Lead Independent Director and Chair of the Compensation Committee, met with a significant number of our stockholders to discuss matters that are top of mind for our stockholders, such as our strategic direction, financial and operating performance, capital allocation, executive compensation and corporate social responsibility programs, employee diversity and inclusion programs, and corporate governance practices, including director refreshment and risk oversight.

Since our 2017 annual meeting of stockholders, we proactively sought meetings with stockholders who hold over 70% of our shares outstanding, which resulted in Juniper Networks meeting with stockholders who hold approximately 40% of our shares outstanding.

Our engagement efforts have provided valuable feedback that help to inform our decisions and our corporate practices. For example, as discussed in the section entitled “ Compensation Discussion and Analysis ,” our executive compensation programs for 2018 have been significantly modified from prior years and our 2018 performance share awards (“PSAs”) included a 3-year performance goal based on Juniper Networks’ relative total shareholder return (“TSR”) measured against S&P500 companies to align such awards with long-term stock performance and stockholder returns. In addition, we have revised our equity grant practices to limit the impact on stockholder dilution while still being able to grant equity awards to our employees at levels reasonably necessary to attract, retain and motivate talent.

The Board and various committees of the Board are also regularly presented with summaries of the feedback received from our stockholders for their review and consideration. We view our stockholder outreach program as an important aspect of maintaining an open and continuous dialogue with our stockholders, and we anticipate continuing our stockholder engagement efforts to help further our understanding of their perspectives and to incorporate their feedback, as appropriate.

Communications with the Board

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Limits on Director Compensation: Our non-employee directors currently receive compensation in the form of restricted stock unit (“RSU”) grants and cash fees. At our 2017 annual meeting of stockholders, our stockholders approved the amendment and restatement of our 2015 Equity Incentive Plan, which provides for (i) an annual fixed dollar value of RSUs in an amount equal to $225,000 (based on the average daily closing price of the Company’s common stock over the six month period ending on the last day of the fiscal year preceding the date of grant) to be granted to non-employee directors and (ii) a limit of  $1,000,000 on the total amount of annual equity compensation and cash fees that may be awarded to any non-employee director in a single fiscal year to provide for sufficient flexibility to adjust non-employee director compensation in the future if such changes are necessary to remain competitive with our peers.

The following table provides information on Juniper Networks’ compensation and reimbursement practices for non-employee directors during fiscal 2017:

(1)

In addition to the cash retainers for Board and committee service set forth in the table above, non-employee directors receive non-discretionary annual grants of RSUs, to further align their interests with stockholders. Pursuant to the 2015 Plan, which was most recently approved by stockholders at the 2017 annual meeting of stockholders, on the date of each of the Company’s annual stockholder meetings, each non-employee director who is elected at (or whose term continues after) such meeting will automatically be granted RSUs for a number of shares equal to the Annual Value (as defined below), rounded down to the nearest whole share. The “Annual Value” means the number of RSUs equal to $225,000 divided by the average daily closing price of the Company’s common stock over the six month period ending on the last day of the fiscal year preceding the date of grant (for example, the period from July 1, 2017 to December 31, 2017 for RSUs to be granted in May 2018). These RSU awards vest on the earlier of  (i) the one year anniversary of the grant date of the award and (ii) the day prior to the Company’s next annual stockholder meeting, subject to the non-employee director’s continuous service on the Board.

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 Director Compensation​

Director Compensation Table for Fiscal 2017

The following table shows compensation information for our non-employee directors for the fiscal year ended December 31, 2017 (“fiscal 2017”). Neither Mr. Rahim, our Chief Executive Officer, nor Dr. Sindhu, our Executive Vice President, Chief Scientist, who also served as a director until May 25, 2017, received any compensation for serving as a director. Compensation information for Mr. Rahim is included in the “ Summary Compensation Table ” set forth in this proxy statement and for Dr. Sindhu is included in the “ Certain Relationships and Related Transactions ” section in this proxy statement.

(1)

As of December 31, 2017, each of our non-employee directors listed in the table above held 9,147 RSUs, and Ms. Johnson also held outstanding options to purchase 50,000 shares.

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(2)

Amounts shown do not reflect compensation actually received by the director, and there can be no assurance that these amounts will ever be realized by the non-employee directors. Instead, the amount shown is the grant date fair value of the RSU awards granted in fiscal 2017 computed in accordance with ASC Topic 718 — Compensation — Stock Compensation (“ASC Topic 718”), disregarding forfeiture assumptions.

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(3)

Amount shown under “All Other Compensation” reflects our reimbursement of the filing fees incurred by Mr. Kriens in connection with required filings under the Hart-Scott-Rodino Antitrust Improvements Act (the “HSR Act”). During fiscal 2017, Mr. Kriens submitted filings under the HSR Act, based on his past acquisitions of Juniper stock. The independent directors of the Board reviewed the legal requirements under the HSR Act, the stock acquisitions triggering the filing requirement and the practices of other public companies with respect to HSR filings. Based on this review, the Board approved the payment by Juniper Networks of the HSR Act filing fees otherwise payable by Mr. Kriens. The Board determined that these payments were appropriate because premerger notifications were required and no exemption was available under the HSR Act, in connection with Mr. Kriens’ acquisition of Company stock which was part of his executive and director compensation.

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 Proposals to be Voted On​

The names of our directors and director nominees and their ages, positions, and brief biographical description as of the date this proxy statement was filed with the SEC are set forth below.

Nominees for Election

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Robert M. Calderoni	​
Age 58 Director since 2003	​
Board Committees: M&A, Audit (Chair), Offering (Chair)	​
Other Current Public Company Boards: KLA-Tencor, Inc., Citrix Systems, Inc., LogMeIn, Inc.	​

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Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    17 ​

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Kevin DeNuccio	​
Age 58 Director since 2014	​
Board Committees: Compensation, Offering	​
Other Current Public Company Boards: Calix, Inc.	​

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 Proposals to be Voted On​

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Mercedes Johnson	​
Age 64 Director since 2011	​
Board Committees: Audit, Nominating and Corporate Governance	​
Other Current Public Company Boards: Micron Technology, Inc. Teradyne, Inc., Synopsys, Inc.	​

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Rahul Merchant	​
Age 61	​
Director since 2015	​
Board Committees: Audit	​
Other Current Public Company Boards: None	​

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Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    19 ​

	​
Rami Rahim	​
Age 47 Director since 2014	​
Board Committees: Stock, M&A (Chair), Offering	​
Other Current Public Company Boards: None	​

20   

 Proposals to be Voted On​

 Proposals to be Voted On​

Board of Directors’ Recommendation Against and Statement of Opposition to Stockholder Proposal

The Board has carefully considered this proposal, believes that it is not in the best interests of the Company and its stockholders, and concluded that its adoption is unnecessary in light of Juniper Networks’ existing and active commitment to diversity. In addition, the Board has determined that disclosure of our EEO-1 data would neither provide an appropriate platform to have a discussion about diversity nor would it enhance our commitment to diversity and inclusion. Accordingly, the Board unanimously recommends a vote AGAINST this proposal.

