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. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
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☒ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☐ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to §240.14a-12 |
salesforce.com, inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notice of the 2018 Annual Meeting and 2018 Proxy Statement Tuesday, June 12, 2018 at 2:00 P.M. (Local Time) 350 Mission Street, San Francisco, California, 94105
salesforce.com, inc.
The Landmark @ One Market
Suite 300
San Francisco, California 94105
May , 2018
Dear Fellow Stockholders:
You are cordially invited to attend the 2018 Annual Meeting of Stockholders of salesforce.com, inc. on Tuesday, June 12, 2018 at 2:00 p.m. local time at 350 Mission Street, San Francisco, California 94105.
At this years meeting, we will vote on the election of directors, an amendment to Salesforces Amended and Restated Certificate of Incorporation to allow stockholders to request special meetings of the stockholders, an amendment and restatement of our 2013 Equity Incentive Plan to, among other things, increase the number of shares authorized for issuance thereunder and the ratification of the selection of Ernst & Young LLP as Salesforces independent registered public accounting firm. We will also conduct a non-binding advisory vote to approve the compensation of Salesforces named executive officers. If properly presented at the meeting, we will also consider three stockholder proposals as described in the Notice of 2018 Annual Meeting of Stockholders and Proxy Statement. Finally, we will transact such other business as may properly come before the meeting, and stockholders will have an opportunity to ask questions.
Your vote is important. Whether or not you plan to attend the Annual Meeting, please vote as soon as possible. You may vote over the Internet, by telephone or by mailing a completed proxy card or voting instruction form (if you request printed copies of the proxy materials to be mailed to you). Your vote by proxy will ensure your representation at the Annual Meeting regardless of whether you attend the meeting. Details regarding admission to the Annual Meeting and the business to be conducted are described in the accompanying Notice of 2018 Annual Meeting of Stockholders and Proxy Statement.
Thank you for your ongoing support of Salesforce. We look forward to seeing you at the Annual Meeting.
Aloha,
Marc Benioff
Chairman of the Board of Directors and
Chief Executive Officer
salesforce.com, inc.
The Landmark @ One Market,
Suite 300
San Francisco, California 94105
NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS
|
To be held Tuesday, June 12, 2018
TO THE STOCKHOLDERS OF SALESFORCE.COM, INC.:
NOTICE IS HEREBY GIVEN that the 2018 Annual Meeting of Stockholders (the Annual Meeting) of salesforce.com, inc., a Delaware corporation (Salesforce), will be held on Tuesday, June 12, 2018 at 2:00 p.m. local time at 350 Mission Street, San Francisco, California 94105 for the following purposes:
1. | To elect Marc Benioff, Keith Block, Craig Conway, Alan Hassenfeld, Neelie Kroes, Colin Powell, Sanford Robertson, John V. Roos, Bernard Tyson, Robin Washington, Maynard Webb and Susan Wojcicki to serve as directors until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified, subject to earlier resignation or removal; |
2. | To amend our Amended and Restated Certificate of Incorporation to allow stockholders holding 15% of our outstanding common stock to request special meetings of the stockholders; |
3. | To amend and restate our 2013 Equity Incentive Plan to, among other things, increase the number of shares authorized for issuance by 40 million shares; |
4. | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending January 31, 2019; |
5. | To approve, on an advisory basis, the fiscal 2018 compensation of our named executive officers; |
6. | To consider, if properly presented at the meeting, a stockholder proposal requesting the elimination of supermajority voting requirements; |
7. | To consider, if properly presented at the meeting, a stockholder proposal requesting the adoption of a policy to consider employee pay ranges when setting CEO compensation; and |
8. | To consider, if properly presented at the meeting, a stockholder proposal requesting a report on Salesforces criteria for investing in, operating in and withdrawing from high-risk regions. |
The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. We also will transact any other business that may properly come before the Annual Meeting, but are not aware of any such additional matters.
Stockholders at the close of business April 18, 2018 and their proxies are entitled to attend and vote at the Annual Meeting and any and all adjournments, continuations or postponements thereof.
All stockholders are invited to attend the Annual Meeting in person. Any stockholder attending the Annual Meeting may vote even if such stockholder returned a proxy. You will need to bring your Notice of Internet Availability of Proxy Materials, or other proof of ownership of Salesforce common stock as of the record date, as well as photo identification, to enter the Annual Meeting.
U.S. Securities and Exchange Commission rules allow companies to furnish proxy materials to their stockholders over the Internet. This expedites stockholders receipt of proxy materials, lowers the annual meeting costs and conserves natural resources. Thus, we are mailing stockholders a Notice of Internet Availability of Proxy Materials, rather than a paper copy of the Proxy Statement and our 2018 Annual Report. The Notice of Internet Availability of Proxy Materials contains instructions on how to access our proxy materials online, vote and (if desired) obtain a paper copy of our proxy materials.
This Notice, the Notice of Internet Availability of Proxy Materials, the Proxy Statement and the 2018 Annual Report are first being made available to stockholders on May , 2018.
By Order of the Board of Directors,
Amy E. Weaver
President, Legal, General Counsel and Secretary
San Francisco, California
May , 2018
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE VOTE AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING. YOU MAY VOTE ONLINE OR BY TELEPHONE OR, IF YOU REQUESTED PRINTED COPIES OF THE PROXY MATERIALS, BY USING THE PROXY CARD OR VOTING INSTRUCTION FORM PROVIDED WITH THE PRINTED PROXY MATERIALS. YOU MAY SUBSEQUENTLY CHANGE OR REVOKE YOUR VOTE AT THE ANNUAL MEETING IF YOU ATTEND THE MEETING.
