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Table of Contents
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant ý |
Filed by a Party other than the Registrant o |
Check the appropriate box: |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12
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CyrusOne Inc. |
(Name of Registrant as Specified In Its Charter) |
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
Payment of Filing Fee (Check the appropriate box): |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Date Filed:
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Table of Contents
Table of Contents
Notice of Annual Meeting of Stockholders
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When |
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Where |
Tuesday, May 18, 2021
9:30 AM Central Time (10:30 AM Eastern Time) |
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Virtual Meeting Site:
www.meetingcenter.io/208455171 |
To
our Stockholders:
In
response to continued public health concerns related to the COVID-19 pandemic, the 2021 annual meeting of stockholders of CyrusOne Inc., a Maryland corporation (the "Company" or "CyrusOne")
will be held in a virtual format only, similar to last year's meeting. To access the virtual meeting, you may visit the virtual meeting site at the web address listed above. More detailed instructions
on how to attend the annual meeting virtually are set forth in this proxy statement. The purposes of the meeting are as follows:
- 1.
- To elect eight directors, each to hold office until our 2022 annual meeting of stockholders and until his or her respective
successor is duly elected and qualified;
- 2.
- To approve, on an advisory basis, the compensation of the Company's named executive officers as disclosed in this proxy statement
("Say-on-Pay");
- 3.
- To consider and vote upon, on an advisory basis, whether the Say-on-Pay vote should occur every year, every two years or every
three years;
- 4.
- To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year
ending December 31, 2021; and
- 5.
- To transact such other business as may properly come before the annual meeting.
The
record date for the 2021 annual meeting is March 18, 2021 and only stockholders of record at the close of business on that date will be entitled to notice of, and to vote
at, the meeting and any postponement or adjournment thereof. Stockholders attending the virtual annual meeting will have the same opportunities to participate as they have had at past in-person annual
meetings.
Your vote is important. Whether or not you plan to attend the virtual meeting, please make sure your shares are represented at the meeting. You may cast
your vote and submit your proxy in advance of the meeting by internet, telephone or mail.
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By Internet |
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By Phone |
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By Mail |
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(if you received a paper copy in the mail) |
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Visit www.evisionreports.com/CONE |
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800-652-8683 |
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Complete, sign, date and return proxy card |
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By
Order of the Board of Directors:
ROBERT
M. JACKSON
Executive Vice President, General Counsel and Secretary
April 8, 2021
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to be held on May 18, 2021:
The Company's Proxy Statement and Annual Report on Form 10-K for 2020 are available at:
www.envisionreports.com/CONE
Table of Contents
Table of Contents
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2021
Proxy
Statement
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Table of Contents
2021 Proxy Statement at a Glance
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Proxy Statement Summary
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Proposal
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Board Voting
Recommendation
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Page
Reference
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Election of directors |
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FOR EACH NOMINEE |
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Advisory vote on executive compensation |
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Advisory vote on frequency of advisory vote on executive compensation |
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EVERY YEAR |
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Ratification of appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2021 |
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Corporate Governance Snapshot
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Independent Oversight |
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7 of 8 director nominees are independent directors Chair of the Board is an
independent director Regular executive sessions of independent directors
Active Board and Committee oversight of enterprise risk, including cybersecurity, strategy and ESG matters |
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Board Composition and Diversity |
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Focus on diversity - 25% of director nominees are women; 38% of director nominees are ethnically or gender diverse
Continued
commitment to expanding the gender, racial and ethnic diversity of the board Annual Board and Committee
self-evaluations Mandatory retirement age of 72
Ongoing director
education |
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Stockholder Rights |
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Annual election of all directors; majority-vote director resignation policy |
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One class of shares with each share entitled to one vote |
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Our bylaws may be amended by our stockholders |
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We have opted out of the Maryland control share acquisition statute |
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No stockholders rights plan in effect |
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Stockholder Engagement |
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Annual outreach by Chair of Compensation Committee to largest stockholders Topics of discussion included
governance and compensation practices, including ESG and sustainability, board composition, diversity, and succession planning |
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Sustainability and ESG |
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Published first-annual Sustainability Report in 2020 |
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Reporting in alignment with Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) Standards and Task Force on Climate-related Financial Disclosures (TCFD) |
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Announced Commitment to Zero-Carbon by 2040 |
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Added sustainability metric to 2021 annual incentive plan |
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Announced two net-positive water data centers |
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Nominating & Corporate Governance Committee oversight of corporate social responsibility and ESG matters |
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Compensation Committee oversight of workforce diversity, equity and inclusion |
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2021
Proxy
Statement
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1 |
Table of Contents
2021 Proxy Statement at a Glance
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Track Record of Value Creation
5-Year Cumulative TSR
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Comparison of the cumulative total stockholder return on CyrusOne Inc.'s common stock for the year ended December 31, 2020 with the cumulative total return on the S&P 500 Market Index
and the MSCI US REIT Index (RMZ). The comparison assumes that $100 was invested on December 31, 2015 in CyrusOne Inc.'s common stock and in each of these indices and assumes reinvestment of dividends, if any. |
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2021
Proxy
Statement |
Table of Contents
2021 Proxy Statement at a Glance
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2020 Company Snapshot
Performance-Based Compensation*
- *
- Pay
mix charts reflect annualized base salaries, target bonuses and target LTI awards for current CEO and other NEOs as a group, excluding sign-on component of LTI
grant for CEO and CFO.
Recent Compensation Changes
The
Board welcomes opportunities to discuss our compensation program with stockholders and takes their feedback into consideration as we continue to evolve our compensation program and other
governance policies. Some of these recent changes are highlighted below:
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COMPONENT |
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RECENT CHANGES |
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Annual Incentive Plan |
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Beginning in 2021, NFFO metric replaced with NFFO per share Added annual bookings and
sustainability metrics |
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LTI Awards |
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Beginning with the 2020 LTI program, eliminated the interim annual accelerated vesting feature of performance-based awards
Added a
second TSR metric which measures our TSR performance against a real estate technology peer group Increased the level of performance
required to achieve a target payout, expanded the bands at the threshold and maximum levels, and added an absolute TSR outperformance component |
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2021
Proxy
Statement
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3 |
Table of Contents
2021 Proxy Statement at a Glance
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Living a Sustainable Mission
Sustainability Working Group: Integrating Sustainability & ESG into the Business DNA
Our Sustainability Working Group ("SWG") was established to integrate sustainability and ESG strategy and planning into each function at the Company, to
coordinate cross functionality, and to develop metrics and measure progress. The SWG is co-chaired by our EVP, General Counsel and our Senior Director of Environmental, Health, Safety &
Sustainability, and its membership consists of the leaders of functions across the company, including those depicted below. The SWG is overseen by the CEO and updates on the SWG's activities are
provided to the Board of Directors on a quarterly basis and the senior management team on a monthly basis.
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2021
Proxy
Statement |
Table of Contents
2021 Proxy Statement at a Glance
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2021
Proxy
Statement |
Table of Contents
Proposal 1: Election of Eight Directors
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Proposal 1: Election of Eight Directors
The
members of CyrusOne's Board of Directors are elected each year at the annual meeting. The Board currently has eight directors. Upon the recommendation of the Nominating and Corporate Governance
Committee, the Board has nominated the eight individuals named below for election at the 2021 annual meeting (the "Nominees"), each of whom currently serves as a director, except for Denise Olsen. Ms.
Olsen is currently senior managing director and a member of the investment committee of GEM Realty Capital, an integrated real estate investment firm that invests in private market assets and publicly
traded securities. The Board is excited to welcome Ms. Olsen to the Board.
The
Board would also like to recognize and thank director Michael A. Klayko for his service, contributions and leadership. Mr. Klayko is retiring from the Board, and his service on the Board will end
upon completion of his current term at the annual meeting.
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Director |
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Independent |
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Board Committees |
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Occupation |
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Bruce W. Duncan |
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President & CEO, CyrusOne |
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2020 |
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No |
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Alex Shumate* |
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Managing Partner, North America, Squire Patton Boggs (US) LLP |
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Yes |
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(C) |
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David H. Ferdman |
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Managing Partner of DTB Capital Partners and Chief Executive Officer of Cybraics, Inc. |
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Yes |
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John W. Gamble, Jr. |
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Corporate Vice President & Chief Financial Officer, Equifax Inc. |
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2014 |
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Yes |
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T. Tod Nielsen |
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Former President & Chief Executive Officer, Financial Force |
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2013 |
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Yes |
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(C) |
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Denise Olsen |
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Senior Managing Director, GEM Realty Capital |
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Yes |
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William E. Sullivan |
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Former Chief Financial Officer & Treasurer, Purdue University |
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2013 |
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Yes |
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(C) |
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Lynn A. Wentworth |
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Former Senior Vice President, Chief Financial Officer & Treasurer, BlueLinx Holdings Inc. |
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2014 |
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Yes |
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(C) |
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Chair of the Board and
Lead Independent Director |
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A = Audit
C = Compensation
N = Nominating/Governance
T = Transaction
E = Executive
(C) Denotes committee chair
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Biographical
information about the Nominees and the experience, qualifications, attributes, and skills considered by our Nominating and Corporate Governance Committee and the Board of Directors in
determining that the Nominee should serve as a director appears below. If any Nominee is unable to serve or declines to do so, the discretionary authority provided in the proxy will be exercised by
the proxy holders to vote for a substitute or substitutes nominated by the Board of Directors, or the Board of Directors, on the recommendation of the Nominating and Corporate Governance Committee,
may reduce the size of the Board and number of nominees.
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The Board of Directors recommends
a vote FOR each Nominee. |
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2021
Proxy
Statement |
Table of Contents
Proposal 1: Election of Eight Directors
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Nominees for Election to the Board of Directors
The
biographical descriptions below set forth certain information with respect to each of the Nominees.
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President & CEO
Board Committees: Executive
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Bruce W. Duncan is the President and Chief Executive Officer, and a member of the Board of Directors, of CyrusOne. Prior to joining CyrusOne in July 2020, Mr. Duncan was the Chair of the Board and the former
President and Chief Executive Officer of First Industrial Realty Trust, Inc. ("First Industrial"), a REIT that engages in the ownership, management, acquisition, sale, development and redevelopment of industrial real estate properties.
Mr. Duncan was the President and Chief Executive Officer of First Industrial from 2009 to 2016 and had served as a director since 2009 and Chair of the Board since January 2016. Mr. Duncan was a private investor from January 2006 to January
2009. Earlier in his career, Mr. Duncan held various positions at Equity Residential, one of the largest publicly traded apartment REITs in the United States, including Chief Executive Officer and Trustee from January 2003 to May 2005. From
December 1995 to March 2000, Mr. Duncan served as Chair, President and Chief Executive Officer of Cadillac Fairview Corporation, one of North America's largest owners and developers of retail and office properties. Mr. Duncan is a director of Boston Properties, Inc., the largest publicly-held developer and owner of Class A office properties in the United States, and was
chair of its compensation committee prior to joining CyrusOne. Mr. Duncan was Chair of the Board of Directors of Starwood Hotels & Resorts Worldwide, Inc. from May 2005 until its acquisition by Marriott International, Inc. in
September 2016. Mr. Duncan was a director of Marriott International, Inc. from 2016 until summer of 2020 and resigned as the Chair of First Industrial in July 2020. Mr. Duncan has served as a director of the T. Rowe Price Mutual Funds
since September 2013. Mr. Duncan has been a senior advisor to Kohlberg Kravis Roberts & Co., a global investment firm, since November 2018. Mr. Duncan received a BA in Economics from Kenyon College and an MBA in Finance from the University of Chicago. Qualifications/Attributes
Mr. Duncan has more than 40 years of diverse real estate management, development and global investment experience across numerous property types, including as a chief executive officer and a director of other publicly traded
companies. |
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2021
Proxy
Statement
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7 |
Table of Contents
Proposal 1: Election of Eight Directors
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Chair of the Board &
Lead Independent Director Board Committees: Executive
(Chair) Nominating and
Corporate Governance
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Mr. Shumate is a Senior Partner of Squire Patton Boggs (US) LLP, an international law firm, where he has served as the Managing Partner, North America, since 2009. He joined Squire Patton Boggs in 1988 and he served
as the Managing Partner of its Columbus, Ohio office from 1991 to 2021. He is a former member of the Board of Trustees of The Ohio State University, having served three terms; and he twice served as Chair of the Board, most recently from 2015 to
2020. Mr. Shumate is the lead independent director of The J.M. Smucker Company and chair of the board's Nominating, Governance and Corporate Responsibility Committee. He previously served as a director of the Wm. Wrigley Jr. Company from 1998
until its acquisition in 2008, of Nationwide Financial Services from 2002 until its acquisition in 2009, and of Cincinnati Bell Inc. from 2005 to January 2013. Prior to joining Squire Patton Boggs, Mr. Shumate served as chief counsel and
deputy chief of staff to the Governor of the State of Ohio and as assistant attorney general, State of Ohio. Qualifications
Mr. Shumate brings to our Board of Directors demonstrated managerial ability and a thorough understanding of the principles of good corporate governance. |
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Board Committees: Transaction
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Mr. Ferdman is a Managing Partner of DTB Capital Partners, a Texas based private investment firm managing a portfolio of private investments, and has served as the CEO of Cybraics, an advanced detection cyber security
company, since December 2020. Mr. Ferdman was a co-founder of CyrusOne and served as President & Chief Executive Officer from 2000 until June 2010. Mr. Ferdman served as the President until August 2011 and served as the Chief
Strategy Officer until January 2013. Upon consummation of our initial public offering, Mr. Ferdman resigned from his employment with the Company. Prior to founding CyrusOne, Mr. Ferdman was the Chief Operating Officer and co-founder of UWI
Association Programs (d/b/a Eclipse Telecommunications), a facilities-based telecommunications service provider. As Chief Operating Officer of UWI, Mr. Ferdman was instrumental in the company's rapid growth, which culminated in its acquisition
by IXC Communications (now part of Level 3 Communications Inc.) in 1998. Mr. Ferdman is also a director of Circuit of the Americas, Quality Uptime Services, and Cybraics, Inc. Qualifications
Mr. Ferdman brings to our Board of Directors a comprehensive understanding of our business coupled with extensive experience in the data center industry. |
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2021
Proxy
Statement |
Table of Contents
Proposal 1: Election of Eight Directors
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Board Committees: Audit Executive
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Mr. Gamble is Corporate Vice President & Chief Financial Officer of Equifax Inc., a global data, analytics and technology company, where he is responsible for corporate finance, accounting, treasury, tax,
internal audit, investor relations, global real estate and global procurement. From September 2005 to May 2014, Mr. Gamble was Executive Vice President & Chief Financial Officer for Lexmark International, Inc. In addition to
corporate finance functions, he was responsible for Lexmark's investor relations, information technology, strategy and development, and internal audit and security functions. Prior to joining Lexmark, Mr. Gamble was executive vice president and
chief financial officer of Agere Systems, Inc. Mr. Gamble also served in finance leadership roles with AlliedSignal, Inc., and then Honeywell International, Inc., following the merger of the two entities. Earlier, Mr. Gamble
served in a variety of finance capacities with General Motors. Mr. Gamble began his career as an electrical engineer with Bethlehem Steel Corporation. Qualifications
Mr. Gamble brings to our Board of Directors extensive knowledge regarding financial management and the information technology market. |
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Board Committees: Compensation
(Chair) Executive
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Mr. Nielsen served as the President & Chief Executive Officer and a member of the board of directors of FinancialForce, a private cloud ERP vendor, from January 2017 until his retirement at the end of 2020.
Mr. Nielsen served as Chief Executive Officer of Heroku, a cloud application development company that was acquired by Salesforce in 2011, and as Executive Vice President of Platform at Salesforce from June 2013 to June 2016. Prior to that,
Mr. Nielsen was Co-President, Applications Platform Group at VMware, Inc. Mr. Nielsen served as VMware's Chief Operating Officer from January 2009 to January 2013. Prior to that, he served as President and Chief Executive Officer of
Borland Software Corporation from November 2005 to December 2008. From June 2005 to November 2005, Mr. Nielsen served as Senior Vice President, Marketing and Global Sales Support for Oracle Corporation, an enterprise software company. From
August 2001 to August 2004, Mr. Nielsen served in various positions at BEA Systems, Inc., a provider of application infrastructure software, including Chief Marketing Officer and Executive Vice President, Engineering. Mr. Nielsen also
spent 12 years with Microsoft Corporation in various roles, including General Manager of Database and Developer Tools, Vice President of Developer Tools, and at the time of his departure, Vice President of Microsoft's platform group.
Mr. Nielsen is a current director of Tech Data, and former director of BTI Systems, MyEdu Corp., Fortify Software and Club Holdings, LLC. Qualifications
Mr. Nielsen brings to our Board of Directors a strong technical background in software development, coupled with extensive management experience and knowledge of the information technology market. |
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2021
Proxy
Statement
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9 |
Table of Contents
Proposal 1: Election of Eight Directors
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New Nominee for Director
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Ms. Olsen is senior managing director and a member of the investment committee of GEM Realty Capital, an integrated real estate investment firm that invests in private market assets and publicly traded securities, where
she has served since 1996. Ms. Olsen oversees business development for GEM Realty Capital and is also responsible for investor relations, reporting and communications for the firm. Prior to joining GEM Realty Capital, Ms. Olsen was Vice
President at EVEREN Securities, serving in its Real Estate Corporate Finance Group. Earlier in her career, Ms. Olsen served in various capacities at JMB Realty Corporation, including Senior Portfolio Manager of corporate mixed-use developments
and as a member of the acquisitions group. Ms. Olsen is a director and member of the audit committee of First Industrial Realty Trust, Inc., a
REIT that engages in the ownership, management, acquisition, sale, development and redevelopment of industrial real estate properties. Ms. Olsen is a member of the Executive Committee of The Samuel Zell and Robert Lurie Real Estate Center at the
Wharton School at the University of Pennsylvania and serves on the Investment Committee of The Harry and Jeanette Weinberg Foundation. Qualifications
Ms. Olsen's significant experience in real estate investment and operations, coupled with her financial expertise, will be a valuable asset to the Board of Directors. |
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Board Committees: Nominating
and
Corporate Governance
(Chair) Audit
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Mr. Sullivan served as the Chief Financial Officer & Treasurer for Purdue University in Indiana from June 2014 until his retirement at the end of 2019. Mr. Sullivan served as the Chief Financial Officer of
Prologis Inc., a REIT operating as an owner, manager and developer of distribution facilities, from March 2007 to May 2012. Prior to joining Prologis, Mr. Sullivan was the founder and President of Greenwood Advisors, Inc., a private
financial consulting and advisory firm, from 2005 to 2007. Prior to that, Mr. Sullivan served as the Chair (2001 to 2007) & Chief Executive Officer (2001 to 2005) of SiteStuff, Inc., a procurement solutions company specializing in
real estate property and facility management. Mr. Sullivan worked for Jones Lang LaSalle Incorporated, and its predecessor, LaSalle Partners, in a variety of positions from 1984 to 2001, including as Chief Financial Officer from 1997 to 2001 and
as a member of the Board of Directors from 1997 to 1999. Prior to joining Jones Lang LaSalle, Mr. Sullivan was a member of the Communications Lending Group of the First National Bank of Chicago and also served as a member of the tax division of
Ernst & Ernst LLP, a predecessor to Ernst & Young LLP. Mr. Sullivan has also served as a director and audit committee chair of Jones Lang LaSalle Income Property Trust, Inc. since September 2012 and served as a
director of Club Corp. from August 2013 until September 2017. Qualifications
Mr. Sullivan brings to our Board of Directors a comprehensive understanding of the commercial real estate industry coupled with extensive REIT management experience. |
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2021
Proxy
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Table of Contents
Proposal 1: Election of Eight Directors
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Board Committees: Audit
(Chair) Compensation Transaction
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Ms. Wentworth served as Senior Vice President, Chief Financial Officer & Treasurer of BlueLinx Holdings Inc. (a building products distributor) from 2007 until her retirement in 2008. Prior to joining
BlueLinx, Ms. Wentworth served as Vice President and Chief Financial Officer for BellSouth Corporation's Communications Group and held various other positions at BellSouth from 1985 to 2007. Ms. Wentworth began her career at
Coopers & Lybrand, where she served in both the audit and tax divisions. Ms. Wentworth is a certified public accountant licensed in the state of Georgia. Ms. Wentworth chairs the Board of Directors and is a member of the audit
committee of Cincinnati Bell. Ms. Wentworth also serves as a director and chair of the audit committee of Graphic Packaging Holding Company. Qualifications
Ms. Wentworth brings to our Board of Directors extensive knowledge regarding complex financial, accounting and corporate governance matters affecting large corporations. |
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Proxy
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11 |
Table of Contents
Proposal 2: Advisory Vote on Executive Compensation
Pursuant
to Section 14A(a)(1) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we are asking our stockholders to approve, on an advisory basis, the compensation of the
Company's named executive officers ("NEOs") as described in this proxy statement ("Say-on-Pay").
Our
executive compensation program rewards performance, supports our business strategies, discourages excessive risk-taking, makes us competitive for top talent among our peers and other relevant
enterprises, while at the same time creates an ownership culture that aligns our executives' interests with the long-term interests of our stockholders. Our Compensation Discussion and Analysis and
the related compensation tables describe in detail the components of our executive compensation
program and the process by which our Compensation Committee makes executive compensation decisions. Highlights of our program include the following:
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- we support a culture committed to paying for performance where compensation is commensurate with the results achieved
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- we cap individual payouts under our executive compensation plans
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- other than limited exceptions for new hires, we do not guarantee incentive compensation under our annual cash bonus plan or long-term incentive
plan
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- clawback policies allow recovery of certain compensation payments and proceeds from executives in the event of a significant restatement of
financial results
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- we do not provide "single-trigger" change-in-control vesting on equity awards or severance
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- we do not provide gross-ups to cover personal income taxes that pertain to change in control or severance benefits
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- we do not provide special executive retirement programs
PERFORMANCE-BASED COMPENSATION*
- *
- Pay
mix charts reflect annualized base salaries, target bonuses and target LTI awards for current CEO and other NEOs as a group, excluding sign-on component of LTI
grant for CEO and CFO
At our 2020 annual meeting of stockholders, approximately 91.7% of the votes cast were in favor of the advisory vote on the 2019 compensation of our NEOs.