Our Diversity and Inclusion Strategic Program

Diversity and Inclusion encompasses our commitment to creating a highly diverse and inclusive workplace, where all of our colleagues are empowered to do their best work. We believe diverse perspectives are essential to solving complex challenges. And to remain competitive, Juniper Networks requires the innovative thinking and creative problem solving of the world’s top talent — a cross section of individuals of all races, genders, sexual orientations, age groups, and religious affiliations.

In 2017, Juniper Networks established a clear vision, mission and strategy to double down on our efforts to create and foster a more inclusive and diverse workforce.

Vision: Foster a culture of inclusivity at Juniper Networks.

Mission: Accelerate development of diverse multi-generational talent at Juniper Networks.

Our diversity and inclusion strategy is two-pronged:

Development Internally: We have developed new programs with the explicit intention of focusing on developing female talent internally.

•

Mentorship and Sponsorship: We invest in and develop our female talent through mentorships led by our executives and senior leaders. With our executive-level focus on mentorship, we believe that we are able to create and sustain meaningful mentorship programs for a number of our mid-level female employees, which better assists our employees to navigate their career paths and develop their career goals. We plan to further scale our mentorship program globally in 2018. We have also initiated a sponsorship program that goes beyond mentoring, and is explicitly focused on helping to advance talented women at Juniper Networks. As part of our sponsorship program, each member of our executive team will be paired with a high potential female employee from within their organization. The sponsorship program will be a multi-year commitment and is designed to help accelerate the career velocity of female employees, including through identifying rotational opportunities, providing challenging projects and increasing visibility within Juniper Networks.

​

•

Training: We are committed to increasing internal employee training (for example in the areas of unconscious bias and mentoring skills) and developing new internal forums to extend our investments in key conferences for women. As an example, we partner with Watermark to provide training and workshops for our employees, and we regularly sponsor and our executives speak at the Grace Hopper conference, which is the world’s largest gathering of women technologists produced by the Anita Borg Institute.

​

Building the STEM Education Pipeline: We also focus our efforts on both internal and external programs with the goal of investing in and increasing the pipeline for qualified female technical talent.

•

Internships: We have a robust internship program that spans multiple functions throughout Juniper Networks. As part of this program, for 2018 we plan to focus on increasing our internships conversion rates for our female interns.

​

•

Scholarships for young women: Juniper Networks maintains two separate programs for scholarships, and we are in the process of enhancing the focus of our scholarship programs to direct an increased portion of our scholarships to help underserved women majoring in STEM and interns at Juniper Networks.

​

•

STEM Grants to Nonprofits: The Juniper Networks’ Foundation plays a critical role in fostering diversity and inclusion in the community. This Foundation provides grants to nonprofit organizations whose missions are to help build the STEM education pipeline.

​

•

Additional Initiatives: We also support a number of other initiatives whose aim is to help women and girls in STEM fields. For example, we have partnered with TechWomen, which empowers, connects and supports the next generation of women leaders in STEM globally and is an initiative of the U.S. Department of State.

​

​

24   

 Proposals to be Voted On​

EEO-1 Data Not Reflective of Juniper Networks’ Diversity

Form EEO-1 requires us to categorize our workforce by gender and race according to certain Equal Employment Opportunity Commission, or EEOC, mandated job categories that do not account for any company or industry-specific factors. The job categories included in the EEOC form are generic and we believe they do not fully capture the structure of a technology company. In certain circumstances, this has forced us to classify employees into job categories that may not completely reflect their actual job description or position. For this reason, the EEO-1 data may be misleading. Further, EEO-1 data is not a reliable measure of Juniper Networks’ commitment to equal opportunity employment and to cultivating an inclusive and diverse workplace. We do not believe that disclosing this data will enhance in any meaningful manner our commitment to an inclusive culture or our goal of workplace diversity. To the contrary, this information, which may be incomplete and susceptible to misinterpretation, could hinder our future recruitment efforts if it is misconstrued, including by candidates we are trying to recruit. Furthermore, the EEO-1 form is a U.S. government required form filed annually with the EEOC on a confidential basis, and as a result it does not offer any insight into our global initiatives and practices, and is therefore not a meaningful indicator of our commitment on a global basis to promote diversity and inclusion at Juniper Networks.

At Juniper Networks, we strive to create a diverse and inclusive workplace in the United States and across the globe. We remain focused on our commitment to authenticity and inclusion and to attracting, retaining and engaging with our global workforce, as we believe this will help us to build a stronger company. We are proud of the work that we have done thus far in this important area, but we also understand that there is still progress to be made. Diversity and inclusion remains a top priority for Juniper Networks and we understand that its continued progress will require ongoing work and a sustained commitment. We do not, however, believe that public disclosure of our EEO-1 filings will further this goal.

For the reasons described above, the Board believes that the public disclosure of Juniper Networks’ EEO-1 data would not be in the best interests of our stockholders.

Recommendation

Our Board recommends that you vote “AGAINST” the proposal requiring annual disclosure of EEO-1 data.

If you sign your proxy card or voting instruction card or vote by telephone or over the Internet but do not give instructions with respect to this proposal, your shares will be voted “AGAINST” the proposal, as recommended by the Board. If you do not give voting instructions to your broker, your broker will not be able to vote your shares and your shares will not be voted on this matter.

Vote Required

Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    25 ​

CEO Compensation for 2015-2017

Consistent with our “pay-for-performance” philosophy, a majority of our CEO’s target pay is at risk. As a result, we believe that the value that will ultimately be received aligns with the Company’s financial results and stock price performance. We believe that realizable compensation provides a valuable data point to evaluate the alignment between pay and performance for our CEO. As demonstrated in the chart below, we believe our CEO’s pay is closely aligned with the Company’s performance and stockholder value creation.

Target vs. Realizable Pay: 2015-2017

This approach compares the value of target pay granted to the CEO from fiscal years 2015-2017 in the context of realizable pay and performance over the same timeframe. The chart compares CEO pay to TSR and revenue performance at fiscal year-end, indexed to December 31, 2014.

“Target Pay” reflects (1) the sum of the following components reported in our “ Summary Compensation Table ” for the applicable year: Salary, Bonus, Stock Awards, and All Other Compensation, and (2) the target opportunity reflected in our “ Grants of Plan-Based Awards For Fiscal 2017 ” table for the applicable year with respect to Non-Equity Incentive Plan Awards.