PROXY STATEMENT FOR 2018 ANNUAL MEETING OF STOCKHOLDERS
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What do I need to bring to attend and vote at the Annual Meeting? |
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Material Features of the 2014 Inducement Equity Incentive Plan |
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Stockholder Outreach, Board Responsiveness, Program Evolution |
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Compensation Elements and Compensation for Named Executive Officers |
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Summary Information Regarding Fiscal 2019 Compensation Decisions |
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2018 Proxy Statement
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i
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TABLE OF CONTENTS (CONTINUED)
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Report of the Compensation Committee of the Board of Directors |
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Proposal 2 Amendment and Restatement of the Companys Certificate of Incorporation |
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Increasing the Number of Shares Reserved for Issuance under the 2013 Plan |
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Number of Awards Granted to Employees, Consultants, and Directors |
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Proposal 4 Ratification of Appointment of Independent Auditors |
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Proposal 5 Advisory Vote to Approve Named Executive Officer Compensation |
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Proposal 6 Stockholder Proposal Requesting the Elimination of Supermajority Voting Requirements |
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2018 Proxy Statement
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TABLE OF CONTENTS (CONTINUED)
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Appendix A: Amended and Restated Certificate of Incorporation |
A-1 | |||
B-1 | ||||
C-1 |
2018 Proxy Statement
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iii
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ABOUT THE ANNUAL MEETING
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The Board of Directors of salesforce.com, inc. (the Board) is soliciting your vote at Salesforces 2018 Annual Meeting of Stockholders (the Annual Meeting). Unless otherwise indicated, references in this Proxy Statement to Salesforce, we, us, our and the Company refer to salesforce.com, inc.
When and where will the Annual Meeting take place?
The Annual Meeting will take place on Tuesday, June 12, 2018 at 2:00 p.m. local time at 350 Mission Street, San Francisco, California 94105.
Where can I access the proxy materials?
Pursuant to the rules of the Securities and Exchange Commission, or SEC, we have provided access to our proxy materials over the Internet. Accordingly, a Notice of Internet Availability of Proxy Materials (the Internet Notice) has been mailed (or, if requested, emailed) to our stockholders owning our stock as of the record date, April 18, 2018. Our proxy materials were mailed to those stockholders who have asked to receive paper copies. Instructions on how to access the proxy materials over the Internet, how to receive our proxy materials via email, or how to request a printed copy by mail may be found in the Internet Notice.
By accessing the proxy materials on the Internet or choosing to receive your future proxy materials by email, you will save the Company the cost of printing and mailing documents to you and will reduce the impact of the Annual Meeting on the environment. If you choose to receive future proxy materials by email, and you are a Salesforce stockholder as of the record date for next years annual meeting, you will receive an email next year with instructions containing a link to those materials. If you choose to receive future proxy materials by mail, you will receive a paper copy of those materials, including a form of proxy or voting instruction form. Your election to receive proxy materials by mail or email will remain in effect until you notify us that you are terminating such election.
All of our stockholders have one vote for every share of Salesforce common stock owned as of our record date of April 18, 2018.
2018 Proxy Statement
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ABOUT THE ANNUAL MEETING (CONTINUED)
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What are the Boards voting recommendations?
How do I vote in advance of the Annual Meeting?
If you are a stockholder of record you may cast your vote in any of the following ways.
If you are a stockholder who holds shares through a brokerage firm, bank, trust or other similar organization (that is, in street name), please refer to the instructions from the broker or organization holding your shares.
What do I need to bring to attend and vote at the Annual Meeting?
Stockholders as of the record date, April 18, 2018, must bring the Internet Notice or other proof of ownership, as well as photo identification, for entrance to the Annual Meeting. Those stockholders whose shares are held in street name may attend and vote at the Annual Meeting by obtaining a legal proxy provided by their broker, bank or other organization and bringing that legal proxy to the Annual Meeting.
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2018 Proxy Statement
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DIRECTORS AND CORPORATE GOVERNANCE
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DIRECTORS AND CORPORATE GOVERNANCE
Board and Corporate Governance Highlights
In addition to a strong, independent Board, we are committed to a corporate governance structure that promotes long-term stockholder value creation by providing the right leadership structure and composition of the Board and providing our stockholders with both the opportunity to provide direct feedback and key substantive rights to ensure accountability. Key highlights of our Board and corporate governance profile are set forth below:
Corporate Governance Best Practices | ||||
✓ BoardComposed of 83% Independent Directors
✓ Commitment to Board Refreshment (Seven New Directors in Past Five Years)
✓ Lead Independent Director with Expansive Duties
✓ Annual Election of Directors
✓ Majority Voting for Directors
✓ Proxy Access Right
✓ Rigorous Director Selection and Evaluation Process
✓ Limit on Outside Directorships |
✓ Fully Independent Committees
✓ Comprehensive Risk Oversight by Full Board and Committees
✓ In Fiscal Year 2018, We Engaged with Holders of a Majority of Our Outstanding Shares
✓ Stock Ownership Policy for Directors and Executive Officers
✓ Diverse Board in Terms of Gender, Ethnicity, Experience, Skills and Tenure
✓ Regular Executive Sessions of Independent Directors |
2018 Proxy Statement
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DIRECTORS AND CORPORATE GOVERNANCE (CONTINUED)
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Summary of Director Experience and Qualifications
The matrix below summarizes what our Board believes are desirable types of experience, qualifications, attributes and skills possessed by one or more of Salesforces directors, because of their particular relevance to the Companys business and structure. While all of these were considered by the Board in connection with this years director nomination process, the following matrix does not encompass all experience, qualifications, attributes or skills of our directors.
