PROXY STATEMENT EXECUTIVE SUMMARY
PROPOSALS AND BOARD RECOMMENDATIONS
Proposal
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Board Recommendation
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Page Number
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1. Election of Directors
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FOR each Nominee
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17
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2. Ratification of Appointment of Independent Registered Public Accounting Firm
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FOR
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25
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3. Advisory Vote on Executive Compensation
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FOR
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27
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Your vote is very important. Even if you plan to attend the Annual Meeting, we encourage you to read the Proxy Statement and to vote. You can vote online or by telephone, or you can request, sign, date and return your proxy card as soon as possible.
For specific instructions on how to vote your shares, please refer to the section entitled “Questions and Answers About the 2018 Annual Meeting of Stockholders and Procedural Matters” below and the instructions on the Notice
of Internet Availability of Proxy Materials.
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2018 Proxy Statement 1
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Table of Contents
Fiscal 2018 Performance and Company Events
Fiscal 2018 Business Model Transition and Performance Metrics
The software industry is undergoing a transition from the PC to cloud, mobile and social computing. Our strategy is to lead the industries we serve to cloud-based technologies and business models. As part of the transition, we discontinued selling new perpetual licenses and now offer term-based subscriptions for our products, cloud service offerings, and flexible enterprise business agreements (collectively referred to as "subscription plan").
Over time, Autodesks business model transition will result in a more predictable, recurring and profitable business. However
, during the transition, traditional financial metrics such as revenue, margins, EPS and cash flow from operations have been adversely impacted. This is primarily a result of revenue for new subscription offerings being recognized over time rather than up front and subscription offerings generally have a lower initial price than perpetual offerings. Despite the lower initial price,
our subscription plan offerings are expected to increase the lifetime value of Autodesks customers.
Following Andrew Anagnosts appointment as Chief Executive Officer ("CEO"), and in consul
tation with the Board of Directors (the "Board"), he established three strategic priorities of completing the subscription transition, digitizing the Company, and re-imagining manufacturing, construction, and production. To free up resources to pursue these strategic priorities, we commenced a world-wide restructuring plan in the fourth quarter of fiscal 2018. Through the restructuring, we seek to reduce our investments in areas not aligned with our strategic priorities. At the same time, we plan to further invest primarily in strategic priority areas related to digital infrastructure, customer success, and construction. By re-balancing resources to better align with our strategic priorities, we are better positioning ourselves to meet our long-term goals, while maintaining our goal to keep non-GAAP spend flat in fiscal 2019.
To incent long-term value creation and strong financial performance during the transition, we adopted performance metrics for our bonus and equity plans that align with the key drivers of success during the business model transition and reflect the health of the business during the transition. The following performance metrics were used for our CEO during fiscal 2018:
Performance Metrics
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Total Annualized Recurring Revenue ("ARR")
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Net Total Subscription Additions
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Non-GAAP Total Spend
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Total Subscription Renewal rate
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Relative Total Shareholder Return (TSR) (multi
-year)
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Free Cash Flow P
er Share
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2018 Proxy Statement 2
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Table of Contents
Our executive officers' continued successful implementation of our business model drove the following fiscal 2018 results:
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Total ARR was $2.05 billion
, an increase of 25% from fiscal 2017; of which subscription plan ARR was $1.18 billion.
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●
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Total subscriptions were 3.72 million
, an increase of 20% from fiscal 2017; of which subscription plan subscriptions were 2.27 million.
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Subscription plan ARR and subscriptions base
surpassed the base of maintenance plan ARR and subscriptions.
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Deferred revenue was $1.96 billion
, an increase of 9% from fiscal 2017.
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Total deferred revenue (deferred revenue plus unbilled deferred revenue) was $2.28 billion
, an increase of approximately 25% from fiscal 2017.
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Total GAAP spend (cost of revenue plus operating expenses) was $2,566 million
, an increase of 1% from fiscal 2017.
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●
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Total non-GAAP spend was $2,169 million
, an increase of 1% from fiscal 2017. A reconciliation of GAAP to non- GAAP results is provided in
Appendix A
.
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Total subscription renewal rate was 80.9%.
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During fiscal 2018 our stock price increased by 42%
and over five years our stock price increased by 197%.
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CORPORATE GOVERNANCE HIGHLIGHTS
Our Board of Directors
We believe that our director nominees are highly qualified and well suited to continue providing effective oversight of our rapidly evolving business. Our director nominees provide our Board with a balance of relevant critical skills and an effective mix of experience, knowledge and diverse viewpoints, as listed below.
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Technology Industry Experience
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Senior Leadership Experience
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Outside Public Company Board Service
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Financial Experience
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International Experience
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Ongoing Board of Director Refreshment and Key Updates
Jeff Clarke and Scott Ferguson each resigned from the Board, effective June 19, 2017, in accordance with the settlement agreement, dated February 6, 2017, by and among Autodesk, Sachem Head Capital Management LP, Uncas GP LLC, and Sachem Head GP LLC. On June 18, 2017, the Board appointed Andrew Anagnost as President and CEO of the Company (CEO), effective June 19, 2017. The Board also appointed Dr. Anagnost to the Board to fill the vacancy created by the
resignation of Mr. Clarke, effective June 19, 2017. On July 19, 2017, the Board appointed Reid French to the Board to fill the vacancy created by the resignation of Mr. Ferguson. On March 21, 2018, the Board appointed Karen Blasing to the Board to fill a vacancy. Carl Bass, Thomas Georgens and Richard Hill are not standing for reelection at the Annual Meeting.
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2018 Proxy Statement 3
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Table of Contents
As reflected in the charts below, we have an experienced and balanced slate of Board nominees.
Tenure
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Diversity
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Age Distribution
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Corporate Governance Guidelines
We believe the highest standards of corporate governance and business conduct are essential to running our business efficiently, serving our stockholders well, and maintaining our integrity in the marketplace. Over the years, we have devoted substantial
attention to the subject of corporate governance and have developed Corporate Governance Guidelines (the “Guidelines”).
The Guidelines set forth the principles that guide our Board's exercise of its responsibility to oversee corporate governance, maintain its independence, evaluate its own performance and the performance of our executive officers, and set corporate strategy. On a regular basis, the Board reviews our governance practices, corporate governance developments and stockholder feedback to ensure continued effectiveness.
Our Board is committed to ensuring that stockholder feedback informs our strong governance practices. As such, we have and intend to continue to engage with stockholders to maintain an open dialogue and ensure that we have an in-depth understanding
of our stockholders’ perspectives.
EXECUTIVE COMPENSATION HIGHLIGHTS
Compensation Guiding Principles
The executive compensation program is designed to attract, motivate, and retain talented executives and should provide a rigorous framework that is tied to stockholder returns, Company performance, long-term strategic corporate goals, and individual performance. The general compensation objectives are to:
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Recruit and retain the highest caliber of executives through competitive rewards;
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Motivate executive officers to achieve business and financial goals;
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Balance rewards for short- and long-term performance; and
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Align rewards with stockholder value creation.
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2018 Proxy Statement 4
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Table of Contents
Our executive compensation program emphasizes variable compensation with both annual and long-term performance
components. In fiscal 2018, 92% of our current CEO's and 84% of all other continuing named executive officers’ total
compensation wa
s variable in nature and “at risk” and 86% of our current CEO’s and 73% of all other continuing named executive officers’ total compensation consisted of long
-term equity. Our incentive programs reward strong annual financial and operational performance, as well as relative TSR over one-, two-, and three-year performance periods. The charts below demonstrate the fiscal 2018 pay mix between base salary, actual short-term incentives, and targeted long-term equity compensation for the current CEO and all other continuing named executive officers ("NEOs").
Current CEO
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Other Continuing NEOs
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During fiscal 2018, the Compensation and Human Resources Committee approved annual equity awards in the form of PSUs and RSUs for the NEOs. The Compensation and Human Resources Committee elected to use the following mix of PSUs and RSUs to complement the performance aspects of PSUs with the long-term retention component of RSUs.
NEOs
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2018 Proxy Statement 5
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Table of Contents
Elements of Executive Compensation
The principal elements of Autodesk’s annual executive compensation program are describe
d below.
Element
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Purpose
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Payout Range
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Base Salary
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Forms basis for competitive compensation package
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N / A
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Short-Term Incentive Opportunities
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Motivate achievement of strategic priorities relating to the business model transition while maintaining our year-over-year non-GAAP spend
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0% - 150% of target
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PSUs
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Align compensation with key drivers of the business and relative shareholder return
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0% - 180% of target shares
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Encourage focus on near-term and long-term strategic objectives
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Change in Autodesk stock price
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Align compensation with long-term drivers of the business model transition
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CEO Promotion Grant: 0% - 200% of target shares
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RSUs
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Encourage focus on long-term stockholder value creation
Promote retention
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Change in Autodesk stock price
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2018 Proxy Statement 6
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Table of Contents
Executive Compensation and Corporate Performance
The chart below highlights the multi-
year relationship between the CEO’s total compensation, the percentage achievement against annual cash incentives as well as the Company’s annual and cumulative Total Shareholder Return. This
chart
underscores the Compensation and Human Resources Committee’s commitment to a philosophy of pay
-for-performance.
Company Performance and Total Shareholder Return
vs. CEO Total Compensation
____________________
(1)
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Total Compensation is based on the amounts in the Summary Compensation Table; the fiscal 2014 - fiscal 2017 data is for Carl Bass and the fiscal 2018 data is for Dr. Anagnost.
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(2)
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TSR shown in boxes is calculated by comparing year-over-
year changes in the closing price of Autodesk’s Common Stock at each
fiscal year-
end. The green line reflects Autodesk’s cumulative total shareh
older return indexed off 100% from the beginning of fiscal 2014 through the end of fiscal 2018.
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(3)
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Percentage of achievement against annual cash incentives in place during each fiscal year.
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2018 Proxy Statement 7
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Table of Contents
Leading Compensation Governance Practices
Autodesk’s executive compensation objectives are supported by policies and strong governance practices that align executives’ interests with the interests of our stockholders. Some of the program’s most notable features are highlighted in the table an
d summarized below.
Yes
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No
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Robust stockholder outreach program
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No hedging
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Large percentage of NEO total pay tied to achievement of critical financial and stockholder value creation
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Prohibition on option re-pricing
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Representative peer group
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No executive benefits and limited perquisites
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Significant stock ownership requirements
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Clawback policy
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Double-trigger change in control arrangements with no excise tax gross-up
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Equity award grant policy
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Effective risk management
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Independent compensation committee and consultant
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RECENT EVENTS
2017 Executive Transition
In February 2017, Carl Bass announced he was stepping down from his CEO and President roles.
Mr. Bass’ separation as CEO led to a number of chang
es to our executive management team:
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The Board formed an interim Office of the Chief Executive to oversee the Company's day-to-day operations, which was headed by Dr. Anagnost and Amar Hanspal, who served as interim Co-CEOs.
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In June 2017, after an extensive review process and search, the Board appointed Dr. Anagnost as President and CEO and a member of the Board.
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Mr. Hanspal then elected to resign from his role at the Company.
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In October 2017, Jan Becker, having helped the Board and management transition through the management changes in fiscal 2018, also chose to resign.
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2017 Settlement Agreement
Also, in February 2017, Autodesk entered into an agreement with Sachem Head. Pursuant to this agreement, Messrs. Clarke and Ferguson resigned from the Board when Dr. Anagnost was appointed as President and CEO on June 19, 2017. Following the
resignation of Mr. Clarke, the Board appointed Dr. Anagnost to fill his vacancy on the Board. Following Mr. Ferguson’s
resignation and with the assistance of executive search firm Egon Zehnder, the Board appointed Reid French as a replacement director.
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2018 Proxy Statement 8
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Table of Contents
PROXY STATEMENT FOR 2018 ANNUAL MEETING OF
STOCKHOLDERS
QUESTIONS AND ANSWERS ABOUT THE 2018 ANNUAL MEETING OF
STOCKHOLDERS AND PROCEDURAL MATTERS
Stock Ownership, Quorum and Voting
Q:
Who is entitled to vote at the Annual Meeting?
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A: Holders of record of Autodesk’s Common Stock, par value $0.01 per share (“Common Stock”
), at the close of business on April 16, 2018
(the “Record Date”) are entitled to receive notice of and to vote their shares at the Annual Meeting (as defined
below). Beneficial owners at the close of business on the Record Date have the right to direct their broker, trustee or nominee on how to vote their shares, as described below. Stockholders are entitled to cast one vote for each share of Common Stock they hold as of the Record Date.
As of the Record Date, there were 219,108,924 shares of Common Stock outstanding and entitled to vote at the Annual Meeting. No shares of Autodesk’s Preferred Stock were outstanding.
Q:
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
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|
A:
Stockholders of record
—If your shares are registered directly in your name with Autodesk’s transfer agent, Computershare Investor Services LLC, you are considered the “stockholder of record” with respect to those shares. If you are a stockholder of
record, Autodesk sent these proxy materials directly to you.
Beneficial owners
—
Most Autodesk stockholders hold their shares through a broker or other agent rather than directly in their own n
ames. If your shares are held in a brokerage account or by a broker or other agent, you are considered the “beneficial owner” of shares held in “street name.” If you hold your shares in street name, these proxy materials have been forwarded to
you by your broker or other agent. That entity is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker or other agent on how to vote your shares. Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a legal proxy giving you the right to do so from the broker or other agent that holds your shares.
Q:
How many shares must be present or represented by proxy to conduct business at the Annual Meeting?
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A: The presence of the holders of a majority of the shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum. Stockholders are counted as present if they attend the Annual Meeting in person or have properly
submitted a proxy. Under the General Corporation Law of the State of Delaware (the law governing Autodesk’s corporate activities), abstentions and “broker non
-
votes” are counted as present and entitled to vote and are therefore included for
purposes of determining whether a quorum is present at the Annual Meeting.