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Table of Contents
We
are asking our stockholders to approve the following non-binding advisory resolution:
"RESOLVED, that the stockholders of CyrusOne Inc. approve, on an advisory basis, the compensation of CyrusOne Inc.'s named executive
officers, as disclosed pursuant to Item 402 of Regulation S-K of the
rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, Summary Compensation Table and other related tables and disclosures."
While
the vote is non-binding, we highly value the opinions of our stockholders and the Compensation Committee will consider the outcome of this advisory vote in connection with future executive
compensation decisions.
The
Board has adopted a policy of providing annual advisory votes on the compensation of our NEOs. Subject to the Board of Directors' determination with respect to the frequency of future Say-on-Pay
votes as discussed in Proposal 3, the Board will present stockholders with the next advisory Say-on-Pay vote at our 2022 annual meeting of stockholders.
This
year, as required by Section 14A(a)(2) of the Exchange Act, we are also providing our stockholders with an advisory vote indicating how frequently we should include a Say-on-Pay vote in
our annual proxy statement, that is, whether stockholders would prefer an advisory vote on the compensation of our NEOs once every year, every two years or every three years. See "Proposal 3
Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation" on page 14 of this Proxy Statement.
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The Board of Directors recommends
a vote FOR the approval of the advisory
resolution on executive compensation. |
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Proxy
Statement
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13 |
Table of Contents
Proposal 3: Advisory Vote on Frequency of Advisory Vote on Executive Compensation
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Proposal 3: Advisory Vote on Frequency of Advisory Vote on Executive Compensation
As
required by Section 14A(a)(2) of the Exchange Act, the Company's stockholders have the opportunity to indicate, on an advisory basis, their views as to the frequency with which stockholders
should be presented with a Say-on-Pay vote. In particular, we are asking stockholders to vote on whether future Say-on-Pay votes should occur every year, every two years, or every three years.
Stockholders may specify one of four choices for this proposal on the proxy card: every year, every two years, every three years, or abstain.
Stockholders
have voted on an advisory Say-on-Pay vote at each annual meeting of stockholders held since 2015, and with respect to this proposal on the frequency of future Say-on-Pay votes, the Board
recommends that stockholders vote "FOR" holding the Say-on-Pay vote on an annual basis.
Stockholders
are not voting to approve or disapprove the Board's recommendation. Although advisory and not binding, the Compensation Committee and the Board will take into account the outcome of this
vote when considering the frequency with which to hold Say-on-Pay votes. The Board will disclose its decision as to the frequency of future Say-on-Pay votes in accordance with the timing specified by
Form 8-K. The Board expects to present stockholders with the next advisory vote on how frequently the Say-on-Pay vote should be held at our 2027 annual meeting of stockholders.
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The Board of Directors recommends
a vote FOR "EVERY YEAR" with respect to the frequency
of future Say-on-Pay votes. |
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Proxy
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Table of Contents
Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm
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Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm
The
Audit Committee of the Board of Directors has appointed Deloitte & Touche LLP ("Deloitte") to serve as the Company's independent registered public accounting firm for the year ending
December 31, 2021, and the Board of Directors is asking stockholders to ratify this appointment. Although current law, rules and regulations, as well as the Audit Committee Charter, require the
Company's independent registered public accounting firm to be engaged, retained and supervised by the Audit Committee, the Board of Directors considers the selection of the independent registered
public accounting firm to be an important matter of stockholder concern and is submitting the appointment of Deloitte for ratification by stockholders as a matter of good corporate practice. If the
stockholders fail to ratify the appointment, the Audit Committee may reconsider whether or not to retain Deloitte in the future. Even if the appointment is ratified, the Audit Committee may, in its
discretion, appoint a different independent registered public accounting firm.
Deloitte
has served as the Company's independent registered public accounting firm since 2011.
Fee Disclosure
The following is a summary of the fees billed by Deloitte for professional services rendered for the years ended December 31, 2020 and
December 31, 2019:
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Year Ended December 31, 2020
($) |
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Year Ended December 31, 2019
($) |
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Audit Fees |
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1,833,515 |
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1,639,351 |
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Audit Related Fees |
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142,000 |
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183,048 |
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Tax Fees |
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All Other Fees |
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Total |
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1,975,515 |
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1,822,399 |
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Audit Fees
"Audit Fees" consist of fees and related expenses billed for professional services rendered for the audit of the financial statements and services that are
normally provided by Deloitte in connection with statutory and regulatory filings or engagements. For example, audit fees include fees for professional services rendered in connection with quarterly
and annual reports, and the issuance of consents by Deloitte to be named in our registration statements and to the use of their audit report in the registration statements.
Audit-Related Fees
"Audit-Related Fees" consist of fees and related expenses for products and services other than services described under "Audit Fees", "Tax Fees" and "All
Other Fees". These services included, among others, due diligence related to completed and potential acquisitions, accounting consultations that were not required by statute or regulation and
consultations concerning financial accounting and reporting.
Tax Fees
"Tax Fees" consist of fees and related expenses billed for professional services for tax compliance, tax advice and tax planning. These services include
assistance regarding federal and state tax compliance and tax planning and structuring.
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15 |
Table of Contents
Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm
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Pre-Approval Policy
All audit, tax and other services provided to us by Deloitte were reviewed and pre-approved by the Audit Committee or a member of the Audit Committee
designated by the full committee to pre-approve such services.
Generally,
the scope of the work to be performed by Deloitte, and the proposed fees associated with the work, are reviewed by management. The proposed work and associated fees are then presented to
the Audit Committee for review, and if deemed appropriate, approved. The Audit Committee in its discretion meets with both Deloitte and with management together and, if needed, separately, prior to
giving its approval. For approval of minor adjustments to the scope of work or fees, the Audit Committee in its discretion may delegate approval to its chair. The Audit Committee or designated member
concluded that the provision of such services by Deloitte was compatible with the maintenance of that firm's independence in the conduct of its auditing functions.
A
representative of Deloitte will attend the virtual annual meeting, will be given the opportunity to make a statement if he or she so desires and is expected to be available to respond to appropriate
questions.
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The Board of Directors recommends
a vote FOR the ratification of the appointment
of Deloitte & Touche LLP as the Company's
independent registered public accounting firm for 2021. |
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Table of Contents
Audit Committee Report
The
following is a report by the Audit Committee regarding the responsibilities and functions of the Audit Committee.
The
Audit Committee oversees the Company's financial reporting process on behalf of the Board of Directors, in accordance with the Audit Committee Charter adopted by the Board. All members of the
Audit Committee are independent under applicable SEC rules and Nasdaq listing standards related to service on audit committees, and all three members of the Audit Committee are "audit committee
financial experts" as defined by SEC rules. Management is responsible for the preparation of the Company's financial statements and the financial reporting process, including implementing and
maintaining effective internal control over financial reporting and for the assessment of, and reporting on, the effectiveness of internal control over financial reporting. The Company's independent
registered public accounting firm, Deloitte, is responsible for expressing an opinion on the conformity of the Company's audited financial statements and financial statement schedules with accounting
principles generally accepted in the United States of America.
The
Audit Committee is responsible for the appointment, compensation and oversight of our independent auditor. Deloitte has served as the Company's independent auditor since 2011. In fulfilling its
oversight responsibilities, the Audit Committee reviewed with management and Deloitte the audited financial statements for the year ended December 31, 2020 contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 2020, and discussed with management the quality, not just the acceptability, of the accounting principles, the reasonableness of
significant judgments and the clarity of disclosures in the financial statements. The Audit Committee also reviewed and discussed with management and Deloitte the disclosures made in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and "Controls and Procedures" included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2020.
In
addition, the Audit Committee received and discussed the written disclosures and the letter from Deloitte that are required by applicable requirements of the Public Company Accounting Oversight
Board ("PCAOB") regarding the firm's communications with the Audit Committee concerning independence, discussed with Deloitte the firm's independence from management and the Audit Committee, and
discussed with Deloitte the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. In reviewing the independence of Deloitte, the Audit Committee considers the
non-audit fees paid to Deloitte, if any, during the year.
In
reliance on the reviews and discussions referred to above, prior to the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2020 with the SEC, the Audit
Committee recommended to the Board of Directors (and the Board approved) that the audited financial statements be included in such Annual Report for filing with the SEC.
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Submitted by the Audit Committee
of the Board of Directors |
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Lynn A. Wentworth (Chair)
John W. Gamble, Jr.
William E. Sullivan
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2021
Proxy
Statement
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17 |
Table of Contents
Executive Officers
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Name |
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Position(s) |
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Age |
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Bruce W. Duncan |
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President & CEO |
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69 |
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Katherine Motlagh |
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Executive Vice President & Chief Financial Officer |
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47 |
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John P. Hatem |
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Executive Vice President & Chief Operating Officer |
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46 |
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Robert M. Jackson |
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Executive Vice President, General Counsel & Secretary |
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53 |
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For
biographical information about Bruce W. Duncan, see "Proposal 1: Election of Eight DirectorsNominees for Election to the Board of Directors" above.
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Executive Vice President &
Chief Financial Officer Education: BS/MS -
Finance Academy in Moscow, Russia MBA - American University in Moscow
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Katherine Motlagh was appointed Executive Vice President and Chief Financial Officer in October 2020. Prior to joining the Company, Ms. Motlagh was Chief Financial Officer for the Europe,
Africa and Latin America regions at American Tower Corporation, a global infrastructure REIT which develops, owns, and operates multitenant communications real estate, where she was responsible for providing strategic leadership and oversight of
finance activities, periodic financial planning, reporting and analysis and management of operational finance and accounting functions, tax planning and internal controls and compliance for international businesses in 18 countries. Before joining
American Tower Corporation in 2015, Ms. Motlagh served as Customer Unit CFO at Ericsson, Inc. and as Divisional CFO/Senior Business Controller at Nokia, Inc. Ms. Motlagh has also held a variety of finance and accounting leadership
roles at Nextel Communications, Inc., AmerisourceBergen Corporation and Coopers & Lybrand, L.L.P. (now PricewaterhouseCoopers, LLP). Ms. Motlagh is both a licensed Certified Public Accountant and a Certified Management
Accountant. |
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Table of Contents
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Executive Vice President &
Chief Operating Officer Education: Texas Tech
University
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John P. Hatem was appointed Executive Vice President and Chief Operating Officer in October 2020. Mr Hatem previously served as the Company's Executive Vice President of Design,
Construction and Operations, a position he held from December 2015 to April 2019. Mr. Hatem joined the Company in 2011 to oversee data center design and construction, holding positions of increasing responsibility through his promotion in
December 2015. From August 2019 through July 2020, Mr. Hatem served as an independent data center consultant and served as President of Development for Commonwealth Development Services LLC in August 2020 and as an advisor for viaPhoton
from August 2020 to October 2020. Mr. Hatem started his career as a network operations engineer and he has worked with some of the largest financial companies in the world, including JPMorgan Chase & Co. (formerly Bear
Stearns & Co. Inc. ("Bear Stearns")), Deutsche Bank, and Morgan Stanley. As a managing director at Bear Stearns, he was responsible for the strategic design, planning and control of vital data centers worldwide. Prior to joining
the Company in 2011, he served as the director of design and construction for ConceptCSI Global Data Center Solutions. |
Executive Vice President,
General Counsel &
Secretary Education: BS - Indiana
University JD - University of
Missouri-Kansas City LLM -University of
Florida
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Robert M. Jackson has served as our Executive Vice President, General Counsel & Secretary since August
2015. Prior to joining CyrusOne, Mr. Jackson served as Executive Vice President & Chief Administrative Officer of Storage Post, a privately held owner and operator of self-storage facilities, from April 2014 to July 2015, where he was
responsible for legal, accounting, human resources and risk management. Prior to that, from December 2004 to September 2012, Mr. Jackson was Senior Vice President, General Counsel & Corporate Secretary of Cousins Properties Incorporated,
a NYSE-listed REIT, where he was responsible for legal, human resources, information technology and risk management. Mr. Jackson was previously a partner at Troutman Sanders LLP (now named Troutman Pepper LLP), an international law
firm headquartered in Atlanta, Georgia. |
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19 |
Table of Contents
Corporate Governance
Notable
features of our corporate governance structure include the following:
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- the Board of Directors is not classified; instead, each of our directors is subject to election annually
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- as a condition to being nominated, each director nominee must agree to offer to resign if he or she receives a greater number of votes
"withheld" than votes "for" his or her election as a director in an uncontested election
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- 7 of 8 current directors (other than Mr. Duncan, our President & CEO) are "independent" within the meaning of the Nasdaq listing
standards
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- the Board has a mandatory retirement age (72)
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- the Board has separated the positions of Chair and CEO, with an independent director serving as Chair (as well as Lead Independent Director)
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- we have opted out of the control share acquisition statute of the Maryland General Corporation Law
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- we have no stockholder rights plan in effect
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- our Bylaws may be amended by our stockholders by the affirmative vote of a majority of the votes entitled to be cast on the matter
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- our independent directors meet regularly in executive sessions without the presence of management
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- each of the members of the Audit Committee and the Compensation Committee meets the applicable heightened independence standards of the federal
securities laws and Nasdaq listing standards for service on those committees
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- each member of the Audit Committee qualifies as an "audit committee financial expert" as defined by SEC rules
Role of the Board in Risk Oversight
One of the key functions of the Board of Directors is informed oversight of our enterprise risk management process. The Board administers this
oversight function directly, with support from other standing committees of the Board, each of which addresses risks specific to its respective areas of oversight. In particular, among other things,
the Audit Committee has the responsibility to consider and discuss our major financial and regulatory risk exposures (including cybersecurity) and the steps our management has taken to identify,
assess, monitor and mitigate these exposures, including the process by which risk assessment and management is undertaken. The Audit Committee also reviews and evaluates the performance of our
internal audit function and the system of internal controls and the results of internal audits as well as oversees and monitors compliance with the Company's policy on related party transactions, our
executives' compliance with the Company's code of business conduct and ethics, and the Company's ethics and compliance reporting helpline. The Compensation Committee oversees succession planning for
our executive officers and assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking. The Nominating and Corporate Governance
Committee monitors the effectiveness of our corporate governance guidelines, the Company's compliance with applicable corporate governance requirements, and the Company's corporate social
responsibility policies and practices. The Transaction Committee assists the Board with its oversight function in reviewing strategic transactions and capital allocations that arise between regularly
scheduled Board meetings, as delegated by the Board.
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Table of Contents
Board Leadership
The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide
independent oversight of management. The Board understands that there is no single, generally accepted approach to providing Board leadership and the right Board leadership structure may vary as
circumstances warrant. Consistent with this understanding, the Board of Directors considers its leadership structure on an annual basis.
Since
June 2014, Alex Shumate, an independent director, has served as our Chair of the Board of Directors and lead independent director. Based on its most recent review of our leadership structure and
the needs of the Company, the Board continues to believe that having Mr. Shumate serving in this position is optimal because it provides our Company with strong, effective and consistent
leadership. Furthermore, our corporate governance guidelines provide that it is the Board's general policy that the positions of Chair of the Board and CEO should be held by separate persons as an aid
to the Board's oversight of management.
In
considering its leadership structure, the Board has taken a number of factors into account. The Board, which consists solely of independent directors other than Mr. Duncan, exercises a
strong, self-governing oversight function. Further, each committee, other than the Executive Committee, is comprised entirely of independent directors, enhancing the Board's oversight function. A
number of Board and committee processes and procedures, including regular executive sessions of independent directors and a regular review of our executive officers' performance, provide substantial
independent oversight of our management's performance. Finally, under our Bylaws and corporate governance guidelines, the Board has the ability to change this structure, should it deem doing so to be
appropriate and in the best interests of our Company. The Board believes that these factors currently provide the appropriate balance between the independent authority of those who oversee our Company
and those who manage it on a day-to-day basis.
The
Chair of the Board presides at all meetings of the Board of Directors, unless otherwise prescribed. The Chair performs such other duties, and exercises such powers, as from time to time shall be
prescribed in our Bylaws or by the Board of Directors.
Director Independence
In accordance with the corporate governance listing standards of Nasdaq and our corporate governance guidelines, the Board, upon the
recommendation of the Nominating and Corporate Governance Committee, affirmatively evaluates and determines the independence of each director and each nominee for election. Based on an analysis of
information supplied by the directors, and other information including the matters set forth in "Certain Relationships and Related Transactions," the Board evaluates whether any director has any
relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Based
on these standards, the Board affirmatively determined that each of the following directors is independent: Alex Shumate, David H. Ferdman, John W. Gamble, Jr., Michael A. Klayko, T. Tod
Nielsen, William E. Sullivan and Lynn A. Wentworth. Based on these standards, the Board also affirmatively determined that Denise Olsen, whom the Board is nominating as a director for the first time
this year, is independent. In determining Mr. Klayko's independence, the Board has considered the Company's employment of Mr. Klayko's son-in-law as an account director in the Company's
sales organization and determined that such employment did not interfere with the exercise of independent judgment by Mr. Klayko in carrying out his responsibilities as a director of the
Company. Mr. Klayko's son-in-law is not an officer of the Company and his employment was reviewed and approved by the Audit Committee of the Board pursuant to the Company's Policy on Related
Party Transactions. For 2020, Mr. Klayko's son-in-law's compensation was approximately $234,000 and this relationship is disclosed below in "Certain Relationships and Related
Transactions Review and Approval of
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Table of Contents
Transactions
with Related Persons". Mr. Klayko is retiring from the Board, and his service on our Board will end upon completion of his current term at the annual meeting in May 2021.
The
Board determined that Mr. Duncan is not independent because he is our President & CEO.
Board Meetings
In 2020, the Board of Directors held 13 meetings, the Audit Committee held 5 meetings, the Compensation Committee held 8 meetings, and the
Nominating and Corporate Governance Committee held 6 meetings. The Transaction Committee and the Executive Committee did not meet during 2020. Each director attended over 75% of the aggregate of the
total number of meetings of the Board and his or her respective committee(s) in 2020, in each case during the periods which he or she served.
Although
we do not have a policy requiring directors' attendance at annual meetings of stockholders, they are expected to do so. Each of our directors who were then on the Board attended our 2020
annual meeting of stockholders.
The
independent directors of the Board and the committees meet regularly in independent sessions without management or non-independent directors present. Generally, these executive sessions follow
after each quarterly meeting of the Board and each committee. Alex Shumate, our Chair and lead independent director, presides over such independent, non-management sessions of the Board. In 2020, the
independent directors met at least four times in such independent sessions. As deemed necessary, directors also discuss matters informally between Board and committee meetings.
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22 |
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2021
Proxy
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Table of Contents
Board Committees
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Audit Committee |
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Current Members: |
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The Audit Committee helps ensure the integrity of our accounting and financial reporting processes and our financial statements, the qualifications and independence of our independent auditor, the performance of our
internal audit function and independent auditors, as well as our compliance with legal and regulatory requirements and our overall risk profile. The Audit Committee selects, approves compensation of, assists and meets with the independent auditor,
oversees each annual audit and quarterly review, discusses with management disclosures relating to our internal controls over financial reporting and prepares the report that federal securities laws require be included in our annual proxy
statement. |
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Ms. Wentworth (chair)* Mr. Gamble* Mr. Sullivan*
*Audit Committee Financial Expert |
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Compensation Committee |
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Current Members: |
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The Compensation Committee evaluates and approves the compensation and benefits of our executive officers, administers and makes recommendations to our Board of Directors regarding our base compensation and short- and long-term incentive
compensation, oversees CEO and management performance and succession planning, and produces an annual report on executive compensation for inclusion in our proxy statement. |
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Mr. Nielsen (chair)
Mr. Klayko Ms. Wentworth |
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Nominating and Corporate Governance Committee |
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Current Members: |
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The Nominating and Corporate Governance Committee oversees an annual evaluation of our Board of Directors and its committees, develops and recommends to our Board of Directors a set of corporate governance guidelines, a
code of business conduct and ethics and related policies and periodically reviews and recommends updates and changes to the Board of Directors, monitors our compliance with applicable corporate governance requirements and the rules and regulations of
Nasdaq, establishes criteria for prospective members of our Board of Directors, conducts candidate searches and interviews and recommends individuals to fill vacant director and committee positions to our Board of Directors. |
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Mr. Sullivan (chair)
Mr. Klayko Mr. Shumate |
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Transaction Committee |
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Current Members: |
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|
|
|
The Transaction Committee has the authority to assist our Board of Directors in fulfilling its oversight responsibility with the review, and to the extent so delegated approval, of strategic transactions or capital
investments that may arise between regularly scheduled meetings of the Board. |
|
|
|
Mr. Klayko (chair)
Mr. Ferdman Ms. Wentworth |
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Committee |
|
Current Members: |
|
|
|
|
The Executive Committee has the authority and power to exercise all duties of the Board between meetings, except as prohibited by law, when urgent action is required and such other functions which from time to time may
be assigned to it by the Board. The Executive Committee is responsible for reporting to the full Board at its next regular meeting all actions taken or items discussed at any Executive Committee meetings. |
|
|
|
Mr. Shumate (chair)
Mr. Duncan Mr. Gamble Mr. Nielsen |
|
|
|
|
|
|
|
|
|
|
|
Each
of the committees, other than the Executive Committee, operates pursuant to a written charter which is available on our website at www.cyrusone.com
in the "Corporate Governance" section.
Under
our corporate governance guidelines, the composition of each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee must comply with applicable
SEC rules and Nasdaq listing standards. Our corporate governance guidelines define "independent director" by reference to applicable rules and regulations of the SEC and listing standards of Nasdaq,
which generally deem a director to be independent if the director has no relationship that may interfere with the exercise of independent judgment in carrying out such director's responsibilities, and
which further impose heightened requirements of independence for members of the Audit and Compensation Committees.
Each
of our committees, other than the Executive Committee, consists entirely of independent directors, and each of the members of the Audit Committee and the Compensation Committee meets applicable
heightened requirements for service on such committees.
|
|
|
2021
Proxy
Statement
|
|
23 |
Table of Contents
Board and Committee Evaluations
The Board and each of its committees perform an annual performance evaluation, with each director performing a self-evaluation of his or her
Board and committee experiences. The Nominating and Corporate Governance Committee oversees the annual performance evaluation process and considers various methods of performing the same. For 2020,
the self-evaluations were conducted through questionnaires prepared by the Corporate Secretary and discussions with the Chair of the Nominating and Corporate Governance Committee. Generally, the
evaluation process described below is managed by the Corporate Secretary's office with oversight by the Nominating and Corporate Governance Committee to ensure the process remains as thorough and
transparent as possible. The annual evaluation includes a review of each Committee's charter.