“Realizable Pay” is calculated in the same manner as “Target Pay,” except that Non-Equity Incentive Plan Compensation reflects the actual value disclosed for the applicable year in our “ Summary Compensation Table ,” and long-term equity incentive vehicles are valued based on the closing price per share of our common stock at each fiscal year end, and further adjusted as follows:

•

PSA awards are adjusted to reflect actual “banked” amounts in the case where performance tranches for PSAs have been completed, and target amounts in the case where performance tranches for PSAs are pending or will be determined in the future;

​

•

Price-vested RSUs are included only to the extent that any amounts have been earned based on achievement of performance goals as of December 31, 2017; and

​

•

Bonus PSUs (as described in greater detail below) are included only if the performance conditions were achieved.

​

​

28   

 Executive Compensation​

Stockholder Engagement and Significant Changes for 2018

Following our annual “Say-on-Pay” advisory vote, Juniper Networks continued its practice of meeting with significant stockholders to obtain feedback on our executive compensation program. As described above in the section entitled “ Stockholder Engagement ” of this proxy statement, our engagement efforts, as well as ongoing conversations between management and stockholders on a variety of matters, reflect our commitment to strong corporate governance and our goal of seeking input directly from our stockholders, which we believe allows us to better understand our stockholders’ perspectives.

As a result of the Committee’s evaluation of the results of the “Say-on-Pay” advisory vote, the feedback received from stockholders and the advice from the Committee’s independent compensation consultant, the Committee continued to further evolve the design of the Company’s executive compensation and equity programs for 2018 as follows:

•

Changes to Long-Term Incentive Program. Following the Committee’s review of our executive compensation programs, the Committee, in consultation with its independent compensation consultant, determined that the introduction of a relative TSR metric to our PSA program for 2018, while continuing to require the achievement of annual operating goals, would help to better align such awards with long-term stock performance and stockholder returns. Consequently, the Committee granted PSAs in 2018 which will be earned subject to the achievement of annual operating goals and a 3-year performance goal based on Juniper Networks’ relative TSR against other S&P 500 companies. The Committee also did not grant any price-vested RSUs in 2018. The Committee believes that these changes to the long-term incentive plan will allow the Company to continue to attract and retain key talent, while aligning compensation with business objectives and our pay-for-performance philosophy.

​

•

Continuing Focus on Reducing Equity Burn Rate. The Company intends to continue its focus on reducing its equity burn rate to be more in line with its peer companies. For 2017, the Company achieved an equity burn rate commitment reduction from 2.4% (which was the Company’s commitment in 2016) of basic weighted-average common shares outstanding (“CSO”) to 2.3% of CSO (counting each RSU as one share and counting each performance share as one share based on the target number of shares issuable under the award). We believe that reducing our equity utilization target will continue to help mitigate stockholder dilution while still allowing us to be competitive to attract and retain talent. This reduction in our target burn rate demonstrates the Company’s ongoing commitment to continue its long-term focus on prudently managing our equity issuance. For 2018, we intend to continue to target an equity burn rate of 2.3% of CSO even with the Company’s announcement of an accelerated share repurchase program, which is expected to significantly reduce our CSO. The following chart shows how we have been prudently managing our equity burn rate over the past five years.

​

Total Shares Granted (Burn Rate): 2013-2017 (1)

(1)

Shares granted, as well as burn rate, count each RSU as one share and counts each performance share as one share based on the target number of shares issuable under the award.

​

 

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Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    29 ​

Strong Executive Compensation Practices

The Committee takes seriously its duty to maintain a comprehensive governance framework that is aligned with market leading practice and standards. Therefore, the Committee has adopted a strong corporate governance framework for executive compensation that includes the components described below.

Section 2 — Setting Executive Compensation

Roles

The Company’s executive compensation program is established and overseen by the Compensation Committee and Subcommittee, with support provided by their independent compensation consultant, Semler Brossy, and the Chief Executive Officer and management. Each of their roles is described below.

Role of the Compensation Committee and Subcommittee

30   

 Executive Compensation​

compensation consultants, or other advisors, as the Committee deems necessary to carry out its duties. In addition, the Committee is free to replace its independent compensation consultants or retain additional advisors at any time.

The Committee independently decides the salary, incentive target and equity awards for the Chief Executive Officer with input from its independent compensation consultant. Based on the information presented from the independent compensation consultant, the Committee discusses the Chief Executive Officer’s contribution and performance, Company performance, the competitive market, and the other factors discussed below, and independently makes compensation decisions in an executive session, without members of management present.

Role of the Independent Compensation Consultant

During 2017, the Committee engaged Semler Brossy Consulting Group, LLC (“Semler Brossy”) to advise the Committee on executive compensation. The Compensation Committee determined that Semler Brossy is an independent compensation advisor under the rules of the New York Stock Exchange and there are no conflicts of interest. During the 2017 fiscal year, Semler Brossy did not provide the Company any services unrelated to executive compensation, and therefore received no fees for additional services.

Semler Brossy attends most Committee meetings either in person or by phone and provides its advice and guidance, as well as relevant market data on executive pay levels, practices and design, to the Committee. For additional details on the engagement and services provided by Semler Brossy, please refer to the “ Compensation Consultant Fee Disclosure ” section of this proxy statement.

Role of the Chief Executive Officer and Management

The Chief Executive Officer makes recommendations to the Committee regarding the salary, incentive target and equity awards for the executive officers other than himself. These recommendations are based on analysis and guidance provided by the compensation consultant on behalf of the Committee and the Chief Executive Officer’s assessment of individual specific factors, such as the individual’s role and contribution to Company performance and the other factors discussed below. The Chief Executive Officer is also assisted by the Senior Vice President, Chief Human Resources Officer in making these recommendations.

Executive Compensation Philosophy and Objectives

The Compensation Committee has established guiding principles with respect to our executive compensation program, and has maintained them for 2017, as detailed below. The Committee believes that these guiding principles drive desirable behaviors, accountability, and alignment with stockholder interests.

For 2017 executive officer compensation decisions, the Committee decreased the reference for NEO pay positioning to the market median. The Committee will continue to determine compensation on a case-by-case basis, taking into account, among other things, peer market data, individual performance, tenure, criticality of role, and ability to impact business results. The Committee believes this change better aligns executive officer compensation levels with stockholder interests while continuing to reward executives for achieving financial and strategic results that drive stockholder value over the long-term, including rewarding above-target performance with above-target pay.

 

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Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    31 ​

Competitive Compensation Data

The Committee reviews competitive compensation data to establish market reference points, including data regarding our executive compensation peer group and published compensation surveys, as described below.

2017 Peer Group

In August 2016, the Committee, with input from Semler Brossy, established a peer group of publicly traded networking equipment and other high technology companies set forth in the table below (the “Peer Group”) for use in 2017. In deciding whether a company should be included in the Peer Group, the Committee generally considers the following screening criteria:

•

Revenue;

​

•

Market value;

​

•

Historical revenue growth;

​

•

Business model;

​

•

Scope of operations;

​

•

Industry relevance; and

​

•

Whether we compete with the company for executive talent.