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2018 Proxy Statement 9
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Table of Contents
Q:
What are “broker non
-
votes”?
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A: Generally, if shares are held in street name, the beneficial owner is entitled to give voting instructions to the broker or other agent holding the shares. If the beneficial owner does not provide voting instructions, the broker or other agent can vote the
shares with respect to matters that are considered “routine,” but not with respect to “non
-
routine” matters. Broker non
-votes occur when a beneficial owner of shares held in street name does not give instructions to the broker or other agent holding the
shares as to how to vote on a matter deemed “non
-
routine.” If a broker or other record holder of our Common Stock indicates
on a proxy that it does not have discretionary authority to vote certain shares on a particular proposal, then those shares will be treated as broker non-votes with respect to that proposal. Accordingly, if you own shares through a broker or other agent, please be sure to give voting instructions so your vote will be counted on all proposals that come before the Annual Meeting.
Q:
Which ballot measures are considered “routine” or “non
-
routine”?
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A: The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending January 31, 2019 (Proposal Two) is considered routine under applicable rules. A broker, trustee or nominee holding shares generally may use its discretion to vote on routine matters, so there should not be any broker non-votes in connection with Proposal Two. The election of the eight directors listed in the accompanying Proxy Statement (Proposal One) and the advisory vote on executive compensation (Proposal Three) are considered non-routine matters under applicable rules. A broker or other agent cannot vote without instructions on non-routine matters, so there may be broker non-votes on Proposals One and Three.
Q:
How can I vote my shares in person at the Annual Meeting?
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A: If you hold shares in your name as the stockholder of record, you may vote those shares in person at the Annual Meeting. If you hold shares beneficially in street name, you may vote those shares in person at the Annual Meeting only if you obtain a legal proxy from the broker or other agent that holds your shares.
Even if you plan to attend the Annual Meeting, we recommend that you also submit your proxy card or follow the voting instructions described below so that your vote will be counted if you later decide not to attend.
Q:
How can I vote my shares without attending the Annual Meeting?
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A: If you are a stockholder of record, you may instruct the proxy holders how to vote your shares in one of three ways:
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by using the internet voting site listed on the proxy card and Notice,
|
●
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by calling the toll-free telephone number listed on the proxy card and Notice, or
|
●
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by requesting a proxy card from Autodesk by telephone at (415) 507-6705 or by email at
investor.relations@autodesk.com
, and completing, signing, dating and returning the proxy card in the postage pre-paid envelope provided.
|
Proxy cards submitted by mail must be received by the time the Annual Meeting begins in order for the related shares to be voted. If you return a signed proxy card without giving specific voting instructions, your shares will be voted as recommended by the Board.
Specific instructions for using the telephone and internet voting systems are on the proxy card and Notice. The telephone and internet voting systems for stockholders of record will be available until 11:59 p.m. (Eastern Time) on June 11, 2018.
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2018 Proxy Statement 10
|
Table of Contents
If you are a beneficial owner, you will receive instructions from your broker or other agent that you must follow in order to have your shares voted. These instructions will indicate if internet and telephone voting are available, and if so, how to access and use those methods.
Q:
What is the voting requirement to approve these proposals?
|
|
A:
Proposal One
—
A majority of the votes duly cast is required for the election of each director. If the number of shares voted “for” a director nominee exceeds the number of votes cast “against,” the nominee will be elected as a director of Autode
sk to serve until the next annual meeting or until his or her successor has been duly elected and qualified. For additional information
on how our majority voting policy works, see the section captioned “Corporate Governance” below.
You may vote “FOR,” “AGAINST” or “ABSTAIN” on each of the eight nominees for election as director. Abstentions and
broker non-votes will not affect the outcome of the election.
Proposal Two
—
The affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote are required to ratify the appointment of Ernst
& Young LLP as Autodesk’s independent registered public accounting firm.
You may vote “FOR,” “AGAINST” or “ABSTAIN” on this proposal.
Abstentions are deemed to be votes cast and have the same effect as a vote against this proposal.
However, broker non-votes are not deemed to be votes cast and are not included in the tabulation of the voting results on this proposal.
Proposal Three
—
The affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote are required to approve, on an advisory basis, the compensation of our named executive officers.
You may vote “FOR,” “AGAINST” or “ABSTAIN” on this proposal.
Abstentions are deemed to be votes cast and have the same effect as a vote against this proposal.
However, broker non-votes are not deemed to be votes cast and are not included in the tabulation of the voting results on this proposal.
Q:
What happens if I do not cast a vote?
|
|
A:
Stockholders of record
—
If you are a stockholder of record and you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the Annual Meeting.
Beneficial owners
—
If you hold your shares in street name and you do not cast your vote, your broker, trustee or nominee can use its discretion to vote on the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm (Proposal Two). However, you must cast your vote if you want it to count in the election of directors (Proposal One) or the non-binding approval of compensation for our named executive officers (Proposal Three). Your broker may not vote your uninstructed shares with respect to Proposals One and Three.
Q:
How does the Board recommend that I vote?
|
|
A: The Board unanimously recommends
that you vote your shares “
FOR
” the election of each of the eight nominees listed in Proposal One, “
FOR
” the ratification of the appointment of Ernst
& Young LLP as Autodesk's independent registered public accounting firm for the fiscal year ending January
31, 2019, and “
FOR
” the approval, on an advisory basis, of the
compensation of our named executive officers.
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2018 Proxy Statement 11
|
Table of Contents
Q:
If I sign a proxy, how will it be voted?
|
|
A: All shares entitled to vote and represented by properly executed proxy cards received prior to the Annual Meeting and not revoked before the polls are closed will be voted in accordance with the instructions on those proxy cards. If there are no instructions on an otherwise properly executed proxy card, the shares represented by that proxy card will be voted as recommended by the Board.
Q:
What happens if additional matters are presented at the Annual Meeting?
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|
A: If any other matters are properly presented for consideration at the Annual Meeting, including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place (for the purpose of soliciting additional proxies or otherwise), the persons named as proxies will have discretion to vote on those matters in accordance with their best judgment. We do not currently anticipate that any other matters will be raised at the Annual Meeting.
Q:
Can I change or revoke my vote?
|
|
A: If you are a stockholder of record, there are three ways you can change your vote.
(1)
|
Befo
re your shares are voted at the Annual Meeting, you can file with Autodesk’s Chief Legal Officer a written notice of
revocation or a duly executed proxy card, in either case dated later than the proxy card you wish to change.
|
(2)
|
You can attend the Annual Meeting and vote in person. Simply attending the Annual Meeting without actually voting will not revoke a proxy.
|
(3)
|
If you voted online or by telephone, you may change that vote by voting again, either by making a timely and valid internet or telephone vote or by voting in person at the Annual Meeting.
|
Any written notice of revocation or subsequent proxy card should be hand-
delivered to Autodesk’s Chief Legal Officer or sent
to Autodesk, Inc., 111 McInnis Parkway, San Rafael, California 94903, Attention: Chief Legal Officer, and must be received by the Chief Legal Officer before the vote at the Annual Meeting.
If you are a beneficial owner of shares held in street name, there are two ways you can change your vote. You can submit new voting instructions to your broker or other agent. Alternatively, if you have obtained a legal proxy from the broker or other agent that holds your shares giving you the right to vote those shares, you can attend the Annual Meeting and vote in person.
Q:
Who will bear the costs of soliciting votes for the Annual Meeting?
|
|
A: Autodesk will bear all expenses of this solicitation, including the cost of preparing and mailing these proxy materials. Autodesk may reimburse brokerage firms, custodians, nominees, fiduciaries and other persons representing beneficial owners of Common Stock for their reasonable expenses in forwarding solicitation material to such beneficial owners. Directors, officers and other employees of Autodesk also may solicit proxies in person or by other means of communication. These individuals may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation, but will not receive any additional compensation. Autodesk has engaged the services of D.F. King & Co., Inc., a professional proxy solicitation firm, to help us solicit proxies from stockholders, including certain brokers, trustees, nominees and other institutional owners, for a fee of approximately $9,000 plus costs and expenses.
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2018 Proxy Statement 12
|
Table of Contents
Q:
Where can I find the voting results of the Annual Meeting?
|
|
A: We intend to announce preliminary voting results at the Annual Meeting and expect to provide final results in a Current Report on Form 8-K within four business days of the Annual Meeting.
2018 Annual Meeting
Q:
Why am I receiving these proxy materials?
|
|
A: The Board of Directors (“Board”) of Autodesk, Inc. (“Autodesk,” “we” or “our”) is providing these proxy materials to you
in connection with the solicitation of proxies for use at our 2018 Annual Meeting of Stockholders, to be held on Tuesday, June
12, 2018, at 3:00 p.m., Pacific Time, and at any adjournment, postponement or other delay thereof (the “Annual Meeting”) for the purpose of considering and acting upon the matters set forth in this
Proxy Statement. We are providing these
materials to all of our stockholders through a Notice of Internet Availability of Proxy Materials (the “Notice”) unless a
stockholder has specifically requested a full set paper copy of this Proxy Statement and our fiscal 2018 Annual Report.
Q:
Where is the Annual Meeting?
|
|
A:
The Annual Meeting will be held at Autodesk’s San Francisco office, located at The Landma
rk, One Market Street, 2nd Floor, San Francisco, California 94105. The telephone number at that location is (415) 356-0700. Maps and directions to the Annual Meeting are available at
www.autodesk.com
under “Contact Us.”
Q:
What proposals will be voted on at the Annual Meeting?
|
|
A: At the Annual Meeting, stockholders will be asked to vote:
(1)
|
To elect the eight directors named in this Proxy Statement to serve for the coming year and until their successors are duly elected and qualified;
|
(2)
|
To ratify the appointment of Ernst & Young LLP as Autodesk's independent registered public accounting firm for the fiscal year ending January 31, 2019; and
|
(3)
|
To approve, on an advisory basis, the compensation of our named executive officers.
|
Q:
Can I attend the Annual Meeting?
|
|
A: Yes, you can attend the Annual Meeting in person if you are a stockholder of record or a beneficial owner as of the Record Date. Please notify David Gennarelli, Autodesk's Senior Director of Investor Relations, by telephone at (415) 507-6705 or by email at
investor.relations@autodesk.com
if you plan to attend the Annual Meeting. You will need proof of identity to enter the Annual Meeting. If your shares are held in a brokerage account or by a bank or another nominee, you also will need to bring a copy of a brokerage statement reflecting stock ownership as of the Record Date. The Annual Meeting will begin promptly at 3:00 p.m., Pacific Time. Please leave ample time for parking and to check in.
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2018 Proxy Statement 13
|
Table of Contents
Q:
Why did I receive a Notice in the mail regarding the Internet Availability of Proxy Materials instead of a full set paper copy of this Proxy Statement and fiscal 2018 Annual Report?
|
|
A: We are once again relying on a Securities and Exchange Commission (“SEC”) ru
le that allows companies to furnish their proxy materials over the internet rather than in paper form. This rule allows us to send all of our stockholders a Notice that explains how to access the proxy materials over the internet or how to request a paper copy of proxy materials. If you would prefer to receive proxy materials in printed form by mail or electronically by email on an ongoing basis, please follow the instructions contained in the Notice. Proxy materials for our 2019 and future annual meetings of stockholders will be delivered to you by a Notice rather than in paper form unless you specifically request to receive printed proxy materials.
Q:
Why did I receive a full set paper copy of this Proxy Statement in the mail and not a Notice Regarding the Internet Availability of Proxy Materials?
|
|
A: Stockholders who previously requested full paper copies of the proxy materials are receiving paper copies again this year. If you would like to reduce the costs we incur in printing and mailing proxy materials, you can consent to receive all future proxy statements, proxy cards and annual reports electronically via email or the internet. To sign up for electronic delivery, please follow the instructions provided at
www.autodesk.com
under “Investor Relations” or on your proxy card or voting instruction
form.
Stockholder Proposals and Director Nominations at Future Meetings
Q:
What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals to serve as directors?
|
|
A: Stockholders may present proper proposals for inclusion in Autodesk's proxy statement and for consideration at the next annual meeting of stockholders by submitting their proposals in writing to Autodesk's Chief Legal Officer in a timely manner. In order to be included in the proxy statement for the 2019 Annual Meeting of Stockholders, proposals must be received by Autodesk's Chief Legal Officer no later than January 1, 2019, and must otherwise comply with the requirements of Rule 14a-8
of the Securities Exchange Act of 1934 (the “Exchange Act”).
In addition, Autodesk's Bylaws establish an advance notice procedure for stockholders who wish to present certain matters before an annual meeting of stockholders. In general, nominations for the election of directors may be made by or at the direction of the Board, or by any stockholder entitled to vote who has delivered written notice to Autodesk's Chief Legal Officer during the Notice Period (as defined below). Any such notice must contain specified information concerning the nominee(s) and the stockholder proposing such nomination(s). A stockholder who wishes to recommend a candidate for consideration by the Corporate Governance and Nominating Committee as a potential nominee for director should read the procedures discussed in the section
titled “Corporate Governance
-
Nominating Process for Recommending Candidates for Election to the Board”
below.
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2018 Proxy Statement 14
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Autodesk's Bylaws also provide that the only business that may be conducted at an annual meeting is business that is brought (1) pursuant to the notice of meeting (or any supplement thereto), (2) by or at the direction of the Board, or (3) by a stockholder who has delivered written notice setting forth all information required by Autodesk's Bylaws to Autodesk's Chief Legal Officer during the Notice Period (as defined below).
For the purposes described above, the “Notice Period” begins 75 days before the one
-year anniversary of the date on which Autodesk first mailed its proxy materials for the previous year's annual meeting of stockholders, and lasts for 30 days. As a result, the Notice Period for the 2019 Annual Meeting of Stockholders will be from February 15, 2019 to March 17, 2019.
