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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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Definitive Proxy Statement

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Soliciting Material under §240.14a-12

 

CyrusOne Inc.

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Notice of Annual Meeting of Stockholders


When

 

Where

Tuesday, May 18, 2021
9:30 AM Central Time (10:30 AM Eastern Time)

 

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.

  By Internet     By Phone     By Mail    
              (if you received a paper copy in the mail)    

 


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  Visit www.evisionreports.com/CONE     800-652-8683     Complete, sign, date and return proxy card    

By Order of the Board of Directors:

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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


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PROXY STATEMENT SUMMARY   1

PROPOSAL 1: ELECTION OF EIGHT DIRECTORS

 

6

PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

12

PROPOSAL 3: ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

14

PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

15

AUDIT COMMITTEE REPORT

 

17

EXECUTIVE OFFICERS

 

18

CORPORATE GOVERNANCE

 

20

Role of the Board in Risk Oversight

  20

Board Leadership

  21

Director Independence

  21

Board Meetings

  22

Board Committees

  23

Board and Committee Evaluations

  24

Nomination of Directors

  24

Majority Voting Resignation Policy for Election of Directors

  25

Compensation Committee Interlocks and Insider Participation

  25

Corporate Governance Materials Available on Website

  26

Contacting the Board of Directors

  26

BOARD COMPENSATION FOR 2020

 

27

EXECUTIVE COMPENSATION

 

29

COMPENSATION COMMITTEE REPORT

 

46

EXECUTIVE COMPENSATION TABLES

 

47

Summary Compensation Table

  47

Grants of Plan-Based Awards

  50

Outstanding Equity Awards at Fiscal Year End

  51

Option Exercises and Stock Vested

  52

No Pension Benefits

  52

No Nonqualified Deferred Compensation

  52

Potential Payments Upon Termination of Employment or Change in Control

  52

Estimated Payments in Connection with a Termination of Employment or Change in Control

  56

EQUITY COMPENSATION PLAN INFORMATION

 

58

CEO PAY RATIO DISCLOSURE

 

59

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

60

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

62

Indemnification of Officers and Directors

  62

Review and Approval of Transactions with Related Persons

  62

STOCKHOLDER PROPOSALS

 

64

GENERAL INFORMATION ABOUT THE ANNUAL MEETING

 

65

APPENDIX A — NON-GAAP FINANCIAL MEASURES AND DEFINITIONS

 

A-1

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2021 Proxy Statement at a Glance

Proxy Statement Summary

Proposal
  Board Voting
Recommendation

  Page
Reference

Election of directors   FOR EACH NOMINEE   6
Advisory vote on executive compensation   FOR   12
Advisory vote on frequency of advisory vote on executive compensation   EVERY YEAR   14
Ratification of appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2021   FOR   15

Corporate Governance Snapshot

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    Independent Oversight  

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

   
   
    Board Composition and Diversity  

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

   
   
    Stockholder Rights  

Annual election of all directors; majority-vote director resignation policy

   
     

One class of shares with each share entitled to one vote

   
     

Our bylaws may be amended by our stockholders

   
     

We have opted out of the Maryland control share acquisition statute

   
     

No stockholders rights plan in effect

   
   
    Stockholder Engagement  

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

   
   
    Sustainability and ESG  

Published first-annual Sustainability Report in 2020

   
     

Reporting in alignment with Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) Standards and Task Force on Climate-related Financial Disclosures (TCFD)

   
     

Announced Commitment to Zero-Carbon by 2040

   
     

Added sustainability metric to 2021 annual incentive plan

   
     

Announced two net-positive water data centers

   
     

Nominating & Corporate Governance Committee oversight of corporate social responsibility and ESG matters

   
     

Compensation Committee oversight of workforce diversity, equity and inclusion

   
 

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2021 Proxy Statement at a Glance

Track Record of Value Creation

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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 at a Glance

2020 Company Snapshot

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Performance-Based Compensation*



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*
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:

    COMPONENT   RECENT CHANGES    
    Annual Incentive Plan  

Beginning in 2021, NFFO metric replaced with NFFO per share

Added annual bookings and sustainability metrics

   
    LTI Awards  

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 at a Glance

Living a Sustainable Mission

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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 at a Glance

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Proposal 1: Election of Eight Directors

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.

            Director   Independent   Board Committees
Name   Age   Occupation   Since       A   C   N   T   E
Bruce W. Duncan   69   President & CEO, CyrusOne   2020   No                   ·
Alex Shumate*   70   Managing Partner, North America, Squire Patton Boggs (US) LLP   2013   Yes           ·       (C)
David H. Ferdman   53   Managing Partner of DTB Capital Partners and Chief Executive Officer of Cybraics, Inc.   2013   Yes               ·    
John W. Gamble, Jr.   58   Corporate Vice President & Chief Financial Officer, Equifax Inc.   2014   Yes   ·               ·
T. Tod Nielsen   55   Former President & Chief Executive Officer, Financial Force   2013   Yes       (C)           ·
Denise Olsen   55   Senior Managing Director, GEM Realty Capital     Yes                    
William E. Sullivan   66   Former Chief Financial Officer & Treasurer, Purdue University   2013   Yes   ·       (C)        
Lynn A. Wentworth   62   Former Senior Vice President, Chief Financial Officer & Treasurer, BlueLinx Holdings Inc.   2014   Yes   (C)   ·       ·    

 

*   Chair of the Board and
Lead Independent Director
  A = Audit
C = Compensation
N = Nominating/Governance
T = Transaction
E = Executive
(C) Denotes committee chair

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.

       
  The Board of Directors recommends
a vote
FOR each Nominee.
 
     

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Proposal 1: Election of Eight Directors

Nominees for Election to the Board of Directors

The biographical descriptions below set forth certain information with respect to each of the Nominees.