Significant
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Experience
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Experience
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Experience
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Leadership
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Leadership
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Expertise in
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Professional
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Experience
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Diversity,
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Leadership
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Leadership involving international operations or
| |||||||||||||
Marc Benioff
|
✓
|
✓
|
✓
|
✓
|
✓
|
✓
|
✓
|
✓
| ||||||||||||||||
Keith Block
|
✓
|
✓
|
✓
|
✓
|
✓
| |||||||||||||||||||
Craig Conway
|
✓
|
✓
|
✓
|
✓
|
✓
|
✓
|
✓
|
✓
|
✓
|
✓
| ||||||||||||||
Alan Hassenfeld
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✓
|
✓
|
✓
|
✓
|
✓
|
✓
| ||||||||||||||||||
Neelie Kroes
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✓
|
✓
|
✓
|
✓
| ||||||||||||||||||||
Colin Powell
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✓
|
✓
|
✓
|
✓
|
✓
|
✓
| ||||||||||||||||||
Sanford Robertson
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✓
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✓
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✓
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✓
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✓
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|||||||||||||||||||
John V. Roos
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✓
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✓
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✓
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✓
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✓
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Bernard Tyson
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✓
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✓
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✓
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|||||||||||||||||||||
Robin Washington
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✓
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✓
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✓
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✓
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✓
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|||||||||||||||||||
Maynard Webb
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✓
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✓
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✓
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✓
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✓
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✓
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✓
| |||||||||||||||||
Susan Wojcicki
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✓
|
✓
|
✓
|
✓
|
✓
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✓
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2018 Proxy Statement
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DIRECTORS AND CORPORATE GOVERNANCE (CONTINUED)
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Biographies of Our Board Members
The names and certain information as of March 31, 2018 about our director nominees, all of whom are currently members of our Board and were elected by stockholders at the 2017 Annual Meeting (other than Bernard Tyson, who was appointed to the Board in October 2017), are set forth below. There are no family relationships among any of our directors or executive officers. Our directors serve until the next Annual Meeting of Stockholders and until their successors are elected and qualified, subject to earlier resignation or removal. Please see Proposal 1 in this Proxy Statement for more information about the election of our directors.
2018 Proxy Statement
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5
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DIRECTORS AND CORPORATE GOVERNANCE (CONTINUED)
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6
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2018 Proxy Statement
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DIRECTORS AND CORPORATE GOVERNANCE (CONTINUED)
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2018 Proxy Statement
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7
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DIRECTORS AND CORPORATE GOVERNANCE (CONTINUED)
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8
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2018 Proxy Statement
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DIRECTORS AND CORPORATE GOVERNANCE (CONTINUED)
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2018 Proxy Statement
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9
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DIRECTORS AND CORPORATE GOVERNANCE (CONTINUED)
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Primary Committees of the Board of Directors
Director
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Independent
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Audit
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Compensation
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Nominating
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||||||||||||
Marc Benioff (Chairman & CEO)
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||||||||||||||||
Keith Block
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||||||||||||||||
Craig Conway
|
|
✓
|
|
|
✓
|
|
||||||||||
Alan Hassenfeld
|
|
✓
|
|
|
✓
|
|
|
✓
|
| |||||||
Neelie Kroes
|
|
✓
|
|
|||||||||||||
Colin Powell
|
|
✓
|
|
|
✓
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| ||||||||||
Sanford Robertson (Lead Independent Director)
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✓
|
|
|
✓
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|
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Chair
|
| |||||||
John V. Roos
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✓
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|
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Chair
|
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||||||||||
Bernard Tyson
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✓
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|||||||||||||
Robin Washington
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✓
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|
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Chair
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||||||||||
Maynard Webb
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✓
|
|
|
✓
|
|
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✓
|
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|||||||
Susan Wojcicki
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✓
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Total Meetings in Fiscal 2018
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8
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|
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12
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5
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12
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2018 Proxy Statement
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DIRECTORS AND CORPORATE GOVERNANCE (CONTINUED)
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2018 Proxy Statement
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DIRECTORS AND CORPORATE GOVERNANCE (CONTINUED)