If a stockholder who has notified Autodesk of an intention to present a proposal at an annual meeting does not appear to present that proposal, Autodesk need not present the proposal for vote at such meeting.
Q:
How may I obtain a copy of the bylaw provisions regarding stockholder proposals and director nominations?
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A: You can obtain a copy of the full text of the bylaw provisions discussed above by writing to the Chief Legal Officer of Autodesk or from
www.autodesk.com
under “Investor Relations
-Corporate Governanc
e.” All notices of proposals by
stockholders should be sent to Autodesk, Inc., 111 McInnis Parkway, San Rafael, California 94903, Attention: Chief Legal Officer.
Additional Information About the Proxy Materials
Q:
What should I do if I receive more than one set of proxy materials?
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A: You may receive more than one Proxy Statement, proxy card, voting instruction card or Notice. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction card for each account. If you are a stockholder of record and your shares are registered in more than one name, you may receive more than one proxy card. Please complete, sign, date and return each proxy card or voting instruction card that you receive to ensure that all your shares are voted.
Q:
How may I obtain a separate Notice or a separate set of proxy materials and Fiscal 2018 Annual Report?
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A: If you share an address with another stockholder, it is possible you will not each receive a separate Notice or a separate copy of the proxy materials and fiscal 2018 Annual Report. If you wish, you may request individual documents by calling (415) 507-6705 or by sending an email to
investor.relations@autodesk.com
. Stockholders who share an address and receive multiple Notices or multiple copies of our proxy materials and fiscal 2018 Annual Report can request to receive a single copy in the same manner.
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2018 Proxy Statement 15
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Q:
What is the mailing address for Autodesk’s principal executive offices?
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A:
Autodesk’s principal executive offices are located at 111 McInnis Parkway, San Rafael, California 94903. Any written
requests for additional information, additional copies of the proxy materials and fiscal 2018 Annual Report, notices of stockholder proposals, recommendations for candidates to the Board, communications to the Board, or any other communications should be sent to this address.
Our internet address is
www.autodesk.com
. The information posted on our website is not incorporated into this Proxy Statement.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JUNE 12, 2018.
The Proxy Statement and Annual Report to Stockholders are available at:
https://materials.proxyvote.com/052769
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2018 Proxy Statement 16
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Table of Contents
PROPOSAL ONE - ELECTION OF DIRECTORS
Nominees
Autodesk's Bylaws currently set the number of directors at eleven. Carl Bass, Thomas Georgens and Richard Hill are not standing for reelection at the Annual Meeting. The Board thanks each of them for their distinguished service to Autodesk.
Upon the recommendation of the Corporate Governance and Nominating Committee, the Board has nominated eight individuals to be elected at the Annual Meeting. All of the nominees are presently directors of Autodesk and have consented to being named in this Proxy Statement and to serving as directors if elected. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the eight nominees named below. Your proxy cannot be voted for more than eight director candidates.
February 2017 Settlement Agreement
Jeff Clarke and Scott Ferguson each resigned from the Board, effective June 19, 2017, in accordanc
e with the settlement agreement, dated February 6, 2017, by and among Autodesk, Sachem Head Capital Management LP, Uncas GP LLC, and Sachem Head GP LLC. On June 18, 2017, the Board appointed Andrew Anagnost as President and Chief Executive Officer of the Company (“CEO”), effective June 19, 2017. The Board also appoi
nted Dr. Anagnost to the Board to fill the vacancy created by the resignation of Mr. Clarke, effective June 19, 2017. On July 19, 2017, the Board appointed Reid French to the Board to fill the vacancy created by the resignation of Mr. Ferguson. Pursuant to the terms of the 2017 Sachem Settlement Agreement, Mr. Ferguson consented to the appointment of Mr. French to the Board.
Among others, the following material terms are included in and effective pursuant to the 2017 Sachem Settlement Agreement:
●
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The size of the Board shall not exceed 11 directors prior to the conclusion of the 2018 Annual Meeting.
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Under the 2017 Sachem Settlement Agreement, Sachem Head has agreed to observe voting and standstill provisions during the period beginning on the date of the 2017 Sachem Settlement Agreement to the date that is the earlier to occur of (i) the date of the 2018 Annual Meeting and (ii) June 30, 2018 (the “Standstill Period”). The standstill provisions provide, among other things, that Sachem Head and its affiliates will not directly or indirectly:
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●
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engage in any “solicitation” or become a “participant” as such terms are used in the proxy rules of the SEC other than at the Board’s director or consistent with the Board’s recommendation in connection with such matter, or publicly disclose how it intends to vote or act, except in certain limited circumstances;
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●
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form or join in any “group” as defined pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended, with respect to any of Autodesk’s voting securities;
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●
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individually beneficially own more than 7% of Autodesk’s voting securities;
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effect or seek to effect certain extraordinary transactions or material changes with Autodesk;
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enter into a voting trust or subject any of Autodesk’s voting securities to any voting trust;
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2018 Proxy Statement 17
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●
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institute any litigation against Autodesk, its directors or its officers, make any “books and records” demands against Autodesk or make application or demand to a court or other person for an inspection, investigation or examination of Autodesk or its subsidiaries or affiliates, except in certain limited circumstances;
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●
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(i) enter into or maintain any economic or compensatory arrangements with Mr. Hill that depend, directly or indirectly, on the performance of Autodesk or its stock price, or (ii) enter into or maintain any economic or compensatory arrangements with any other director or nominees for director of Autodesk;
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●
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other than sale transactions in which the identity of the purchaser is not known, sell or agree to sell directly or indirectly, in excess of 1% of the outstanding shares of Autodesk’s Common Stock or any derivatives relating to its Common Stock to any third party that has filed a Schedule 13D with respect to Autodesk or run (or publicly announced an intention to run) a proxy contest or consent solicitation with respect to another company in the past three years (to the extent known after reasonably inquiry that such third party has or will have, beneficial ownership of more than 5% of Autodesk’s Common Stock); or
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●
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alone or in concert with others, make any public disclosure, announcement or statement regarding any intent, purpose, plan or proposal with respect to the Board, Autodesk, its management, policies or affairs, any of its securities or assets or the 2017 Sachem Settlement Agreement that is inconsistent with the provisions of the 2017 Sachem Settlement Agreement.
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●
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During the Standstill Period, Autodesk and Sachem Head shall each refrain from making, or causing to be made, any public statement or announcement that relates to and constitutes an ad hominem attack on, or relates to and otherwise disparages, Autodesk and Sachem Head, as applicable, or any of their respective officers or directors or any affiliates or subsidiaries, advisors, employees, as applicable.
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●
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During the Standstill Period, Sachem Head has agreed, at any meeting of Autodesk's stockholders (or in connection with any action by written consent) in which (or through which) action will be taken with respect to the election or removal of directors, to cause the shares of Common Stock over which they have the right to vote or direct the voting to be present for quorum purposes and voted (or consent to be given (if applicable)) (A) in favor of all nominees recommended by the Board, (B) against any nominees for director not recommended by the Board and (C) against any proposals to remove any director.
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The foregoing is not a complete description of the terms of the agreements. For a further description of those terms, see our Current Report on Form 8-K that we filed with the SEC on February 7, 2017.
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2018 Proxy Statement 18
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Table of Contents
Summary of Director Nominee Experience, Qualifications, Attributes and Skills
We believe that our director nominees are highly qualified and well suited to continue providing effective oversight of our rapidly evolving business. Our director nominees provide our Board with a balance of critical relevant skills and an effective mix of experience, knowledge and diverse viewpoints, as summarized below.
Technology Industry Experience
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8/8 directors
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Nominees with experience in the software and technology industries help us to analyze our research and development efforts, competing technologies, the various products and processes that we develop and the industries in which we compete.
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Senior Leadership Experience
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8/8 directors
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Nominees who have served in senior leadership positions enhance the Board’s ability to identify and develop those qualities i
n management. They also bring a practical understanding of organizations, processes, strategy, risk management and methods to drive change and growth.
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Outside Public Company Board Service
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6/8 directors
|
Nominees who have served on other public company boards offer advice and insights with regard to the dynamics and operation of a board of directors, the relations of a board with senior management and oversight of a changing mix of strategic, operational and compliance-related matters.
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Financial Experience
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8/8 directors
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Nominees who have knowledge of financial markets, financing operations and accounting and financial reporting processes assist us in understanding, advising and overseeing our capital structure, financing and investing activities and our financial reporting and internal controls.
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International Experience
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8/8 directors
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As a global organization with offices in 124 locations in the United States and internationally, nominees with global expertise bring useful business and cultural perspectives that relate to many significant aspects of our business.
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As reflected in the charts below, we have an experienced and balanced slate of Board nominees.
Tenure
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Diversity
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Age Distribution
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See “Information and Qualifications” below for more detail regarding each director nominee’s qualifications and relevant
experience.
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2018 Proxy Statement 19
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Table of Contents
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE
NOMINEES LISTED BELOW.
|
Information and Qualifications
The name, age as of March 31, 2018, certain biographical information about each nominee and the nominees' unique qualifications to serve on the Board are set forth below. There are no family relationships among any of our directors or executive officers.
See “Corporate Governance” and “Executive Compensation—Compensation of Directors” below for additional information
regarding the Board, including procedures for nominations of directors.
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Andrew Anagnost
Director
Age: 53
Director since 2017
|
Dr. Anagnost joined Autodesk in September 1997 and has served as President and Chief Executive Officer since June 2017. Dr. Anagnost served as Co-CEO from February 2017 to June 2017, Chief Marketing Officer from December 2016 to June 2017
and as the Company’s Senior Vice President, Business Strategy & Marketing, from March 2012 to June 2017. From December 2009 to March 2012, Dr. Anagnost was Vice President, Product Suites and Web Services of the Company. Prior to this position, Dr. Anagnost served as Vice President of CAD/CAE products for the manufacturing division of the Company from March 2007 to December 2009. Previously, Dr. Anagnost held other senior management positions at the Company. Prior to joining the Company, Dr. Anagnost held various engineering, sales, marketing and product management positions at Lockheed Aeronautical Systems Company and EXA Corporation. He also served as an NRC post-doctoral fellow at NASA Ames Research Center. Dr. Anagnost holds a bachelor of science degree in Mechanical Engineering from the California State University, and holds both a MS in Engineering Science and a PhD in Aeronautical Engineering and Computer Science from Stanford University.
Dr. Anagnost brings to the Board extensive experience in the technology industry and has spent nearly two decades in management roles within Autodesk. As our President and Chief Executive Officer, Dr. Anagnost possesses a deep knowledge and understanding of Autodesk's business, operations, and employees; the opportunities and risks we face; and management's strategy and plans for accomplishing Autodesk's goals.
Pursuant to Dr. Anagnost’s employment agreement, Autodesk has agreed to nominate Dr. Anagnost to serve as a member of the
Board for as long as he is employed by Autodesk.
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2018 Proxy Statement 20
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Table of Contents
Crawford W. Beveridge
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Non-Executive Chairman of the Board of Directors, Autodesk, Inc.
Age: 72
Director since 1993
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Mr. Beveridge is the non-executive Chairman of the Board of Directors. From April 2006 until January 2010, Mr. Beveridge served as Executive Vice President and Chairman EMEA, APAC and the Americas of Sun Microsystems, Inc. From March 1985 to December 1990 and from March 2000 to April 2006, Mr. Beveridge held other positions at Sun Microsystems, including Executive Vice President and Chief Human Resources Officer. From January 1991 to March 2000, Mr. Beveridge served as the Chief Executive Officer of Scottish Enterprise. Before joining Sun Microsystems in 1985, he held HR management positions in the United States and Europe with Hewlett-Packard, Digital Equipment Corporation and Analog Devices Inc. Mr. Beveridge served as a non-executive board member of iomart Group plc from September 2011 to December 2017.
Mr. Beveridge is independent and his three decades of experience in the high technology industry provide him with a deep understanding of Autodesk's technology and business. His management positions with Sun Microsystems have also provided him with critical insight into the operational requirements of a global company and the management and consensus-building skills required to lead our Board as non-executive Chairman and to serve on our Corporate Governance and Nominating Committee. Mr. Beveridge's extensive international experience, gained from his roles as Chief Executive of Europe's largest economic development agency and as a member of the Council of Economic Advisers for Scotland, provides a valuable perspective to our Board.
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Karen Blasing
Director
Age: 61
Director since 2018
|
Ms. Blasing has over 25 years of executive operational and financial leadership experience in the technology industry. Ms. Blasing served as the chief financial officer of Guidewire Software, Inc. from 2009 to March 2015. Prior to Guidewire, Ms. Blasing served as the chief financial officer for Force 10 Networks and the Senior Vice President of Finance for salesforce.com, inc. Ms. Blasing also served as chief financial officer for Nuance Communications, Inc. and Counterpane Internet Security, Inc., and held senior finance roles for Informix (now IBM Informix) and Oracle Corporation. Ms. Blasing has served on the boards of directors of Ellie Mae, Inc. since June 2015 and Zscaler, Inc. since January 2017.
Ms. Blasing is independent and has over 25 years of executive operational and financial experience in the technology industry. Ms. Blasing experience at Guidewire Software, Force 10 Networks, salesforce.com and Nuance Communications provides her with a strong understanding of Autodesk's business and international operational challenges. Her experience as a chief financial officer provides her with the financial acumen necessary to serve on our Audit Committee.