Nomination of Directors
Before each annual meeting of stockholders, the Nominating and Corporate Governance Committee considers the nomination of all incumbent
directors, and also considers new candidates whenever there is a vacancy on the Board or whenever a vacancy is anticipated due to a change in the size or composition of the Board, a retirement of a
director or for any other reason. In addition to considering incumbent directors, the Committee may identify director candidates based on recommendations from any qualified individual or group,
including, but not limited to, stockholders, the incumbent directors and members of management. The Committee has, and may in the future, engage the services of third-party search firms to assist in
identifying or evaluating director candidates. When evaluating candidates, the Nominating and Corporate Governance Committee will consider such individual's potential contribution to the Board's
diversity of experience, profession, expertise, skill and background (including with respect to race, ethnicity and gender).
The
Committee evaluates annually the effectiveness of the Board as a whole, its committees, and of each individual director and identifies any areas in which the Board would be better served by adding
new members with different skills, backgrounds or areas of experience.
|
|
|
24 |
|
2021
Proxy
Statement |
Table of Contents
|
The Board of Directors considers director candidates based on a number of attributes,
including: Established leadership reputation in his/her field Reputation for good business judgment Active in business or academia Knowledge of business on a national/global basis
Meets high ethical standards
Commitment to regular Board / committee meeting attendance Familiarity with data center facilities and operations
Whether the candidate would contribute to Board's diversity of experience, profession, expertise, skills and background (including with respect to race and gender)
|
Candidates
also are evaluated based on their understanding of our business and willingness to devote adequate time to carrying out their duties. The Committee also monitors the mix of skills,
experience and background to assure that the Board has the necessary composition to effectively perform its oversight function. As listed above, diversity characteristics of the Board as a whole and
of a particular candidate
are one of several factors considered by the Committee when evaluating director candidates. However, a candidate will neither be included nor excluded from consideration solely based on his or her
diversity traits. The Committee conducts regular reviews of current directors in light of the considerations described above and their past contributions to the Board of Directors.
The
Committee will consider appropriate director candidates recommended by a stockholder, evaluating such candidates on the same basis as any other candidate. We did not receive any recommendations of
director candidates or director nominations by stockholders for the 2021 annual meeting.
Recommendations
for nominations should be addressed to CyrusOne Inc., 2850 N Harwood Street, Suite 2200, Dallas, Texas 75201, Attention: Corporate Secretary, indicating the candidate's
qualifications and other relevant biographical information and providing confirmation of the candidate's consent to serve as a director, if elected. Stockholders may also nominate qualified
individuals for election to the Board by complying with the advance notice and other requirements of our current Bylaws regarding director nominations. These requirements are also described under
"Stockholder Proposals."
Majority Voting Resignation Policy for Election of Directors
Our corporate governance guidelines provide that, as a condition to nomination, each director will agree to offer to resign if at a meeting of
the stockholders relating to an uncontested election, the director receives a greater number of votes "withheld" than votes "for" such election. The Nominating and Corporate Governance Committee will
consider the offer and recommend to the Board whether to accept or reject the offer to resign within 60 days following the certification of the stockholder vote. No later than 90 days
following the certification of the stockholder vote, the Board will decide whether to accept the offer to resign. Any director who offers to resign is prohibited from participating in the Nominating
and Corporate Governance Committee's deliberations or recommendation, or in the Board's deliberations and determination, regarding whether to accept his or her offer of resignation.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee has been an officer or employee of the Company. None of our executive officers serves on the board of
directors or compensation committee of a company that has an executive officer that serves on our Board of Directors or the Compensation Committee.
|
|
|
2021
Proxy
Statement
|
|
25 |
Table of Contents
Corporate Governance Materials Available on Website
We have adopted corporate governance guidelines and a code of business conduct and ethics that applies to all of our executive officers and
employees and to each member of the Board of Directors. We anticipate that any amendments or waivers of our code of business conduct and ethics will be posted on our website. The following documents
are available on our website at www.cyrusone.com in the "Corporate Governance" area of the "Investors" tab:
|
|
|
Corporate Governance
Guidelines |
|
Compensation Committee
Charter |
Code of Business Conduct
and Ethics |
|
Nominating and Corporate
Governance Committee Charter |
Audit Committee
Charter |
|
Transaction Committee
Charter |
Copies
of the documents listed above are also available in print to any stockholder who requests them. Requests should be sent to CyrusOne Inc., 2850 N Harwood Street, Suite 2200,
Dallas, Texas 75201, Attention: Corporate Secretary.
Contacting the Board of Directors
Any person may contact the Board of Directors, any committee of the Board, the independent directors as a group, or any individual
director(s), via mail at the address listed below.
[Board
of Directors / independent directors / committee / individual director name]
c/o Corporate Secretary
CyrusOne Inc.
2850 N Harwood Street, Suite 2200
Dallas, Texas 75201
Any
person may contact the Board of Directors via e-mail at: boardofdirectors@cyrusone.com
The
Audit Committee has adopted a process for anyone to send communications to the Audit Committee with concerns or complaints concerning our Company's regulatory compliance, accounting, audit or
internal controls. Any party may contact the Audit Committee via mail or email at the address listed below:
Chair
Audit Committee
CyrusOne Inc.
2850 N Harwood Street, Suite 2200
Dallas, Texas 75201
auditcommittee@cyrusone.com
Alternatively,
anyone may call our toll-free ethics and compliance helpline at 1-844-348-5823 or visit www.cyrusone.ethicspoint.com.
Relevant
communications are distributed to the Board, or to any individual director or directors, as appropriate, depending on the facts and circumstances outlined in the communication. In that
regard, the Board of Directors has requested that certain items unrelated to the duties and responsibilities of the Board should be excluded or redirected, as appropriate, such as: business
solicitations or advertisements; junk mail and mass mailings; resumes and other forms of job inquiries; spam; and surveys.
In
addition, material that is unduly hostile, threatening, potentially illegal or similarly unsuitable will be excluded.
|
|
|
26 |
|
2021
Proxy
Statement |
Table of Contents
Board Compensation for 2020
|
Board Compensation for 2020
We use a combination of cash and equity compensation to attract and retain qualified candidates to serve on the Board. The Compensation
Committee periodically reviews non-employee director compensation with the advice of its independent compensation consultant and makes recommendations to the Board for any changes it considers
appropriate. In 2020, based on this review, a comparison of the Company's non-employee director compensation program with those of Company's peer group and the advice of its independent compensation
consultant, the Compensation Committee recommended, and the Board approved, the first increase to our non-employee director compensation since 2017, increasing the cash retainer from $75,000 to
$85,000, the equity retainer from $125,000 to $150,000 and modestly increasing committee retainers.
Non-Employee Director Compensation Program
|
|
|
|
|
|
Compensation Component |
|
Amount |
|
|
|
|
|
ANNUAL BOARD RETAINER: |
|
|
|
|
|
|
|
|
Cash |
|
|
$ |
85,000 |
|
|
|
|
|
Equity (restricted stock with 1-year vesting requirement) |
|
|
$ |
150,000 |
|
|
|
|
|
CHAIRPERSON RETAINERS: |
|
|
|
|
|
|
|
|
Independent Chairperson of the Board |
|
|
$ |
150,000 |
|
|
|
|
|
Audit Committee Chair |
|
|
$ |
30,000 |
|
|
|
|
|
Compensation Committee Chair |
|
|
$ |
25,000 |
|
|
|
|
|
Nominating and Corporate Governance Committee & Transaction Committee Chairs |
|
|
$ |
20,000 |
|
|
|
|
|
COMMITTEE MEMBER RETAINERS: |
|
|
|
|
|
|
|
|
Audit Committee Member |
|
|
$ |
12,500 |
|
|
|
|
|
Compensation Committee Member |
|
|
$ |
12,500 |
|
|
|
|
|
Nominating and Corporate Governance Committee & Transaction Committee Members |
|
|
$ |
10,000 |
|
|
|
|
|
PER-MEETING FEES |
|
|
$ |
|
|
|
|
|
|
BOARD COMPOSITION: |
|
|
|
|
|
|
|
|
Number of Board Members |
|
|
8 |
|
|
|
|
|
Number of Independent Members |
|
|
7 |
|
|
|
|
|
Independent Chairperson of the Board |
|
|
Yes |
|
|
|
|
|
BOARD STOCK OWNERSHIP POLICIES: |
|
|
|
|
|
|
|
|
Director Stock Ownership Guidelines |
|
5x Annual Cash Retainer
|
|
|
|
|
|
Pledging and Hedging |
|
Prohibited
|
|
|
|
|
|
Our
non-employee directors have five years from the time they are elected to meet the minimum stock ownership requirements. As of December 31, 2020, each of our non-employee directors has met
the minimum requirements for stock ownership. Directors are also covered by our written policy that prohibits hedging and pledging of Company securities, as described under "Other Compensation-Related
Policies" of this proxy statement.
|
|
|
2021
Proxy
Statement
|
|
27 |
Table of Contents
Board Compensation for 2020
|
The
following table summarizes the compensation that we paid to our non-employee directors in 2020. Our President and CEO does not receive compensation for his service as a director, and his
compensation for service as our President and CEO is disclosed in the Summary Compensation Table.
2020 Director Compensation Table
|
|
|
|
|
|
|
Name
|
|
Fees Earned or
Paid in Cash
($)
|
|
Stock
Awards
($)(1)
|
|
Total
($)
|
|
|
|
|
|
|
|
Alex Shumate |
|
213,750 |
|
150,051 |
|
363,801 |
|
|
|
|
|
|
|
William E. Sullivan |
|
108,750 |
|
150,051 |
|
258,801 |
|
|
|
|
|
|
|
Lynn A. Wentworth |
|
127,500 |
|
150,051 |
|
277,551 |
|
|
|
|
|
|
|
T. Tod Nielsen |
|
102,500 |
|
150,051 |
|
252,551 |
|
|
|
|
|
|
|
John W. Gamble, Jr. |
|
91,250 |
|
150,051 |
|
241,301 |
|
|
|
|
|
|
|
David H. Ferdman |
|
88,750 |
|
150,051 |
|
238,801 |
|
|
|
|
|
|
|
Michael A. Klayko |
|
117,500 |
|
150,051 |
|
267,551 |
|
|
|
|
|
|
|
- (1)
- Reflects
the aggregate grant date fair value of the restricted stock awards granted in 2020, determined in accordance with Financial Accounting Standards Board ASC
Topic 718 Stock Compensation (FASB ASC 718). The assumptions used in the calculation of the grant date fair value are set forth in Note 16 to the financial statements in our annual report on
Form 10-K filed with the SEC on February 19, 2021.
As
of December 31, 2020, each of our non-employee directors held 2,139 shares of unvested restricted stock and no stock options.
|
|
|
28 |
|
2021
Proxy
Statement |
Table of Contents
Executive Compensation
Compensation Discussion and Analysis
The
Compensation Committee is responsible for the Company's executive compensation philosophy and policies, as well as the annual executive compensation program that flows from them. This section of
the Proxy Statement contains a detailed explanation of the compensation arrangements for our NEOs for 2020.
|
|
|
|
|
CyrusOne's Named Executive Officers |
|
|
Bruce W. Duncan(1)
President & Chief Executive Officer |
|
|
|
|
|
Katherine Motlagh(2)
Executive Vice President & Chief Financial Officer |
|
|
|
|
|
John P. Hatem(3)
Executive Vice President & Chief Operating Officer |
|
|
|
|
|
Robert M. Jackson
Executive Vice President, General Counsel & Secretary |
|
|
|
|
|
Gary J. Wojtaszek(1)
Former President & Chief Executive Officer |
|
|
|
|
|
Venkatesh S. Durvasula(1)
Former Interim President and Chief Executive Officer |
|
|
|
|
|
Diane M. Morefield(2)
Former Executive Vice President & Chief Financial Officer |
|
|
|
|
|
Kevin L. Timmons(4)
Former Executive Vice President & Chief Technology Officer |
- (1)
- Mr. Duncan
was appointed President and Chief Executive Officer, effective July 6, 2020, at which time Mr. Durvasula transitioned to the position
of Consultant to the President and Chief Executive Officer, until August 1, 2020, at which time he departed from the Company. Mr. Durvasula had served as interim President and Chief
Executive Officer since February 20, 2020, when Mr. Wojtaszek had stepped down from the position of President and Chief Executive Officer.
- (2)
- Ms. Motlagh
was appointed Executive Vice President and Chief Financial Officer, effective October 30, 2020. Pursuant to her previously announced
retirement, on October 30, 2020, Ms. Morefield stepped down from her role as Executive Vice President and Chief Financial Officer, and remained a full-time employee through
December 31, 2020. Ms. Morefield then transitioned to a part-time employee role until she departed the Company on March 1, 2021.
- (3)
- Mr. Hatem
joined CyrusOne as Executive Vice President and Chief Operating Officer, effective October 1, 2020.
- (4)
- Mr. Timmons
departed from the Company, effective September 1, 2020.
|
|
|
2021
Proxy
Statement
|
|
29 |
Table of Contents
Executive Summary
Our long-term success depends on our ability to attract, motivate, focus and retain highly talented individuals who are committed to our
vision and strategy. A key objective of our executive compensation program is to create an ownership culture that aligns pay to performance and overall stockholder value creation. We believe that the
amount of compensation for each of our NEOs reflects their extensive management experience and continued high performance and incentivizes exceptional service to CyrusOne. We also believe that our
compensation strategies have been effective in attracting executive talent and promoting performance and the creation of stockholder value.
|
|
|
|
|
|
|
|
|
|
|
2020 PERFORMANCE HIGHLIGHTS |
|
|
|
|
|
|
|
|
|
|
|
12% |
|
(3)% |
|
7% |
|
15.2% |
|
$156.8M |
|
$101M |
|
|
|
|
|
|
|
|
|
|
|
Y-o-Y Growth in Normalized FFO* |
|
Y-o-Y Growth in Net Income per share |
|
Y-o-Y Growth in Normalized FFO* per share |
|
Total Stockholder Return (TSR) for 2020 |
|
Annualized GAAP Revenue Signed* Company Record |
|
12/31/20
Backlog* |
|
|
|
|
|
|
|
|
|
|
|
- *
- See
Appendix A for definitions and a reconciliation of Normalized FFO to GAAP net income.
Stockholder Engagement
Last year, our Say-on-Pay proposal received the support of 91.7% of votes cast. While we were encouraged by the significant level of support, we have
continued our robust stockholder outreach efforts. Since 2017, our Board, primarily through the Compensation Committee, has engaged in annual outreach to our largest stockholders, who collectively
hold over 60% of our outstanding stock, in order to solicit feedback on our compensation program and structure, as well as other matters, including those relating to environmental, social and
corporate governance.
Informed
by feedback from our stockholders, we made several significant changes to our compensation program in 2020 and 2021, including the following:
|
|
|
|
|
COMPONENT
|
|
2020 MODIFICATIONS
|
|
|
|
|
|
|
|
LTI Awards |
|
Eliminated the interim
annual accelerated vesting feature from our performance-based awards, so that the awards cliff-vest at the end of the three-year performance period
Added a second TSR metric to our
performance-based awards, which measures our TSR performance against a real estate technology peer group Increased the level of performance required to achieve a target payout, expanded the bands at the threshold and maximum levels, and added an absolute TSR
outperformance component |
|
|
|
|
|
|
|
|
|
|
|
|
2021 MODIFICATIONS
|
|
|
|
|
|
|
|
Annual Incentive Bonus |
|
Replaced NFFO metric with
NFFO per share (30% weighting) Added sustainability metric (10% weighting)
Added customer sales bookings metric (10% weighting), which we believe to be a key indicator of the underlying strength of our business
Retained revenue and
individual performance metrics (30% and 20% weighting, respectively) |
|
|
|
|
|
|
|
LTI Awards |
|
Increased portion of 2021
awards that are subject to performance-vesting conditions to 70% of total grant value, applicable to all NEOs Added performance- and time-based LTIP units as alternatives to PRSUs
and RSUs, respectively; LTIP units are profits interests with respect to our operating partnership, which remain subject to the same performance- and time-based vesting conditions of stock awards and which only provide value to our NEOs if the value
of our business increases |
|
|
|
|
|
|
|
|
30 |
|
2021
Proxy
Statement |
Table of Contents
Our
sustainability metric in particular is intended to supplement, and drive progress towards, our 2021 sustainability initiatives and projects, which have themselves been an important area of
interest for our
stockholders. Achievement against this metric will be measured based on, among other things, our progress against our goals of having zero carbon footprint by 2040 and further our "net positive water"
initiative, by reducing our water usage in high stress regions and establishing low water use model facilities and related policies.
Alignment of Pay with Performance
Our executive compensation program provides significant alignment between pay and performance by linking a meaningful portion of our NEOs' compensation to the
achievement of pre-established financial and strategic goals under our annual incentive bonus program and the Company's relative TSR under our long-term incentive grants. Variable pay, consisting of
annual cash bonuses and LTI equity awards, constitutes the vast majority of our executive compensation. The following charts reflect the allocations of total target direct pay for our CEO and all
other current NEOs as a group, excluding the sign-on component of the LTI grant for our CEO and CFO.
CEO Total Target Direct Compensation
Set forth below is a summary of the total target direct compensation for Bruce W. Duncan, who was named President & CEO in July 2020, excluding the
sign-on component of Mr. Duncan's 2020 equity grant, which had a grant date value of $5 million and vests ratably over three years.
|
|
|
|
|
|
|
|
|
CEO Annual Cash |
|
CEO Annual Equity |
|
CEO Annual Total |
|
|
|
|
|
|
|
|
|
Salary |
|
Target Bonus |
|
Performance-Based
LTI Target Award |
|
Time-Based
LTI Award |
|
Total Target Direct
Compensation |
|
|
|
|
|
|
|
|
|
$850,000 |
|
$1,275,000 |
|
$3,412,500 |
|
$1,462,500 |
|
$7,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEO Compensation Highlights |
|
|
|
|
|
88% |
|
70% |
|
70% |
|
|
|
|
|
of pay is variable
and not guaranteed |
|
of pay is
equity-based |
|
of total equity awarded as TSR-based performance equity |
|
|
|
|
|
Total Target Direct CompensationOther NEOs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash |
|
|
Annual Equity |
|
|
Annual Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary |
|
|
Target Bonus |
|
|
Performance-Based
LTI Target Award |
|
|
Time-Based
LTI Award |
|
|
Total Target Direct
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Motlagh* |
|
$ |
500,000 |
|
$ |
500,000 |
|
$ |
700,000 |
|
$ |
300,000 |
|
$ |
2,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hatem* |
|
$ |
450,000 |
|
$ |
450,000 |
|
$ |
770,000 |
|
$ |
330,000 |
|
$ |
2,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Jackson |
|
$ |
395,000 |
|
$ |
395,000 |
|
$ |
630,000 |
|
$ |
270,000 |
|
$ |
1,690,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- *
- Based
on their hire dates, Ms. Motlagh and Mr. Hatem did not receive an annual LTI grant in 2020. In connection with her hiring, Ms. Motlagh
received a sign-on award of time-based restricted stock which had a grant date value of $1.25 million and vests ratably over three years.
|
|
|
2021
Proxy
Statement
|
|
31 |
Table of Contents
Compensation Objectives and Governance Highlights
Our fundamental objective is to be outstanding stewards of our stockholders' capital by creating value on a consistent, long-term basis. Our compensation
philosophy is to incentivize thoughtful capital allocation and value creation for our stockholders by attracting and retaining talented executives with competitive pay packages intended to cultivate
an ownership culture, to align the compensation for our executive officers with sustainable, consistent, balanced growth and to achieve specific short- and long-term goals set by the Compensation
Committee. We use a combination of compensation programs to incentivize our executive officers to achieve growth and value creation over the short- and long-term. We supplement our pay for performance
program with a number of compensation polices intended to encourage an ownership culture, align the interests of management with those of our stockholders and discourage excessive risk taking. These
include:
|
|
|
|
|
|
|
DESIGN PRINCIPLES |
|
|
|
|
|
|
|
WHAT WE DO: |
|
WHAT WE DON'T DO: |
|
|
|
|
|
|
|
✔ |
|
We link pay to performance; we reward our NEOs based upon the value they create |
|
✘ |
|
We do not target pay based on the market median, but rather use it as an initial reference point |
|
|
|
|
|
|
|
✔ |
|
The vast majority of NEO pay is variable, based on performance |
|
✘ |
|
We set performance goals with a view to discouraging unnecessary or excessive risk-taking, and our policies reinforce this view |
|
|
|
|
|
|
|
✔ |
|
We set rigorous and measurable performance goals at the beginning of the performance period across our annual incentive and long-term incentive plans, placing significant emphasis on multi-year, total stockholder return performance |
|
✘ |
|
Other than limited exceptions for new hires, we do not guarantee incentive compensation under our annual cash bonus or long-term incentive plan |
|
|
|
|
|
|
|
✔ |
|
We employ metrics for annual and long-term incentives that do not overlap and support both short- and long-term strategies and stockholder interests |
|
✘ |
|
We do not use positive discretion in determining Company performance for purposes of our annual cash bonus or long-term incentive plan payouts |
|
|
|
|
|
|
|
✔ |
|
Beginning in 2021, we added a sustainability goal to our annual cash bonus plan, to ensure that our performance is achieved in a way that aligns with our values |
|
✘ |
|
We do not provide "single-trigger" change-in-control vesting on equity awards or severance |
|
|
|
|
|
|
|
✔ |
|
We compensate fairly and competitively, but not excessively |
|
✘ |
|
We do not have uncapped bonus amounts under our incentive plans |
|
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32 |
|
2021
Proxy
Statement |
Table of Contents
|
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|
GOVERNANCE PRACTICES |
|
|
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|
|
|
|
WHAT WE DO: |
|
WHAT WE DON'T DO: |
|
|
|
|
|
|
|
✔ |
|
We have robust stock ownership guidelines for our CEO (6x base salary) and directors (5x cash retainer) |
|
✘ |
|
We do not provide NEOs with tax gross-ups on executive or severance benefits, including upon a change in control |
|
|
|
|
|
|
|
✔ |
|
We maintain a clawback policy, whereby we can recoup incentive compensation in the event of certain financial restatements |
|
✘ |
|
We do not re-price outstanding stock options, whether vested or unvested |
|
|
|
|
|
|
|
✔ |
|
We prohibit pledging and hedging of our common stock |
|
✘ |
|
We do not pay dividends on unvested performance awards; rather, such amounts are paid only if and to the extent that the applicable performance targets are in fact met (other than distributions equal to 1/10th of our dividend to allow for the
payment of taxes in connection with our LTIP units) |
|
|
|
|
|
|
|
✔ |
|
The Compensation Committee retains an independent compensation consultant |
|
✘ |
|
We do not provide separate benefit plans for our NEOs; our NEOs participate in the same benefit plans available to salaried employees |
|
|
|
|
|
|
|
✔ |
|
We perform an annual compensation risk assessment |
|
✘ |
|
We do not provide pension benefits or supplemental retirement plans |
|
|
|
|
|
|
|
✔ |
|
We engage with our stockholders on compensation and governance matters |
|
✘ |
|
We do not provide excessive perquisites to our NEOs |
|
|
|
|
|
|
|
How We Make Compensation Decisions
Role of the Compensation Committee
All compensation for the NEOs (including the CEO) is set by the Compensation Committee annually. The Compensation Committee also sets performance measures and
targets and determines performance and payouts under our annual and long-term incentive plans. Individual base salaries, along with annual and long-term incentive targets, are determined by the
Compensation Committee after taking into consideration a number of internal and external factors, including the external marketplace and peer group data, the executive's position and responsibility,
the demand for executive talent in the marketplace, the Company's performance and the individual's performance and future potential. The Compensation Committee also considers the CEO's
self-performance evaluation when setting the CEO's compensation, and when setting each of the other NEOs' compensation, the CEO's recommendations based on his assessment of their individual
performance.