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DIRECTOR COMPENSATION FOR FISCAL 2018
Name | Fees Earned or Paid in Cash |
Stock Awards (3) (4) |
Total | |||||||||
Craig Conway
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$
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70,000
|
|
$
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543,962
|
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$
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613,962
|
| |||
Alan Hassenfeld
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$
|
50,000
|
|
$
|
543,962
|
|
$
|
593,962
|
| |||
Neelie Kroes
|
$
|
50,000
|
|
$
|
543,962
|
|
$
|
593,962
|
| |||
Colin Powell
|
$
|
50,000
|
|
$
|
543,962
|
|
$
|
593,962
|
| |||
Sanford Robertson
|
$
|
100,000
|
|
$
|
543,962
|
|
$
|
643,962
|
| |||
John V. Roos
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$
|
70,000
|
|
$
|
543,962
|
|
$
|
613,962
|
| |||
Lawrence Tomlinson (1)
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$
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45,000
|
|
$
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274,423
|
|
$
|
319,423
|
| |||
Bernard Tyson (2)
|
$
|
12,500
|
|
$
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138,665
|
|
$
|
151,165
|
| |||
Robin Washington
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$
|
70,000
|
|
$
|
543,962
|
|
$
|
613,962
|
| |||
Maynard Webb
|
$
|
70,000
|
|
$
|
543,962
|
|
$
|
613,962
|
| |||
Susan Wojcicki
|
$
|
50,000
|
|
$
|
543,962
|
|
$
|
593,962
|
|
(1) | Compensation amounts reflect partial-year service for Mr. Tomlinson, who retired in June 2017. |
(2) | Mr. Tyson was appointed to the Board effective October 1, 2017. |
(3) | Stock awards consist solely of grants of fully-vested shares of Salesforce common stock. The amounts reported are the aggregate grant date fair value, which is calculated by multiplying the number of shares subject to the stock grant by the closing price of one share of common stock on the date of grant. No directors held unvested stock awards as of the end of fiscal 2018. |
(4) | During fiscal 2018, all directors (other than Mr. Tyson and Mr. Tomlinson) received stock awards of fully-vested shares of Salesforce common stock on February 22, 2017, May 22, 2017, August 22, 2017 and November 22, 2017, with grant date fair values of $141,013, $133,410, $130,874 and $138,665, respectively. Mr. Tyson received a stock award of fully-vested shares of Salesforce common stock on November 22, 2017, with a grant date fair value of $138,665. Mr. Tomlinson received stock awards of fully vested shares of Salesforce common stock on February 22, 2017 and May 22, 2017, with grant date fair values of $141,013 and $133,410, respectively. |
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2018 Proxy Statement
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned |
Percent of Class |
||||||
Five Percent Stockholders |
||||||||
FMR LLC (1) |
84,301,017 | 11.5% | ||||||
245 Summer Street, Boston, Massachusetts 02210 |
||||||||
The Vanguard Group (2) |
48,713,324 | 6.7% | ||||||
100 Vanguard Boulevard, Malvern, PA 19355 |
||||||||
T. Rowe Price Associates Inc. (3) |
48,296,163 | 6.6% | ||||||
100 East Pratt Street, Baltimore, Maryland 21202 |
||||||||
BlackRock, Inc. (4) |
39,895,020 | 5.5% | ||||||
55 East 52nd Street, New York, New York 10022 |
||||||||
Directors and Named Executive Officers |
||||||||
Marc Benioff (5) |
37,230,012 | 5.1% | ||||||
Keith Block (6) |
792,297 | * | ||||||
Craig Conway |
9,828 | * | ||||||
Alexandre Dayon (7) |
407,726 | * | ||||||
Parker Harris (8) |
2,778,747 | * | ||||||
Alan Hassenfeld (9) |
148,323 | * | ||||||
Mark Hawkins (10) |
54,968 | * | ||||||
Neelie Kroes |
7,242 | * | ||||||
Colin Powell |
53,284 | * | ||||||
Sanford R. Robertson |
203,773 | * | ||||||
John V. Roos |
15,126 | * | ||||||
Bernard Tyson |
2,468 | * | ||||||
Robin Washington |
34,173 | * | ||||||
Maynard Webb (11) |
35,754 | * | ||||||
Susan Wojcicki |
46,393 | * | ||||||
Directors and Executive Officers as a Group (20 Persons) (12) |
44,056,148 | 6.0% |
* | Less than 1%. |
(1) | Based upon a Schedule 13G/A filed with the SEC on February 13, 2018 by FMR LLC, on behalf of itself, Crosby Advisors LLC, FIAM LLC, Fidelity (Canada) Asset Management ULC, Fidelity Institutional Asset Management Trust Company, Fidelity Management & Research (Hong Kong) Limited, Fidelity Management & Research Company, FMR Co., Inc. and Strategic Advisers, Inc. |
2018 Proxy Statement
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17
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SECURITY OWNERSHIP (CONTINUED)
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(2) | Based upon a Schedule 13G/A filed with the SEC on February 7, 2018 by The Vanguard Group on behalf of itself, Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd. |
(3) | Based upon a Schedule 13G filed with the SEC on February 14, 2018 by T. Rowe Price Associates, Inc. |
(4) | Based upon a Schedule 13G filed with the SEC on January 23, 2018 by BlackRock, Inc., on behalf of itself, BlackRock Life Limited, BlackRock International Limited, BlackRock Advisors, LLC, BlackRock Capital Management, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, N.A., BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co. Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, Future Advisor Inc., BlackRock Investment Management (UK) Ltd, BlackRock Asset Management Canada Limited, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors, BlackRock Asset Management North Asia Limited, BlackRock (Singapore) Limited and BlackRock Fund Managers Ltd. |
(5) | Includes 3,873,212 shares issuable upon the exercise of options vested and exercisable as of March 1, 2018 or, assuming continued service to the Company, vesting within 60 days of March 1, 2018. All other shares are held in the Marc R. Benioff Revocable Trust. |
(6) | Includes 772,679 shares issuable upon the exercise of options that vested and exercisable as of March 1, 2018 or, assuming continued service to the Company, vesting within 60 days of March 1, 2018 and upon settlement of RSUs vesting within 60 days of March 1, 2018. |
(7) | Includes 369,104 shares issuable upon the exercise of options vested and exercisable as of March 1, 2018 or, assuming continued service to the Company, vesting within 60 days of March 1, 2018. |
(8) | Includes 719,443 shares issuable upon the exercise of options vested and exercisable as of March 1, 2018 or, assuming continued service to the Company, vesting within 60 days of March 1, 2018. Also includes 2,041,147 shares held in trusts. |
(9) | Includes 1,350 shares held by a family member. |
(10) | Includes 33,690 shares issuable upon the exercise of options vested and exercisable as of March 1, 2018 or, assuming continued service to the Company, vesting within 60 days of March 1, 2018. |
(11) | All shares held in trust. |
(12) | Includes 6,548,859 shares issuable upon the exercise of options vested and exercisable as of March 1, 2018 or, assuming continued service to the Company, vesting within 60 days of March 1, 2018, and upon the settlement of RSUs vesting, assuming continued service to the Company, within 60 days of March 1, 2018. |
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2018 Proxy Statement
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EQUITY COMPENSATION PLAN INFORMATION
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EQUITY COMPENSATION PLAN INFORMATION
Plan category | Number of securities (a) |
Weighted-average warrants and rights (b) (1) |
Number of securities (c) |
|||||||||
Equity compensation plans approved by stockholders |
36,508,228(2) | $ | 38.20 | 57,169,855(3) | ||||||||
Equity compensation plans not approved by stockholders |