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2018 Proxy Statement 21
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Reid French
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Director
Age: 46
Director since 2017
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Mr. French has served as Chief Executive Officer of Applied Systems, Inc., a software solutions and services provider in the insurance industry, since September 2011. Previously, Mr. French was Chief Operating Officer at Intergraph Corporation, a global geospatial and computer-aided design software company, from April 2005 until October 2010 when Intergraph was acquired by Hexagon AB. From October 2003 to April 2005, Mr. French was Executive Vice President of Strategic Planning and Corporate Development at Intergraph. Prior to joining Intergraph, Mr. French served as Chief Operating Officer, North America for Solution 6 Group, Ltd., Australia's largest software company, directing all regional operations including sales & marketing, product development, services and support. Prior to Solution 6, Mr. French served as a strategic planner in the Business Planning & Development group for Walt Disney World, a business unit of The Walt Disney Company. Prior to Disney, Mr. French worked in investment banking with The Robinson-Humphrey Company, managing various transactions within the technology sector. He sits on the board of directors for Applied and The Lovett School in Atlanta.
Mr. French is independent and his executive operational and strategic leadership experience in the technology industry provide him with a deep und
erstanding of Autodesk's technology and business. Mr. French’s years of service as an executive officer and
his service on the board of directors of Applied provide him with the corporate governance knowledge necessary to serve on our Compensation and Human Resources Committee.
Mary T. McDowell
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Director
Age: 53
Director since 2010
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Ms. McDowell has served as the Chief Executive Officer and member of the board of directors at Polycom, Inc. since September 2016. Prior to Polycom, Ms. McDowell was an Executive Partner at Siris Capital, LLC. She served as Executive
Vice President in charge of Nokia’s Mobile Phone unit from July 2010 to July 2012 and as Executive Vice President and Chief
Development Officer of Nokia Corporation from January 2008 to July 2010. Previously, Ms. McDowell served as Executive Vice President and General Manager of Enterprise Solutions of Nokia from January 2004 to December 2007. Prior to joining Nokia in 2004, Ms. McDowell spent 17 years in various executive, managerial and other positions at Compaq Computer Corporation and Hewlett-Packard Company, including serving as Senior Vice President, Industry-Standard Servers of Hewlett-Packard. Ms. McDowell has served as a director of UBM plc since August 2014. Ms. McDowell previously served as a director of Bazaarvoice, Inc. from December 2014 to October 2016 and NAVTEQ Corporation, a subsidiary of Nokia, from July 2008 until July 2010.
Ms. McDowell is independent and brings to our Board extensive management experience in the technology industry. Her two and a half decades of experience working for global technology companies focused on innovation and collaboration provide her with a firm understanding of Autodesk's core mission, business and technology. Her years of service as an executive officer at Polycom, Nokia and other technology companies, including Compaq Computer and Hewlett-Packard, provide her with the executive compensation knowledge necessary to serve as Chair of our Compensation and Human Resources Committee.
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2018 Proxy Statement 22
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Table of Contents
Lorrie M. Norrington
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Director
Age: 58
Director since 2011
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Ms. Norrington has over 35 years of operating experience in technology, software, and internet businesses.
Ms. Norrington currently serves as an adviser and in an Operating Partner capacity for Lead Edge Capital.
Lead Edge is a growth equity firm that partners with world-class entrepreneurs and exceptional technology businesses. Ms. Norrington served as President of eBay Marketplaces from July 2008 to September 2010. Previously, she served in a number of senior management roles at eBay from July 2006 until June 2008. Prior to joining eBay, Ms. Norrington served from June 2005 to July 2006 as President and CEO of Shopping.com, Inc., an online shopping comparison site. Prior to joining Shopping.com, Ms. Norrington served from August 2001 to January 2005, initially as Executive Vice President of small business, and later in the office of the CEO, at Intuit Inc., a business and financial management software company. Prior to joining Intuit, Ms. Norrington served in a variety of executive positions at General Electric Corporation over a twenty-year period, working in a broad range of industries and businesses. Ms. Norrington has served on the boards of directors of Colgate-Palmolive since September 2015 and HubSpot since September 2013. Previously, she served on the boards of directors of DIRECTV from February 2011 until it was acquired by AT&T in July 2015; Lucasfilm, from June 2011 until it was acquired by Disney in December 2012; McAfee, Inc. from December 2009 until it was acquired by Intel in February 2011; and Shopping.com from November 2004 until it was acquired by eBay in August 2005.
Ms. Norrington is independent and has extensive experience in online commerce SaaS, and valuable management experience in technology and manufacturing industries. Her three decades of building businesses, and adapting to and capitalizing on rapid technological advancement provide Ms. Norrington with a unique perspective. As Autodesk evolves its business model to better serve customer needs and demands, her experience as a chief executive officer provides her with the financial acumen necessary to serve on our Audit Committee. Also, she is an accredited fellow of the National Association of Corporate Directors and brings significant governance knowledge to the Board.
Betsy Rafael
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Director
Age: 56
Director since 2013
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Ms. Rafael has over 30 years of executive financial experience in the technology industry. Ms. Rafael served as Principal Accounting Officer of Apple Inc. from January 2008 to October 2012, and as its Vice President and Corporate Controller from August 2007 until October 2012. From April 2002 to September 2006, Ms. Rafael served as Vice President, Corporate Controller and Principal Accounting Officer of Cisco Systems, Inc., and held the position of Vice President, Corporate Finance of Cisco Systems from September 2006 to August 2007. From December 2000 to April 2002, Ms. Rafael was the Executive Vice President, Chief Financial Officer, and Chief Administrative Officer of Aspect Communications, Inc., a provider of customer relationship portals. From April 2000 to November 2000, Ms. Rafael was Senior Vice-President and CFO of Escalate, Inc., an enterprise e-commerce application service provider. From 1994 to 2000, Ms. Rafael held a number of senior positions
at Silicon Graphics International Corp. (“SGI”), culminating her career at SGI as Senior Vice President and
Chief Financial Officer. Prior to SGI, Ms. Rafael held senior management positions in finance with Sun Microsystems, Inc. and Apple Computers. Ms. Rafael began her career with Arthur Young & Company. Ms. Rafael has served on the board of directors of Echelon Corporation since November 2005, GoDaddy Inc. since May 2014 and Shutterfly since June 2016. Ms. Rafael previously served on the board of directors of PalmSource, Inc.
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2018 Proxy Statement 23
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Ms. Rafael is independent and has over 30 years of executive financial experience in the technology industry. Ms. Rafael’s experience at Apple and Cisco, including her finance and executive roles, provides her with a strong understanding of Autodesk's industry, business and international operational challenges. Her experience as a principal accounting officer provides her with the financial acumen necessary to serve as the Chair of our Audit Committee.
Stacy J. Smith
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Director
Age: 55
Director since 2011
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Mr. Smith served as Group President of Sales, Manufacturing and Operations at Intel Corporation from February 2017 to January 2018. He served as the Executive Vice President, Manufacturing, Operations and Sales of Intel Corporation from October 2016 to February 2017. From November 2012 to October 2016, he served as Executive Vice President, Chief Financial Officer. Previously, Mr. Smith served as Senior Vice President, Chief Financial Officer from January 2010 to November 2012; Vice President, Chief Financial Officer from 2007 to 2010; and Vice President, Assistant Chief Financial Officer from 2006 to 2007. From 2004 to 2006, Mr. Smith served as Vice President, Finance and Enterprise Services and Chief Information Officer. Mr. Smith joined Intel in 1988. Mr. Smith previously served on the boards of directors of Virgin America from February 2014 until it was acquired by Alaska Air Group in December 2016 and of Gevo, Inc. from June 2010 to June 2014.
Mr. Smith is independent and brings over two decades of experience in the technology industry. Mr. Smith's experience at Intel, including his finance and executive roles, and his time spent overseas, provide him with a strong understanding of Autodesk's industry, business and international operational challenges. Mr. Smith's years of service as an executive officer at Intel provide him with the corporate governance knowledge necessary to serve on our Compensation and Human Resources Committee.
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2018 Proxy Statement 24
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PROPOSAL TWO - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Ernst & Young LLP as the independent registered public accounting firm to audit the consolidated financial statements of Autodesk for the fiscal year ending January 31, 2019, and recommends that the stockholders vote to ratify that appointment. In the event of a negative vote on this proposal, the Audit Committee will reconsider its selection. Even if the selection of Ernst & Young LLP is ratified, the Audit Committee, in its discretion, may direct the selection of a different independent registered public accounting firm at any time if the Audit Committee determines that such a change would be in the best interests of Autodesk and its stockholders.
Ernst & Young LLP has been retained as our independent registered public accounting firm continuously since the fiscal year ended January 31, 1983.
We expect a representative of Ernst & Young LLP to be present at the Annual Meeting. The representative will have the opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM.
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Principal Accounting Fees and Services
The following table presents fees billed for professional audit services and other services rendered to Autodesk by Ernst & Young LLP and its affiliates for the fiscal years ended January 31, 2018 and 2017.
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Fiscal 2018
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Fiscal 2017
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(in millions)
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Audit Fees (1)
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$
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5.0
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$
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4.7
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Audit-Related Fees (2)
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0.4
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0.3
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Tax Fees (3)
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0.4
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0.7
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All Other Fees (4)
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—
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0.1
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Total
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$
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5.8
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$
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5.8
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____________________
(1)
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Audit Fees consisted of fees billed for professional services rendered for the integrated audit of Autodesk's annual financial statements and management's report on internal controls included in Autodesk's Annual Reports on Form 10-K, for the review of the financial statements included in Autodesk's Quarterly Reports on Form 10-Q, and for other services, including statutory audits and services rendered in connection with SEC filings.
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(2)
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Audit-Related fees consisted of fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. This category includes fees arising from accounting-related consulting services.
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(3)
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Tax Fees consisted of fees billed for tax compliance, consultation and planning services.
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(4)
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Other fees consisted of fees for license compliance consultation services.
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2018 Proxy Statement 25
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Pre-Approval of Audit and Non-Audit Services
Generally, all audit and non-audit services provided by Ernst & Young LLP and its affiliates to Autodesk must be pre-approved by the Audit Committee. The Audit Committee is presented with a detailed listing of the individual audit and non-audit services and fees (separately describing audit-related services, tax services and other services) expected to be provided by Ernst & Young LLP and its affiliates during the year. The Audit Committee is also responsible for the audit fee negotiations associated with Autodesk's retention of Ernst & Young LLP. Periodically, the Audit Committee receives an update of all pre-approved audit and non-audit services conducted, and information regarding any new audit and non-audit services to be provided by Ernst & Young LLP and its affiliates. The Audit Committee reviews the update and approves the proposed services if they are deemed acceptable.
To ensure prompt handling of unexpected matters, the Chair of the Audit Committee has authority to amend or modify the list of approved audit and non-audit services and fees so long as such additional or amended services do not affect Ernst & Young LLP's independence under applicable SEC rules. The Chair reports any such action taken at subsequent Audit Committee meetings.
Rotation
The Audit Committee periodically reviews and evaluates the performance of Ernst
& Young LLP’s lead audit partner, oversees
the required rotation of the lead audit partner responsible for our audit, and reviews and considers the selection of the lead audit partner.
At this time, the Audit Committee and the Board believe that the continued retention of Ernst & Young LLP to serve as our independent registered public accounting firm is in the best interests of Autodesk and its stockholders.
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PROPOSAL THREE - NON-BINDING VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
We are asking our stockholders to vote, on a non-binding advisory basis, to approve the compensation of our named executive
officers as described in the section titled “Compensation Discussion and Analysis” (or “CD&A”) below and the accompanying compensation tables and narrative discussion in this Proxy Statement (a “Say
-on-
Pay” vote). St
ockholders are encouraged to read that information in its entirety to obtain a complete understanding of Autodesk's executive compensation program philosophy, design and linkage to stockholder interests.
Autodesk has designed its compensation programs to reward executives for producing strong results that are aligned with the
interests of stockholders. We emphasize variable “long
-
term” and “at risk” compensation dependent upon prospective financial, strategic and stock price performance and a retrospective assessment of Autodesk's success to determine pay opportunities. In
fiscal 2018, 92% of our current CEO's and 84% of all other continuing NEOs’ total compensation was variable in nature and “at risk” and 86% of our current CEO’s and 73% of all other continuing NEOs’ total compensation consisted of long
-term equity.
Fiscal 2018 Business Model Transition and Performance Metrics
The software industry is undergoing a transition from the PC to cloud, mobile and social computing. Our strategy is to lead the industries we serve to cloud-based technologies and business models. As part of the transition, we discontinued selling new perpetual licenses and now offer term-based subscriptions for our products, cloud service offerings, and flexible enterprise business agreements (collectively referred to as "subscription plan").
Over time, Autodesk’s business model transition will result in a more predictable, recurring and profitable business. However
, during the transition, traditional financial metrics such as revenue, margins, EPS and cash flow from operations have been adversely impacted. This is primarily a result of revenue for new subscription offerings being recognized over time rather than up front and subscription offerings generally have a lower initial price than perpetual offerings. Despite the lower initial price,
our subscription plan offerings are expected to increase the lifetime value of Autodesk’s customers.
Following Dr. Anagnost’s appointment to CEO, and in consultation with the Board, he establish
ed three strategic priorities of completing the subscription transition, digitizing the Company, and re-imagining manufacturing, construction, and production. To free up resources to pursue these strategic priorities, we commenced a world-wide restructuring plan in the fourth quarter of fiscal 2018. Through the restructuring, we seek to reduce our investments in areas not aligned with our strategic priorities. At the same time, we plan to further invest primarily in strategic priority areas related to digital infrastructure, customer success, and construction. By re-balancing resources to better align with our strategic priorities, we are better positioning ourselves to meet our long-term goals, while maintaining our goal to keep non-GAAP spend flat in fiscal 2019.