Use of Judgment
The Compensation Committee believes that the application of its collective experiences and judgment is as important a resource to setting executive
compensation as the use of data and formulae. While market data provides an important tool for analysis and decision-making, the Compensation Committee believes that over-reliance on data can give a
false illusion of precision. Consequently, the Compensation Committee also gives consideration and emphasis to an individual's personal contributions to the organization, as well as his or her skill
set, qualifications and experience. The Compensation Committee also values and seeks to reward performance that develops talent within the Company, embraces the sense of urgency that we believe
distinguishes the Company and demonstrates the qualities of imagination and drive that enables a Company executive to resolve long-term challenges and address important new issues. The Compensation
Committee believes these and similar qualities and attributes are not easily correlated to typical compensation data, but also deserve consideration and weight in reaching compensation decisions.
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2021
Proxy
Statement
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|
33 |
Table of Contents
Role of Compensation Consultant
Since 2017, the Compensation Committee has engaged FPL Associates, L.P. ("FPL") to assist in the performance of its duties and to make
recommendations to the Compensation Committee with respect to NEO and director compensation. FPL assisted the Compensation Committee in development of the peer group framework for 2020 and advised the
Committee on the 2020 base salaries, target bonuses and long-term incentive ("LTI") awards for our NEOs, including with respect to our newly hired NEOs. The Compensation Committee also worked with FPL
to conduct a competitive market assessment of the compensation elements for each of our executive officers and the design of our annual incentive plan and long-term incentive awards, compared to our
peer groups. FPL did not perform any other work for the Company in 2020.
In
connection with the engagement of FPL, the Compensation Committee conducts an annual evaluation of the independence of FPL and its individual consultants, which includes reviewing information from
FPL and the Company's directors and executive officers addressing any potential conflicts of interest. For 2020, as with prior years, the Compensation Committee concluded that FPL and its individual
consultants are independent and that their work did not raise any conflicts of interest.
Peer Groups and Use of Data
The Compensation Committee believes that data plays an important role in the design and implementation of optimal compensation programs and considers a number
of types of internal and external data in making both individual and plan-level compensation decisions. In particular, the Compensation Committee uses peer groups to maintain an awareness of market
data and pay practices, but does not target any element of compensation at a particular percentile or percentile range of the peer group data. The Compensation Committee uses the median
(50th percentile) of the peer group data as the starting reference point and indicator of competitive market trends when assessing and determining pay for our executive officers. We believe
this use of peer group data is consistent with how stockholders and proxy advisory firms use such data.
The
Compensation Committee evaluates the members of our peer group and the use of peer data each year to ensure that they continue to be appropriate. In the second half of 2017, after soliciting and
receiving feedback from our stockholders, the Compensation Committee, with the assistance of FPL, determined it was necessary and appropriate to revise our compensation peer groups to take into
account our size and our complex business model as other REITs, both in the data center sector and in other sectors, are not always comparable to us because of differences in underlying business
fundamentals and operations. Based on a review of market data, with the assistance of FPL, the Compensation Committee determined to use two peer groups for reference points in evaluating and
determining compensation, an approach the Compensation Committee continued to use in 2020:
-
- a size-based peer group, comprised of high growth REITs of similar size (0.5x to 2x of our total capitalization) and asset focus (such as data
center/industrial or specialty); and
-
- a technology real estate peer group.
|
|
|
34 |
|
2021
Proxy
Statement |
Table of Contents
The
table below identifies the companies in each of these peer groups:
|
|
|
SIZE-BASED REIT PEER GROUP
|
Alexandria Real Estate
Equities, Inc. |
|
Iron Mountain
Incorporated |
American Campus Communities,
Inc. |
|
JBG SMITH
Properties |
Americold Realty
Trust |
|
Medical Properties Trust,
Inc. |
CoreSite Realty
Corporation |
|
MGM Growth Properties
LLC |
CubeSmart |
|
Regency Centers
Corporation |
EPR Properties |
|
STORE Capital
Corporation |
Healthcare Trust of America,
Inc. |
|
Sun Communities,
Inc. |
Invitation Homes
Inc. |
|
|
|
|
|
TECHNOLOGY REAL ESTATE PEER GROUP
|
American Tower
Corporation |
|
QTS Realty Trust,
Inc. |
CoreSite Realty
Corporation |
|
SBA Communications
Corporation |
Crown Castle International
Corp. |
|
Switch, Inc. |
Digital Realty Trust,
Inc. |
|
Uniti Group
Inc. |
Equinix, Inc. |
|
Zayo Group Holdings,
Inc. |
There
were no changes to the technology real estate peer group for 2020. There were three additions (American Campus Communities, Inc., Americold Realty Trust and Cubesmart) and two deletions (Extra
Space Storage, Inc. and Mid-America Apartment Communities, Inc.) made to the sized-based REIT peer group for 2020, which were made to better align our relative ranking with the total capitalization
market median and to align focus on high-growth REITs.
|
|
|
2021
Proxy
Statement
|
|
35 |
Table of Contents
2020 Executive Compensation Components
|
|
|
|
|
|
|
|
|
Component |
|
Objective |
|
Key features |
|
|
|
|
|
|
|
|
|
Base Salary |
|
To provide salary levels sufficient to attract and retain high-performing executives. |
|
Fixed cash salary that is
both market-derived and market-driven.
Adjustments considered as appropriate based on performance, market data and other factors described below; we do not provide guaranteed salary
increases. |
|
|
|
|
|
|
|
|
|
Annual Incentive Bonus |
|
To encourage executives to pursue annual goals that will benefit the Company and stockholders in both the short- and long-term. |
|
80% of our annual cash
bonus awards are tied to achievement of financial goalsfor 2020, 30% was tied to revenue and 50% was tied to Normalized FFO. 20% of our annual cash bonus awards are tied to individual
performance. |
|
|
|
|
|
|
|
|
|
Long-Term Incentive* |
|
To promote executive retention and the achievement of long-term stockholder value and to create an ownership culture that closely aligns the compensation of our executives with the returns realized by our stockholders. |
|
70% of the target LTI
award for our CEO (60% for other NEOs) consists of performance-based restricted stock, which cliff vests following a three-year performance period, contingent upon achievement of relative TSR goals. The performance-based component was increased to
70% for all NEOs beginning with the 2021 LTI grants.
30% of the target LTI award for our CEO (40% for other NEOs) consists of time-based restricted stock, which vests ratably over three years.
Beginning with the 2021 LTI grants, the time-based component was decreased to 30% for all NEOs. |
|
|
|
|
|
|
|
- *As
discussed below, the Compensation Committee implemented certain design changes effective with the 2020 LTI grants, including the addition of a second
TSR metric and the elimination of the annual vesting feature for performance awards.
|
|
|
36 |
|
2021
Proxy
Statement |
Table of Contents
Base Salary
Policy and Process. Base salary, which under our compensation program is market-derived and market-driven, represents the fixed component of our executive officer
compensation program, which is paid in cash. The main purpose of base salary compensation is to provide cash compensation levels
sufficient
to attract and retain high-performing executive officers. Because one of the primary objectives of our executive compensation program is to align our NEOs' compensation with the interests
of our long-term investors by awarding a significant portion of total compensation in the form of equity-based awards with multi-year performance periods, base salary is targeted to be approximately
10% to 25% of total target annual compensation opportunity for each of the NEOs. The percentage of actual pay will vary from year to year based on each NEO's performance, as well as the Company's
performance, within that year, and payouts under our incentive plans. On a regular basis, and otherwise as appropriate, the Compensation Committee reviews the base salary of each of the executives and
considers adjustments to executive officer base salaries based primarily on the individual's performance, but also takes into account the base salary paid to similarly situated executives of the peer
group companies and other factors, such as Company performance.
2020 Base Salaries. The table below summarizes the base salaries approved for each of our NEOs for 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
Base Salary
($) |
|
|
2019
Base Salary
($) |
|
|
2020 vs. 2019
Change
(%) |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Duncan |
|
|
850,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Motlagh |
|
|
500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hatem |
|
|
450,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Jackson |
|
|
395,000 |
|
|
352,000 |
|
|
12% |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Wojtaszek |
|
|
800,000 |
|
|
800,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Durvasula(1) |
|
|
700,000 |
|
|
550,000 |
|
|
27% |
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Morefield |
|
|
550,000 |
|
|
475,000 |
|
|
16% |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Timmons |
|
|
475,000 |
|
|
475,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- Mr. Durvasula's
base salary increased to $700,000 in connection with his appointment as interim President and Chief Executive Officer, effective as of
February 26, 2020, in order to reflect the enhanced duties and responsibilities associated with such appointment.
Annual Incentive Bonus Opportunity
Policy and Process. Our annual incentive bonuses are designed to encourage our executive officers to pursue annual goals that will inure to the benefit of our
Company and stockholders in both the short-and long-term. Annual incentive bonus opportunities are intended to reward NEOs whose contributions improve the operational performance of our existing
portfolio and the Company, enhance short-term strategic goals and generate new business opportunities and investments, all of which are intended to create stockholder value over the long-term. The
Compensation Committee reviewed the bonus targets as a percentage of base salary in February 2020 as part of its annual compensation review and determined no adjustments were necessary for our NEOs
serving at that time.
In
the case of our newly hired NEOs, the Compensation Committee calibrated the approach based on the timing of their appointment. In the case Mr. Duncan, who joined us halfway through the year,
he was made a participant in our ongoing bonus program, with a target of 150% of base salary, but with a minimum bonus for 2020 equal to his target bonus, prorated for the number of days
Mr. Duncan was employed with us. Since Mr. Hatem joined us during the fourth quarter of the year, it was determined to instead provide him with a sign-on bonus equal to his target bonus
amount (100% of base salary), prorated for the number of days Mr. Hatem was employed with us. However, as a result of Mr. Hatem's
|
|
|
2021
Proxy
Statement
|
|
37 |
Table of Contents
performance
during 2020, the Compensation Committee determined to provide him with a prorated bonus amount based on the actual Company performance. In the case of Ms. Motlagh, since she was
also joining the Company in the fourth quarter, and since she would forgo a 2020 annual bonus from her former employer in accepting the Company's offer, the Compensation Committee determined that it
was necessary and appropriate to provide Ms. Motlagh with a sign-on bonus of $400,000 (equal to 80% of her annual target bonus amount) in order to incentivize her to accept the Company's offer.
Each of Messrs. Durvasula and Timmons and Ms. Morefield received an annual bonus pursuant to the terms of their respective separation agreement or transition and retirement agreement, as applicable,
as discussed in more detail below.
The
table below depicts the annual incentive bonus opportunity for each NEO for 2020:
|
|
|
|
|
|
|
|
|
|
|
Name(1) |
|
|
Threshold
(25% of Target)
($)(2) |
|
|
Target
($)(2) |
|
|
Maximum
(200% of Target)
($)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Duncan(3) |
|
|
612,981 |
|
|
1,275,000 |
|
|
2,550,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Jackson |
|
|
98,750 |
|
|
395,000 |
|
|
790,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Durvasula(4) |
|
|
306,250 |
|
|
1,225,000 |
|
|
2,450,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Morefield(4) |
|
|
137,500 |
|
|
550,000 |
|
|
1,100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Timmons(4) |
|
|
118,750 |
|
|
475,000 |
|
|
950,000 |
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- As
described above, Ms. Motlagh's and Mr. Hatem's 2020 bonus opportunities were determined pursuant to their respective offer letters.
- (2)
- Amounts
in the table above assume annualized 2020 base salary rates. The actual bonus of our NEOs who are current executive officers was calculated using actual
salary earned for 2020, as reported in the "Salary Column" of the "2020 Summary Compensation Table".
- (3)
- Per
his employment agreement, Mr. Duncan's 2020 bonus would not be less than his target bonus, prorated for the number of days Mr. Duncan was employed
with us.
- (4)
- Each
of Messrs. Durvasula and Timmons and Ms. Morefield received an annual bonus pursuant to the terms of their respective separation agreement or
transition and retirement agreement, as applicable, as discussed in more detail below.
Financial Goals (weighted 80%). The following graphs show the threshold, target, maximum and actual performance levels for each financial component of the 2020
bonus plan, in millions:
|
|
|
Revenue: The Compensation Committee considers revenue to be an important indicator of financial performance. It also is a metric typically evaluated by investors and analysts and is used by many
of our peers to evaluate performance. The revenue target established for 2020 was approximately 5% higher than the actual revenue results for 2019 ($1,028.9M vs. $981.3M). Actual revenue for 2020 was $1,033.5 million. |
|
Revenue (30%)
|
|
|
|
38 |
|
2021
Proxy
Statement |
Table of Contents
|
|
|
Normalized FFO(1): The Compensation Committee considers Normalized Funds From Operations ("Normalized FFO" or "NFFO") to be an important indicator of the Company's
overall financial performance. It also is a metric typically used by investors and analysts, as well as many of our peers, to evaluate performance. The Normalized FFO target established for 2020 was approximately 11% higher than the actual Normalized
FFO results for 2019 ($455.7M vs. $409.0M). Actual Normalized FFO for 2020 was $459.4 million. |
|
NFFO (50%)
|
(1) Normalized FFO is a non-GAAP financial measure calculated from the Company's financial statements as
set forth in Appendix A. |
|
|
In
determining payouts, the following sliding scale is applied to the financial performance targets, with data between points interpolated on a straight-line basis.
|
|
|
|
|
Performance Percentage of Target |
|
|
Payout Percentage |
|
|
|
|
|
|
<80% |
|
|
0% |
|
|
|
|
|
|
80% |
|
|
25% |
|
|
|
|
|
|
90% |
|
|
50% |
|
|
|
|
|
|
100% |
|
|
100% |
|
|
|
|
|
|
115% |
|
|
200% |
|
|
|
|
|
|
Based
on this, the Company's performance relative to the financial goals resulted in a weighted payout of 103.5% of target on the financial component, which accounts for 80% of each NEO's bonus.
Individual Performance. The remaining 20% of each NEO's annual bonus is based on individual performance. For 2020, the Compensation Committee determined to pay the
individual component at 100% of target for all executives other than Mr. Jackson, who was paid at 145% of target on his individual component.
2020 Annual Incentive Bonus Payouts. The following table sets forth the award earned by each NEO under, as applicable, the 2020 annual incentive bonus plan or
pursuant to his or her offer letter, separation agreement or transition and retirement agreement, as applicable (and, for reference, under the 2019 annual incentive bonus plan):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
|
($) |
|
|
% of
Target(1) |
|
|
($) |
|
|
% of
Target(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Duncan |
|
|
634,190 |
|
|
103.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Motlagh(2) |
|
|
400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hatem(2) |
|
|
111,021 |
|
|
103.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Jackson |
|
|
450,000 |
|
|
112.4 |
% |
|
581,504 |
|
|
165.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Wojtaszek(3) |
|
|
|
|
|
|
|
|
2,312,800 |
|
|
165.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Durvasula(3) |
|
|
716,257 |
|
|
|
|
|
908,600 |
|
|
165.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Morefield(3) |
|
|
553,846 |
|
|
100.0 |
% |
|
784,700 |
|
|
165.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Timmons(3) |
|
|
316,667 |
|
|
|
|
|
760,873 |
|
|
165.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
Proxy
Statement
|
|
39 |
Table of Contents
- (1)
- For
Messrs. Duncan, Hatem and Jackson and Ms. Morefield for 2020 and for all NEOs for 2019, target bonus and percentage of Target are based on actual salary
earned during the fiscal year as presented in the Summary Compensation Table. Per his employment agreement, Mr. Duncan's 2020 bonus would not be less than his target bonus, prorated for the number of
days Mr. Duncan was employed with us.
- (2)
- As
discussed above, as a result of joining the Company near the end of the annual bonus cycle, the offer letters with each of Ms. Motlagh and Mr. Hatem
provided for a specified bonus amount for 2020, which was fixed at $400,000 in the case of Ms. Motlagh and 100% of target for Mr. Hatem, prorated for the number of days Mr. Hatem was
employed with us. As discussed above, based on his performance in 2020, the Compensation Committee determined that Mr. Hatem's bonus should be based on actual Company performance, instead of
target performance.
- (3)
- The
separation agreements with each of Messrs. Durvasula and Timmons, and the transition and retirement agreement with Ms. Morefield, provided for a
prorated target bonus. In the case of Ms. Morefield, based on her providing services through the end of the year, the Compensation Committee determined that her amount should be paid without
proration. Mr. Wojtaszek's separation agreement did not provide for a 2020 bonus payment, although the Company agreed to pay him a consulting payment equal to his pro-rated target bonus amount
in respect of certain consulting services, which amount is reflected in the Summary Compensation Table below.
Long-Term Incentives
Policy and Purpose. The third component of NEO compensation is targeted toward providing rewards for long-term stockholder value creation. We believe that
outstanding long-term performance is achieved through an executive compensation program that awards a significant portion of total compensation in the form of equity-based awards with multi-year
performance periods, which encourages a focus on
long-term stockholder value creation. Accordingly, at the target level, long-term incentive awards constitute the highest percentage each of our NEOs' annual target compensation.
Annual 2020 LTI Awards. The LTI awards granted to our NEOs in 2020 consisted of a performance-based restricted stock unit ("PRSU") component (70% for
Mr. Duncan, 60% for our other NEOs), which cliff vests based upon achievement of specified TSR goals described below over a three-year performance period (2020-2022), and a time-based
restricted stock unit ("RSU") component (30% for Mr. Duncan, 40% for our other NEOs), which vests ratably over three years.
Following
a review of our LTI program, with the assistance of FPL, and informed by feedback from our stockholders we made several changes, effective with our 2020 LTI grants, as summarized below and
in the table that follows:
-
- We added a second TSR metric to the PRSU awards and, as a result, 75% of the PRSU awards granted in 2020 vest based on the Company's TSR
performance compared to that of the MSCI US REIT Index and the remaining 25% of such awards vest based on the Company's TSR performance compared to that our Real Estate Technology Peer Group (as set
forth above). The Compensation Committee believes that the use of these two metrics provides an appropriate balance of incentives. The MSCI US REIT Index component rewards our executives for
performance and returns to stockholders compared to other companies with whom we compete for investors and the Real Estate Technology Peer Group component rewards our executives for performance and
returns to stockholders compared to our industry and other companies with whom we compete for customers and key talent. The Compensation Committee also believes that TSR is widely accepted by
investors and results in a strong alignment between executive pay and performance.
-
- We eliminated the interim annual accelerated vesting feature from our PRSU awards, so that the awards will cliff-vest at the end of the
three-year performance period, generally subject to the achievement of the performance criteria and the NEO's continued employment. This enhances the retentive power of the program and ensures that
the awards are only earned based on long-term, sustained performance.
-
- We modified the performance curve, increasing the level of performance required to achieve a target payout, and expanding the bands at the
threshold and maximum levels. We also added an absolute
|
|
|
40 |
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Proxy
Statement |
Table of Contents
TSR
outperformance component, to reward our executives for exceptional performance against the market and our peer group and where strong absolute returns are provided to stockholders. We also
maintained the modifier that reduces the payout when our TSR is negative, even where we have outperformed our peers.
In
determining 2020 LTI award values, the Compensation Committee considered the market and peer data provided by FPL, individual and Company performance in 2019 and the value of the other components
that make up each NEO's target total direct compensation. Based on Mr. Duncan's hire date, the Compensation Committee determined it was appropriate to provide him with a 2020 annual LTI grant
generally aligned with those previously provided to the NEOs, except that given his position as President and Chief Executive Officer, the Compensation Committee set a higher portion of the award as
PRSUs. Mr. Duncan also received a sign-on award of RSUs with three-year ratable vesting as part of his appointment. Based on their hire dates, Ms. Motlagh and Mr. Hatem did not
receive annual LTI grants in 2020, and will receive their first such grants in 2021, although Ms. Motlagh received a sign-on
|
|
|
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Proxy
Statement
|
|
41 |
Table of Contents
award
of RSUs with three-year ratable vesting. In the case of Mr. Durvasula, in light of his status as interim President and Chief Executive Officer, the Compensation Committee determined to
defer action on a 2020 LTI grant pending completion of the CEO search and as such Mr. Durvasula did not receive a 2020 annual LTI grant.