4,217,054(4) | $ | 9.27 | 661,564(5) | ||||||||
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Total |
40,725,282 | $ | 35.20 | 57,831,419 |
(1) | The weighted average exercise price of outstanding options, warrants and rights includes the purchase price of $0.001 per restricted stock unit. |
(2) | Consists of options and restricted stock units granted under the 2013 Equity Plan. Performance-based restricted stock units are for purposes of this column assumed to be payable at 100% of target. If instead the maximum amount of shares were achieved the number of securities to be issued would be 36,888,471. |
(3) | Consists of 7,518,906 shares available under the ESPP and 49,650,949 shares available under the 2013 Equity Plan. Offerings under the ESPP were authorized by the Board of Directors in September 2011. |
(4) | Consists of shares issuable under the 2014 Inducement Plan and the following plans, which have been assumed by us in connection with certain of our acquisition transactions: the Radian6 Technologies Inc. Third Amended and Restated Stock Option Plan assumed by us with our acquisition of Radian6 Technologies, Inc. in May 2011; the Assistly, Inc. 2009 Stock Plan assumed by us with our acquisition of Assistly, Inc. in September 2011; the Model Metrics, Inc. 2008 Stock Plan assumed by us with our acquisition of Model Metrics, Inc. in December 2011; the 2Catalyze, Inc. Second Amended 2008 Stock Option Plan assumed by us with our acquisition of 2Catalyze, Inc. d/b/a Rypple in February 2012; the Buddy Media, Inc. 2007 Equity Incentive Plan assumed by us with our acquisition of Buddy Media, Inc. in August 2012; the EdgeSpring, Inc. 2010 Equity Incentive Plan assumed by us with our acquisition of EdgeSpring, Inc. in June 2013; the ExactTarget, Inc. 2008 Equity Incentive Plan assumed by us with our acquisition of ExactTarget, Inc. in July 2013; the RelateIQ, Inc. 2011 Stock Plan assumed by us with our acquisition of RelateIQ, Inc. in August 2014; the SteelBrick Holdings, Inc. 2013 Equity Incentive Plan assumed by us with our acquisition of SteelBrick Inc. in December 2015; the MetaMind, Inc. 2014 Stock Incentive Plan assumed by us with our acquisition of MetaMind, Inc. in April 2016 (the MetaMind Plan); the Demandware, Inc. 2012 Stock Incentive Plan assumed by us with our acquisition of Demandware, Inc. in July 2016; the Backchannel, Inc. 2012 Equity Incentive Plan assumed by us with our acquisition of Quip, Inc. in August 2016; the BeyondCore, Inc. 2007 Stock Incentive Plan and the BeyondCore, Inc. 2016 Equity Incentive Plan assumed by us with our acquisition of BeyondCore, Inc. in August 2016; and the Krux Digital, Inc. 2010 Stock Plan assumed by us with our acquisition of Krux Digital, Inc. in November 2016. |
(5) | Consists of the 2014 Inducement Plan and the MetaMind Plan. The material features of the 2014 Inducement Plan are described below. |
Material Features of the 2014 Inducement Equity Incentive Plan
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A LETTER FROM OUR COMPENSATION COMMITTEE
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A LETTER FROM OUR COMPENSATION COMMITTEE
May , 2018
Dear Fellow Stockholders,
We thank you for your continued support of Salesforce and wish to share with you how the Committee continues to evolve our executive compensation program and practices to support our long-term strategic goals and drive stockholder value.
Durable Growth
The Companys outstanding full year financial results are a reflection of the relentless focus on customer success that has allowed the organization to scale and continue to strengthen its position as the worlds #1 CRM. No other enterprise software company has achieved such scale faster. Fiscal 2018 was another record-breaking year that saw the Company deliver significant growth and strong financial performance, including:
| Revenue of $10.48 Billion, up 25% year-over-year |
| Operating cash flow of $2.74 Billion, up 27% year-over-year |
| Deferred Revenue of $7.09 Billion, up 28% year-over-year |
Salesforce prides itself not only on award-winning technology, but also on the talent of its people. The Company is thriving under the guidance and leadership of some of the brightest minds and most experienced executives in business. These executives, led by a visionary CEO, together with Salesforces more than 29,000 dedicated employees have done more than just create great products and great services. Their continuous focus on making our customers successful and improving the state of the world has earned Salesforce recognition as #1 in Fortunes 100 Best Companies to Work For, #15 in Fortunes Worlds Most Admired Companies, #2 in Barrons 100 Most Sustainable Companies and #1 in Forbes Worlds Most Innovative Companies.
Our Fiscal 2018 Compensation Program
As our business evolves and grows, we remain focused on ensuring our compensation program continues to support our strategic goals and reflects our commitment to pay and performance alignment. During fiscal 2018 we made one change that we believe serves to better align our incentive program with our business. We shifted the timing of our annual equity award cycle from November to March. This allows us to take recent full fiscal year company and individual performance into consideration when making annual equity award decisions. As a result of this shift in timing, our NEOs did not receive any equity grants in fiscal 2018. The resulting one-time reduction in total fiscal 2018 NEO compensation is not a reflection of company or individual performance. The equity awards we granted to our NEOs in March 2018, which will form a key part of their compensation for fiscal 2019, better reflect outstanding Company and individual performance during fiscal 2018. Equity incentives will remain an integral part of our incentive structure and will continue to be a significant component of our executive compensation program going forward, as we believe they support strong alignment of interests between our executives and our stockholders.
Further detail on our compensation program is included in the Compensation Discussion & Analysis that follows.
Ongoing Commitment to Stockholder Engagement
The Committee values the perspectives of our stockholders and takes stockholder feedback seriously, as evidenced by the continued evolution of our compensation program. We appreciate the strong support we received from stockholders on our 2017 advisory vote on executive compensation. We appreciate the discussions that many of you have had with us as our programs have evolved and we look forward to ongoing engagement with you. We are committed to maintaining a compensation structure that aligns pay with performance, drives long-term value creation, and reflects the perspectives of our stockholders.
Thank you for your continued support and investment in Salesforce.
Sincerely,
John V. Roos, Compensation Committee Chair
Craig Conway, Compensation Committee Member
Maynard Webb, Compensation Committee Member
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2018 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS
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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes the material elements of our executive compensation program, providing an overview of our executive compensation philosophy, policies, practices and the corresponding pay decisions for our Named Executive Officers (NEOs). Specifically, it describes how and why the Compensation Committee of the Board (the Compensation Committee or Committee) arrived at the specific executive compensation decisions for and during fiscal 2018 (February 1, 2017 January 31, 2018) and the key factors the Committee considered in making those decisions.