​

The Peer Group is regularly reviewed and updated by the Committee with the assistance of its compensation consultant to take into account changes in both the Company’s business and the businesses of the companies in the Peer Group. The data on the compensation practices of the Peer Group is gathered through publicly available information.

For competitive benchmarking purposes, the positions and compensation levels of our NEOs were compared to similar positions in the Peer Group. For compensation decisions made in early 2017, the Peer Group consisted of the 16 companies set forth below.

Peer Group Changes for 2018

In September 2017, the Committee reviewed the then current Peer Group and, with input from Semler Brossy, decided to remove SanDisk Corp., as it was acquired and no longer publicly-listed. No other companies were added to the peer group for the 2018 pay assessment.

Published Surveys

32   

2017 Target Pay Mix: CEO and Other NEOs Who Served the Entire Year

(1)

Target Total Direct Compensation reflects salary and stock awards as disclosed in the “ Summary Compensation Table ,” and target opportunity for non-equity incentive plan awards as disclosed in the “ Grants of Plan-Based Awards For Fiscal 2017 ” table.

​

(2)

Target Total Direct Compensation reflects an average of the following components for our NEOs (other than the CEO) who served as executive officers for the entire year: (i) salary and stock awards as disclosed in the “ Summary Compensation Table ,” and (ii) target opportunity for non-equity incentive plan awards as disclosed in the “ Grants of Plan-Based Awards For Fiscal 2017 ” table.

​

Base Salary

In 2017, the Committee independently decided not to provide a base salary increase to Mr. Rahim as it determined that his salary for 2017 was competitive when compared to market peers. In determining the base salary for our other NEOs, the Committee took into consideration Mr. Rahim’s recommendations which were based upon analysis and guidance from Semler Brossy, including competitive data from our Peer Group and Mr. Rahim’s assessment of individual-specific factors. The Committee determined in connection with Mr. Athreya’s promotion in August 2017 to provide a base salary increase commensurate with his expanded responsibilities as EVP, Chief Development Officer. Further, the Committee provided Mr. Miller with a base salary increase, which was intended to better align his salary with other executive officers of Juniper Networks with similar levels of responsibility and be more competitive with market peers. The Committee determined Mr. Koley’s starting base salary after considering market competitive pay levels for the position and the pay levels of similarly situated executive officers of Juniper Networks.

(1)

On August 9, 2017, Mr. Athreya was promoted to his position as EVP, Chief Development Officer.

​

(2)

Mr. Koley joined the Company in September 2017.

​

(3)

Mr. Davidson resigned from the Company in March 2017.

​

​

34   

 Executive Compensation​

Executive Annual Incentive Plan and Cash Bonus

Consistent with our objective of linking a significant portion of our NEOs’ compensation to performance, the Committee established a target annual performance-based incentive opportunity for each NEO, expressed as a percentage of base salary. In setting the amount of the target incentive, the Committee, with input from Semler Brossy, takes into account competitive market data, the individual’s role and contribution to performance, and internal equity. The actual payout may be higher or lower than this target incentive amount, based on Company and/or individual performance factors.

For 2017, the target incentive opportunities (expressed as a percentage of base salary) for all NEOs remained consistent with 2016 levels. With respect to the 2017 AIP, a portion of each NEO’s (excluding Mr. Koley, as he did not join the Company until September 2017) target opportunity under the AIP was awarded in performance shares (“Bonus PSUs”) at the beginning of the AIP performance period, as discussed in further detail below. The target incentive opportunities for our NEOs for 2017 are presented below.

(1)

Adjusted base salaries reflect actual salaries earned in 2017, which is the basis for the AIP target values.

​

(2)

A portion of the target incentive opportunity value was awarded in Bonus PSUs (as discussed below). The percentages disclosed in this column reflect the target incentive opportunity value as a percentage of base salary prior to adjusting for Bonus PSUs.

​

(3)

These values reflect the target AIP value prior to adjusting for Bonus PSUs. Actual cash payout is based on the Target AIP (as% of Base Salary), less Target Bonus PSUs value prior to the 1.5x multiplier, as further described below.

​

(4)

On August 9, 2017, Mr. Athreya was promoted to his role as EVP, Chief Development Officer. His adjusted base salary is prorated for the portion of fiscal year 2017 he served in his new role.

​

(5)

Mr. Koley joined Juniper Networks on September 5, 2017.

​

(6)

Mr. Davidson was not eligible to receive an AIP award for 2017 due to his resignation from the Company in March 2017.

​

Performance Goals under the Executive Annual Incentive Plan

Under the 2017 AIP, our NEOs could earn annual cash incentive payments based on an achievement of pre-established financial and strategic performance components for the year.

For purposes of the 2017 AIP:

•

A threshold amount of non-GAAP operating income must be achieved to earn any amounts under the AIP (the “Non-GAAP Operating Income Gate”). If the Non-GAAP Operating Income Gate is achieved, the AIP will then pay out based on the performance against the financial and strategic components, weighted 70% and 30%, respectively. In 2017, the Non-GAAP Operating Income Gate was not achieved; accordingly, our NEOs did not receive any payout under the AIP.

​

•

With respect to the financial component, the Committee determined that a focus on revenue and non-GAAP operating margin was appropriate as it focuses executive compensation on top-line growth in a sustained and reasonable manner.

​

•

The strategic component was focused on a number of key corporate objectives that the Committee believes would contribute to longer-term operational and financial results. The Committee evaluates the achievement of each strategic metric on a quantitative scale.

​

 

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Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    35 ​

The 2017 AIP design is illustrated below.

*

Non-GAAP Operating Margin and non-GAAP Operating Income are based on GAAP operating income and adjusted to take into account certain items, including, but not limited to, share-based compensation expense and related payroll taxes, amortization of purchased intangible assets, acquisition/divestiture and other charges, payment of  (or gains from) legal settlements or legal claims, restructuring charges (benefits), certain one-time gains and losses, and income taxes related to these items.

​

Assuming achievement of the Non-GAAP Operating Income Gate, the actual amounts payable to individual NEOs under the 2017 AIP depended on the actual level of achievement measured against the pre-established objectives for the financial and strategic components. Maximum bonus pool funding is 200%, and our NEOs could earn anywhere between 0%-200% of their respective target AIP opportunities based on our actual performance, less the portion of the 2017 AIP used to calculate Bonus PSUs, as described below. For 2017, the Committee established target performance goals for revenue and non-GAAP operating margin per the table below. The financial and strategic goals were the same for the participants in the 2017 AIP.

2017 Financial Performance Targets and Achievements

(1)

No payout if the Company’s non-GAAP operating income does not equal or exceed the Non-GAAP Operating Income Gate.

​

(2)

Non-GAAP Operating Income excludes certain items, primarily share-based compensation expense and related payroll taxes, amortization of purchased intangible assets, acquisition-related and other charges, supplier component remediation charges, restructuring charges, and income taxes related to these items.