The
grant date fair value of the annual LTI awards to our NEOs made in 2020, as determined in accordance with FASB ASC 718, was:
|
|
|
|
|
|
|
|
|
|
|
Performance Share
Units
(at target)
($)(1) |
|
|
Time-Based
Restricted Stock
($) |
|
|
|
|
|
|
|
|
|
Mr. Duncan(2) |
|
|
7,030,462 |
|
|
1,462,513 |
|
|
|
|
|
|
|
|
|
Ms. Motlagh(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hatem(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Jackson |
|
|
737,366 |
|
|
320,024 |
|
|
|
|
|
|
|
|
|
Mr. Wojtaszek(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Durvasula(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Morefield(4) |
|
|
1,106,043 |
|
|
480,036 |
|
|
|
|
|
|
|
|
|
Mr. Timmons(5) |
|
|
1,106,043 |
|
|
480,036 |
|
|
|
|
|
|
|
|
|
- (1)
- Reflects
FASB ASC 718 value. For the actual number of units granted, see "Executive Compensation Tables2020 Grants of Plan-Based Awards Table".
- (2)
- Mr. Duncan
and Ms. Motlagh each received a sign-on grant of restricted stock with a three-year ratable vesting schedule in connection with their
appointments. These awards had grant date values of $5,000,028 and $1,250,047, respectively.
- (3)
- Mr. Hatem
did not receive an LTI grant in 2020 due to the timing of his appointment. He will receive his first LTI grant in 2021. Messrs. Wojtaszek and
Durvasula did not receive LTI grants in 2020.
- (4)
- In
connection with her retirement and transition, Ms. Morefield received full vesting of all of her time-based equity awards and remained eligible to vest in
a portion of her performance-based awards, based on pro-ration through March 1, 2021 and the achievement of the applicable performance criteria.
- (5)
- In
connection with his departure on September 1, 2020, Mr. Timmons received full vesting on his time-based equity awards that would have vested prior
to the first anniversary of his departure date and remained eligible to vest in a portion of his performance-based awards, based on pro-ration through his departure and the achievement of the
applicable performance criteria.
Annual Target LTI Award Values for Current NEOs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Target LTI Award |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-Based
LTI Target Award |
|
|
Time-Based
LTI Award |
|
|
Total Target
LTI Award Value |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Duncan |
|
$ |
3,412,500 |
|
$ |
1,462,500 |
|
$ |
4,875,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Motlagh |
|
$ |
700,000 |
|
$ |
300,000 |
|
$ |
1,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hatem |
|
$ |
770,000 |
|
$ |
330,000 |
|
$ |
1,100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Jackson |
|
$ |
630,000 |
|
$ |
270,000 |
|
$ |
900,000 |
|
|
|
|
|
|
|
|
|
|
|
|
LTI Payout Determinations
In February 2021, the Compensation Committee certified the performance results under outstanding performance awards granted in 2018 and 2019 based upon the
performance period ending December 31, 2020, as described below. Our performance awards granted prior to 2020 vest over a three-year period contingent upon TSR achievement relative to the MSCI
US REIT Index for the applicable one-, two- and three-year performance period(s). As described above, PRSU awards granted in 2020 cliff vest upon the third anniversary of the applicable grant date,
subject to achievement of
|
|
|
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Proxy
Statement |
Table of Contents
specified
TSR goals over a three-year performance period (2020-2022). Since the Compensation Committee eliminated the annual vesting feature of the PRSU awards granted in 2020, the Compensation
Committee did not certify the performance results for PRSU awards granted in 2020 as the performance goals are cumulative and only need to be certified at the end of the three-year performance period.
For purposes of the 2020 LTI awards, TSR is generally defined as (i) the trailing 60-day average closing stock price at the end of the performance period minus the trailing 60-day average
closing stock price at the beginning of the performance period, divided by (ii) the trailing 60-day average closing stock price at the beginning of the performance period, with all stock prices
adjusted for the reinvestment of dividends and stock splits. LTI awards granted prior to 2020 generally utilized the same definition of TSR, but with the 60-day periods replaced with one-month
periods. For purposes of
the LTI awards granted prior to 2020, TSR is generally defined as (i) the trailing one-month average adjusted closing stock price at the end of the performance period minus the trailing one-month
average adjusted closing stock price at the beginning of the performance period, divided by (ii) the trailing one-month average adjusted closing stock price at the beginning of the performance period.
2018 LTI Performance Awards - Final Vesting Determination
The performance awards granted in 2018 vested in February 2021. These awards consisted of PRSUs, which vested over a three-year performance period ending in
December 31, 2020 based upon achievement of TSR targets compared to the MSCI US REIT Index. Up to one-third of the total target award could be earned after each of the first year and first two
years of the performance period, if actual performance over such periods met or exceeded the target performance for that period. Actual TSR for the 2018 awards for the three-year performance period
ending December 31, 2020 was 30.2%, which exceeded the maximum performance threshold, resulting in achievement at 200%. Actual shares that vested for each NEO as a result of 2020 performance
are as follows: Mr. Jackson-20,582; Mr. Wojtaszek-89,579; Ms. Morefield-35,082; and Mr. Timmons-31,178 Additional information about the 2018 PRSU awards is disclosed in the
Outstanding Equity Awards at 2020 Fiscal Year End table.
2018 Awards Performance:
|
|
|
|
|
|
|
|
|
|
|
Performance Measure |
|
Target |
|
Maximum |
|
Actual Cumulative Performance(1) |
|
|
Payout% |
|
|
|
|
|
|
|
|
|
|
|
|
TSR |
|
³ Index |
|
> 2.0% above Index |
|
> 2.0% above Index |
|
|
200% |
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- 2020
is the third year for this performance award, in which up to 200% of the total target award may be earned (less any portion previously earned). TSR payout was
based on the three-year performance period of January 1, 2018 through December 31, 2020.
2019 LTI Performance Awards
The performance awards granted in 2019 vest solely upon achievement of TSR targets compared to the MSCI US REIT Index. Up to one-third of the total target
award can be earned after each of the first year and first two years of the performance period if actual performance over such periods meets or exceeds the target performance. Actual TSR for 2019
awards for the two-year performance period ending December 31, 2020 was 33.2%, which exceeded the MSCI US REIT Index, resulting in vesting of two-thirds of the total target award. Actual shares
that vested for each NEO as a result of 2020 performance are as follows: Mr. Jackson-7,624; Mr. Wojtaszek-16,460; Ms. Morefield-11,436; and Mr. Timmons-6,356. Additional
information about the 2019 PRSU awards is disclosed in the Outstanding Equity Awards at 2020 Fiscal Year End table.
2019 Awards Performance:
|
|
|
|
|
|
|
|
|
|
|
Performance Measure |
|
Target |
|
Maximum |
|
Actual Cumulative Performance(1) |
|
|
Payout% |
|
|
|
|
|
|
|
|
|
|
|
|
TSR |
|
³ Index |
|
> 2.0% Above Index |
|
> Above Index |
|
|
100% |
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- Based
on performance period of January 1, 2019 through December 31, 2020.
|
|
|
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|
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Table of Contents
2020 LTI Performance Awards
As discussed above, the annual vesting feature was eliminated, beginning with the 2020 LTI performance awards. The target and maximum number of shares that
may be earned by the NEOs under the 2020 performance awards over the full three-year performance period are disclosed in the Grants of Plan-Based Awards Table for 2020.
Other Elements of Compensation
Retirement and Other Benefits
Benefits are established based upon a determination of what is needed to aid in attracting and retaining a talented and motivated work force. The Compensation
Committee does not view benefits and perquisites for our NEOs as a key component of our executive compensation program.
Our NEOs participate in benefit plans on the same terms as our other participating employees, and their total value remains a negligible percentage of each executive officer's total compensation
package.
We
do not provide perquisites or other personal benefits to our NEOs that are not available to all employees of the Company, other than offering an annual physical to certain of our executives and
their spouses. We provide the following benefits to all employees of the Company: medical, dental, vision and disability insurance, parking at our corporate offices or public transportation credit,
401(k) employer match and group life insurance premiums. We do not maintain any defined benefit or supplemental retirement plans.
The
Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to our NEOs and may revise, amend or add to any such benefits and perquisites in the
future as it deems advisable.
Severance Benefits
In order to achieve our compensation objective of attracting, retaining and motivating qualified executives, we believe that we need to provide the NEOs with
severance protections provided in an employment agreement or severance agreement. Each NEO is entitled to certain severance benefits based on the nature of their termination. See "Employment
Agreements and Severance Agreements" and "Executive Compensation TablesPotential Payments Upon Termination of Employment or Change in Control" below for complete details of severance
benefits payable to our NEOs who are current executive officers upon certain terminations of employment and those provided to our former NEOs.
Other Compensation-Related Policies
Stock Ownership Guidelines. The Company's corporate governance guidelines specify that the CEO is expected to hold shares worth at least six times his or her
annual base pay, and each other NEO is
expected to hold shares worth at least one and a half times his or her annual base pay. All individuals who are subject to the guidelines has five years from the time he or she first becomes subject
to the guidelines in order to meet the ownership requirement. As of December 31, 2020, each of our NEOs has met the minimum requirements for stock ownership or has not yet been subject to the
guidelines for five years.
Hedging and Pledging. The Company has a written policy prohibiting the purchase or sale of puts, calls, options or other derivative securities based on the
Company's securities by directors, officers or employees, including Company securities granted to a director, officer or employee by the Company as part of the compensation of such individual or held
directly or indirectly by the director, officer or employee. This prohibition also includes hedging or monetization transactions, such as exchange funds, equity swaps, collars and prepaid variable
forward contracts, in which the stockholder continues to own the underlying Company security without all the risks or rewards of ownership. Directors and officers of
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|
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Proxy
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the
Company are also prohibited from pledging Company securities or from holding Company securities in a margin account, absent specific preapproval. This same prohibition applies to any employee as
set out in the Company's policy on insider trading, and any exceptions to this prohibition must be authorized in advance in accordance with the pre-clearance requirements of such policy. No such
pre-approvals have been requested or provided.
Clawback. The Company has a written clawback policy, allowing it to recover incentive payments and equity awards realized by our NEOs in the preceding three years
in the event of a material restatement of the Company's financial statements, if the incentive payments or amount of equity awards received would have been lower if calculated based on the restated
financials, and the executive engaged in actual fraud or willful unlawful misconduct that materially contributed to the need for the restatement. To the extent that the SEC adopts final rules for
clawback policies that require changes to our policy, we will revise our policy accordingly.
Repricing Prohibition. The Company maintains prohibitions on the re-pricing of underwater stock options, and cash buyouts of underwater stock options.
Double-Trigger Change in Control Benefits. Severance benefits under an executive's employment agreement or severance agreement, as applicable, are not payable, and
equity awards do not vest upon
a change in control unless the executive is terminated without cause or experiences a constructive termination, in each case, within 12 months following the change in control.
Employment Agreements
The Company has entered into a written employment agreement with each of Messrs, Duncan and Jackson, which govern their terms of employment and provide for
pre-determined severance benefits in the event of certain terminations of employment. The Company has also entered into other letters with each of Ms. Motlagh and Mr. Hatem, that set
forth the compensation and benefits each will receive in connection with their employment, as well as written severance agreements that provide for pre-determined severance benefits in the event of
certain terminations of employment. Employment agreements and severance agreements allow the Company the flexibility to make changes in key positions with or without cause, and minimize the potential
for disagreements or litigation, by establishing separation terms in advance, including arbitration provisions and the execution of appropriate releases, and perpetuation of important confidentiality
and non-competition restrictions. The benefits specified in the employment agreements or severance agreements, including the severance and change in control payments, are important provisions designed
to ensure the recruitment and retention of quality executive talent.
Information
regarding the severance payable to our NEOs pursuant to their employment agreements, severance agreements and, in the case of our former NEOs, separation or transition and retirement
agreements, including the treatment of outstanding equity awards can be found in "Executive Compensation TablesPotential Payments Upon Termination of Employment or Change in Control".
Compensation Committee Analysis of Risk
The Compensation Committee engaged FPL to perform an annual assessment to determine whether the Company's compensation practices, plans and
policies encourage unnecessary risk taking or create risks that are reasonably likely to have a material adverse effect on the Company. These assessments reviewed the material elements of executive
and non-executive employee compensation. Based on these assessments, the Compensation Committee concluded these policies
and practices do not encourage unnecessary risk taking or create risk that is reasonably likely to have a material adverse effect on CyrusOne.
|
|
|
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Proxy
Statement
|
|
45 |
Table of Contents
Compensation Committee Report
|
Compensation Committee Report
The
Compensation Committee has the overall responsibility of evaluating the performance and determining the compensation of the Chief Executive Officer and approving the compensation structure for the
Company's other NEOs. In fulfilling its responsibilities, the Compensation Committee has reviewed and discussed the "Compensation Discussion and Analysis" required by Item 402(b) of
Regulation S-K with management. Based on such review and discussion, the Committee recommended to the Board of Directors that the "Compensation Discussion and Analysis" be included in this
proxy statement for the 2021 Annual Meeting of Stockholders for filing with the SEC.
|
|
|
|
|
Compensation Committee: |
|
|
T. Tod Nielsen (Chair)
Michael A. Klayko
Lynn A. Wentworth
|
|
|
|
46 |
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Proxy
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Table of Contents
Executive Compensation Tables
|
Executive Compensation Tables
2020 Summary Compensation Table
The following table sets forth the compensation paid to or earned by the Company's NEOs for the years indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position |
|
Year |
|
Salary
($) |
|
Bonus
($)(1) |
|
Stock
Awards
($)(2) |
|
Option
Awards
($)(3) |
|
Non-Equity
Incentive Plan
Compensation
($)(4) |
|
All Other
Compensation
($)(5) |
|
Total($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce W. Duncan(6) |
|
2020 |
|
408,654 |
|
612,981 |
|
13,493,003 |
|
|
|
21,209 |
|
37,498 |
|
14,573,345 |
President and Chief |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Katherine Motlagh(7) |
|
2020 |
|
78,846 |
|
400,000 |
|
1,250,047 |
|
|
|
|
|
13,300 |
|
1,742,193 |
Executive Vice President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John P. Hatem(7) |
|
2020 |
|
107,308 |
|
111,021 |
|
|
|
|
|
|
|
14,736 |
|
233,065 |
Executive Vice President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Chief Operating Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert M. Jackson |
|
2020 |
|
400,269 |
|
|
|
1,057,391 |
|
|
|
450,000 |
|
21,255 |
|
1,928,915 |
Executive Vice President, |
|
2019 |
|
352,000 |
|
|
|
699,547 |
|
|
|
581,504 |
|
22,713 |
|
1,655,764 |
General Counsel and Secretary |
|
2018 |
|
344,616 |
|
|
|
716,671 |
|
|
|
453,686 |
|
14,088 |
|
1,529,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary J. Wojtaszek(8) |
|
2020 |
|
150,769 |
|
|
|
|
|
|
|
|
|
4,458,808 |
|
4,609,577 |
former President and |
|
2019 |
|
800,000 |
|
|
|
3,978,260 |
|
|
|
2,312,800 |
|
17,868 |
|
7,108,928 |
Chief Executive Officer |
|
2018 |
|
800,000 |
|
|
|
4,376,808 |
|
|
|
1,683,101 |
|
11,949 |
|
6,871,858 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Venkatesh S. Durvasula(9) |
|
2020 |
|
409,615 |
|
|
|
3,300,213 |
|
|
|
|
|
3,640,044 |
|
7,349,872 |
former Interim President and |
|
2019 |
|
545,769 |
|
|
|
1,442,704 |
|
|
|
908,600 |
|
292,368 |
|
3,189,441 |
Chief Executive Officer |
|
2018 |
|
472,116 |
|
|
|
1,221,438 |
|
|
|
527,117 |
|
18,229 |
|
2,238,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diane M. Morefield(10) |
|
2020 |
|
553,846 |
|
553,846 |
|
3,320,777 |
|
|
|
|
|
19,670 |
|
4,448,139 |
former Executive Vice President |
|
2019 |
|
475,000 |
|
|
|
1,049,240 |
|
|
|
784,700 |
|
21,282 |
|
2,330,222 |
and Chief Financial Officer |
|
2018 |
|
463,462 |
|
|
|
1,221,438 |
|
|
|
610,147 |
|
13,888 |
|
2,308,935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin L. Timmons(11) |
|
2020 |
|
374,519 |
|
|
|
1,586,079 |
|
|
|
|
|
1,964,862 |
|
3,925,460 |
former Executive Vice President |
|
2019 |
|
460,577 |
|
|
|
1,349,231 |
|
|
|
760,873 |
|
21,612 |
|
2,592,293 |
and Chief Technology Officer |
|
2018 |
|
419,231 |
|
|
|
1,221,438 |
|
|
|
468,071 |
|
13,019 |
|
2,121,759 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- Reflects
any amounts paid to each NEO that are considered "bonuses" pursuant to SEC guidance. For a detailed discussion regarding these amounts, see "Executive
Compensation2020 Executive Compensation ComponentsAnnual Incentive Bonus Opportunity."
- (2)
- Reflects
the aggregate grant date fair value of restricted stock and restricted stock unit awards, determined in accordance with FASB ASC Topic 718. The
assumptions used in the calculation of the grant date fair values of these awards are set forth in Note 16 to the financial statements in our Annual Report on Form 10-K filed with the
SEC on February 19, 2021. As described below in the 2020 Grants of Plan-Based Awards Table, amounts reported in this column also include the incremental fair value related to award
modifications with respect to time-based and performance-based equity awards held by Mr. Durvasula and Ms. Morefield.
|
|
|
2021
Proxy
Statement
|
|
47 |
Table of Contents
Executive Compensation Tables
|
The
amounts shown consist of time-based and performance-based restricted stock unit awards at target:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date Fair ValuePerformance-Based Restricted Stock Units
($) |
|
|
Grant Date Fair ValueTime-Based Restricted Stock Units
($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2020 |
|
Fiscal
2019 |
|
Fiscal
2018 |
|
|
Fiscal
2020 |
|
Fiscal
2019 |
|
Fiscal
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Duncan |
|
|
7,030,462 |
|
|
|
|
|
|
6,462,541 |
|
|
|
|
Ms. Motlagh |
|
|
|
|
|
|
|
|
|
1,250,047 |
|
|
|
|
Mr. Hatem |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Jackson |
|
|
737,366 |
|
499,517 |
|
540,626 |
|
|
320,024 |
|
200,030 |
|
176,045 |
Mr. Wojtaszek |
|
|
|
|
2,840,717 |
|
3,301,761 |
|
|
|
|
1,137,543 |
|
1,075,047 |
Mr. Durvasula |
|
|
3,102,511 |
* |
1,030,159 |
|
921,429 |
|
|
197,702 |
* |
412,545 |
|
300,010 |
Ms. Morefield |
|
|
2,281,007 |
* |
749,222 |
|
921,429 |
|
|
1,039,770 |
* |
300,019 |
|
300,010 |
Mr. Timmons |
|
|
1,106,043 |
|
749,222 |
|
921,429 |
|
|
480,036 |
|
600,009 |
|
300,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- *
- The
amounts reported in this column with respect to Mr. Durvasula and Ms. Morefield include the incremental fair value related to award modifications
with respect to time-based and performance-based equity awards held by Mr. Durvasula and Ms. Morefield. Mr. Durvasula did not receive any new equity award grants in 2020.
- Assuming
performance at maximum levels, the performance-based restricted stock unit awards valued at the closing stock price on the grant date are shown
below (300% of target for awards granted in 2020 and 200% of target for awards granted in 2018 and 2019):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Performance-Based
Restricted Stock Units Assuming
Maximum Performance
($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2020 |
|
|
Fiscal 2019 |
|
|
Fiscal 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Duncan |
|
|
10,237,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Motlagh |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hatem |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Jackson |
|
|
1,440,109 |
|
|
1,200,075 |
|
|
1,056,062 |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Wojtaszek |
|
|
|
|
|
6,825,046 |
|
|
6,450,077 |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Durvasula |
|
|
|
* |
|
2,475,063 |
|
|
1,800,057 |
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Morefield |
|
|
2,160,163 |
* |
|
1,800,008 |
|
|
1,800,057 |
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Timmons |
|
|
2,160,163 |
|
|
1,800,008 |
|
|
1,800,057 |
|
|
|
|
|
|
|
|
|
|
|
|
- *
- The
amounts reported in this column with respect to Mr. Durvasula and Ms. Morefield do not reflect the incremental fair value related to award
modifications with respect to time-based and performance-based equity awards held by Mr. Durvasula and Ms. Morefield.
- (3)
- No
option awards were granted in 2018, 2019 or 2020.
- (4)
- Reflects
annual incentive plan awards earned for the year indicated. For a detailed discussion regarding our annual incentive plan, see "Executive
Compensation2020 Executive Compensation ComponentsAnnual Incentive Bonus Opportunity".
|
|
|
48 |
|
2021
Proxy
Statement |
Table of Contents
Executive Compensation Tables
|
- (5)
- The
components of the "All Other Compensation" column for 2020 include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Match
($) |
|
Insurance
($)(a) |
|
Perquisites
($)(b) |
|
Severance Payments
($)(c) |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Mr. Duncan |
|
5,515 |
|
1,935 |
|
30,048 |
|
|
|
37,498 |
|
|
|
|
|
|
|
|
|
|
|
Ms. Motlagh |
|
1,731 |
|
1,569 |
|
10,000 |
|
|
|
13,300 |
|
|
|
|
|
|
|
|
|
|
|
Mr. Hatem |
|
3,219 |
|
1,517 |
|
10,000 |
|
|
|
14,736 |
|
|
|
|
|
|
|
|
|
|
|
Mr. Jackson |
|
9,832 |
|
1,423 |
|
10,000 |
|
|
|
21,255 |
|
|
|
|
|
|
|
|
|
|
|
Mr. Wojtaszek |
|
4,923 |
|
1,882 |
|
10,000 |
|
4,442,003 |
|
4,458,808 |
|
|
|
|
|
|
|
|
|
|
|
Mr. Durvasula |
|
11,400 |
|
1,778 |
|
33,369 |
|
3,593,497 |
|
3,640,044 |
|
|
|
|
|
|
|
|
|
|
|
Ms. Morefield |
|
8,049 |
|
1,621 |
|
10,000 |
|
|
|
19,670 |
|
|
|
|
|
|
|
|
|
|
|
Mr. Timmons |
|
7,233 |
|
1,543 |
|
10,000 |
|
1,946,086 |
|
1,964,862 |
|
|
|
|
|
|
|
|
|
|
|
- (a)
- Reflects
employer-paid life, long-term disability, short-term disability, and accidental death and dismemberment insurance.