For fiscal 2018, our NEOs included our principal executive officer, our principal financial officer and the three next most highly-compensated executive officers, who were:
| Marc Benioff, our Chairman of the Board and Chief Executive Officer (CEO); |
| Mark Hawkins, our President and Chief Financial Officer (CFO); |
| Keith Block, our Vice Chairman, President and Chief Operating Officer; |
| Parker Harris, our Co-Founder and Chief Technology Officer; and |
| Alexandre Dayon, our President and Chief Strategy Officer. |
Business Overview and Fiscal 2018 Performance Highlights
Salesforce is a leading provider of enterprise software, delivered through the cloud, with a focus on customer relationship management, or CRM. We introduced our first CRM solution in 2000, and we have since expanded our service offerings into new areas and industries with new editions, features and platform capabilities. Our core mission is to empower our customers to connect with their customers in entirely new ways through cloud, mobile, social, Internet of Things (IoT) and artificial intelligence technologies.
Salesforce is the fastest growing top-five enterprise software company in the world. In fiscal 2018, Salesforce surpassed $10 billion in annual revenue, reaching that milestone faster than any other enterprise software company. Salesforce has earned recognition as #1 in Fortunes 100 Best Companies to Work For, #15 in Fortunes Worlds Most Admired Companies, #2 in Barrons 100 Most Sustainable Companies and #1 in Forbes Worlds Most Innovative Companies.
In fiscal 2018, the Company delivered significant growth and strong financial performance, including:
| Revenue. Fiscal 2018 revenue grew by 25% year-over-year. |
| Operating Cash Flow. Fiscal 2018 operating cash flow grew by 27% year-over-year. |
| Deferred and Unbilled Deferred Revenue. Fiscal 2018 deferred revenue grew by 28% year-over-year, and unbilled deferred revenue (representing business that is contracted but unbilled and off the balance sheet) grew by 48% year-over year. |
Revenue Operating Cash Flow
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
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Return to Stockholders
We have delivered significant long-term TSR as evidenced by the chart below, which shows how a $100 investment in Salesforce on January 31, 2013 would have grown to $265 on January 31, 2018. The chart also compares the TSR on an investment in our common stock to the same investment in the S&P 500 Index, the Nasdaq Computer & Data Processing Index and the Nasdaq 100 Index over the last five fiscal years.
1/31/2013 | 1/31/2014 | 1/31/2015 | 1/31/2016 | 1/31/2017 | 1/31/2018 | |||||||||||||||||||
salesforce.com |
$100 | $141 | $131 | $158 | $184 | $265 | ||||||||||||||||||
S&P 500 Index |
$100 | $119 | $133 | $130 | $152 | $188 | ||||||||||||||||||
Nasdaq Computer & Data Processing Index |
$100 | $128 | $152 | $158 | $196 | $277 | ||||||||||||||||||
Nasdaq 100 Index |
$100 | $129 | $152 | $157 | $187 | $254 |
Data for the Standard & Poors 500 Index, the Nasdaq Computer & Data Processing Index and the Nasdaq 100 Index assume reinvestment of dividends. The comparisons in the graph above are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock.
As shown above, the Company has shown consistently strong performance with a stock price that has appreciated substantially over the past five years. For example, our stock price on February 1, 2013 was $43.76 (as adjusted for our April 2013 stock split), and our stock price on February 1, 2018 was $112.74, approximately 2.576x the February 2013 stock price.
Fiscal 2018 Compensation ProgramHighlights
Highlights of our fiscal 2018 executive compensation program were:
| Kept Named Executive Officers Base Salary and Target Cash Bonus at Prior Levels. In fiscal 2018, we kept the CEOs base salary and target bonus the same as in fiscal 2016 and fiscal 2017. We kept fiscal 2018 base salary and target bonus for our other NEOs at the same levels as for fiscal 2017. |
| Changed Annual Equity Award Grant Cycle Timing to Align with Fiscal Year Results. The fiscal 2018 executive compensation program reflects one significant change, which relates to the timing of our annual equity award grant cycle. Historically, we granted equity awards annually in November. The Committee determined to move our annual grants from November to March. This change allows the Compensation Committee to consider Company and individual performance for the full, recently completed fiscal year when making annual equity award decisions. The transition to this new grant cycle resulted in a one-time delay to our annual equity award program, with no annual grants occurring for a 16-month period, including all of fiscal 2018. This significantly impacted the total fiscal 2018 compensation reported for all of our NEOs in our Summary Compensation Table. The reduction is not a reflection on individual or Company performance. The fiscal 2019 equity awards, summarized on page 30, reflect outstanding Company and individual performance during fiscal 2018. The delay in the equity grant cycle was also taken into account by the Compensation Committee when setting equity award amounts for fiscal 2019. |
Comparison of Cumulative Total Return of salesforce.com, inc.