To incent long-term value creation and strong financial performance during the transition, we adopted performance metrics for our bonus and equity plans that align with the key drivers of success during the business model transition and reflect the health of the business during the transition. The following performance metrics were used for our CEO during fiscal 2018:
Performance Metrics
●
|
Total Annualized Recurring Revenue ("ARR")
|
●
|
Net Total Subscription Additions
|
●
|
Non-GAAP Total Spend
|
●
|
Total Subscription Renewal rate
|
●
|
Relative TSR (multi-year)
|
●
|
Free Cash Flow Per Share
|
|
2018 Proxy Statement 27
|
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Our executive officers’ continued successful implementation of our business model drove the following
fiscal 2018 results:
●
|
Total ARR was $2.05 billion
, an increase of 25% from fiscal 2017; of which subscription plan ARR was $1.18 billion.
|
●
|
Total subscriptions were 3.72 million
, an increase of 20% from fiscal 2017; of which subscription plan subscriptions were 2.27 million.
|
●
|
Subscription plan ARR and subscriptions base
surpassed the base of maintenance plan ARR and subscriptions.
|
●
|
Deferred revenue was $1.96 billion
, an increase of 9% from fiscal 2017.
|
●
|
Total deferred revenue (deferred revenue plus unbilled deferred revenue) was $2.28 billion
, an increase of approximately 25% from fiscal 2017.
|
●
|
Total GAAP spend (cost of revenue plus operating expenses) was $2,566 million
, an increase of 1% from fiscal 2017.
|
●
|
Total non-GAAP spend was $2,169 million
, an increase of 1% from fiscal 2017. A reconciliation of GAAP to non-GAAP results is provided in
Appendix A
.
|
●
|
Total subscription renewal rate was 80.9%.
|
●
|
During fiscal 2018 our stock price increased by 42%
and over five years our stock price increased by 197%.
|
The Compensation and Human Resources Committee (the “Committee”) considered those performance factors in reaching its
decisions regarding pay for the NEOs for fiscal 2018.
Stockholder Engagement and Actions Taken
Autodesk and the Committee value the input of our stockholders. In fiscal 2018, 95% of the votes cast on our Say-on-Pay proposal were favorable, which reflected strong stockholder support for our executive compensation programs. In fiscal 2018, the Chairman of our Board, alongside key management team members, continued our annual outreach and contacted stockholders representing over 63% of the outstanding shares. Our engagement team met with governance professionals from
passive funds as well as portfolio managers from active funds. The breadth of the Company’s outreach program enabled us to
gather feedback from a significant cross-
section of Autodesk’s stockholder base. Based on these discussions, the Committee
found that our stockholders continued to be supportive of our executive transition, our executive compensation programs and the alignment betwe
en our CEO pay and Autodesk’s performance, particularly in light of our stage in the business model
transition. In addition, our stockholders provided us helpful input regarding compensation design and disclosure. The Committee carefully considered stockholder feedback as part of its ongoing review of our executive compensation program and will continue to consider stockholder feedback regarding compensation design and metrics as we emerge from our business
model transition. As described below in “Fiscal 2019 Executive Incentive Plan,” the Committee approved annual incentive
metrics for fiscal 2019 that differ from those used for PSU awards, largely in response to input from our stockholders.
Compensation Guiding Principles
The executive compensation program is designed to attract, motivate, and retain talented executives and provide a rigorous framework that is tied to stockholder returns, Company performance, long-term strategic corporate goals, and individual performance. The general compensation objectives are to:
●
|
Recruit and retain the highest caliber of executives through competitive rewards;
|
●
|
Motivate executive officers to achieve business and financial goals;
|
●
|
Balance rewards for short- and long-term performance; and
|
●
|
Align rewards with stockholder value creation.
|
|
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|
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Within this framework, the total compensation for each executive officer varies based on multiple dimensions:
●
|
Whether Autodesk achieves its short-term and long-term financial and non-financial objectives, including execution on its business model transition;
|
●
|
Autodesk's TSR relative to the companies included in the S&P Computer Software Select Index and companies in the North American Technology Software Index;
|
●
|
The specific role and responsibility of the officer;
|
●
|
Each individual officer’s skills, competency, contributions and performance;
|
●
|
Internal pay parity considerations, and
|
●
|
Retention considerations.
|
Executive compensation is variable and balanced between short- and long-term performance, all of which is tied to Autodesk's absolute and relative financial and stock price performance.
Current CEO
|
|
Other Continuing NEOs
|
|
|
|
Our executive compensation program emphasizes variable compensation with both annual and long-term performance components. In fiscal 2018, 92% of our current CEO's and 84% of all other c
ontinuing NEOs’ total compensation was variable in nature and “at risk” and 86% of our current CEO’s and 73% of all other continuing NEOs’ total compensation consisted of
long-term equity. Our incentive programs reward strong annual financial and operational performance, as well as relative TSR over one-, two-, and three-year performance periods.
|
2018 Proxy Statement 29
|
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Leading Compensation Governance Practices
Autodesk’s executive compensation objectives are supported by policies and strong governance practices that align executives’ interests with the interests of our stockholders. Some of the program’s most notable features are highlighted in the table below and summarized in the CD&A.
Yes
|
No
|
✓
|
Robust stockholder outreach program
|
⦸
|
No hedging
|
✓
|
Large percentage of NEO total pay tied to achievement of critical financial and stockholder value creation
|
⦸
|
Prohibition on option re-pricing
|
✓
|
Representative peer group
|
⦸
|
No executive benefits and limited perquisites
|
✓
|
Significant stock ownership requirements
|
|
|
✓
|
Clawback policy
|
|
|
✓
|
Double-trigger change in control arrangements with no excise tax gross-up
|
|
|
✓
|
Equity award grant policy
|
|
|
✓
|
Effective risk management
|
|
|
✓
|
Independent compensation committee and consultant
|
|
|
Vote Recommendation
When casting the 2018 Say-on-Pay vote, we encourage our stockholders to consider our fiscal 2018 stockholder outreach and the collective changes we have made to the executive compensation program in recent years to more closely align the total direct compensation opportunity of the named executive officers with Autodesk's objectives of driving meaningful annual financial growth and maximizing long-term value. Accordingly, we ask our stockholders to v
ote “FOR” the advisory, non
-binding Say-on-Pay proposal at the Annual Meeting.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY
(NON-BINDING) PROPOSAL APPROVING NAMED EXECUTIVE OFFICER
COMPENSATION.
|
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CORPORATE GOVERNANCE
Autodesk is committed to the highest standards of corporate ethics and diligent compliance with financial accounting and reporting rules. Our Board provides independent leadership in the exercise of its responsibilities. Our executive officers oversee a strong system of internal controls and compliance with corporate policies and applicable laws and regulations. Our employees operate in a climate of responsibility, candor and integrity.
Corporate Governance Guidelines; Code of Business Conduct and Ethics
We believe the highest standards of corporate governance and business conduct are essential to running our business efficiently, serving our stockholders well, and maintaining our integrity in the marketplace. Over the years, we have devoted substantial attention to the subject of corporate governance and have developed
Corporate Governance Guidelines (the “Guidelines”). The
Guidelines set forth the principles that guide our Board's exercise of its responsibility to oversee corporate governance, maintain its independence, evaluate its own performance and the performance of our executive officers, and set corporate strategy. On a regular basis, the Board reviews our governance practices, corporate governance developments and stockholder feedback to ensure continued effectiveness.
The Board first adopted the Guidelines in December 1995 and has refined them periodically since.
●
|
In March 2007, the Board amended the Guidelines to provide for majority voting in director elections, except for contested elections. The 2007 amendments also required each director to submit a resignation that will take effect if such director fails to receive a majority vote in any subsequent election and the Board accepts the resignation.
|
●
|
In March 2009, the Board amended the Guidelines to provide for a non-executive Chairman of the Board.
|
●
|
In March 2010, the Board amended the Guidelines to, among other things, clearly outline the Board's responsibility for overseeing Autodesk's risk management.
|
●
|
In December 2011, the Board amended the Guidelines to, among other things, address changes in a director's occupation.
|
●
|
In December 2016, the Board amended the Guidelines to enhance related party transaction processes, align restrictions relating to multiple directorships, and expand on compliance.
|
The Guidelines are available on our website at
www.autodesk.com
under “Investor Relations
-
Corporate Governance.”
In addition, we have adopted a Code of Business Conduct for directors and employees, and a Code of Ethics for Senior Executive and Financial Officers, including our principal executive officer, principal financial officer, principal accounting officer, all senior vice presidents, and all individuals reporting to our principal financial officer, to ensure that our business is conducted in a consistently legal and ethical manner. Our current Code of Business Conduct and Code of Ethics for Senior Executive and Financial Officers are available on our website at
www.autodesk.com
under “Investor Relations
-Corporate Governance.” We will post on this section of our website any amendment to our Code of Bus
iness Conduct or Code of Ethics for Senior Executive and Financial Officers, as well as any waivers of these Codes that are required to be disclosed by the rules
of the SEC or The NASDAQ Global Select Market (“NASDAQ”).
|
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|
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Stock Ownership Guidelines
The Board believes directors and executive officers should have a meaningful financial stake in Autodesk in order to further
align their interests with Autodesk’s stockholders. To that end, the Board has adopted mandatory ownership guidelines for the
directors and executive officers. These mandatory ownership guidelines require all executive officers and directors to hold
shares of Autodesk’s Common Stock equivalent in value to a multiple of his or her base salary or cash retainer. The current
stock ownership guidelines are as follows:
|
|
Executive Vice
|
Senior
|
|
|
CEO
|
President
|
Vice President
|
Director
|
Multiple of Base
Salary/Cash Retainer
|
6.0 times
|
3.0 times
|
3.0 times
|
5.0 times
|
The Board reviews progress against these guidelines and requirements annually and updates them as appropriate. See the
section titled “Executive Compensation—Compensation Discussion and Analysis” below for additional information regarding Autodesk's stock ownership guidelines.
Independence of the Board
As required by applicable NASDAQ listi
ng standards, a majority of the members of our Board qualify as “independent.” The Board has determined that, with the exception of Andrew Anagnost, our President and CEO, and Carl Bass, our former President and CEO, all of its members are “independent directors” as that term is defined by applicable NASDAQ listing
standards. That definition includes a series of objective tests, including that the director is not an employee of the company and has not engaged in various types of business dealings with the company. The Board also previously determined that Jeff Clarke and Scott Ferguson, who served on the Board during fiscal 2018, were independent under applicable SEC rules and NASDAQ listing standards for membership on the Board and on all committees of the Board on which they served prior to their respective resignations.
In addition, as further required by applicable NASDAQ listing standards, the Board has made a subjective determination as to each independent director that no relationships exist that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making its independence determinations, the Board considered that Ms. McDowell and Messrs. French, Smith and Clarke are or were executive officers at entities that have arms-length, ordinary course commercial relationships with Autodesk and that amounts paid or received by those entities for products or services in fiscal 2018 were not material. The Board determined that the foregoing relationships would not interfere with the exercise of independent judgment by Ms. McDowell and Messrs. French, Smith and Clarke in carrying out their responsibilities as directors.
The independent directors meet regularly in executive session, without executive officers present, as part of the quarterly meeting procedure. The Chairman presides at executive sessions, which are intended to facilitate open discussion among the independent directors.
Outside Board Memberships
We have a highly experienced and engaged Board
of Directors. We value the diverse perspectives that our directors’ outside
board memberships bring to our Boardroom. Directors who serve on other public company boards offer advice and insights with regard to the dynamics and operation of a Board of Directors, the relations of a board with senior management and oversight of a changing mix of strategic, operational and compliance-related matters.
|
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However, in order to ensure sufficient time and attention to meet the responsibilities of Board membership, our Corporate Governance Guidelines state that directors shall serve on no more than five boards of directors of publicly traded companies, including this Board, without consent of the Corporate Governance and Nominating Committee. Per our corporate governance guidelines, directors shall advise the Chairman of the Board or the Lead Independent Director, as applicable, and the Corporate Governance and Nominating Committee before accepting an invitation to serve on an additional for-profit corporate board of directors. The Corporate Governance and Nominating Committee reviews on an annual basis, in the context of recommending a slate of directors for stockholder approval, the composition of the Board, including matters such as other board commitments.
Board Meetings and Board Committees
The Board held a total of ten meetings (including regularly scheduled and special meetings) during fiscal 2018. Each director then serving attended at least 75% of the total number of meetings of the Board and committees of which he or she was a member during fiscal 2018. The Board currently has three standing committees: an Audit Committee, a Compensation and Human Resources Committee, and a Corporate Governance and Nominating Committee. Each committee has adopted a written charter approved by the Board. All three charters are available on Autodesk's website at
www.autodesk.com
under Investor Relations-
Corporate Governance.
Audit Committee
The Audit Committee, which has been established in accordance with Section 3(a)(58)(A) of the Exchange Act, currently
consists of Betsy Rafael (Chair), Karen Blasing, Thomas Georgens and Lorrie M. Norrington, each of whom is independent
as such term is defined for audit committee members by applicable NASDAQ listing standards. The Board has determined that
each member of the Audit Committee is an audit committee financial expert as defined in the rules of the SEC.
The Audit Committee held nine meetings during fiscal 2018.
See Report of the Audit Committee of the Board of Directors
on page 85 for more information regarding the functions of the Audit Committee.
Compensation and Human Resources Committee
The Compensation and Human Resources Committee currently consists of Mary T. McDowell (Chair), Reid French and Stacy J. Smith, each of whom qualifies as independent for compensation committee purposes under applicable NASDAQ listing standards, the requirements of Section 162(m) of the Code, and SEC Rule 16b-3.
The Compensation and Human Resources Committee reviews compensation and benefits for our executive officers and has authority to grant stock options, RSUs and PSUs to executive officers and non-executive employees under our stock plans. As non-employee directors, the members of the Compensation and Human Resources Committee are not eligible to participate in Autodesks discretionary employee stock programs. RSUs are granted automatically to non
-employee directors under the non-discretionary 2012 Outside Directors' Stock Plan.