- (b)
- Consists
of a $10,000 payment to Mr. Duncan for reimbursement of attorney's fees and $10,048 in relocation expenses; $23,369 for relocation to
Mr. Durvasula; and an annual physical for each executive and spouse ($10,000 per couple).
- (c)
- Reflects
severance payments made to Mr. Wojtaszek, Mr. Durvasula and Mr. Timmons as part of their terminations during 2020. See "Separation
AgreementsMessrs. Wojtaszek, Durvasula and Timmons" on page 55 of this Proxy Statement.
- (6)
- Mr. Duncan
was appointed President & CEO, and a member of the board of directors, effective July 6, 2020.
- (7)
- Ms. Motlagh
was appointed EVP and Chief Financial Officer effective October 30, 2020. Mr. Hatem was appointed EVP and Chief Operating Officer
effective October 5, 2020.
- (8)
- Mr. Wojtaszek
stepped down as President & CEO, and a member of the board of directors, effective February 20, 2020.
- (9)
- Mr. Durvasula
served as the Company's EVP & President, Europe through February 20, 2020, and as the Company's President & CEO from
February 20, 2020 through July 6, 2020.
- (10)
- In
connection with her previously announced retirement, Ms. Morefield stepped down as Chief Financial Officer effective October 30, 2020.
Ms. Morefield remained employed full-time through December 31, 2020 and part-time through March 1, 2021.
- (11)
- Mr. Timmons'
employment was terminated effective September 1, 2020.
|
|
|
2021
Proxy
Statement
|
|
49 |
Table of Contents
Executive Compensation Tables
|
Grants of Plan-Based Awards
The following table presents information concerning plan-based awards granted to each of the NEOs during 2020.
2020 Grants of Plan-Based Awards Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
Under Non-Equity Incentive Plan
Awards(1) |
|
Estimated Future Payouts
Under Equity Incentive Plan
Awards(2) |
|
All Other
Stock/Unit
Awards:
Number of
Shares of |
|
Grant Date
Fair Value of
Stock/Unit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Award
Type |
|
Grant
Date |
|
Approval
Date |
|
Threshold
($) |
|
Target
($) |
|
Maximum
($) |
|
Threshold
(#) |
|
Target
(#) |
|
Maximum
(#) |
|
Stock/Units
(#) |
|
Awards
($)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Duncan |
|
AIP |
|
7/6/2020 |
|
6/26/2020 |
|
|
|
|
|
612,981 |
|
|
|
|
|
|
|
|
|
|
|
|
PSUs |
|
7/6/2020 |
|
6/26/2020 |
|
|
|
|
|
|
|
22,621 |
|
45,241 |
|
135,723 |
|
|
|
7,030,462 |
|
|
RES |
|
7/6/2020 |
|
6/26/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
85,676 |
|
6,462,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Motlagh |
|
RES |
|
11/2/2020 |
|
10/6/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
17,584 |
|
1,250,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Jackson |
|
AIP |
|
2/25/2020 |
|
2/25/2020 |
|
98,750 |
|
395,000 |
|
790,000 |
|
|
|
|
|
|
|
|
|
|
|
|
PSUs |
|
2/25/2020 |
|
2/25/2020 |
|
|
|
|
|
|
|
3,618 |
|
7,236 |
|
21,708 |
|
|
|
737,367 |
|
|
RSUs |
|
2/25/2020 |
|
2/25/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
4,824 |
|
320,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Durvasula |
|
AIP |
|
2/25/2020 |
|
2/25/2020 |
|
306,250 |
|
1,225,000 |
|
2,450,000 |
|
|
|
|
|
|
|
|
|
|
|
|
PSUs - Modified(4) |
|
2/21/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,779,394 |
|
|
RSUs - Modified(4) |
|
2/21/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197,702 |
|
|
PSUs - Modified(4) |
|
2/26/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,323,117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Morefield |
|
AIP |
|
2/25/2020 |
|
2/25/2020 |
|
137,500 |
|
550,000 |
|
1,100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
PSUs(5) |
|
2/25/2020 |
|
2/25/2020 |
|
|
|
|
|
|
|
5,427 |
|
10,854 |
|
32,562 |
|
|
|
1,883,715 |
|
|
RSUs(5) |
|
2/25/2020 |
|
2/25/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
7,236 |
|
881,248 |
|
|
PSUs - Modified(5) |
|
2/21/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
397,292 |
|
|
RSUs - Modified(5) |
|
2/21/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158,522 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Timmons |
|
AIP |
|
2/25/2020 |
|
2/25/2020 |
|
118,750 |
|
475,000 |
|
950,000 |
|
|
|
|
|
|
|
|
|
|
|
|
PSUs |
|
2/25/2020 |
|
2/25/2020 |
|
|
|
|
|
|
|
5,427 |
|
10,854 |
|
32,562 |
|
|
|
1,106,043 |
|
|
RSUs |
|
2/25/2020 |
|
2/25/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
7,236 |
|
480,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- Reflects
each NEO's threshold, target and maximum incentive opportunity under our annual incentive plan ("AIP") for 2020. Actual payouts are calculated using actual
salary earned for 2020, as opposed to annualized base salary rate. Per his employment agreement, Mr. Duncan's 2020 bonus would not be less than his target bonus, prorated for the number of days
Mr. Duncan was employed with us. The amount shown represents the maximum additional amount he could have received under the AIP for 2020. Ms. Motlagh's offer letter provided that her
bonus for 2020 would be $400,000 and Mr. Hatem's offer letter provided that his bonus for 2020 would be paid at target, prorated for the number of days Mr. Hatem was employed with us.
- (2)
- Reflects
performance-based restricted stock units ("PSUs") granted in 2020.
- (3)
- Reflects
the grant date fair value of time-based restricted units ("RSUs"), time-based restricted shares ("RES") and PSUs at target (the most probable outcome as of
the grant date), computed in accordance with FASB ASC 718 without regard to estimated forfeitures. The assumptions used in the calculation of the grant date fair values of the awards are set forth in
Note 16 to the financial statements in our Annual Report on Form 10-K filed with the SEC on February 19, 2021.
- (4)
- Reflects
incremental fair value of awards due to an award modification to accelerate vesting of certain shares in conjunction with Mr. Durvasula's
termination.
- (5)
- Reflects
incremental fair value of awards due to an award modification to accelerate vesting of certain shares in conjunction with Ms. Morefield's retirement.
|
|
|
50 |
|
2021
Proxy
Statement |
Table of Contents
Executive Compensation Tables
|
Outstanding Equity Awards at Fiscal Year End
The following table presents information concerning outstanding equity awards held by the NEOs as of December 31, 2020.
Outstanding Equity Awards at 2020 Fiscal Year End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock/Unit Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Grant Date |
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable |
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable |
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unearned
Options
(#) |
|
Option
Exercise
Price
($) |
|
Option
Expiration
Date |
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#) |
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(1) |
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested (#) |
|
Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested ($)(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Duncan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 LTIRES(8) |
|
7/6/2020 |
|
|
|
|
|
|
|
|
|
|
|
85,676 |
|
6,267,199 |
|
45,241 |
|
3,309,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Motlagh |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 LTIRES(10) |
|
11/2/2020 |
|
|
|
|
|
|
|
|
|
|
|
17,584 |
|
1,286,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Jackson |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 LTIRSUs & PSUs(5) |
|
2/26/2018 |
|
|
|
|
|
|
|
|
|
|
|
1,144 |
|
83,684 |
|
10,291 |
|
752,787 |
2019 LTIRSUs & PSUs(6) |
|
2/21/2019 |
|
|
|
|
|
|
|
|
|
|
|
2,542 |
|
185,947 |
|
11,438 |
|
836,690 |
2020 LTIRSUs & PSUs(9) |
|
2/25/2020 |
|
|
|
|
|
|
|
|
|
|
|
4,824 |
|
352,876 |
|
7,236 |
|
529,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Wojtaszek |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 LTIRSUs & PSUs(5) |
|
2/26/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,789 |
|
3,276,315 |
2019 LTIRSUs & PSUs(6) |
|
2/21/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,690 |
|
1,806,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Durvasula |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 LTIOptions(2) |
|
4/17/2013 |
|
13,775 |
|
|
|
|
|
23.58 |
|
4/17/2023 |
|
|
|
|
|
|
|
|
2015 LTIOptions(3) |
|
2/10/2015 |
|
43,317 |
|
|
|
|
|
28.42 |
|
2/10/2025 |
|
|
|
|
|
|
|
|
2016 LTIOptions(4) |
|
2/1/2016 |
|
37,554 |
|
|
|
|
|
36.99 |
|
2/1/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Morefield |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 LTIRSUs & PSUs(5) |
|
2/26/2018 |
|
|
|
|
|
|
|
|
|
|
|
1,949 |
|
142,569 |
|
17,541 |
|
1,283,124 |
2019 LTIRSUs & PSUs(6) |
|
2/21/2019 |
|
|
|
|
|
|
|
|
|
|
|
3,812 |
|
278,848 |
|
15,560 |
|
1,138,214 |
2020 LTIRSUs & PSUs(9) |
|
2/25/2020 |
|
|
|
|
|
|
|
|
|
|
|
7,236 |
|
529,313 |
|
4,210 |
|
307,962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Timmons |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 LTIRSUs & PSUs(5) |
|
2/26/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,589 |
|
1,140,335 |
2019 LTIRSUs & PSUs(6)(7) |
|
2/21/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,533 |
|
697,339 |
2020 LTIRSUs & PSUs(9) |
|
2/25/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,418 |
|
176,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- Based
on the closing price of the Company's common stock on December 31, 2020 of $73.15.
- (2)
- Reflects
shares underlying performance-based stock options granted on April 17, 2013, which vested in 2014, 2015, and 2016. The target number of stock options
granted was 10,455 for Mr. Durvasula.
- (3)
- Reflects
shares underlying time-based stock options granted on February 10, 2015, which vested ratably over three years on the anniversary date of the grant.
- (4)
- Reflects
shares underlying time-based stock options granted on February 1, 2016, which vested ratably over three years on the anniversary date of the grant.
- (5)
- Reflects
time-based and performance-based restricted stock unit awards, granted on February 26, 2018, that have not vested, based on the target level of
achievement. The performance-based restricted stock units vest based on the achievement of certain relative TSR goals, as set forth in the award agreement, during the 2018-2020 performance period. The
maximum number of shares that may be earned assuming the highest level of performance over the entire 3-year performance period would be 200% of the target number. The 2018 PSUs were earned at maximum
performance and settled in February 2021. The time-based restricted stock units vest ratably over three years on the anniversary date of the grant, subject generally to the executive's continued
employment on such vesting date.
- (6)
- Reflects
time-based and performance-based restricted stock unit awards, granted on February 21, 2019, that have not vested, based on the target level of
achievement. The performance-based restricted stock units vest in cumulative installments on February 28, 2020, 2021 and 2022 based on the achievement of certain relative TSR goals, as set
forth in the award agreement, during the 2019-2021 performance period. The maximum number of shares that may be earned assuming the highest level of performance over the entire 3-year performance
period would be 200% of the target number. Two-thirds of the target award vested in February 2021. The balance remains outstanding. The time-based restricted stock units vest ratably over three years
on the anniversary date of the grant, subject generally to the executive's continued employment on such vesting date.
- (7)
- Reflects
time-based restricted stock unit awards, granted on April 1, 2019 and May 2, 2019, which vest on the third anniversary of the grant date,
subject generally to continued employment on such vesting date.
- (8)
- Reflects
time-based restricted stock awards and performance-based restricted stock unit awards, granted on July 6, 2020, that have not vested, based on the
target level of achievement. The performance-based restricted stock units vest February 28, 2023 based on the achievement of certain relative TSR goals, as set forth in the award agreement,
during the 2020-2022 performance period. The maximum number of shares that may be earned assuming the highest level of performance over the entire 3-year performance period would be 300% of the target
number. The time-based restricted stock vest ratably over three years on the anniversary date of the grant, subject generally to the executive's continued employment on such vesting date.
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|
- (9)
- Reflects
time-based and performance-based restricted stock unit awards, granted on February 25, 2020, that have not vested, based on the target level of
achievement. The performance-based restricted stock units vest on February 28, 2023 on the achievement of certain relative TSR goals, as set forth in the award agreement, during the 2020-2022
performance period. The maximum number of shares that may be earned assuming the highest level of performance over the entire 3-year performance period would be 300% of the target number. The
time-based restricted stock units vest ratably over three years on the anniversary date of the grant, subject generally to the executive's continued employment on such vesting date.
- (10)
- Reflects
time-based restricted stock unit awards, granted on November 2, 2020, that have not vested. The time-based restricted stock units vest ratably over
three years on the anniversary date of the grant, subject generally to the executive's continued employment on such vesting date.
Option Exercises and Stock Vested
The following table presents information concerning amounts realized by our NEOs upon the vesting of stock awards and the exercise of stock
options in 2020. The value realized on vesting or exercise represents the number of shares that vested or options that were exercised in 2020 and the aggregate value of such shares based upon the
closing price of our common stock on the applicable vesting date.
|
|
|
|
|
|
|
|
|
|
|
Stock Awards |
|
Stock Options |
|
|
|
|
|
|
|
|
|
Name |
|
Number of
Shares Acquired
on Vesting
(#) |
|
Value Realized
on Vesting
($) |
|
Number of
Shares Acquired
on Vesting
(#) |
|
Value Realized
on Vesting
($) |
|
|
|
|
|
|
|
|
|
Mr. Duncan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Motlagh |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hatem |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Jackson |
|
16,818 |
|
1,043,695 |
|
24,164 |
|
1,007,309.75 |
|
|
|
|
|
|
|
|
|
Mr. Wojtaszek |
|
109,453 |
|
6,891,077 |
|
184,001 |
|
6,650,568.91 |
|
|
|
|
|
|
|
|
|
Mr. Durvasula |
|
73,151 |
|
5,579,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Morefield |
|
22,988 |
|
1,430,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Timmons |
|
30,715 |
|
2,090,618 |
|
68,016 |
|
2,819,889.96 |
|
|
|
|
|
|
|
|
|
No Pension Benefits
In the year ended December 31, 2020, our NEOs received no pension benefits and had no accumulated pension benefits.
No Nonqualified Deferred Compensation
In
the year ended December 31, 2020, our NEOs received no nonqualified deferred compensation and had no nonqualified deferred compensation balances.
Potential Payments Upon Termination of Employment or Change in Control
Each
of the employment agreements and severance agreements with our NEOs who are current executive officers specify the payments and benefits to which such executives are entitled upon a termination
of employment for specified reasons, as described below. In addition, certain of our award agreements under our long-term incentive plan provide for certain treatment of outstanding equity awards upon
a termination of employment for specified reasons, as described below. The section below also describes the separation agreements entered into with each of Messrs. Wojtaszek, Durvasula and
Timmons, and the transition and retirement agreement entered into with Ms. Morefield.
Employment Agreements
Without Cause or for Good Reason. Under the employment agreements with Messrs. Duncan and Jackson and the severance agreements and equity award agreements
with Ms. Motlagh and Mr. Hatem, in each case, as in effect on December 31, 2020, if the Company terminates the executive's
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|
employment
for any reason other than for cause or if the executive's employment is terminated due to death or disability or, if the executive resigns for good reason (as defined below), in each case,
prior to a change in control, then, in addition to the executive's right to receive accrued obligations, the executive will be entitled to, generally subject to the execution and non-revocation of a
release of claims:
-
- a lump sum cash severance payment equal to (1) in the case of Ms. Motlagh and Mr. Hatem, her or his then-current base
salary or (2) in the case of Messrs. Duncan and Jackson, the sum of his (i) then-current annual base salary, and (ii) annual incentive bonus target, multiplied by two in
the case of Mr. Duncan, and, in each case, with such amount increased by the interest that would have been earned on such amount over a 60-day period at an annual rate of interest of 3.5%;
-
- annual bonus for the year of termination, pro-rated to reflect the number of days worked during the year of termination, and based on target
performance (actual performance in the case of Mr. Duncan);
-
- vesting of outstanding time-vesting equity awards as follows:
- o
- in the case of Mr. Duncan and Ms. Motlagh, immediate vesting of their
sign-on equity award;
- o
- in the case of Mr. Duncan, immediate pro-rata vesting of his other time-vesting
equity awards, with one additional year of service credited for vesting purposes;
- o
- in the case of Ms. Motlagh and Mr. Hatem, in accordance with the terms of
our standard executive award agreements, immediate pro-rata vesting of any outstanding time-based equity award held by the applicable NEO;
- o
- in the case of Mr. Jackson, immediate vesting of any outstanding time-based
equity award held by him that would otherwise have vested on or prior to the end of the one-year period beginning at the time of Mr. Jackson's termination;
-
- pro-rata vesting of outstanding performance-vesting equity awards, based on actual performance:
-
- solely in the case of Mr. Jackson, if applicable, any unvested benefits under any qualified 401(k) plan which would have accrued for the
executive under any qualified defined benefit pension plan if the term of his employment had not been terminated prior to the end of the first anniversary of his termination date; and
-
- continued medical, dental and vision coverage under the Company's group health plan if the executive timely elects and remains eligible for
COBRA, as well as continued Company group life insurance coverage through the first anniversary of the termination date.
For
purposes of the employment agreements and severance agreements, "cause" generally means an act of fraud, misappropriation, embezzlement or misconduct constituting serious criminal activity on the
part of the executive, as determined by the Board of Directors.
For
purposes of the employment agreements and severance agreements, "good reason" (referred to as "constructive termination" in Mr. Jackson's employment agreement) will generally be deemed to
have occurred if, without the executive's consent, (a) there is a material adverse change in the reporting responsibilities set forth in his employment agreement or there is otherwise a
material reduction in his authority, reporting relationship or responsibilities, (b) there is a reduction in his base salary or bonus target or (c) the applicable executive's principal
place of employment is changed to a location that is more than 50 miles from the designated location set forth in his employment agreement.
Mr. Duncan's
employment agreement also provides that if he remains employed with us through the end of the term of his agreement (currently December 31, 2023), then continued service on
the Board following the end of Mr. Duncan's employment will satisfy any service-based vesting requirements of long-term incentive awards held by Mr. Duncan at such time, and the removal
of Mr. Duncan from the Board (including as a result of a mandatory retirement policy) under circumstances that do not constitute
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|
cause
will be treated as a termination of his employment without cause for purposes of such awards, as described above.
Change in Control. If, within one year following a change in control, (a) the executive resigns for good reason (or, in the case of Mr. Jackson, for
"constructive termination") or (b) the Company terminates the executive's employment for any reason other than for cause or the executive's death or disability, then,
in addition to the executive's right to receive accrued obligations, the executive will be entitled to, generally subject to the execution and non-revocation of a release of
claims:
-
- a lump-sum cash severance payment equal to two times (three times in the case of Mr. Duncan) the sum of his or her
(i) then-current annual base salary and (ii) annual incentive bonus target, with such amount increased by the interest that would have been earned on such amount over a 60-day period at
an annual rate of interest of 3.5%;
-
- annual bonus for the year of termination, based on actual performance for Mr. Duncan and target for other executives, in each case,
pro-rated based on the applicable executive's termination date;
-
- immediate vesting of any outstanding equity awards, with any outstanding performance-based criteria being deemed satisfied at the maximum level
(or 300% if the overperformance hurdle is actually satisfied with respect to performance-based awards granted beginning in 2020);
-
- solely in the case of Mr. Jackson, if applicable, any unvested benefits under any qualified 401(k) plan which would have accrued for the
executive under any qualified defined benefit pension plan if the term of his or her employment had not been terminated prior to the first anniversary of his termination date; and
-
- continued medical, dental and vision coverage under the Company's group health plan if the executive timely elects and remains eligible for
COBRA, as well as continued Company group life insurance coverage through the first anniversary of his termination date.
In
the event that Section 280G of the Internal Revenue Code of 1986, as amended, applies to the payments and benefits set forth above, the aggregate amount of such payments and benefits will
not exceed the amount which produces the greatest after-tax benefit to the executive after taking into account any applicable excise tax to be payable by the executive. Each executive is fully
responsible for his or her own personal income taxes and the Company has no obligation to reimburse or otherwise provide a tax gross-up to the executive in connection with any change of control
payments.
Disability and Death. In the event of an executive's death or disability, the Company will pay the executive or his or her estate, as applicable, his or her
accrued compensation (base salary, bonus or otherwise) as of the date of termination and, in the case of disability, will provide the executive with disability benefits and all other benefits in
accordance with the provisions of the applicable Company disability plans and other applicable plans. In addition, Mr. Duncan will be eligible to receive a pro-rated annual bonus for the year
of termination, based on actual performance. For all NEOs, time-based equity awards will vest on a pro-rata basis and performance-based equity awards will vest at the target level on a pro-rata basis,
in each case, based on the number of days the executive was employed with the Company from the grant date to the date of death or disability.
Voluntary Resignation. If an executive voluntarily resigns, other than for good reason or constructive termination, then the executive will be entitled only to
accrued compensation.
Restrictive Covenants. Each of the executives is subject to confidentiality and intellectual property covenants during the term of his or her employment and
thereafter. In addition, each of the executives is subject to non-competition, non-disclosure and non-solicitation covenants during the term of his or her employment and for a period of one year
following the cessation of his or her employment for any reason.
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|
Separation Agreements (Messrs. Wojtaszek, Durvasula and Timmons)
Mr. Wojtaszek. Mr. Wojtaszek stepped down as President and Chief Executive Officer on February 20, 2020 (the "Wojtaszek Termination Date").