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2018 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
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Stockholder Outreach, Board Responsiveness, Program Evolution
Evolution of our Executive Compensation Program
Our Compensation Committee has put considerable thought and care into evolving our executive compensation program over the last few years. We conduct extensive ongoing outreach with our stockholders. The stockholder perspectives that we receive, through direct engagement as well as through voting decisions, are very valuable to our Compensation Committee and Board and have helped inform the evolution of our program. For example, over the past three fiscal years we have:
| Implemented performance-based RSUs (PRSUs) for the CEO in fiscal 2016 |
| Extended the grant of PRSUs to all NEOs in fiscal 2017 |
| Required above-median relative total shareholder return (TSR) performance to achieve target payouts for all PRSUs |
| Continued to maintain rigorous performance goals each year for our cash incentive plan, including performance targets that exceed our external financial guidance |
| Changed the timing of our annual equity award cycle to better align with the Companys fiscal year, so the Compensation Committee can evaluate recent full fiscal year Company and individual performance when making annual equity grant decisions |
| Increased share ownership requirements for the Board and executives in fiscal 2016 |
Compensation Philosophy and Practices
Compensation Philosophy, Objectives and Challenges
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
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Compensation and Governance Practices and Policies
What We Do | What We Dont Do | |
✓ Actively engage in year-round dialogue with our stockholders and incorporate feedback into our compensation programs
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× No pension plans or Supplemental Executive Retirement Plans
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✓ Significant portion of compensation for Named Executive Officers is at risk, based on both the Companys absolute performance and performance relative to peers
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× No stock option repricing
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✓ Provide compensation mix that more heavily weights variable pay
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× No hedging or pledging of our securities
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✓ Utilize performance-based RSUs for all NEOs
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× No excise tax gross-ups upon a change of control
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✓ Maintain stringent stock ownership requirements for executives and directors
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✓ Annual advisory vote on executive compensation
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✓ Rigorous goal-setting, including performance-based RSUs that require above-median relative performance to earn target payout
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✓ Regular reviews of executive compensation and peer group data
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✓ Maintain a compensation clawback policy
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✓ Use an independent compensation consultant
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✓ Double-trigger cash, option and RSU change of control benefits
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Compensation Elements and Compensation for Named Executive Officers
We award cash compensation to our NEOs in the form of base salaries and annual cash incentives under our Kokua Bonus Plan, and we award equity compensation in the form of stock options, restricted stock units (RSUs) and PRSUs. Our CEOs equity compensation consists solely of stock options and PRSUs. To a lesser extent we also provide certain other benefits, generally consistent with what we provide to other employees, as described further below. We believe that each of these compensation elements is necessary to attract and retain individuals in a very competitive market for executive talent.
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2018 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
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A description of our key pay elements, the applicable performance measures and the rationale for each element are set forth in the following table:
Pay Component FY 2018 Metric Rationale Long-Term Equity Incentives Annual Cash Incentive Base Salary Performance-Based Restricted Stock Units Restricted Stock Units Stock Options Annual Performance-Based Cash Bonus Relative TSR Stock Price Stock Price Revenue Operating Cash Flow Non-GAAP Income from Operations Base Salary Establishes direct alignment with Company and stock price performance and the interests of stockholdersCEO LTI mix (PRSUs and stock options) establishes even greater emphasis on Company performance Drives achievement of key annual corporate performance goals that align with our strategy and that are used by investors to evaluate our financial performance Provides compensation for day-to-day responsibilities for all employees
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
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Named Executive Officer |
Fiscal 2018 Target Cash Bonus (as a Percentage of Base |
Fiscal 2018 Target |
Change from Fiscal 2017 | |||||
Mr. Benioff |
200% | $3,100,000 | No change | |||||
Mr. Hawkins |
100% | $ 750,000 | No change | |||||
Mr. Block |
100% | $1,150,000 | No change | |||||
Mr. Harris |
100% | $ 900,000 | No change | |||||
Mr. Dayon |
100% | $ 900,000 | No change |
Annual Bonus Performance Metric Targets
(all amounts in millions)
Fiscal 2017 | Fiscal 2018 | |||||||||||||||||||||||||||
Guidance* | Target | Actual | Guidance** | Target | Actual | Achievement | ||||||||||||||||||||||
Revenue |
$ | 8,080 - $8,120 | $ | 8,268 | $ | 8,272 | $ | 10,150 - $10,200 | $ | 10,298 | $ | 10,480 | Exceeded | |||||||||||||||
Operating Cash Flow |
$ | 1,984 - $2,000 | $ | 2,118 | $ | 2,162 | $ | 2,594 - $2,616 | $ | 2,625 | $ | 2,738 | Exceeded | |||||||||||||||
Non-GAAP Income from Operations |
N/A | $ | 1,170 | $ | 1,186 | N/A | $ | 1,516 | $ | 1,520 | Exceeded |
* | Guidance as published at the beginning of fiscal 2017 on February 26, 2016. |
** | Guidance as published at the beginning of fiscal 2018 on February 28, 2017. |
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2018 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
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2018 Proxy Statement
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED)
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2018 Proxy Statement
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CEO PAY RATIO
|
Employee | Fiscal Year |
Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compens- ation ($) |
All Other ation |
Total ($) |
||||||||||||||||||||||||
CEO |
2018 | 1,550,000 | 0 | 0 | 0 | 3,100,000 | 3,362 | 4,653,362 | ||||||||||||||||||||||||
Median Employee |
2018 | 131,758 | 6,503 | 0 | 0 | 17,023 | 0 | 155,284 |
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2018 Proxy Statement
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SUMMARY COMPENSATION TABLE
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The following table sets forth, for fiscal 2018 and the two prior years, the compensation reportable for our NEOs, as determined under SEC rules.