​

(3)

No payout for the financial component if revenue is less than the “Threshold” revenue amount. The actual payout percentage scales linearly between threshold and target and between target and maximum.

​

(4)

Reflects GAAP revenue for fiscal year 2017.

​

(5)

Revenue attainment greater than target reduces the decelerator on a sliding scale from 0.9x down to 0.75x at maximum revenue attainment. The decelerator is 0.9x for revenue at target attainment or less. The decelerator increases for revenue in excess of target attainment to further focus executive compensation on revenue growth in a sustained and reasonable manner.

​

For 2017, the Non-GAAP Operating Income Gate required attainment of at least $1,167 million in non-GAAP operating income. Our 2017 Non-GAAP operating income did not exceed the Non-GAAP Operating Income Gate; therefore our NEOs were not eligible for, and did not receive, cash awards under the AIP.

Bonus PSUs Granted Pursuant to the Executive Annual Incentive Plan

36   

 Executive Compensation​

required to earn the cash portion of the AIP. In connection with the longer vesting period for the Bonus PSUs, the Committee awarded Bonus PSUs in the amount equal to 1.5 times the approximately 50% target annual incentive opportunity for each applicable NEO. The Bonus PSUs vest only if both (i) the Non-GAAP Operating Income Gate under the 2017 AIP and (ii) the threshold revenue figure under the 2017 AIP are achieved. Subject to achievement of the performance criteria, the Bonus PSUs vest in two equal tranches in February 2018 and 2019. The Bonus PSUs are not eligible for any additional performance multipliers.

With respect to the 2017 performance period, our NEOs received the following Bonus PSUs, which did not vest because the Non-GAAP Operating Income Gate and threshold revenue figure under the 2017 AIP were not achieved:

(1)

Reflects the target annual incentive opportunity value for the Bonus PSU prior to the 1.5x multiplier.

​

(2)

In connection with the longer vesting period for the Bonus PSUs, the Committee awarded Bonus PSUs in the amount equal to 1.5 times approximately 50% of AIP target opportunity for each applicable NEO.

​

(3)

Mr Athreya received his Bonus PSU commiserate with his role prior to his promotion to EVP, Chief Development Officer.

​

(4)

Mr. Koley joined Juniper Networks in September 2017 and therefore did not receive Bonus PSUs for 2017.

​

(5)

Mr. Davidson’s Bonus PSUs were cancelled in connection with his resignation from the Company in March 2017.

​

Sign-on and Retention Cash Bonuses

In conjunction with Mr. Koley’s hire, the Committee approved a hire-on cash bonus of  $500,000, payable upon commencement of Mr. Koley’s employment with Juniper Networks in September 2017. In the event that Mr. Koley voluntarily terminates his employment with the Company within twenty-four months from his employment commencement date, he is responsible for repaying to the Company a pro-rata portion of his hire-on cash bonus. This hire-on cash bonus was primarily intended to induce Mr. Koley to join Juniper Networks and to compensate him for incentive compensation that he was forfeiting upon his resignation from his former employer. Such an award is consistent with Juniper Networks’ philosophy of providing competitive compensation to attract high performing executives.

In connection with Mr. Athreya’s promotion to Executive Vice President, Chief Development Officer, the Committee approved a special cash bonus award of  $530,000 that will be payable on November 30, 2018, provided that he remains employed through such date. This cash bonus is intended to help retain Mr. Athreya and also recognizes his valuable contributions, critical role in the overall performance of the Company and expanded responsibilities.

Long-Term Equity Incentive Compensation

The Company and the Committee remain focused on aligning the Company’s long-term equity compensation program with stockholder interests. For 2017, the Committee reviewed target equity pay mix and determined to maintain the combination of performance-contingent awards and service-vested awards granted in 2016 and 2015. In determining the ranges for long-term equity incentives, the Committee sought to allocate the number of long-term equity awards (which does not include the Bonus PSUs described above) granted to our NEOs as follows:

•

Approximately 33% based on achievement of target awarded in the form of PSAs;

​

•

Approximately 33% based on achievement of target awarded in the form of price-vested RSUs; and

​

•

Approximately 34% awarded in the form of service-vested RSUs.

​

 

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Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    37 ​

The Committee believed that this equity mix aligned the executive officers’ compensation opportunities directly with stockholder interests (i.e., stock price appreciation), and also provided incentivizes for our executive officers to continue to drive performance in key financial metrics that support our innovation agenda and, which will in the long-term positively impact stockholder value (i.e., revenue and operating income).

Performance Share Awards

Our ability to successfully offer our products and services in a rapidly evolving market requires us to effectively scale and adjust our business to fluctuating market opportunities and conditions on an annual basis while also remaining focused on long-term success. In this regard, the Committee believes that, by using three concurrent 1-year tranches that cliff-vest over a 3-year period, the Committee can best align the financial objectives for our NEOs with long-term stockholder value creation and the business plans and goals approved by our Board.

In 2017 and prior fiscal years, including 2016 and 2015, the Committee granted PSAs with a three-year performance period with three concurrent 1-year tranches that cliff-vest after the completion of the three-year performance period. One-third of the total target PSAs (i.e., one-third of the total PSAs awarded to a participant) are subject to annual performance targets established by the Committee, and the amount of PSAs earned or “banked” for a particular year is based on the achievement of annual performance targets established for that year. With respect to each year’s performance, participants can “bank” between 0% and 200% of the target number of PSAs for that year based on the level of achievement against the performance targets for that year. Vesting for the “banked” shares under a PSA occurs only after the Committee certifies the level of achievement for the third tranche, and any “banked” but unvested shares under a PSA are forfeited if the participant leaves the Company before the vest date.

Given the significant strategic importance to focus on top-line growth in a sustained and reasonable manner in the current market, the Committee determined that a significant focus on revenue and non-GAAP operating margin was appropriate. Accordingly, the Committee, in consultation with Semler Brossy, approved the use of financial performance goals for the 2017 performance period under the PSAs similar to those used in the AIP. The performance targets for 2017 are illustrated below.

(1)

Non-GAAP Operating Income and Non-GAAP Operating Margin exclude certain items, primarily share-based compensation expense and related payroll taxes, amortization of purchased intangible assets, acquisition-related and other charges, supplier component remediation charges, restructuring charges, and income taxes related to these items.

​

(2)

Revenue is based on the Company’s GAAP revenue, and adjusted to exclude revenue from acquisitions or normalize for the loss of revenue from divestitures, in each case that may occur during the year.

​

For 2017, the Committee set target performance goals under the PSA at levels which it believed at the time to be difficult but achievable, and set maximum performance goals at a level which it believed to be very difficult to achieve.