Mr. Wojtaszek had served as President since August 2011 and CEO since July 2012. In connection with Mr. Wojtaszek's departure, Mr. Wojtaszek received the following payments and
benefits provided under his Transition and Separation Agreement, in exchange for a release of claims: (a) a lump sum severance payment equal to two times the sum of Mr. Wojtaszek's
annual base salary and annual bonus target ($4,400,000); (b) immediate vesting of the portion of Mr. Wojtaszek's outstanding time-based equity awards that would have vested had
Mr. Wojtaszek remained employed with us through February 28, 2021 ($1,943,633); (c) Mr. Wojtaszek's performance-based awards remained outstanding and eligible to vest based
on the achievement of the applicable performance criteria, pro-rated based on the Wojtaszek Termination Date ($9,865,593, based on actual performance for his award granted in 2017 and assuming target
performance for his awards granted in 2018 and 2019); (d) a cash payment in satisfaction of the Company's obligation to subsidize the cost of Mr. Wojtaszek's continued group health and
life insurance coverage for one year ($16,688); and (e) a cash payment which represented the amount of interest that would have been earned on the amount in (a) by Mr. Wojtaszek
during the sixty (60) day period following the Wojtaszek Termination Date had such amount earned interest for such period at an annual rate of 3.5% ($25,315). In exchange for certain consulting
services, Mr. Wojtaszek also received a consulting payment equal to his 2020 target bonus amount, pro-rated based on the number of days he was employed with us in 2020 ($195,082).
Mr. Durvasula. Mr. Durvasula stepped down as interim President and Chief Executive Officer on July 6, 2020, and departed the Company on
August 1, 2020 (the "Durvasula Termination Date"). Prior to serving as interim President and CEO, Mr. Durvasula had served as EVP & President, Europe since December 2018 and was
EVP & Chief Commercial Officer from 2012 through November 2018. In connection with Mr. Durvasula's departure, Mr. Durvasula received the following payments and benefits under his
Transition and Separation Agreement, in exchange for a release of claims: (a) a lump sum severance payment equal to the sum of two times Mr. Durvasula's annual base salary and annual
bonus target, prorated to the Durvasula Termination Date ($2,832,514); (b) full vesting of all of Mr. Durvasula's equity awards on the Durvasula Termination Date, with all
performance-based awards vesting based on target performance ($4,031,021); (c) a cash payment in satisfaction of the Company's obligation to subsidize the cost of Mr. Durvasula's
continued group health and life insurance coverage for one year ($28,429); (d) a cash payment equal to Mr. Durvasula's annual target bonus, prorated ($716,257); (e) a cash payment
which represented the amount of interest that would have been earned on the amount in (a) by Mr. Durvasula during the sixty (60) day period following the Durvasula Termination
Date had such amount earned interest for such period at an annual rate of 3.5% ($16,297); and (f) a cash amount to compensate Mr. Durvasula for post-termination consulting services,
which amount had previously been paid to Mr. Durvasula in connection with his prior separation agreement ($366,666).
Mr. Timmons. Mr. Timmons departed the Company on September 1, 2020 (the "Timmons Termination Date"). Prior to his departure,
Mr. Timmons had served as EVP & Chief Technology Officer since October 2011. In connection with Mr. Timmons's departure, Mr. Timmons received the following payments and
benefits provided for under his Separation Agreement in exchange for a release of claims: (a) a lump sum severance payment equal to two times the sum of Mr. Timmons' annual base salary
and annual bonus target, prorated to the Timmons Termination Date ($1,583,333); (b) a payment equal to Mr. Timmons' annual target bonus, prorated based on the Timmons Termination Date
($316,667); (c) full vesting on the Timmons Termination Date of time-based equity awards that would have vested prior to the first anniversary of the Timmons Termination Date ($728,022);
(d) Mr. Timmons' outstanding performance-based awards remained outstanding and eligible to vest based on the achievement of the applicable performance criteria, pro-rated based on the
Timmons Termination Date ($2,270,122, assuming target performance); (e) a cash payment in satisfaction of the Company's obligation to
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|
subsidize
the cost of Mr. Timmons' group health and life insurance coverage for one year ($26,014); and (f) a cash payment which represented the amount of interest that would have been
earned on the amount in (a) by Mr. Timmons during the sixty (60) day period following the Timmons Termination Date had such amount earned interest for such period at an annual
rate of 3.5% ($9,110).
Transition and Retirement Agreement (Ms. Morefield)
In
connection with her announced retirement, Ms. Morefield entered into a Transition and Retirement Agreement that provided that, upon the appointment of her successor (the
"Morefield Transition Date"), Ms. Morefield would transition from an executive role, but remain with the Company in a full-time role until December 31, 2020, at which point
Ms. Morefield became a part-time employee through March 1, 2021. In connection with her retirement and transition, Ms. Morefield, in exchange for a release of claims and an
extension of her non-compete from 1-year to 2-years: (a) continued to receive her base salary through December 31, 2020, and then received a $5,000 a month consulting fee for each month
thereafter that she provided services to the Company ($10,000); (b) received an amount equal to Ms. Morefield's annual target bonus ($553,846); (c) received full vesting of all of
Ms. Morefield's time-based equity awards ($438,527); and (d) remained eligible to vest in her outstanding performance-based awards based on the achievement of the applicable performance
criteria, pro-rated through March 31, 2021 ($1,080,157, assuming target performance). Based on Ms. Morefield's performance and services in support of the transition, the Compensation
Committee determined to pay her target bonus in full, without pro-ration.
Estimated Payments in Connection with a Termination of Employment or Change in Control
The
table below presents estimates of the amounts of compensation that would have been payable to the NEOs upon their termination of employment or upon a change in control, in each case as of
December 31, 2020. The amounts in the table exclude: (i) 401(k) retirement plan contributions and distributions that are generally available to all salaried employees,
(ii) payments pursuant to awards originally scheduled to vest on or before such date by their terms, and (iii) any amounts that may be due at the time of payment for accrued and unpaid
salary, bonuses or vacation. The actual amounts payable upon such terminations may be different and will only be determined upon the actual occurrence of any such event.
Given
that Messrs. Wojtaszek, Durvasula and Timmons and Ms. Morefield were not executive officers of the Company as of December 31, 2020, and in the case of Ms. Morefield,
her retirement payments were fixed by her transition and separation agreement, and that quantitative disclosure of the amounts
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payable
to them in connection with their separations has been provided above, the Company has not included in the below table quantitative disclosure of their payments.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Termination
for Cause or
Resignation
without
Good
Reason
($)
|
|
No Change
in Control:
Termination
without
Cause or
Resignation
For Good
Reason
($)(4)
|
|
Death or
Disability
($)(5)
|
|
Change
in Control:
Termination
without
Cause or
Resignation
For Good
Reason
($)(6)
|
|
Change
in Control:
(no termination
of employment)
($)
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Duncan |
|
|
|
|
|
|
|
|
|
|
Cash Severance(1) |
|
|
|
4,274,792 |
|
|
|
6,412,188 |
|
|
Medical Benefit(2) |
|
|
|
13,803 |
|
|
|
13,803 |
|
|
Life Insurance(2) |
|
|
|
39,312 |
|
|
|
|
|
|
Unvested Time Based Restricted Stock/Units(3) |
|
|
|
5,647,794 |
|
1,050,108 |
|
6,267,199 |
|
|
Unvested Performance-Based Restricted Stock/Units(3) |
|
|
|
648,755 |
|
648,755 |
|
6,618,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Motlagh |
|
|
|
|
|
|
|
|
|
|
Cash Severance(1) |
|
|
|
502,917 |
|
|
|
2,011,667 |
|
|
Medical Benefit(2) |
|
|
|
20,226 |
|
|
|
20,226 |
|
|
Life Insurance(2) |
|
|
|
5,280 |
|
|
|
|
|
|
Unvested Time Based Restricted Stock/Units(3) |
|
|
|
1,286,270 |
|
69,306 |
|
1,286,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hatem |
|
|
|
|
|
|
|
|
|
|
Cash Severance(1) |
|
|
|
452,625 |
|
|
|
1,810,500 |
|
|
Medical Benefit(2) |
|
|
|
17,840 |
|
|
|
17,840 |
|
|
Life Insurance(2) |
|
|
|
4,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Jackson |
|
|
|
|
|
|
|
|
|
|
Cash Severance(1) |
|
|
|
794,608 |
|
|
|
1,589,217 |
|
|
Medical Benefit(2) |
|
|
|
10,832 |
|
|
|
10,832 |
|
|
Life Insurance(2) |
|
|
|
6,067 |
|
|
|
|
|
|
Unvested Time Based Restricted Stock/Units(3) |
|
|
|
294,282 |
|
294,340 |
|
622,507 |
|
|
Unvested Performance-Based Restricted Stock/Units(3) |
|
|
|
2,239,134 |
|
1,408,264 |
|
4,237,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- Represents
an amount equal to, in the case of Ms. Motlagh and Mr. Hatem, his or her base salary or, in the case of Mr. Jackson one times (or two
times in the case of Mr. Duncan) the sum of (i) base salary plus (ii) target bonus, in each case as specified in the employment agreement of such NEO with such amount increased by
the interest that would have been earned on such amount over a 60-day period at an annual rate of interest of 3.5%. If the termination occurs in connection with a change in control, amounts represent
two times (or three times in the case of Mr. Duncan) the sum of (i) base salary plus (ii) target bonus with such amounts increased by the interest that would have been earned on
such amounts over a 60-day period at an annual rate of interest of 3.5%. All cash payments are payable in a lump sum within 60 days following the termination, subject to the executive's
execution of an irrevocable release.
- (2)
- Represents
the cost for continuation of benefits as specified in the employment agreement for each of our NEOs who are current executive officers. The amounts shown
for this item are calculated based upon the Company's current actual costs of providing benefits and are not discounted for the time value of money.
- (3)
- Based
on the closing price of the Company's common stock on December 31, 2020 of $73.15.
- (4)
- Represents
time-based equity awards that would become vested within one year from the termination date for Mr. Jackson, the pro-rata portion from the grant
date through the first anniversary of termination for Mr. Duncan, and the full amount of Mr. Duncan and Ms. Motlagh's sign-on restricted stock award grants. Performance-based
equity awards will remain outstanding until the end of the applicable performance period (or, if earlier, the executive's death or disability or a change in control) and the vesting will be determined
based on the actual level of performance attained and pro-rated based on the number of days employed during the applicable performance period. Amounts shown represent actual amounts for completed
performance periods and pro-rata amounts for performance periods ending after 2020, assuming target performance is achieved.
- (5)
- Represents
vesting of time-based and performance-based awards on a pro-rata basis from grant date to the date of termination; performance awards vest at target.
- (6)
- Represents
vesting of time-based awards and performance-based awards vesting at 200% of target. For performance-based equity awards granted in 2020, each NEO could
earn up to 300% of target if certain Company performance levels are achieved as of the change in control date.
|
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Proxy
Statement
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57 |
Table of Contents
Equity Compensation Plan Information
|
Equity Compensation Plan Information
The
following table provides information as of December 31, 2020 regarding securities of the Company to be issued and remaining available for issuance under the equity compensation plans of the
Company:
|
|
|
|
|
|
|
Plan Category |
|
Number of securities to be
issued upon exercise of
stock options, awards,
warrants and rights(a)(1) |
|
Weighted-average exercise
price of outstanding stock
options, awards, warrants
and rights($)(2) |
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column(a)) |
|
|
|
|
|
|
|
Equity compensation plans approved by security holders |
|
827,103 |
|
$30.87 |
|
4,324,743 |
|
|
|
|
|
|
|
Equity compensation plans not approved by security holders |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
827,103 |
|
$30.87 |
|
4,324,743 |
|
|
|
|
|
|
|
- (1)
- Represents
outstanding stock options granted in 2013, 2015 and 2016 but not yet exercised, and unvested performance awards assuming the maximum awards that can be
earned if the performance conditions are achieved.
- (2)
- Represents
weighted average exercise price of outstanding stock options.
|
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|
58 |
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2021
Proxy
Statement |
Table of Contents
CEO Pay Ratio Disclosure
As
required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about
the relationship of the annual total compensation of our median employee and the annualized compensation of Mr. Gary J. Wojtaszek, our President and Chief Executive Officer (our "CEO")
on the date on which we determined the median employee. This relationship is referred to as the "CEO pay ratio." The CEO pay ratio included in this information is a reasonable estimate calculated in a
manner consistent with Item 402(u) of Regulation S-K.
To
identify the median employee, the annual total compensation of the median employee and to determine the CEO pay ratio, we took the following steps:
-
- We selected December 31, 2018, the last day of our 2018 payroll year, as the date upon which we would identify the median employee
because it enabled us to make such identification in a reasonably efficient and economical manner.
-
- As permitted by SEC rules, we identified our median employee from our employee population as of December 31, 2018, excluding our CEO and
34 employees of Zenium Data Centers, which we acquired in a transaction that closed in August 2018. Excluding these employees, we determined that, as of December 31, 2018, our employee
population consisted of approximately 415 employees, all of whom are located in the United States. This population consisted of our full-time, part-time and temporary employees.
-
- To identify the median employee from our 2018 employee population, we compared the amount of salary and wages of our employees as reflected in
our payroll records as reported to the Internal Revenue Service on Form W-2 (for 2018). In making this determination, we annualized the compensation of approximately 83 full-time employees who
were hired in 2018 but did not work for us the entire fiscal year. Other than the foregoing, we did not make any assumptions, adjustments or estimates with respect to our employees' salary and wages
as reflected in our payroll records, and used this consistently applied compensation measure to identify our median employee.
-
- For 2020, we concluded that we could continue to use the same median employee identified in fiscal year 2018 as, in accordance with SEC rules,
there have been no significant changes in our employee population, including the impact of the acquisition of Zenium Data Centers, employee compensation arrangements, or in the median employee's
circumstances that we reasonably believe would significantly affect our CEO pay ratio disclosure.
-
- Once we confirmed we would continue to use the same median employee, we combined all the elements of the median employee's compensation for
2020 in accordance with the requirements of Item 402(c)(2)(x) of regulation S-K, resulting in annual total compensation of $119,633.
-
- With respect to the annual total compensation of our CEO, we used the amount reported in the "Total" column of our 2020 Summary Compensation
Table included in this Proxy Statement.
For
2020, our last completed fiscal year:
-
- the annual total compensation of the median employee was $119,633; and
-
- the annual total compensation of our CEO, as reported in the 2020 Summary Compensation Table, was $4,609,577.
Based
on this information, for 2020 the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee was 39 to 1.
|
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Proxy
Statement
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59 |
Table of Contents
Security Ownership of Certain Beneficial Owners and Management
|
Security Ownership of Certain Beneficial Owners and Management
The
following table sets forth information regarding the beneficial ownership of our common stock as of March 18, 2021, the record date, by (i) each person or group who is known by us to
be a beneficial owner of 5% or more of our common stock, (ii) each of our directors and director nominees, (iii) each of our NEOs and (iv) our directors and executive officers as
a group.
Beneficial
ownership of shares is determined under rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Except as indicated by
footnote, we believe based on the information provided to us that each person and entity named in the table has sole voting and investment power with respect to all of the shares of our common stock
shown as beneficially owned by such person or entity. Applicable percentage of beneficial ownership is based
on 120,685,063 shares of common stock outstanding on the record date. Shares of common stock subject to options currently exercisable or exercisable within 60 days after the record date are
deemed to be outstanding and beneficially owned by the person holding the options for the purpose of computing the percentage of beneficial ownership of that person and any group of which that person
is a member, but are not deemed outstanding for the purpose of computing the percentage of beneficial ownership for any other person. Unless otherwise indicated, the address of each named person is
c/o CyrusOne Inc., 2850 N Harwood Street, Suite 2200, Dallas, Texas 75201.
|
|
|
|
|
Name of Beneficial Owner |
|
Number of Shares
of Common Stock
Beneficially Owned |
|
Percent of
Common
Shares |
|
|
|
|
|
Beneficial owners of 5% or more of our common stock: |
|
|
|
|
|
|
|
|
|
Cohen & Steers, Inc. and affiliates(1) |
|
20,346,462 |
|
16.9% |
|
|
|
|
|
The Vanguard Group(2) |
|
16,775,985 |
|
13.9% |
|
|
|
|
|
BlackRock, Inc.(3) |
|
14,064,008 |
|
11.7% |
|
|
|
|
|
Directors and Named Executive Officers |
|
|
|
|
|
|
|
|
|
Bruce W. Duncan(4) |
|
85,676 |
|
* |
|
|
|
|
|
Katherine Motlagh(5) |
|
17,584 |
|
* |
|
|
|
|
|
John P. Hatem |
|
|
|
* |
|
|
|
|
|
Robert M. Jackson |
|
35,373 |
|
* |
|
|
|
|
|
Gary J. Wojtaszek(6) |
|
66,505 |
|
* |
|
|
|
|
|
Venkatesh S. Durvasula(7) |
|
199,938 |
|
* |
|
|
|
|
|
Diane M. Morefield(8) |
|
63,870 |
|
* |
|
|
|
|
|
Kevin L. Timmons(9) |
|
|
|
* |
|
|
|
|
|
David H Ferdman |
|
89,629 |
|
* |
|
|
|
|
|
John W. Gamble, Jr. |
|
23,691 |
|
* |
|
|
|
|
|
Michael A. Klayko |
|
8,985 |
|
* |
|
|
|
|
|
T. Tod Nielsen |
|
25,156 |
|
* |
|
|
|
|
|
Denise Olsen |
|
|
|
|
|
|
|
|
|
Alex Shumate |
|
32,438 |
|
|
|
|
|
|
|
William E. Sullivan |
|
33,438 |
|
* |
|
|
|
|
|
Lynn A. Wentworth |
|
22,790 |
|
* |
|
|
|
|
|
All directors and executive officers as a group (11 persons, but not including Mr. Wojtaszek(6), Mr. Durvasula(7), Ms. Morefield(8) and Mr. Timmons(9)) |
|
374,760 |
|
% |
|
|
|
|
|
|
|
|
60 |
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2021
Proxy
Statement |
Table of Contents
Security Ownership of Certain Beneficial Owners and Management
|
- (1)
- As
disclosed on Schedule 13G/A filed on February 16, 2021, the holdings of Cohen & Steers, Inc. consist of an aggregate of 20,346,462
shares of which Cohen & Steers Inc. has sole dispositive power over 20,346,462 shares and sole voting power over 13,979,359 shares; the holdings of Cohen & Steers Capital
Management, Inc. consist of an aggregate of 20,105,644 shares of which Cohen & Steers Capital Management, Inc. has sole dispositive power over 20,105,644 shares and sole voting
power over 13,939,920 shares; and the holdings of Cohen & Steers UK Limited consist of an aggregate of 240,818 shares of which Cohen & Steers UK Limited has sole dispositive power over
240,818 shares and sole voting power over 39,439 shares. The address of Cohen & Steers Inc. and Cohen & Steers Capital Management, Inc. is 280 Park Avenue,
10th Floor, New York, NY 10017. The address of Cohen & Steers UK Limited is 50 Pall Mall 7th Floor, London, United Kingdom SW1Y 5JH.
- (2)
- As
disclosed on Schedule 13G/A filed on February 10, 2021, the holdings of The Vanguard Group ("Vanguard") consist of an aggregate of 16,775,985
shares, of which Vanguard has: (i) sole dispositive power over 16,337,285 shares, (ii) sole voting power over 0 shares, (iii) shared voting power over 343,028 shares and
(iv) shared dispositive power over 438,700 shares. Vanguard's address is 100 Vanguard Blvd., Malvern, PA 19355.
- (3)
- As
disclosed on Schedule 13G/A filed on January 26, 2021, the holdings of BlackRock, Inc. ("BlackRock") consist of an aggregate of 14,064,008
shares, of which BlackRock has sole dispositive power over 14,064,008 shares and sole voting power over 13,553,756 shares. BlackRock's address is 55 East 52nd Street, New York, NY 10055.
- (4)
- Includes
79,213 shares of time-based restricted stock, all of which remains subject to vesting.
- (5)
- Represents
shares of time-based restricted stock, all of which remains subject to vesting.
- (6)
- Effective
February 20, 2020, Mr. Wojtaszek stepped down as a Director and as President & CEO.
- (7)
- From
February 20, 2020 to July 6, 2020, Mr. Durvasula served as interim President & CEO. Includes 94,646 shares of common stock
underlying exercisable stock options.
- (8)
- Effective
October 30, 2020, Ms. Morefield stepped down as EVP and CFO in connection with her previously announced retirement.
- (9)
- Effective
September 1, 2020, Mr. Timmons departed from the Company.
|
|
|
2021
Proxy
Statement
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|
61 |
Table of Contents
Certain Relationships and Related Transactions
|
Certain Relationships and Related Transactions
Indemnification of Officers and Directors
We
have entered into indemnification agreements with each of our directors and executive officers that provide for indemnification to the maximum extent permitted by Maryland law.
To
the extent permitted by applicable law, under the partnership agreement of CyrusOne LP, a Maryland limited partnership (our "Operating Partnership"), our Operating Partnership is required to
indemnify us, our directors, officers and employees, the general partner and its trustees, officers and employees, employees of the Operating Partnership and any other persons whom the general partner
may designate from and against any and all claims arising from or that relate to the operations of the Operating Partnership in which any indemnitee may be involved, or is threatened to be involved,
as a party or otherwise unless:
-
- it is established by a final judgement of a court of competent jurisdiction that the act or omission of the indemnitee that is material to the
matter giving rise to the claim constituted fraud, intentional harm or gross negligence on the part of the indemnitee;
-
- the claim is brought by the indemnitee (other than to enforce the indemnitee's rights to indemnification or advance of expenses); or
-
- the indemnitee is found to be liable to the Operating Partnership, and then only with respect to each such claim.