Bruce W. Duncan

President & CEO

Board Committees:

Executive

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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Proposal 1: Election of Eight Directors


Alex Shumate

Chair of the Board &
Lead Independent Director

Board Committees:

Executive (Chair)

Nominating and
Corporate Governance

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.

 

David H. Ferdman

Board Committees:

Transaction

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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Proposal 1: Election of Eight Directors


John W. Gamble, Jr.

Board Committees:

Audit

Executive

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.

 

T. Tod Nielsen

Board Committees:

Compensation (Chair)

Executive

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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Proposal 1: Election of Eight Directors

Denise Olsen

New Nominee for Director

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.



William E. Sullivan

Board Committees:

Nominating and
Corporate Governance
(Chair)

Audit

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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Proposal 1: Election of Eight Directors


Lynn A. Wentworth

Board Committees:

Audit (Chair)

Compensation

Transaction

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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Proposal 2: Say-on-Pay

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:

we support a culture committed to paying for performance where compensation is commensurate with the results achieved

we cap individual payouts under our executive compensation plans

other than limited exceptions for new hires, we do not guarantee incentive compensation under our annual cash bonus plan or long-term incentive plan

clawback policies allow recovery of certain compensation payments and proceeds from executives in the event of a significant restatement of financial results

we do not provide "single-trigger" change-in-control vesting on equity awards or severance

we do not provide gross-ups to cover personal income taxes that pertain to change in control or severance benefits

we do not provide special executive retirement programs


PERFORMANCE-BASED COMPENSATION*

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*
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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Proposal 2: Say-on-Pay

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.

       
  The Board of Directors recommends
a vote
FOR the approval of the advisory
resolution on executive compensation.
 
     

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Proposal 3: Advisory Vote on Frequency of Advisory Vote on Executive Compensation

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.

       
  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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Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm

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:

  Year Ended December 31, 2020
($)
  Year Ended December 31, 2019
($)

Audit Fees

  1,833,515   1,639,351

Audit Related Fees

  142,000   183,048

Tax Fees

   

All Other Fees

   

Total

  1,975,515   1,822,399

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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Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm

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.

       
  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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Audit Committee Report

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.

 

Submitted by the Audit Committee
of the Board of Directors

 

Lynn A. Wentworth (Chair)
John W. Gamble, Jr.
William E. Sullivan

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Executive Officers

Executive Officers

Name   Position(s)   Age
Bruce W. Duncan   President & CEO   69
Katherine Motlagh   Executive Vice President & Chief Financial Officer   47
John P. Hatem   Executive Vice President & Chief Operating Officer   46
Robert M. Jackson   Executive Vice President, General Counsel & Secretary   53

For biographical information about Bruce W. Duncan, see "Proposal 1: Election of Eight Directors—Nominees for Election to the Board of Directors" above.

Katherine Motlagh

Executive Vice President &
Chief Financial Officer

Education:

BS/MS - Finance Academy in Moscow, Russia

MBA - American University in Moscow

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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Executive Officers

John P. Hatem

Executive Vice President &
Chief Operating Officer

Education:

Texas Tech University

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.

Robert M. Jackson

Executive Vice President,
General Counsel &
Secretary

Education:

BS - Indiana University

JD - University of
Missouri-Kansas City

LLM -University of
Florida

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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Corporate Governance

Corporate Governance

Notable features of our corporate governance structure include the following:

the Board of Directors is not classified; instead, each of our directors is subject to election annually

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

7 of 8 current directors (other than Mr. Duncan, our President & CEO) are "independent" within the meaning of the Nasdaq listing standards

the Board has a mandatory retirement age (72)

the Board has separated the positions of Chair and CEO, with an independent director serving as Chair (as well as Lead Independent Director)

we have opted out of the control share acquisition statute of the Maryland General Corporation Law

we have no stockholder rights plan in effect

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

our independent directors meet regularly in executive sessions without the presence of management

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

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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Corporate Governance

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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Corporate Governance

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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Corporate Governance

Board Committees

  Audit Committee
Current Members:
  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.  

Ms. Wentworth (chair)*

Mr. Gamble*

Mr. Sullivan*

*Audit Committee

Financial Expert

 
         
  Compensation Committee
Current Members:
 
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.
  •  Mr. Nielsen (chair)

Mr. Klayko

Ms. Wentworth

 
         
  Nominating and Corporate Governance Committee
Current Members:
  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.   •  Mr. Sullivan (chair)

Mr. Klayko

Mr. Shumate

 
         
  Transaction Committee
Current Members:
  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.

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Corporate Governance

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.

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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.

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Corporate Governance

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.

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Corporate Governance

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.

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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.

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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.

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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.

Table of Contents

Executive Summary

  30

How We Make Compensation Decisions

 
33

Role of the Compensation Committee

  33

Use of Judgment

  33

Role of Compensation Consultant

  34

Peer Groups and Use of Data

  34

2020 Executive Compensation Components

 
36

Base Salary

  37

Annual Incentive

  37

Long-Term Incentives

  40

Other Elements of Compensation

  44

Other Compensation-Related Policies

  44

Employment Agreements

  45

Compensation Committee Analysis of Risk

 
45

Compensation Committee Report

 
46

Executive Compensation Tables

 
47

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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

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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.

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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 Compensation—Other 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.

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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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GOVERNANCE PRACTICES
  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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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.

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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.

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2020 Executive Compensation Components

    Component   Objective   Key features
Fixed Compensation

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.

     
Variable Compensation

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 goals—for 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.

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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

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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%)              

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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%)              

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(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 %

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(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

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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.

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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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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 Tables—2020 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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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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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 Tables—Potential 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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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 Tables—Potential 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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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

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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