See the section titled Executive Compensation
-Compe
nsation Discussion and Analysis below for a description of Autodesk's
processes and procedures for determining executive compensation. The Compensation and Human Resources Committee may form and delegate authority to subcommittees when appropriate.
The Compensation and Human Resources Committee held nine meetings during fiscal 2018.
The Report of the Compensation Committee is included in this Proxy Statement on page
59.
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Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee currently consists of Thomas Georgens (Chair), Crawford W. Beveridge and Richard S. Hill. Each of Messrs. Georgens, Beveridge and Hill qualifies as an independent director under applicable NASDAQ listing standards.
The Corporate Governance and Nominating Committee is responsible for developing general criteria regarding the qualifications and selection of members of the Board, and for recommending candidates for election to the Board. The Corporate Governance and Nominating Committee also is responsible for developing overall governance guidelines, overseeing the performance of the Board, and reviewing and making recommendations regarding director composition and the mandates of Board committees. The Corporate Governance and Nominating Committee will consider recommendations of candidates for
the Board submitted by Autodesk stockholders. For more information, see the section titled Corporate Governance
-
Nominating Process for Recommending Candidates for Election to the Board below.
The Corporate Governance and Nominating Committee held five meetings during fiscal 2018.
Board Leadership Structure
Our Corporate Governance Guidelines direct the Board to fill the Chairman of the Board and Chief Executive Officer positions after considering a number of factors, including the current size of our business, composition of the Board, current candidates for such positions, and our succession planning goals. Currently, we separate the positions of Chief Executive Officer and non-executive Chairman of the Board. Since March 2009, Mr. Beveridge, who previously served as our Lead Director, has served as our non-executive Chairman. Our Corporate Governance Guidelines also provide that, in the event the Chairman of the Board is not an independent director,
the Board must elect a Lead Independent Director. The responsibilities of the Chairman of the Board or the Lead Independent Director include setting the agenda for each meeting of the Board, in consultation with the Chief Executive Officer; presiding at executive sessions; and facilitating communication with the Board, executive officers and stockholders.
Separating the positions of Chief Executive Officer and Chairman of the Board allows our President and Chief Executive Officer to focus on our day-to-day business, while allowing the Chairman of the Board to lead the Board in its fundamental role of providing independent advice to, and oversight of, management. The Board believes that having an independent director serve as Chairman is the appropriate leadership structure for Autodesk at this time and demonstrates our commitment to good corporate governance.
In addition, as described above, our Board has three standing committees, consisting entirely of independent directors. The Board delegates substantial responsibility to these committees, which report their activities and actions back to the full Board. We believe having independent committees with independent chairpersons is an important aspect of the leadership structure of our Board.
Risk Oversight
Our Board, as a whole and through its committees, is responsible for the oversight of risk management. Our executive officers are responsible for the day-to-day management of the material risks Autodesk faces. In its oversight role, our Board must satisfy itself that the risk management processes designed and implemented by our executive officers are adequate and functioning as designed. The involvement of the full Board in setting our business strategy at least annually is a key part of its oversight of risk management, its consideration of our executive officers' appetite for risk, and its determination of what constitutes an appropriate level of risk. The full Board receives updates from our executive officers and outside advisers regarding certain risks Autodesk faces, including litigation, cyber security, data privacy, corporate governance best practices and various operating risks.
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In addition, each Board committee oversees certain aspects of risk management. For example, our Audit Committee is responsible for overseeing the management of risks associated with Autodesk's financial reporting, accounting and auditing matters; our Compensation and Human Resources Committee oversees our executive officer succession planning and risks associated with our compensation policies and programs; and our Corporate Governance and Nominating Committee oversees the management of risks associated with director independence, conflicts of interest, composition and organization of our Board, and director succession planning. Board committees report their findings to the full Board.
Senior executive officers attend all meetings of the Board and its standing committees and are available to address any questions or concerns raised by the Board regarding risk management and any other matters. Annually, the Board holds strategic planning sessions with senior executive officers to discuss strategies, key challenges, and risks and opportunities for Autodesk.
Sustainability
Autodesks long
-standing commitment to sustainability is reflected in our products, services and operations. To help our customers imagine, design, and create a better world, we focus our efforts where we can have the greatest impact: providing sustainability-enabling solutions, delivering free sustainable design learning and training opportunities, providing software grants to qualifying nonprofits and entrepreneurs and leading by example with our sustainable business practices. Through our products and services, we are supporting our customers to better understand and improve the environmental performance of everything they make.
Autodesk develops solutions that our customers can use to design a future in which our built environment, infrastructure, and manufacturing serve the needs of all, within the limits of the planet. We help our customers proactively understand, optimize, and improve the environmental performance of everything they make, with a focus on resource productivity. We help them to innovate and respond to changes in climate change regulations, building codes, physical climate parameters, and other climate-related developments. We continue to expand the solutions, education, and support we offer, helping customers secure a competitive advantage for a low carbon future by designing high-performance buildings, resilient cities and infrastructure, and more efficient transportation, factories, and products.
Although our biggest opportunity to improve our shared future is through the designers who use our software, we also work to reduce the direct impact of our operations. We are investing in best practices to mitigate our greenhouse gas (GHG) emissions and climate change risk through renewable energy, energy efficiency, and disaster management and recovery strategies. We are on track to meet our science-based target to reduce our absolute GHG emissions by an estimated 43 percent by 2020.
By the end of fiscal 2017, Autodesk had reduced its net GHG emissions for its operational boundary by 44% from our fiscal 2009 baseline to 156,000 metric tons of carbon dioxide equivalent. We achieved this through increased investment in renewable energy and energy efficiency in our global real estate portfolio, and continued transition from physical to cloud and electronic software delivery.
The Autodesk Foundation, a privately funded 501(c)(3) charity organization established and solely funded by us, leads our philanthropic efforts. The purpose of the Foundation is twofold: to support employees to create a better world at work, at home, and in the community
by matching employees volunteer time and/or donations to nonprofit organizations; and to support
organizations and individuals using design to drive positive social and environmental impact. In the latter case, we use grant funding, software donations, and training to accomplish this goal, selecting the most impactful and innovative organizations around the world, thus, leading to a better future for our planet. On our behalf, the Foundation also administers a discounted software donation program to nonprofit organizations, social and environmental entrepreneurs, and others who are developing design solutions that will shape a more sustainable future.
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More information about our sustainability commitments and performance can be found in our annual sustainability reports, which we have published on our website since 2008. Our fiscal 2018 sustainability report will be released in the second quarter of fiscal 2019.
Compensation Committee Interlocks and Insider Participation
The current members of the Compensation and Human Resources Committee are Mary T. McDowell, Reid French and Stacy J. Smith. In addition, Scott Ferguson served on the Compensation and Human Resources Committee during fiscal 2018. No director who served as a member of the Compensation and Human Resources Committee during fiscal 2018 is or was formerly an officer or employee of Autodesk or any of its subsidiaries. No interlocking relationship exists between any director who served as a member of the Compensation and Human Resources Committee during fiscal 2018 and the compensation committee of any other company, nor has any such interlocking relationship existed in the past.
Nominating Process for Recommending Candidates for Election to the Board
The Corporate Governance and Nominating Committee is responsible for, among other things, determining the criteria for membership on the Board and recommending candidates for election to the Board. It is the policy of the Corporate Governance and Nominating Committee to consider recommendations for candidates to the Board from stockholders. Stockholder recommendations for candidates to the Board must be directed in writing to Autodesk, Inc., 111 McInnis Parkway, San Rafael, California 94903, Attention: Chief Legal Officer, and must include the candidate's name, home and business contact information, detailed biographical data and qualifications; information regarding any relationships between the candidate and Autodesk within the last three years; and evidence that the nominating person owns Autodesk stock.
The Corporate Governance and Nominating Committee’s criteria and process for evaluating and identifying the candidates that
it selects, or recommends to the full Board for selection, as director nominees are as follows:
●
|
The Corporate Governance and Nominating Committee regularly reviews the current composition and size of the Board.
|
●
|
The Corporate Governance and Nominating Committee oversees a periodic evaluation of the performance of the Board as a whole and evaluates the performance of individual members of the Board eligible for re-election at the annual meeting of stockholders.
|
●
|
In its evaluation of director candidates, including the members of the Board eligible for re-election, the Corporate Governance and Nominating Committee seeks to achieve a balance of knowledge, experience and skills on the Board. The Corporate Governance and Nominating Committee considers: (1) the current size and composition of the Board and the needs of the Board and its committees; (2) such factors as character, judgment, diversity, age, expertise, business experience, length of service, independence, and other commitments; (3) relationships between directors and Autodesk's customers and suppliers; and (4) such other factors as the Committee may consider appropriate.
|
●
|
While the Corporate Governance and Nominating Committee has not established specific minimum qualifications for director candidates, the Corporate Governance and Nominating Committee believes that candidates and nominees must reflect a Board that comprises directors who (1) are predominantly independent; (2) have high integrity; (3) have broad, business-related knowledge and experience at the policy-making level in business or technology, including their understanding of the software industry and Autodesk's business in particular; (4) have qualifications that will increase overall Board effectiveness; (5) have varied and divergent experiences, viewpoints and backgrounds; and (6) meet other requirements as may be required by applicable rules, such as financial literacy or financial expertise with respect to audit committee members.
|
|
2018 Proxy Statement 36
|
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●
|
With regard to candidates who are properly recommended by stockholders or by other means, the Corporate Governance and Nominating Committee will review the qualifications of any such candidate, which review may, in the Corporate Governance and Nominating Committee’s discretion, include interviewing references, direct interviews with the candidate, or other actions the Corporate Governance and Nominating Committee deems necessary or proper.
|
●
|
The Corporate Governance and Nominating Committee has the authority to retain and terminate any third-party search firm to identify director candidates, and has the authority to approve the fees and retention terms of such search firm.
|
●
|
The Corporate Governance and Nominating Committee will apply these same principles when evaluating Board candidates who may be elected initially by the full Board to fill vacancies or to add additional directors prior to the annual meeting of stockholders at which directors are elected.
|
●
|
After completing its review and evaluation of director candidates, the Corporate Governance and Nominating Committee selects, or recommends to the full Board for selection, the director nominees.
|
The Corporate Governance and Nominating Committee does not have a formal written policy with regard to the consideration of diversity in identifying director nominees. However, as discussed above, diversity is one of the numerous criteria the Corporate Governance and Nominating Committee reviews before recommending a candidate.
Attendance at Annual Stockholders' Meetings by Directors
Autodesk does not have a formal policy regarding attendance by members of the Board at the Annual Meeting of Stockholders. Directors are encouraged, but not required, to attend. All of our directors then serving attended the 2017 Annual Meeting of Stockholders either in person or telephonically.
Contacting the Board
Communications from stockholders to the non-employee directors should be addressed to the non-executive Chairman as follows: Autodesk, Inc., c/o Chief Legal Officer, 111 McInnis Parkway, San Rafael, California 94903, Attention: Non-Executive Chairman.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Throughout this proxy statement, the individuals included in the Summary Compensation Table on page 60 are referred to as
our “named executive officers” or “NEOs.” For fiscal 2018, our NEOs were:
●
|
Andrew Anagnost, Chief Executive Officer and President;
|
●
|
R. Scott Herren, Senior Vice President and Chief Financial Officer;
|
●
|
Steven M. Blum, Senior Vice President, Worldwide Field Operations; and
|
●
|
Pascal W. Di Fronzo, Senior Vice President, Corporate Affairs, Chief Legal Officer and Corporate Secretary;
|
|
2018 Proxy Statement 37
|
Table of Contents
as well as former employees:
●
|
Carl Bass, former Chief Executive Officer and President;
|
●
|
Amar Hanspal, former Co-CEO, Senior Vice President, Products and Chief Product Officer; and
|
●
|
Jan Becker, former Senior Vice President and Chief Human Resources Officer and Corporate Real Estate.
|
The information in this discussion provides perspective and narrative analysis relating to, and should be read along with, the executive compensation tables beginning on page 60.
Executive Transition
In February 2017, Carl Bass announced he was stepping down from his Chief Executive Officer and President roles.
Mr. Bass’ separation as CEO led to a number of changes to our executive management
team:
●
|
The Board formed an interim Office of the Chief Executive to oversee the Company's day-to-day operations, which was headed by Dr. Anagnost and Mr. Hanspal who served as interim Co-CEOs.
|
●
|
In June 2017, after an extensive review process and search, the Board appointed Dr. Anagnost as President and CEO and a member of the Board.
|
●
|
Mr. Hanspal then elected to resign from his role at the Company.
|
●
|
In October 2017, Ms. Becker, having helped the Board and management transition through the management changes in in fiscal 2018, also chose to resign.
|
Mr. Bass, Mr. Hanspal and Ms. Becker, though no longer employees of the Company, are included as NEOs pursuant to applicable SEC disclosure requirements.
As a result of these changes, the Compensation and Human Resources Committee (the “Committee”) made a number of
compensation-related decisions (which are described below) in addition to its customary duties in overseeing our executive compensation program. These decisions related to Co-CEO stipends and equity grants, CEO promotion compensation and separation compensation. The material terms and conditions of these arrangements are described more fully below.
Executive Summary
Fiscal 2018 Business Model Transition and Performance Metrics
The software industry is undergoing a transition from the PC to cloud, mobile and social computing. Our strategy is to lead the industries we serve to cloud-based technologies and business models. As part of the transition, we discontinued selling new perpetual licenses and now offer term-based subscriptions for our products, cloud service offerings, and flexible enterprise business agreements (collectively referred to as "subscription plan").
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Over time, Autodesk’s business model transition will result in a more predictable, recurring and profitable business. However
, during the transition, traditional financial metrics such as revenue, margins, EPS and cash flow from operations have been adversely impacted. This is primarily a result of revenue for new subscription offerings being recognized over time rather than up front and subscription offerings generally have a lower initial price than perpetual offerings. Despite the lower initial price,
our subscription plan offerings are expected to increase the lifetime value of Autodesk’s customers.