Review and Approval of Transactions with Related Persons
The
Board of Directors has adopted a written policy for the review and approval of related person transactions. The policy provides that the Audit Committee is responsible for reviewing and approving
or disapproving all interested transactions, meaning any transaction, arrangement or relationship in which (i) the amount involved may be expected to exceed $120,000 in any fiscal year,
(ii) the Company will be a participant and (iii) a Related Party has a direct or indirect material interest (any such transaction being a "Related Party Transaction"). A "Related Party"
means (i) any person who is, or at any time since the beginning of the Company's last fiscal year was, a director or executive officer of the Company or a nominee to become a director of the
Company; (ii) any person who is known to be the beneficial owner of more than 5% of any class of the Company's voting securities; (iii) any immediate family member of any of the
foregoing persons; and (iv) any firm, corporation or other entity in which any of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person
has a 5% or greater beneficial ownership interest. An "immediate family member" of a Related Party means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the Related Party, and any person (other than a tenant or employee) sharing the household of such Related Party. Generally, a potential
transaction that may be a Related Party Transaction is brought first to the General Counsel for review. If the General Counsel determines that a potential transaction involves a Related Party
Transaction requiring approval under the policy or disclosure under Item 404(a) of Regulation S-K, the transaction will be brought to the Audit Committee, which will review the
transaction under several criteria, including but not limited to the Related Party's interest in the transaction, the benefits to the Company, the availability of commercial alternatives, and whether
it is in the best interests of the Company to enter into the transaction. Subject to limited exceptions, the Audit Committee or the Chair of the Audit Committee must approve all Related
|
|
|
62 |
|
2021
Proxy
Statement |
Table of Contents
Certain Relationships and Related Transactions
|
Party
Transactions. Since January 1, 2020, there were no Related Party Transactions requiring review under the policy that were not so reviewed.
As
discussed in "Director Independence" above, a son-in-law of one of our directors, Michael A. Klayko, is employed by the Company as an Account Director in the Company's sales organization. The
son-in-law is not an officer of the Company and his employment was reviewed and approved by the Audit Committee of the Board pursuant to the Company's Policy on Related Party Transactions. The
son-in-law's compensation is primarily commission-based and for 2020 was approximately $234,000. As
noted above, Mr. Klayko is retiring from the Board and his service on our Board will end upon completion of his current term at the 2021 annual meeting.
|
|
|
2021
Proxy
Statement
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|
63 |
Table of Contents
Stockholder Proposals
Stockholder
proposals intended to be included in our proxy statement and form of proxy relating to the 2022 annual meeting pursuant to Rule 14a-8 under the Exchange Act ("Rule 14a-8")
must be received by us no later than December 9, 2021. Such proposals must comply with the requirements established by the SEC for such proposals.
A
stockholder who wishes to submit a business proposal at the 2022 annual meeting that is not intended to be included in our proxy statement and form of proxy or who wishes to nominate a director for
election at the meeting must, in accordance with our current Bylaws, notify us between November 9, 2021, and 5:00 p.m., Eastern Time, on December 9, 2021. If the stockholder fails
to give timely notice, the nominee or proposal will be excluded from consideration at the meeting. In addition, our current Bylaws include other requirements for nomination of candidates for director
and proposals of other business with which a stockholder must comply to make a nomination or business proposal.
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64 |
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2021
Proxy
Statement |
Table of Contents
General Information about the Meeting
|
General Information about the Meeting
- Q:
- Why did I receive a Notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy
materials?
- A:
- The
Board of Directors is soliciting proxies to be voted at our 2021 annual meeting of stockholders. This year we have again elected to distribute proxy materials to
many stockholders via the Internet under the Securities and Exchange Commission's (SEC's) "Notice and Access" rules. On or about April 8, 2021 we mailed a Notice Regarding the Availability of
Proxy Materials ("Notice") that contains information about our 2021 Annual Meeting of Stockholders (the "Annual Meeting") and instructions on how to view all proxy materials online. Also included are
instructions on how to request a paper copy of the proxy materials.
Q: Who is entitled to vote?
- A:
- All
common stockholders of record as of the close of business on March 18, 2021, the record date, are entitled to notice of and to vote at the Annual Meeting
and any postponement or adjournment of the meeting. As of the close of business on the record date, 120,685,063 shares of our common stock were outstanding and entitled to vote. Each outstanding share
of common stock is entitled to one vote on each matter properly brought before the Annual Meeting or any postponement or adjournment thereof. There is no cumulative voting.
Q: What is the quorum for the Annual Meeting?
- A:
- A
quorum at the Annual Meeting will consist of the presence, in person or by proxy, of stockholders entitled to cast a majority of all the votes entitled to be cast
on any matter. No business may be conducted at the meeting if a quorum is not present when the quorum is determined, but the meeting may be adjourned to another date not more than 120 days
after the original record date without notice other than announcement at the meeting.
Q: How do I access the annual meeting?
- A:
- To
access the Annual Meeting, you may visit www.meetingcenter.io/208455171. To login to the meeting, you will have two options: Join as a "Guest" or Join as a
"Stockholder". If you join as a "Stockholder", you will be required to have a control number and password. For registered stockholders, the control number can be found on your proxy card or notice, or
in the email you previously received. The password for the meeting is CONE2021.
Q: How do I participate in the annual meeting?
- A:
- If
you were a stockholder of recordthat is, your shares were registered in your name with our transfer agent, Computershare Trust Company N.A.
("Computershare")as of the close of business on March 18, 2021, the record date for the Annual Meeting, and have your control number, you may participate in and vote your shares at
the Annual Meeting by following the instructions available on the meeting website.
If
you hold your shares "in street name" (i.e., through an intermediary, such as a bank, broker or other nominee), you are a beneficial stockholder and you must register in advance to attend the
Annual Meeting. To register, you must submit proof of your "legal proxy" obtained from your bank, broker or nominee (which can be submitted by forwarding an email from your bank, broker or nominee
with your legal proxy or attaching an image of your legal proxy), reflecting your CyrusOne
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Proxy
Statement
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|
65 |
Table of Contents
General Information about the Meeting
|
holdings,
along with your name and email address to Computershare at legalproxy@computershare.com. Obtaining a "legal proxy" may take several days and stockholders are advised to register as far in
advance as possible. Requests for registration must be labeled as "Legal Proxy" and be received no later than 5:00 p.m., Eastern Time, on May 13, 2021. You will receive a confirmation
email from Computershare of your registration. Once registered, you may participate in and vote at the Annual Meeting by following the instructions available on the meeting website.
Stockholders
attending the Annual Meeting remotely will have the same opportunities they have had at past annual meetings to participate, ask questions, and provide feedback to the CyrusOne management
team and the Board of Directors.
If
you do not have your control number, you may still attend as a guest (non-stockholder), but will not have the option to vote your shares or ask questions at the virtual meeting.
Q: How do I vote?
- A:
- If
your shares are registered in your name with our transfer agent, Computershare, you are the "stockholder of record" of those shares and you may authorize a proxy
to vote your shares by following the instructions listed on the Notice. If you received a proxy card, please complete, date, sign and promptly return the proxy card in the self-addressed stamped
envelope provided. You may also authorize your proxy to vote your shares by telephone as described on the proxy card. If you are a stockholder of record, and have your control number, you may vote
your shares at the Annual Meeting by following the instructions available on the meeting website. For registered stockholders, the control number can be found on your proxy card or notice, or in the
email you previously received.
If
your shares are held through a broker, bank or other nominee (held in street name), you will receive instructions from such entity that you must follow in order to have your shares voted. Most
brokers, banks and other holders of record allow you to submit voting instructions by mail, telephone and on the internet. If you want to vote your shares at the Annual Meeting, you must register in
advance to attend the Annual Meeting as discussed in "How do I participate in the annual meeting?" above. Once registered, you may vote at the Annual Meeting by following the instructions available on
the meeting website.
Whichever
method you select to transmit your instructions, the proxies will vote your shares in accordance with those instructions. If you are the stockholder of record and sign and return a proxy
card without giving specific voting instructions, your shares will be voted as recommended by the Board of Directors: for each director nominee, for the advisory vote to approve named executive
officer compensation, for "every year" for the frequency of the advisory vote to approve named executive officer compensation and for ratification of the appointment of the independent registered
public accounting firm. If you hold your shares in street name, see "What vote is required to approve the proposals assuming that a quorum is present at the annual meeting?" below.
Important: Only stockholders of record as of the close of business on the record date or their duly authorized proxy are entitled to attend and vote at the virtual Annual
Meeting.
Q: What am I voting on?
- A:
- The
purpose of the Annual Meeting is to consider the following four proposals:
-
- Proposal 1: To elect eight directors, each to hold office until our 2022 annual meeting of stockholders and until his or her successor has been
duly elected and qualifies;
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66 |
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Table of Contents
General Information about the Meeting
|
-
- Proposal 2: To approve, on an advisory basis, the compensation of the Company's named executive officers as described in this proxy statement
("Say-on-Pay");
-
- Proposal 3: To consider and vote upon, on an advisory basis, the frequency of future Say-on-Pay votes; and
-
- Proposal 4: To consider and vote upon the ratification of the appointment of Deloitte & Touche LLP ("Deloitte") as our
independent registered public accounting firm for the year ending December 31, 2021.
We
are not aware of any matters to be presented at the Annual Meeting other than those described in this proxy statement. If any matters not described in this proxy statement are properly presented at
the meeting, the persons named in the accompanying proxy will vote all proxies in their discretion. If the meeting is postponed or adjourned, the proxies are entitled to vote your shares at the
postponement or adjournment as well.
Q: What vote is required to approve the proposals assuming that a quorum is present at the Annual Meeting?
- A:
- Proposal
1: Election of Eight Directors: The election of each of the eight director nominees must be approved by a plurality of the votes cast. However, as a
condition to being nominated, each director nominee has agreed to offer to resign if he or she receives a greater number of votes "withheld" than votes "for" his or her election.
Proposal
2: Say-on-Pay: The approval, on a non-binding, advisory basis, of the compensation of the Company's named executive officers requires the affirmative vote of a majority of the votes cast on
the matter.
Proposal
3: Frequency of Say-on-Pay: The approval, on a non-binding, advisory basis, of holding the Say-on-Pay vote on a one-, two- or three-year basis requires the affirmative vote of a majority of
the votes cast on the matter. In the event that no option receives a majority of the votes cast, we will consider the option that receives the most votes to be the option selected by stockholders.
Proposal
4: Ratification of Independent Registered Public Accounting Firm: Ratification of the appointment of Deloitte as our independent registered public accounting firm requires the affirmative
vote of a majority of the votes cast on the matter.
If
you hold your shares in street name, you must provide voting instructions to your bank, broker or other nominee by the deadline provided in the materials you receive from your bank, broker or other
nominee in order to ensure your shares are voted in the way you would like. If you do not provide voting instructions to your bank, broker or other nominee, whether your shares can be voted by such
person will depend on the type of item being considered for vote. Proposals #1, #2 and #3 are "non-routine" matters under NYSE rules and therefore non-discretionary items in that they may not be voted
on by brokers, banks or other nominees who have not received specific voting instructions from beneficial holders (so called "broker non-votes"). Proposal #4 is a "routine" matter under NYSE rules and
therefore a discretionary matter in that banks, brokers and other nominees that do not receive voting instructions from beneficial holders may generally vote on this proposal in their discretion. If
you are the stockholder of record and sign and return a proxy card without giving specific voting instructions, your shares will be voted as recommended by the Board of Directors: for each director
nominee, for the advisory vote to approve named executive officer compensation, for "every year" for the frequency of the advisory vote to approve named executive officer compensation and for
ratification of the appointment of the independent registered public accounting firm.
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2021
Proxy
Statement
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67 |
Table of Contents
General Information about the Meeting
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Q: How are abstentions and broker non-votes treated?
- A:
- Pursuant
to Maryland law, abstentions and broker non-votes are counted as present for purposes of determining the presence of a quorum. However, abstentions and
broker non-votes, as applicable, will have no impact on the outcome of any of the four proposals, as they are not counted as votes cast.
Q: Who has paid for this proxy solicitation?
- A:
- We
are providing these proxy materials in connection with the solicitation by the Company's Board of Directors of proxies to be voted at our Annual Meeting. We will
pay the cost of this proxy solicitation. In addition to soliciting proxies by mail, we expect that a number of our employees will solicit stockholders personally, electronically and by telephone. None
of these employees will receive any additional compensation for doing this. We have retained Okapi Partners to assist in the solicitation of proxies for a fee of $10,000 plus reimbursement of
expenses. We will, on request, reimburse brokers, banks and other nominees for their expenses in sending proxy materials to their customers who are beneficial owners and obtaining their voting
instructions.
Q: May stockholders ask questions at the Annual Meeting?
- A
- Yes.
Stockholders attending the Annual Meeting remotely will have the same opportunities they have had at past annual meetings to participate, ask questions, and
provide feedback to the CyrusOne management team and the Board of Directors. There will be time allotted at the end of the formal portion of the meeting when our representatives will answer
appropriate questions.
Q: How many copies should I receive if I share an address with another stockholder?
- A:
- The
SEC has adopted rules that permit companies and intermediaries, such as a broker, bank or other nominee, to implement a delivery procedure called "householding".
Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our proxy materials, unless the affected stockholder has provided us with contrary instructions.
This procedure provides extra convenience for stockholders and cost savings for companies.
Our
Company and some brokers, banks or other nominees may be householding our proxy materials. A single set of our proxy materials, including the proxy statement and our annual report will be
delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Separate proxy cards will be included for each stockholder at the
address. Once you have received notice from your broker, bank or other nominee that it will be householding communications to your address, householding will continue until you are notified otherwise
or until you revoke your consent. If you did not respond that you did not want to participate in householding, you were deemed to have consented to the process. Stockholders of record may revoke their
consent at any time by contacting Robert M. Jackson, Executive Vice President, General Counsel & Secretary, either by calling toll-free (855) 564-3198 or by writing to 2850 N Harwood
Street, Suite 2200, Dallas, Texas 75201, Attention: Corporate Secretary. If you hold your shares through a broker, bank or other nominee holder of record, you should contact your holder of
record to revoke your consent.
Upon
written or oral request, we will promptly deliver a separate copy of our proxy materials to any stockholder at a shared address to which a single copy of any of those documents was delivered. To
receive a separate copy of the proxy materials, you may either call (855) 564-3198 or send a written request to CyrusOne Inc., 2850 N Harwood Street, Suite 2200, Dallas, Texas
75201, Attention: Corporate Secretary. In addition, if you are receiving multiple copies of our proxy materials, you can request householding by contacting our secretary in the same manner.
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68 |
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2021
Proxy
Statement |
Table of Contents
General Information about the Meeting
|
Q: What does it mean if I receive more than one set of proxy materials?
- A:
- It
means that you have multiple accounts with our transfer agent or with brokers. Please submit all of your proxies over the internet, following the instructions
provided on your proxy cards, by mail or by telephone to ensure that all of your shares are voted.
Q: Can I change my vote after I have voted?
- A:
- If
you hold your shares in street name, you must follow the instructions of your broker, bank or other nominee to revoke your voting instructions. If you are a holder
of record and wish to revoke your proxy instructions, you must deliver later-dated proxy instructions, advise the Corporate Secretary in writing before the proxies vote your shares at the meeting, or
attend the virtual meeting and vote your shares during the meeting.
Q: Can I find additional information on the Company's website?
- A:
- Yes.
Our website is located at www.cyrusone.com. Although the information contained on our website is not part of this
proxy statement, you can view additional information on the website, such as our corporate governance guidelines, our code of business conduct and ethics, charters of our Board committees and reports
that we file with the SEC. A copy of our corporate governance guidelines, our code of business conduct and ethics and each of the charters of our Board committees may also be obtained by writing to
CyrusOne Inc., 2850 N Harwood Street, Suite 2200, Dallas, Texas 75201, Attention: Corporate Secretary.
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2021
Proxy
Statement
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69 |
Table of Contents
Appendix ANon-GAAP Financial Measures and Definitions
Annualized GAAP Revenue
Annualized GAAP revenue is equal to monthly recurring rent, defined as average monthly contractual rent during the term
of the lease plus the monthly impact of installation charges, multiplied by 12. It can be shown both inclusive and exclusive of the Company's estimate of customer reimbursements for metered power.
Backlog
Backlog is the twelve-month recurring revenue (calculated in accordance with GAAP) for executed lease contracts
achieved upon full occupancy which have not commenced as of the end of a period.
Normalized FFO
We use funds from operations ("FFO") and normalized funds from operations ("Normalized FFO"),which are non-GAAP
financial measures commonly used in the REIT industry, as supplemental performance measures. We use FFO and Normalized FFO as supplemental performance measures because, when compared period over
period, they capture trends in occupancy rates, rental rates and operating costs. We also believe that, as widely recognized measures of the performance of REITs, FFO and Normalized FFO are used by
investors as a basis to evaluate REITs.
We calculate FFO as Net income computed in accordance with GAAP before Real estate depreciation and amortization and
Impairment losses and (gain) loss on asset disposals. While it is consistent with the definition of FFO promulgated by the National Association of Real Estate Investment Trusts ("NAREIT"), our
computation of FFO may differ from the methodology for calculating FFO used by other REITs. Accordingly, our FFO may not be comparable to others.
We calculate Normalized FFO as FFO adjusted for Loss on early extinguishment of debt; Gain on marketable equity
investment; Foreign currency and derivative losses, net; New accounting standards and regulatory compliance and the related system implementation costs; Amortization of tradenames; Transaction,
acquisition, integration and other related expenses; Cash severance and management transition costs; Severance-related stock compensation costs; Legal claim costs; and other items as appropriate. We
believe our Normalized FFO calculation provides a comparable measure between different periods. Other REITs may not calculate Normalized FFO in the same manner. Accordingly, our Normalized FFO may not
be comparable to others.
In addition, because FFO and Normalized FFO exclude Real estate depreciation and amortization, and capture neither the
changes in the value of our properties that result from use or from market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of
our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO and Normalized FFO as measures of our performance is limited.
Therefore, FFO and Normalized FFO should be considered only as supplements to Net income presented in accordance with GAAP as measures of our performance. FFO and Normalized FFO should not be used as
measures of our liquidity or as indicative of funds available to fund our cash needs, including our ability to make distributions. FFO and Normalized FFO also should not be used as supplements to or
substitutes for cash flow from operating activities computed in accordance with GAAP.
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|
Twelve Months Ended |
|
|
|
|
|
|
|
|
|
($ Millions) |
|
|
December 31, 2020 |
|
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP net income to FFO and Normalized FFO: |
|
|
|
|
|
|
|
Net income |
|
$ |
41.4 |
|
$ |
41.4 |
|
Real estate depreciation and amortization |
|
|
440.1 |
|
|
408.5 |
|
Impairment losses and (gain) loss on asset disposals |
|
|
11.1 |
|
|
1.1 |
|
|
|
|
|
|
|
|
|
Funds from Operations ("FFO")NAREIT defined |
|
$ |
492.6 |
|
$ |
451.0 |
|
Loss on early extinguishment of debt |
|
|
6.5 |
|
|
71.8 |
|
Gain on marketable equity investment |
|
|
(89.5 |
) |
|
(132.3 |
) |
Foreign currency and derivative losses, net |
|
|
27.6 |
|
|
7.5 |
|
New accounting standards and regulatory compliance and the related system implementation costs |
|
|
|
|
|
0.8 |
|
Amortization of tradenames |
|
|
1.2 |
|
|
1.3 |
|
Transaction, acquisition, integration and other related expenses |
|
|
3.7 |
|
|
8.4 |
|
Cash severance and management transition costs |
|
|
14.1 |
|
|
(0.6 |
) |
Severance-related stock compensation costs |
|
|
2.9 |
|
|
|
|
Legal claim costs |
|
|
0.3 |
|
|
1.1 |
|
|
|
|
|
|
|
|
|
Normalized Funds from Operations ("Normalized FFO") |
|
$ |
459.4 |
|
$ |
409.0 |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
41.4 |
|
$ |
41.4 |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstandingbasic |
|
|
117.3 |
|
|
112.1 |
|
Weighted average number of common shares outstandingdiluted |
|
|
117.6 |
|
|
112.5 |
|
Net income per sharebasic |
|
$ |
0.35 |
|
$ |
0.36 |
|
Net income per sharediluted |
|
$ |
0.35 |
|
$ |
0.36 |
|
|
|
|
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2021
Proxy
Statement
|
|
A-1 |
Your vote matters heres how to vote! You may vote online or by phone instead of mailing this card. Online Go to www.envisionreports.com/CONE or scan the QR code login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/CONE Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + 1. The Election of Eight Directors For Withhold For Withhold For Withhold 01 - Bruce W. Duncan 02 - David H. Ferdman 03 - John W. Gamble, Jr. 04 - T. Tod Nielsen 05 - Denise Olsen 06 - Alex Shumate 07 - William E. Sullivan 08 - Lynn A. Wentworth EveryEveryEvery Year 2 Years 3 Years ForAgainst Abstain Abstain 2. Advisory vote to approve the compensation of the Companys named executive officers. 3. Recommendation, by advisory (non-binding) vote, of the frequency of future advisory votes on the compensation of the Companys named executive officers. 4. Ratification of the appointment of Deloitte & Touche LLP as the Companys independent registered public accounting firm for the year ending December 31, 2021. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within the box. Signature 2 Please keep signature within the box. + 1 U P X 03FTQA B Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below A Proposals The Board oref cDoimremcteonrdssreacvoomtme eFnOdR aalvlontoemFiOnReeasl,l tFhOeRnpormopinoeseaslsli2staendd, F4O, RanPdroFpOoRsalEsVXERYX YaEnAdRforoenvePrryopXoYsaElA3R.S on Proposal X. Annual Meeting Proxy Card
The 2021 Annual Meeting of Stockholders of CyrusOne, Inc. will be held on May 18, 2021 at 9:30 a.m. Central Daylight Time, virtually via the internet at www.meetingcenter.io/208455171. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. The password for this meeting is CONE2021. Important notice regarding the Internet Availability of Proxy Materials for the Annual Meeting of Stockholders. The Notice of Annual Meeting, Proxy Statement and Annual Report are available at: www.envisionreports.com/CONE q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + Notice of 2021 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting May 18, 2021 Katherine Motlagh and Robert M. Jackson, or either of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the 2021 Annual Meeting of Stockholders of CyrusOne Inc. to be held on May 18, 2021 at 9:30 a.m., Central Daylight Time, or at any postponement or adjournment thereof. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and the accompanying proxy statement, the terms of which are incorporated by reference, and revokes any proxy previously given with respect to such meeting. Shares represented by this proxy will be voted as directed by the stockholder. If this proxy is executed but no instruction is given, the votes entitled to be cast by the undersigned will be cast "for" each of the nominees for director, "for" Proposal 2, "for" a frequency of one year and "for" Proposal 4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side.) Change of Address Please print new address below. Comments Please print your comments below. + C Non-Voting Items Proxy CyrusOne Inc. Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/CONE
This regulatory filing also includes additional resources:
a2243038zdef14a.pdf
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