The following tables provide the target levels for non-GAAP operating income, non-GAAP revenue, and non-GAAP operating margin goals, our actual achievement, and the number of shares “banked” for the 2017 performance measurement year. For 2017, the Non-GAAP Operating Income Gate required attainment of at least $1,167 million in non-GAAP operating income. As a result of the Non-GAAP Operating Income Gate not being achieved, no PSAs were “banked” with respect to the 2017 performance period.

38   

 Executive Compensation​

2017 Non-GAAP Operating Income, Revenue, and Non-GAAP Operating Margin Achievement

(1)

No shares are earned (i.e., “banked”) if non-GAAP operating income does not exceed the gate.

​

(2)

Non-GAAP Operating Income and Non-GAAP Operating Margin exclude certain items, primarily share-based compensation expense and related payroll taxes, amortization of purchased intangible assets, acquisition-related and other charges, supplier component remediation charges, restructuring charges, and income taxes related to these items.

​

(3)

No shares are earned (i.e., “banked”) if revenue is below the Threshold. The payout percentage scales linearly between threshold and target and between target and maximum.

​

(4)

The revenue attainment for the Company for the PSAs was $5,027 million.

​

(5)

Revenue attainment greater than target reduces the decelerator on a sliding scale from 0.9x down to 0.75x at maximum revenue attainment. The decelerator is 0.9x for revenue at target attainment or less. The decelerator increases for revenue in excess of target attainment to further focus executive compensation on revenue growth in a sustained and reasonable manner.

​

(1)

Mr. Miller was not awarded PSAs in 2015. Mr. Athreya and Mr. Koley did not receive any PSA awards prior to fiscal 2018. As a result of Mr. Davidson’s resignation from the Company in March 2017, no PSAs based on 2017 performance were eligible for vesting.

​

(2)

The number of shares that can be earned (i.e., “banked”) under the PSAs range from 0-200% of target.

​

(3)

Shares to vest in 2018 are from PSAs awarded in 2015 and include shares “banked” for the following performance years: 2017, 2016, and 2015. Shares will vest only to the extent the recipient of the PSA remains employed with the Company through the applicable vesting date.

​

Price-Vested RSUs

To further increase the alignment between our NEOs’ compensation and Company stock price performance, the Committee sought to allocate to the NEOs approximately 33% of target long-term equity value in the form of price-vested RSUs. These price-vested RSUs are designed to provide NEOs an opportunity to build significant ownership when the Company sustains long-term stock price appreciation.

The 2017 price-vested RSUs are subject to vesting on the condition of sustained increase in the Company’s stock price over a period from 2018 through 2021 as follows:

•

33% of the price-vested RSUs will vest if the average closing market price (average stock price, “ASP”) over 60 trading days equals or exceeds $31.50 between January 1, 2018 and December 31, 2019;

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Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    39 ​

•

67% of the price-vested RSUs (minus any portion of which have previously vested) will vest if ASP equals or exceeds $34.00 between January 1, 2019 and December 31, 2020; and

​

•

100% of the price-vested RSUs (minus any portion of which have previously vested) will vest if ASP equals or exceeds $37.00 between January 1, 2020 and December 31, 2021.

​

In determining the stock price targets, the Committee considered a range of internal financial metrics and external market factors, including the long-term performance of the U.S. stock market as represented by the S&P500 Index. The Committee believes these stock price targets represent significant stock price appreciation in comparison to the $28.09 per share closing market price on February 16, 2017, the date the Committee first approved price vested RSUs in 2017.

The following chart depicts the vesting conditions for the price-vested RSUs for the NEOs.

2017 Price-Vested RSUs Design

In 2017, no price vested RSUs, including those granted in prior years, satisfied the applicable ASP vesting conditions for such equity awards. Accordingly, in 2017, there was no vesting of any price vested RSUs granted to our NEOs in 2017. The table below provides a summary of outstanding price-vested RSU awards for our NEOs.

(1)

Average closing market price of our common stock over a period of 60 consecutive trading days.

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(2)

Premium to Grant Date Price represents the difference between the ASP and grant date price.

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(3)

Mr. Rahim was awarded price-vested RSUs in November 2014 in connection with his promotion to Chief Executive Officer.

​

(4)

Mr. Miller’s 2016 price-vested RSU grant was awarded on February 22, 2016 in connection with his promotion to EVP, Chief Financial Officer.

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 Executive Compensation​

Restricted Stock Units

The Compensation Committee grants RSU awards for retention purposes as they provide payout opportunity to the NEOs only if they remain employed through the applicable vesting dates. The payout opportunity is directly linked with stockholder value and executive efforts over a multi-year timeframe. In 2017, the Committee granted RSU awards on an annual basis, representing approximately 34% of the long-term equity awarded, except for Messrs. Athreya and Koley. Generally, annual RSUs grants vest with respect to 34% on the first anniversary of the grant date and with respect to an additional 33% on each of the second and third anniversaries of the grant date, assuming continued service to the Company through each vesting date.

In 2017, prior to his promotion, Mr. Athreya received an annual RSU grant, which will vest over a period of three years, assuming continued service to the Company through each vesting date. In addition, Mr Athreya was granted an additional equity award in the form of RSUs in connection with being promoted to Executive Vice President, Chief Development Officer, which will vest in full on November 20, 2018, assuming continued service to the Company through the vest date. The RSUs granted in connection with Mr. Athreya’s promotion is intended to reward Mr. Athreya for his expanded responsibilities and to help retain Mr. Athreya.

In connection with Mr. Koley’s joining the Company, the Committee granted RSUs to Mr. Koley that will vest over a period of three years, subject to Mr. Koley’s continued service with the Company. The RSU award was intended to induce Mr. Koley to join Juniper Networks and to compensate him for incentive compensation that he was forfeiting upon his resignation from his former employer. This RSU award is consistent with Juniper Networks’ philosophy of providing long-term competitive compensation to attract high performing executives.

Section 4 — Other Compensation Policies and Information

Benefits and Perquisites

The NEOs are provided the same health and welfare benefits that are available to employees broadly. The Compensation Committee believes that the benefits programs are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain talent.

In addition to receiving Company wide-benefits, NEOs are eligible to participate in the Deferred Compensation Plan and Executive Wellness Program described below.

Deferred Compensation Plan

In June 2008, the Company adopted and implemented a deferred compensation plan for U.S. employees. All NEOs are eligible to participate in the deferred compensation plan. The Company implemented this plan in order to offer benefits that are competitive with companies with which we compete for talent. We believe that this is a standard benefit plan also offered by a number of companies within our Peer Group. This plan allows participants to elect to defer a certain amount of compensation and related taxation on such amounts into one or more investment choices.

The participants are not taxed on the compensation deferred into these investments until distribution of invested funds to the participant at a future date, which may be upon termination of employment with the Company or a designated “in-service” date elected by the participant. The deferred compensation plan is intended to comply with Section 409A of the Code. In 2017, other than Mr. Davidson, none of the NEOs participated in this plan.