Following Dr. Anagnost’s appointment to CEO, and in consultation wit
h the Board, he established three strategic priorities of completing the subscription transition, digitizing the Company, and re-imagining manufacturing, construction, and production. To free up resources to pursue these strategic priorities, we commenced a world-wide restructuring plan in the fourth quarter of fiscal 2018. Through the restructuring, we seek to reduce our investments in areas not aligned with our strategic priorities. At the same time, we plan to further invest primarily in strategic priority areas related to digital infrastructure, customer success, and construction. By re-balancing resources to better align with our strategic priorities, we are better positioning ourselves to meet our long-term goals, while maintaining our goal to keep non-GAAP spend flat in fiscal 2019.
To incent long-term value creation and strong financial performance during the transition, we adopted performance metrics for our bonus and equity plans that align with the key drivers of success during the business model transition and reflect the health of the business during the transition. The following performance metrics were used for our CEO during fiscal 2018:
Performance Metrics
●
|
Total Annualized Recurring Revenue ("ARR")
|
●
|
Net Total Subscription Additions
|
●
|
Non-GAAP Total Spend
|
●
|
Total Subscription Renewal rate
|
●
|
Relative TSR (multi-year)
|
●
|
Free Cash Flow Per Share
|
Our executive officers’ continued successful implementation of our business model drove the following fiscal
2018
results:
●
|
Total ARR was $2.05 billion
, an increase of 25% from fiscal 2017; of which subscription plan ARR was $1.18 billion.
|
●
|
Total subscriptions were 3.72 million
, an increase of 20% from fiscal 2017; of which subscription plan subscriptions were 2.27 million.
|
●
|
Subscription plan ARR and subscriptions base
surpassed the base of maintenance plan ARR and subscriptions.
|
●
|
Deferred revenue was $1.96 billion
, an increase of 9% from fiscal 2017.
|
●
|
Total deferred revenue (deferred revenue plus unbilled deferred revenue) was $2.28 billion
, an increase of approximately 25% from fiscal 2017.
|
●
|
Total GAAP spend (cost of revenue plus operating expenses) was $2,566 million
, an increase of 1% from fiscal 2017.
|
●
|
Total non-GAAP spend was $2,169 million
, an increase of 1% from fiscal 2017. A reconciliation of GAAP to non-GAAP results is provided in
Appendix A
.
|
●
|
Total subscription renewal rate was 80.9%
.
|
●
|
During fiscal 2018 our stock price increased by 42%
and over five years our stock price increased by 197%.
|
The Committee considered those performance factors in reaching its decisions regarding pay for the NEOs for fiscal 2018.
|
2018 Proxy Statement 39
|
Table of Contents
Say-on-Pay Results and Stockholder Outreach
Autodesk and the Committee value the input of our stockholders. In 2017, 95% of the votes cast on our Say-on-Pay proposal were favorable, which reflected strong stockholder support for our executive compensation programs. In fiscal 2018, the Chairman of our Board, alongside key management team members, continued our annual outreach and contacted stockholders representing over 63% of the outstanding shares. Our engagement team met with governance professionals from passive funds
as well as portfolio managers from active funds. The breadth of the Company’s outreach program enabled us to gather feedback
from a significant cross-
section of Autodesk’s stockholder base. Based on these discuss
ions, the Committee found that our stockholders continued to be supportive of our executive transition, our executive compensation programs and the alignment
between our CEO pay and Autodesk’s performance, particularly in light of our stage in the business
model transition. In addition, our stockholders provided us helpful input regarding compensation design and disclosure. The Committee carefully considered stockholder feedback as part of its ongoing review of our executive compensation program and will continue to consider stockholder feedback regarding compensation design and metrics as we emerge from our business model transition. As
described below in “Fiscal 2019 Executive Incentive Plan,” the Committee approved annual incentive metrics for fiscal 2019 that differ from those used for PSU awards, largely in response to input from our stockholders.
Emphasis on Variable “At Risk” Performance Executive Compensation
Our executive compensation program emphasizes variable compensation with both annual and long-term performance
components. In fiscal 2018, 92% of our current CEO's and 84% of all other continuing NEOs’ total compensation was variable in nature and “at risk” and 86% of our current CEO’s and 73% of all other continuing NEOs’ total compensation c
onsisted of long-term equity. Our incentive programs reward strong annual financial and operational performance, as well as relative TSR over one-, two-, and three-year performance periods. The charts below demonstrate the fiscal 2018 pay mix between base salary, actual short-term incentives, and targeted long-term equity compensation for the current CEO and all other continuing NEOs.
Current CEO
|
|
Other Continuing NEOs
|
|
|
|
|
2018 Proxy Statement 40
|
Table of Contents
Executive Compensation and Corporate Performance
The chart below highlights the multi-year relationsh
ip between the CEO’s total compensation, the percentage achievement against annual cash incentives as well as the Company’s annual and cumulative Total Shareholder Return.
Company Performance and Total Shareholder Return
vs. CEO Total Compensation
____________________
(1)
|
Total Compensation is based on the amounts in the Summary Compensation Table; the fiscal 2014 - fiscal 2017 data is for Mr. Bass and the fiscal 2018 data is for Dr. Anagnost.
|
(2)
|
TSR shown in boxes is calculated by comparing year-over-
year changes in the closing price of Autodesk’s Common Stock at each fiscal
year-end. T
he green line reflects Autodesk’s cumulative total shareholder return indexed off 100% from the beginning of fiscal 2014
through the end of fiscal 2018.
|
(3)
|
Percentage of achievement against annual cash incentives in place during each fiscal year.
|
Fiscal 2018 Executive Compensation Decisions
Below is a description of the annual compensation decisions made for the NEOs based on results for the just-completed fiscal year.
March
2017
|
|
Base Salary
: The Committee considered an analysis of the base salary for each role, an assessment of each
executive officer’s experience, skills and performance level, and Autodesk’s performance. Based on those factors, the executive officers’ base salaries were increased by 0% to 3% for fiscal 2018.
Equity Awards
: The Committee approved annual equity awards for our NEOs in the form of PSUs and restricted
stock units (“RSUs”). Our NEOs received 50% of their shares in PSUs and 50% in RSUs. The vesting of the PSUs
is contingent upon performance against the metrics used within Autod
esk’s equity incentive plan.
In determining the size of equity awards, the Committee considered the Company’s performance; market data for
each executive; the individual skills, experience, and performance of each executive; and the optimal mix of cash and equity compensation to ensure that equity awards would motivate the creation of long-term value while
satisfying the Committee’s retention objectives
|
March
2018
|
|
Annual Cash Incentive Awards
: Consistent with fiscal 2018 financial results, the Committee determined that,
based on attainment of the performance metrics used within Autodesk’s cash incentive plan, the annual cash
incentive award for our CEO and for our NEOs were paid out at 97.8% of their target award opportunity (for more discussion of cash
awards, see “Annual Short
-
Term Incentive Compensation” below).
|
|
2018 Proxy Statement 41
|
Table of Contents
In conjunction with the executive transition described above, the Committee also made the following compensation decisions described below at various points throughout the year relating to Co-CEO stipends and equity grants, CEO promotion compensation and separation compensation for executives who left the Company.
February
2017
|
|
Bass Transition Agreement
(1)
: In connection with Mr. Bass’ separation from service as President and CEO and
provision of transition services, Mr. Bass received separation payments and benefits that were contractually stipulated under his employment agreement.
Co-CEO Stipends and Equity Grants
: In consideration of their service as Co-CEOs during a transition period, Dr. Anagnost and Mr. Hanspal each received monthly cash stipends and one-time equity grants scheduled to vest 100% on July 1, 2018. In determining stipend amounts, the Committee targeted the Co-
CEOs’ total annual cash
compensation plus stipend to be approximately midway between the Co-
CEOs’ current total annual cash
compensation and the median total annual cash compensation of CEOs from our compensation peer group.
|
June
2017
|
|
Anagnost Employment Agreement
: In connection with the promotion of Dr. Anagnost to President and CEO, he received: a base salary increase to $800,000, an annual cash incentive award target percentage increase to 125% and additional equity grants in the form of RSUs and PSUs. These pay changes were made in reference to relevant market
data, internal pay parity, and Dr. Anagnost’s tenure in the role. The PSU vesting is contingent on the Company’s performance against fiscal 2020 free cash flow per share and ARR goals.
Hanspal Separation Agreement
(1)
: Following Dr. Anagnost’s appointment
as CEO and in connection with Mr.
Hanspal’s separation from service, Mr. Hanspal received separation payments and benefits. These benefits were
consistent with competitive practices pertaining to the separation of long-tenured executives.
|
September
2017
|
|
Becker Separation Agreement
(1)
: After having helped the Board and management transition through the fiscal 2018 management changes, and in connection with Ms. Becker’s separation from service, Ms. Becker received
separation payments and benefits. These benefits were consistent with competitive practices pertaining to the separation of long-tenured executives.
|
____________________
1
|
Compensation was conditioned upon a general release of claims and continued compliance with non-competition, employee non-solicitation, non-disparagement and confidentiality covenants as well as the provision of transition services.
|
Compensation Guiding Principles
The Committee believes that Autodesk’s executive compensation program should be designed to attract, motivate, and r
etain talented executives and should provide a rigorous framework that is tied to stockholder returns, Company performance, long-term strategic corporate goals, and individual performance. The general compensation objectives are to:
●
|
Recruit and retain the highest caliber of executives through competitive rewards;
|
●
|
Motivate executive officers to achieve business and financial goals;
|
●
|
Balance rewards for short- and long-term performance; and
|
●
|
Align rewards with stockholder value creation.
|
|
2018 Proxy Statement 42
|
Table of Contents
Within this framework, the total compensation for each executive officer varies based on multiple dimensions:
●
|
Whether Autodesk achieves its short-term and long-term financial and non-financial objectives, including execution on its business model transition;
|
●
|
Autodesk’s
TSR relative to companies in the S&P Computer Software Select Index and companies in the North American Technology Software Index;
|
●
|
The specific role and responsibility of the officer;
|
●
|
Each individual officer’s skills, competency, contributions and perfo
rmance;
|
●
|
Internal pay parity considerations; and
|
●
|
Retention considerations.
|
The Compensation-Setting Process
The Committee reviews and approves all components of each executive officer’s compensation.
CEO Pay Decisions
As described above under “Executive Transition,” as a result of fiscal 2018 CEO changes, the Committee made compensation
-related decisions throughout the year relating to Co-CEO stipends and equity grants and CEO promotion compensation. In making these decisions, the Committee took into account individual performance assessments, along with competitive compensation data and internal pay parity considerations. The Committee set target levels to be aggressive, yet achievable, with diligent effort during the fiscal year. The Committee formulated recommendations on CEO compensation in consultation with its independent consultant, consulted with the other independent directors, and then approved the CEO compensation.
Executive Officer Pay Decisions
The CEO makes recommendations to the Committee regarding the base salary, annual cash incentive awards, and equity awards
for each executive officer other than himself. These recommendations are based on the CEO’s assessment of each executive officer’s performance during the year, competitive comp
ensation data, internal pay parity and retention considerations. The CEO reports on the performance of the executive officers and their business functions during the year in light of corporate goals and objectives. The CEO bases his evaluation on his knowl
edge of each executive officer’s performance and from others with
knowledge of their performance, including feedback provided by the executive officers and their direct reports. The Human
Resources Group assists the CEO in assessing each executive officer’
s performance and providing market compensation data for each role. In executing the responsibilities set forth in its charter, the Committee relies on a number of resources to provide input to the decision-making process.
|
2018 Proxy Statement 43
|
Table of Contents
Independent consultant
The Committee retained Exequity LLP as its compensation adviser for fiscal 2018. Exequity provided advice and recommendations on many issues: total compensation philosophy; program design, including program goals, components, and metrics; peer data; compensation trends in the high technology sector and general market for senior executives; separation plans; the compensation of the CEO and the other executive officers; and disclosure of our executive pay programs. The Committee has considered the independence of Exequity in light of NASDAQ's listing standards for compensation committee independence and the rules of the SEC. The Committee requested and received a written confirmation from Exequity addressing the independence of the firm and its senior advisers working with the Committee. The Committee discussed these considerations and concluded that the work performed by Exequity did not raise any conflict of interest.
Management
The Committee also consults with management and Autodesk’s Human Resources Group
regarding executive and non-
executive employee compensation plans, including administration of Autodesk’s equity incentive plans.
Competitive Compensation Positioning and Peer Group
To ensure our executive compensation practices are competitive and cons
istent with the Committee’s guiding principles,
Exequity and management provide the Committee with compensation data for each executive role. This data is drawn from a group of companies in relevant industries that compete with Autodesk for executive talen
t (the “compensation peer group”).
Where sufficient data for our compensation peer group was not available, market data from similarly sized San Francisco Bay Area companies was used. The Committee uses this data, as well as information about broader technology industry compensation practices, when deliberating on the compensation of the executive officers.
The compensation peer group is selected based upon multiple criteria, including industry positioning, competition for talent, company size, financial
results and geographic footprint. During Autodesk’s business model transition, Autodesk’s revenue has
been negatively impacted as more revenue is recognized ratably rather than upfront and as new product offerings generally have a lower initial purchase pr
ice. The Committee took this into consideration when analyzing the composition of Autodesk’s peer
group.
|
2018 Proxy Statement 44
|
Table of Contents
The Committee reviews the compensation peer group each year to ensure that the comparisons remain meaningful and relevant.