Executive Wellness Program

Under the Executive Wellness Program, eligible executives receive additional benefits focused on health care screening and wellness. The total value of this benefit is limited to $10,000 per year for each eligible executive.

The Compensation Committee believes that promoting the health and wellness of its executives results in a number of benefits to the Company, including increased productivity, lower absentee rate and increased organizational stability, among others.

 

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Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    41 ​

Severance Benefits

In addition to compensation designed to reward employees for service and performance, the Compensation Committee, in consultation with Semler Brossy, approved severance and change of control benefits for certain employees, including the NEOs, as described further below. Our severance and change of control arrangements are designed to be consistent with the pay practices of our Peer Group. The Compensation Committee, with input from its independent compensation advisor, annually reviews the terms and conditions of our severance and change of control arrangements for our executive officers and will make adjustments when and to the extent it deems appropriate.

Basic Severance

In order to recruit executives to the Company and encourage retention of employees, the Compensation Committee believes it is appropriate and necessary to provide assurance of certain severance payments if the Company terminates the individual’s employment without “cause” or if the individual terminates their employment for “good reason”, each as described in their respective agreements. The Compensation Committee approved severance benefits for several members of senior management, including the NEOs. Under severance agreements with Messrs. Rahim, Miller, Molinaro, Koley, and Athreya, in the event the employee is terminated involuntarily by Juniper Networks without cause or the employee resigns for good reason, and, in either case, provided the employee executes a full release of claims, the employee will be entitled to receive the following severance benefits:

•

an amount equal to 12 months of base salary with respect to Messrs. Miller, Molinaro, Koley and Athreya, or 16.5 months of base salary with respect to Mr. Rahim, in each case as in effect immediately prior to the termination;

​

•

in lieu of continuation of benefits (whether or not the individual elects COBRA), an amount equal to: (a) 12 times the monthly premium cost for coverage under COBRA based on the employee’s benefit plan elections in place as of the date of termination with respect to Messrs. Rahim, Miller, Molinaro and Athreya, or (b) $18,000 with respect to Mr. Koley;

​

•

with respect to Messrs. Rahim, Miller, Molinaro and Athreya, (a) if such employee terminates after the end of a performance period for an annual bonus, but prior to the date of payment, an amount equal to the annual bonus based on actual performance for the performance period and (b) if such employee terminates during a performance period for an annual bonus after the performance metrics have been established, a pro-rated annual bonus for such fiscal year equal to the annual bonus the employee would have received based on actual performance for such fiscal year if the employee had remained employed for the entire fiscal year but pro-rated based on the number of days employed in such year; and

​

•

with respect to Mr. Koley, acceleration of vesting of any remaining portion of the RSU award that was granted in September 2017 in connection with his hire as contemplated by his offer letter with Juniper Networks.

​

In addition, Mr. Davidson had entered into a severance agreement with the Company, which agreement terminated upon his resignation in March 2017 and he received no benefits thereunder.

All current severance agreements with our NEOs will expire in January 2021.

The following table describes the potential payments that would have been provided to each of the NEOs (other than Mr. Davidson) in the event that such NEO is involuntarily terminated by Juniper Networks without cause or resigns for good reason outside of a change of control context on December 31, 2017.

Potential Severance Payments Upon Termination

(1)

The amount of the annual bonus for Messrs. Rahim, Miller, Molinaro and Athreya for fiscal 2017 was determined by the Subcommittee in 2018 following the completion of the performance period, and reflects the actual non-equity incentive compensation that such NEOs received with respect to fiscal 2017.

​

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 Executive Compensation​

(2)

The value of accelerated RSUs are based on a per share price of  $28.50, which was the closing price as reported on December 29, 2017, which was the final trading day in 2017.

​

Change of Control Severance

The Compensation Committee considers maintaining a stable and effective management team to be essential to protecting and enhancing the best interests of the Company and its stockholders. To that end, the Compensation Committee recognizes that the possibility of a change of control may exist from time to time, and that this possibility, and the uncertainty and questions it may raise among management, may result in the departure or distraction of management to the detriment of the Company and its stockholders. Accordingly, the Compensation Committee decided to take appropriate steps to encourage the continued attention, dedication and continuity of members of the Company’s management to their assigned duties without the distraction that may arise from the possibility of a change of control. As a result, following consultation with Semler Brossy, the Compensation Committee approved certain severance benefits for each of our NEOs, as well as for several members of senior management, in the event of certain employment terminations following a change of control. In approving these benefits the Compensation Committee, with input from Semler Brossy, considered a number of factors, including the prevalence of similar benefits adopted by other publicly traded companies.

All current change of control agreements with our NEOs will expire in January 2021. The Compensation Committee takes into account an executive’s current role and the impact of a transaction on the role before renewing the agreements. Although Mr. Davidson had entered into a change of control severance agreement with the Company, such agreement terminated upon his resignation in March 2017 and he received no benefits thereunder.

Provided the executive signs a release of claims and complies with certain post termination non-solicitation and non-competition obligations, all NEOs will receive change of control severance benefits if within 12-months following a change of control the executive is terminated without cause or the executive terminates his or her employment with the Company (or any parent or subsidiary of the Company) for good reason (both cause and good reason are defined in the agreement). These change of control severance benefits consist of:

•

a cash payment equal to 150% (or 200% in the case of Mr. Rahim) of the executive’s annual base salary and target bonus for the fiscal year in which the change of control or the executive’s termination occurs, whichever is greater,

​

•

acceleration of vesting of all of the executive’s then unvested outstanding stock options, stock appreciation rights, performance shares, RSUs and other Company equity compensation awards that vest based on time, and with respect to equity compensation awards that vest wholly or in part based on factors other than time, such as performance (whether individual or based on external measures such as Company performance, market share, stock price, or otherwise): (i) any portion for which the measurement or performance period or performance measures have been completed and the resulting quantities have been determined or calculated, shall immediately vest and, if applicable, become exercisable (and any rights of repurchase by the Company or restriction on sale shall lapse), and (ii) the remaining portions shall immediately vest and, if applicable, become exercisable (and any rights of repurchase by the Company or restriction on sale shall lapse) in an amount equal to the number that would be calculated if the performance measures were achieved at the target level (provided that if there is no “target” level, then such amount shall equal 100% of the equity compensation awards that could vest with respect to that measurement period); and

​

•

in lieu of continuation of benefits (whether or not the individual elects COBRA), an amount equal to 12 times the monthly premium cost for coverage under COBRA based on the employee’s benefit plan elections in place as of the date of termination with respect to Messrs. Rahim, Miller, Molinaro and Athreya, or $36,000 with respect to Mr. Koley.

​

The following table describes the potential payments that would have been provided for each of the NEOs (other than Mr. Davidson) upon termination of employment in connection with a change of control of Juniper Networks, as described above, assuming such termination had occurred on December 31, 2017.