Based on the Committee’s r
eview, the fiscal 2018 compensation peer group consisted of the following companies:
Company
|
Reported Fiscal Year
|
Revenue ($'s in Billions)
|
Market Capitalization as of
1/31/2018 ($'s in billions)
|
Adobe Systems, Inc.
|
1-Dec-17
|
7.30
|
98.13
|
Akamai Technologies, Inc.
|
31-Dec-17
|
2.50
|
11.38
|
CA, Inc.
|
31-Mar-17
|
4.04
|
14.78
|
Citrix Systems, Inc.
|
31-Dec-17
|
2.82
|
13.33
|
Electronic Arts, Inc.
|
31-Mar-17
|
4.85
|
38.98
|
Intuit Inc.
|
31-Jul-17
|
5.18
|
43.00
|
Juniper Networks, Inc.
|
31-Dec-17
|
5.03
|
9.56
|
Mentor Graphics Corporation
|
31-Jan-17
|
1.28
|
N/A
|
National Instruments Corporation
|
31-Dec-17
|
1.29
|
6.54
|
NetApp, Inc.
|
28-Apr-17
|
5.52
|
16.48
|
Nuance Communications, Inc.
|
30-Sep-17
|
1.94
|
5.23
|
PTC Inc.
|
30-Sep-17
|
1.16
|
8.44
|
Red Hat, Inc.
|
28-Feb-17
|
2.41
|
23.25
|
salesforce.com, inc.
|
31-Jan-18
|
10.48
|
83.14
|
Symantec Corporation
|
31-Mar-17
|
4.02
|
16.92
|
Synopsys, Inc.
|
31-Oct-17
|
2.72
|
13.79
|
Autodesk, Inc.
|
31-Jan-18
|
2.06
|
25.24
|
Autodesk Percentile Ranking
|
|
25%
|
73%
|
In September 2017, the Committee reviewed the compensation peer group that would be used for fiscal 2019 compensation decision making. The Committee determined that each of the peers was still appropriate, except for Mentor Graphics Corporation which was removed as a result of its acquisition by Siemens AG in March 2017. The Committee also chose to add Ansys, Inc and Cadence Design Systems Inc, given their size, industry comparability and the fact that they compete with Autodesk for executive talent.
When determining the base salary, incentive targets, equity grants and target total direct compensation opportunity for each of our NEOs, the Committee references the median data from our compensation peer group for each component and in the aggregate. In practice, actual compensation awards
may be above or below the median levels, depending on Autodesk’s financial and operational performance and each executive officer’s experience, skills and performance. The Committee believes
that referencing the total compensation packages of the companie
s in the compensation peer group keeps Autodesk’s
compensation competitive and within market norms. This also provides flexibility for variances in compensation where
appropriate, based on each executive officer’s leadership, contributions and particular
skills or expertise as well as retention considerations.
|
2018 Proxy Statement 45
|
Table of Contents
Principal Elements of the Executive Compensation Program
The principal elements of Autodesk’s annual executive compensation program are described below.
Element
|
|
Purpose
|
|
Operation
|
|
Payout Range
|
|
Performance Measures
|
Base Salary
|
|
Forms basis for competitive compensation package
|
|
Base salary reflects competitive market conditions, individual performance, and internal parity
|
|
N/A
|
|
None, although performance of the individuals is taken into account by the Committee when setting and reviewing base salary levels
|
Short-term Incentive Opportunities
|
|
Motivate achievement of strategic priorities relating to the business model transition while maintaining our year-over-year non-GAAP spend
|
|
Target percentage determined by competitive market practices and internal parity
Actual bonus payouts are determined by the extent to which performance compares to targeted goals established at the beginning of the performance period
|
|
0% - 150% of target
|
|
Fiscal 2018: Performance against total ARR, net total subscription additions, subscription renewal rate and non-GAAP total spend
|
Performance Stock Unit
awards (“PSUs”)
|
|
Align compensation with key drivers of the business and relative shareholder return
|
|
Size of award determined by competitive market practices, corporate and individual performance and internal parity
|
|
0% - 180% of target shares
|
|
Fiscal 2018: Performance against total ARR, net total subscription additions, subscription renewal rate and non-GAAP total spend adjusted
based upon Autodesk’s TSR
relative to companies in the North American Technology Software Index over one-, two-, and three-year performance periods
|
|
|
Encourage focus on near-term and long-term strategic objectives
|
|
Percentage of shares vesting is determined by the extent to which performance compares to targeted goals established at the beginning of the performance period
|
|
Change in Autodesk stock price
|
|
Autodesk stock price
|
|
|
CEO promotion grant
|
|
Vesting over three years
|
|
0% - 200% of target shares
|
|
For our new CEO’s long
-term promotion PSUs, performance against fiscal 2020 free cash flow per share and ARR
|
Restricted Stock Unit Awards (“RSUs”)
|
|
Encourage focus on long-term shareholder value creation
|
|
Size of award determined by competitive market practices, corporate and individual performance and internal parity and retention considerations
|
|
Change in Autodesk stock price
|
|
Autodesk stock price
|
|
|
Promote retention
|
|
Recipients earn shares if they remain employed through the three-year vesting period
|
|
|
|
|
|
2018 Proxy Statement 46
|
Table of Contents
When setting the goals for the short-term incentive opportunity and the PSUs, the Committee considered the overlap of goals to be appropriate at this time in light of the critical importance of these goals during this stage of the business model transition. The use of relative TSR over one-, two-, and three-year performance periods against market indices differentiates PSUs from the short-term incentive program and aligns those awards with the long-term interests of our stockholders.
Minimizing the use of overlapping metrics was a consideration of the Committee at the times it approved fiscal 2019 incentive
compensation designs and Dr. Anagnost’s long
-term promotion PSUs (which also include free cash flow per share as a metric). As described below in “Fiscal 2019 Executive Incentive Plan,” the annual incentives established for NEOs in fiscal 2019
employ a mix of performance metrics that varies from those used for the PSU awards.
Base Salary and Co-CEO Stipends
Base salary is used to provide the executive officers with a competitive amount of fixed annual cash compensation. The Committee views base salary as a reliable source of income for the executive officers and an important recruiting and retention tool. The Committee sets base salaries at a competitive level that recognizes the scope, responsibility, and skills required of each position, as well as market conditions and internal pay equity.
February 2017
|
|
Co-CEO Stipends
: While serving as interim Co-CEOs, in addition to their annual base salaries, Dr. Anagnost and Mr. Hanspal each received a monthly cash stipend. In determining stipend amounts, the Committee targeted the Co-
CEOs’ total annual cash compensation plus stipend to be
approximately midway between the Co-
CEOs’ current total annual cash compensation and the median total annual cash
compensation of CEOs from our compensation peer group. In light of salary differentials and in order for their annual cash compensation plus stipend to be equivalent, Dr. Anagnost received a monthly stipend of $70,000 and Mr. Hanspal received a monthly stipend of $50,000.
|
March 2017
|
|
Base Salaries
: The Committee considered an analysis of the base salary for each executive role, an assessmen
t of each executive officer’s experience, skills and performance level, and Autodesk’s
performance. As a result, the Committee elected to increase executive officer base salaries by 0% to 3%.
|
June 2017
|
|
Anagnost Employment Agreement
: When Dr. Anagnost was promoted to President and Chief Executive Office, the Committee considered an analysis of market data, internal equity and that Dr. Anagnost was new to his role when setting his base salary. As a result, the Committee increased his base salary to $800,000.
While Dr. Anagnost’s base salary is below the median market position of our compensation peer group, the
Committee expects to increase his base salary over time, commensurate with performance.
|
Annual Short-Term Incentive Compensation
At the beginning of each fiscal year, the Committee establishes target award opportunities, payout metrics and performance targets for the Autodesk, Inc. Executive Incentive Plan. This annual cash incentive is intended to motivate and reward participants for achieving company-wide annual financial and non-financial objectives as well as individual objectives.
Target Award Opportunities and Fiscal 2018 Executive Incentive Plan
The Committee sets the target annual cash incentive award opportunity for each eligible executive officer based on competitive
assessments, the executive’s particular role, and internal parity considerations. Based on the Committee’s review of these
factors, the Committee set the fiscal 2018 cash incentive target for each of the NEOs at the same percentage as it was in fiscal 2017, other than for Dr. Anagnost, whose short-term incentive target was increased when he was appointed Chief Executive
Officer and President. These target opportunities are expressed as a percentage of the NEO’s annualized b
ase salary, and range from 75% to 125%. A NEO may receive an earned award that is greater or less than the target award opportunity, depending
upon Autodesk’s performance.
|
2018 Proxy Statement 47
|
Table of Contents
In fiscal 2018, bonus awards for each of our NEOs were funded under the Autodesk, I
nc. Executive Incentive Plan (“Fiscal 2018 EIP”). Cash bonuses under this plan are generally intended to qualify as tax deductible “performance
-based
compensation” to the extent allowed under Section 162(m) of the Internal Revenue Code. At the beginning of
the fiscal year, the Committee established funding performance thresholds, which, if achieved, would establish maximum Fiscal 2018 EIP funding at 190% of target. For fiscal 2018, the Committee selected total ARR, net total subscription additions and subscription
renewal rates as the funding metrics. Autodesk’s fiscal 2018 performance of $2,054 million in ARR, 0.611 million in net total
subscription additions and 80.9% in total subscription renewal rates exceeded the funding threshold, resulting in the maximum bonus award funding for each executive. The Committee then exercised its negative discretion to reduce the actual bonus awards for each of the participants based on pre-established performance measures (as described below).
Company Performance Measures and Performance
At the beginning of fiscal 2018, the Committee approved Fiscal 2018 EIP performance measures to align our CEO’s and NEOs’ bonus opportunities with the Company’s strategic priorities. The metrics selected align our incentives with the key
drivers of success during the business model transition. In its exercise of negative discretion, the Committee considered the performance attainment versus specific targets to determine payouts. For the CEO and other NEOs, the Committee assessed the performance of the Company against targets set at the beginning of the fiscal year based on the criteria below; the final award could range from 0% to 150% of the target award. This calculation yielded a bonus payout of 97.8% of target, as shown below:
Performance Metric
|
Weighting
|
|
Actual
|
|
Target
|
|
Funding %
|
Total ARR
|
40%
|
|
$2,054M
|
|
$2,050M
|
|
100.8%
|
Net Total Subscription Additions
|
30%
|
|
0.611M
|
|
0.657M
|
|
89.4%
|
Total Subscription Renewal Rate
|
15%
|
|
80.9%
|
|
80.6%
|
|
102.5%
|
Non-GAAP Total Spend
|
15%
|
|
$2,169M
|
|
$2,175M
|
|
102.1%
|
Total
|
100%
|
|
|
|
|
|
97.8%
|
Based on the level of achievement of the performance objectives, in March 2018 the Committee approved short-term incentive awards for the NEOs as follows
(1)
:
|
Short-Term
Incentive
Target as a
Percentage of
Base Salary
|
|
Short-Term
Incentive Target
|
|
Short-Term
Incentive Payout
|
|
Short-Term
Incentive
Payout as a
Percentage of
Target
|
Andrew Anagnost
1
|
75% / 125%
|
|
$
741,014
|
|
$724,711
|
|
97.8%
|
R. Scott Herren
|
75%
|
|
$
440,250
|
|
$430,565
|
|
97.8%
|
Steve M. Blum
|
75%
|
|
$
419,250
|
|
$410,027
|
|
97.8%
|
Pascal Di Fronzo
|
75%
|
|
$
366,750
|
|
$358,682
|
|
97.8%
|
____________________
1
|
Dr. Anagnost’s incentive target and payout were prorated for his base salary and bonus target percentage in each role. No bonus payouts were awarded to Mr. Bass, Mr. Hanspal or Ms. Becker as they terminated prior to end of fiscal 2018.
|
|
2018 Proxy Statement 48
|
Table of Contents
Fiscal 2019 Executive Incentive Plan
In fiscal 2019, the bonus awards for each of our NEOs will continue to be determined under the Autodesk, Inc. Executive Incentive Plan. Near the beginning of the fiscal year, the Committee established total ARR, non-GAAP operating income and absolute stockholder return as the funding metrics.
If the funding metrics are achieved, in its exercise of negative discretion, the Committee will consider the performance attainment versus specific targets to determine payouts. The Committee will assess the financial and operational performance of the Company based on the following metrics and weighting:
Performance Metric
|
Weighting
|
Total ARR
|
70%
|
Non-GAAP Operating Income
|
30%
|
The Committee believes that the metrics selected for fiscal 2019 will align our incentives with the key drivers of success. The final awards for our NEOs could range from 0% to 200% of target, depending on achieved performance level. The Committe
e’s
choice of metrics was also driven by stockholder feedback to minimize the overlap of metrics between the bonus and equity plans and include a profitability metric. As we progress through our business model transition we will continue to evaluate the appropriateness and weighting of these performance metrics.
Long-Term Incentive Compensation
Autodesk uses long-term incentive compensation in the form of equity awards to align executive pay opportunities with stockholder value creation, and to motivate and reward executive officers for effectively executing longer-term strategic and operational objectives.
February 2017 Equity Awards
On February 8, 2017, Mr. Bass stepped down as President and Chief Executive Officer. To ensure Autodesk's continued focus on business performance and technological innovation, the Board formed the Office of the Chief Executive Officer to oversee the Company's day-to-day operations during the transition. Dr. Anagnost and Mr. Hanspal were appointed as Co-CEOs.
In connection with their appointment as interim Co-CEOs, Dr. Anagnost and Mr. Hanspal were each granted the following equity awards which vest 100% on July 1, 2018. The use of RSUs and the vesting schedule was chosen to provide additional retention through the appointment of a new CEO and through our business model transition:
|
Target Value of RSU Award
|
RSU Award (#)
(1)
|
Andrew Anagnost
|
$1,500,000
|
17,936
|
Amar Hanspal
|
$1,500,000
|
17,936
|
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