 

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Juniper Networks, Inc. Notice of 2018 Annual Meeting and Proxy Statement    43 ​

Potential Payments Upon Termination in Connection with a Change of Control

(1)

All NEOs are subject to a better-after-tax provision whereby Juniper Networks would either pay the NEO (i) the full amount of the NEO’s severance benefits or, alternatively (ii) an amount of certain severance benefits otherwise payable to the NEO such that the severance benefits will not be subject to the tax imposed by Section 4999 of the Code, whichever produces the better after-tax result for the NEO.

​

(2)

The value of accelerated unvested options, RSUs, price vested RSUs, Bonus PSUs and PSAs are based on a per share price of  $28.50, which was the closing price as reported on December 29, 2017. With respect to PSAs, the equity value is calculated based on the sum of  (i) earned, but unvested shares, and (ii) target unearned and unvested shares. With respect to price vested RSUs, such awards are included in the table only if  $28.50 is equal to or exceeds the ASP value at which such award would vest pursuant to its terms.

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Equity Award Granting Policy

The Board has approved a policy for granting RSUs and other equity awards. All approvals of RSU grants and other equity awards by the Board, the Stock Committee, or the Compensation Committee (or a subcommittee thereof) are made at a meeting, which may be either in-person or telephonic, and not by unanimous written consent, except that this requirement shall not apply to Board actions for which the granting of equity awards is incidental to the primary Board action. Pursuant to the policy, new hire and ad hoc promotional and adjustment grants to non-Section 16 officers are generally granted on the third Friday of each month, except as discussed below. Annual performance grants to non-Section 16 officers are generally approved by the Stock Committee in the manner and at the times described above. Grants in connection with acquisitions shall, unless a date is specified in the acquisition agreement, occur to the extent practical on a date on which equity awards to Company employees are made by the Stock Committee. Annual equity awards to Section 16 officers are generally scheduled to be approved at a meeting of the Compensation Committee, or a subcommittee thereof, in the first quarter after the fourth fiscal quarter earnings announcement. The annual grants to Section 16 officers are also generally scheduled to be effective on the third Friday of the month if the meeting approving such grants occurs on or before such date. The exercise price of stock options granted will be the closing market price on the date of grant. The Company intends to grant RSUs and other equity awards in accordance with the foregoing policy without regard to the timing of the release of material non-public information, such as a positive or negative earnings announcement.

Notwithstanding the foregoing, (i) if the Company is advised by outside counsel that the granting of equity awards on a particular date or to particular recipients, or prior to the disclosure of certain non-public information, could reasonably be deemed to be a violation of applicable laws or regulations, such grants may be delayed until such time as the granting of those awards would be not reasonably expected to constitute a violation, (ii) if the making of a grant would cause the Company to exceed any granting limitation imposed by the Board or Compensation Committee (such as an annual limit), the monthly grant shall be delayed until the first subsequent month in which the limitation would not be exceeded and (iii) if the making of a grant would cause the Company to violate the terms of any agreement approved by the Board or one of its committees, such grant shall be delayed until it would not violate such agreement.

Equity Ownership Guidelines

The Company has adopted stock ownership guidelines to further align the interests of the Company’s NEOs, certain former NEOs and non-employee directors with the interests of its stockholders and promote the Company’s commitment to sound corporate governance. Please see the “ Executive Officer and Director Stock Ownership Guidelines ” section of this proxy statement for more information.

Insider Trading Policy

44   

 Executive Compensation​

No 280G Excise Tax Gross Ups

The Company has no executive officer contracts providing for excise tax gross ups.

Repayment of Certain Bonus and Incentive Payments

The Board has adopted a recoupment policy requiring the Company to seek repayment of certain incentive-based compensation, including both cash and equity compensation, from our executive officers, including our NEOs, in the event the Company is required to prepare an accounting restatement on an annual financial statement included in an Annual Report on Form 10-K due to the material noncompliance of the Company with any financial reporting requirements. In such event, if the Compensation Committee determines that (i) the amount of any incentive-based compensation that is earned, vested or received by an executive officer exceeds the amount of incentive-based compensation that would have been earned, vested or received by such executive officer had such incentive-based compensation been determined based on the restated financial results (the “erroneously awarded compensation”), and (ii) such executive officer engaged in fraud, intentional misconduct or intentional illegal conduct which, or such executive officer’s gross negligence, materially contributed to the need for such an accounting restatement, then the Compensation Committee will seek to recover for the benefit of the Company the erroneously awarded compensation.

Notwithstanding the foregoing, the Compensation Committee will seek recovery only for erroneously awarded compensation earned, vested or received by an executive officer during the fiscal year in which the Company is required to prepare an accounting restatement and the three completed fiscal years (or any transition period that results from a change in the fiscal year of the Company within or immediately following such three completed fiscal years) preceding the date or dates that the Company is required to prepare an accounting restatement. The Compensation Committee may also, in its good faith judgment, determine not to seek recovery of any erroneously awarded compensation to the extent the Compensation Committee determines that (i) to do so would be unreasonable or (ii) it would be better for the Company not to do so.

The Impact of Favorable Accounting and Tax Treatment on
Compensation Program Design

Favorable accounting and tax treatment of the various elements of our compensation program is a relevant consideration in their design. However, the Company and the Compensation Committee (and the Subcommittee) have placed a higher priority on structuring flexible compensation programs to promote the recruitment, retention and performance of Section 16 officers than on maximizing tax deductibility.

Section 162(m) of the Code limits the deductibility of compensation paid to certain of our executive officers. Prior to the enactment of the U.S. Tax Cuts and Jobs Act in December 2017, Section 162(m) provided that the annual compensation paid to any of these executive officers will be deductible only to the extent that such compensation does not exceed $1,000,000 unless such excess compensation was “performance-based.” In past years, including fiscal 2017, we have generally designed our performance-based cash and equity incentives to maintain federal tax deductibility for executive compensation under Section 162(m).The U.S. Tax Cuts and Jobs Act eliminated the ability to rely on the performance-based compensation exception for amounts deductible in fiscal years after fiscal 2017 subject to a limited transition rule for “written binding contracts” in effect as of November 2, 2017 that are not later modified in any material respect. While the Company intends for performance-based cash and equity incentives granted prior to November 2, 2017 to qualify for exemption under Section 162(m) of the Code, no assurance can be given that any compensation otherwise subject to the deduction limit under the legislation will qualify for an exception under this transition rule until further guidance is issued.

The Company intends for all executive officer arrangements to be structured in a manner that does not result in any additional taxation under Section 409A of the Code; however, the Company cannot guarantee this result.

Compensation Risk Assessment

The Compensation Committee annually oversees the performance of a risk assessment of our compensation programs. In 2017, the Compensation Committee, in consultation with Semler Brossy, reviewed the Company’s compensation policies and practices and determined that they do not create risks that are reasonably likely to have a material adverse effect on the Company.

 

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