Name and Principal Position |
Fiscal Year |
Salary | Bonus | Stock Awards(1) |
Option Awards(2) |
Non-Equity Incentive Plan Compens- ation |
All Other ation |
Total | ||||||||||||||||||||||||
Marc Benioff |
2018 | $ | 1,550,000 | | | | $ | 3,100,000 | $ | 3,362 | (3) | $ | 4,653,362 | |||||||||||||||||||
Chairman of the Board and Chief Executive Officer |
2017 | $ | 1,550,000 | | $ | 4,373,238 | $ | 2,848,014 | $ | 3,100,000 | $ | 1,298,795 | $ | 13,170,047 | ||||||||||||||||||
2016 | $ | 1,550,000 | | $ | 17,455,952 | $ | 9,807,069 | $ | 3,100,000 | $ | 1,449,882 | $ | 33,362,903 | |||||||||||||||||||
Mark Hawkins |
2018 | $ | 750,000 | | | | $ | 750,000 | $ | 10,909 | (4) | $ | 1,510,909 | |||||||||||||||||||
President and Chief |
2017 | $ | 750,000 | | $ | 3,035,661 | $ | 3,000,014 | $ | 750,000 | $ | 1,151 | $ | 7,536,826 | ||||||||||||||||||
Financial Officer |
2016 | $ | 700,000 | $ | 250,000 | $ | 1,200,029 | $ | 4,800,004 | $ | 700,000 | $ | 29,362 | $ | 7,679,395 | |||||||||||||||||
Keith Block |
2018 | $ | 1,150,000 | | | | $ | 1,150,000 | $ | 49,889 | (5) | $ | 2,349,889 | |||||||||||||||||||
Vice Chairman, President |
2017 | $ | 1,150,000 | | $ | 5,059,230 | $ | 5,000,017 | $ | 1,150,000 | $ | 91,438 | $ | 12,450,685 | ||||||||||||||||||
and Chief Operating Officer |
2016 | $ | 1,077,000 | $ | 40,564 | | $ | 10,000,003 | $ | 1,077,000 | $ | 58,663 | $ | 12,253,230 | ||||||||||||||||||
Parker Harris |
2018 | $ | 900,000 | | | | $ | 900,000 | $ | 604 | (6) | $ | 1,800,604 | |||||||||||||||||||
Co-Founder and Chief Technology Officer |
2017 | $ | 900,000 | $ | 271,438 | $ | 4,047,445 | $ | 4,000,006 | $ | 900,000 | $ | 256,138 | $ | 10,375,027 | |||||||||||||||||
2016 | $ | 700,000 | | $ | 1,200,029 | $ | 4,800,004 | $ | 700,000 | | $ | 7,400,033 | ||||||||||||||||||||
Alexandre Dayon |
2018 | $ | 900,000 | | | | $ | 900,000 | | $ | 1,800,000 | |||||||||||||||||||||
President and
Chief |
2017 | $ | 900,000 | | $ | 4,047,445 | $ | 4,000,006 | $ | 900,000 | $ | 17,346 | $ | 9,864,797 | ||||||||||||||||||
2016 | $ | 700,000 | $ | 250,000 | $ | 1,600,038 | $ | 6,400,005 | $ | 700,000 | $ | 54,791 | $ | 9,704,834 |
(1) | Amounts reported under the Stock Awards column do not reflect compensation actually received by the NEO. Instead, the amounts reported reflect the aggregate grant date fair value of RSUs and PRSUs granted to the executives, which for RSUs is calculated by multiplying the number of shares subject to the award by the closing price of one share of our common stock on the date of grant and for PRSUs is calculated in the manner described in footnote (2) below, using a Monte Carlo valuation method. |
(2) | Amounts reported under the Option Awards column do not reflect compensation actually received by the NEO. Instead, the amounts reported are the grant date fair value of stock options granted to the executives as determined pursuant to FASB ASC Topic 718, excluding estimated forfeitures. The assumptions used to calculate the value of option awards are set forth under Note 1 of the Notes to Consolidated Financial Statements included in our annual report on Form 10-K for fiscal 2018 filed with the SEC on March 9, 2018. |
(3) | This amount consists of a tax gross-up provided with respect to the Company-paid costs of attending a Company leadership event, which was provided on the same terms to all other employees who attended the event. |
(4) | This amount includes $5,613 for Company-paid costs of attending motivational Company sales team and leadership events and $5,296 for tax gross-ups provided with respect to such costs, consistent with how we treated these benefits for all other employees who attended such events. |
(5) | This amount includes $15,990 for Company-paid costs of attending motivational Company sales team and leadership events and $15,088 for tax gross-ups provided with respect to such costs, consistent with how we treated these benefits for all other employees who attended such events. On occasion, family members of Mr. Block also may accompany him, at no incremental cost to the Company, on corporate aircraft used for business purposes. |
(6) | This amount consists of a tax gross-up provided with respect to the Company-paid costs of attending a Company leadership event, which was provided on the same terms to all other employees who attended the event. |
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GRANTS OF PLAN-BASED AWARDS TABLE
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GRANTS OF PLAN-BASED AWARDS TABLE
The following table sets forth certain information with respect to all plan-based awards granted to the NEOs during fiscal 2018. As discussed in the Compensation Discussion and Analysis, we did not grant any equity awards to our NEOs during fiscal 2018 due to the Compensation Committees decision to move the annual award cycle from November to March.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
Estimated Future Payouts Under Equity Incentive Plan Awards |
All Other Stock Awards: Number of Shares of Stock or Units (#) |
All Other Option Awards: Number of Securities Underlying Options (#) |
Exercise or Base Price of Option Awards |
Grant Date Fair Value of Stock and Option Awards |
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Name | Grant Date |
Threshold | Target (1) |
Maximum (1) |
Threshold (#) |
Target (#) |
Maximum (#) |
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Marc Benioff |
N/A | | $ | 3,100,000 | $ | 3,875,000 | | | | | | | | |||||||||||||||||||||||||||||||
Mark Hawkins |
N/A | | $ | 750,000 | $ | 937,500 | | | | | | | | |||||||||||||||||||||||||||||||
Keith Block |
N/A | | $ | 1,150,000 | $ | 1,437,500 | | | | | | | | |||||||||||||||||||||||||||||||
Parker Harris |
N/A | | $ | 900,000 | $ | 1,125,000 | | | | | | | | |||||||||||||||||||||||||||||||
Alexandre Dayon |
N/A | | $ | 900,000 | $ | 1,125,000 | | | | | | | |
(1) | The Companys non-equity incentive plan awards, and how they were determined, are based upon a formula that may include some discretion as to amounts paid, as discussed under Compensation Discussion and AnalysisCompensation ElementsCash Bonuses. Maximum amounts shown reflect a 125% individual multiplier limit on payouts to executive officers. |
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2018 Proxy Statement
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OPTION EXERCISES AND STOCK VESTED TABLE
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OPTION EXERCISES AND STOCK VESTED TABLE
The following table sets forth certain information concerning option exercises and the vesting of stock awards and the value realized upon exercise or vesting by the NEOs during fiscal 2018.
OPTION AWARDS | STOCK AWARDS | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise (1) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting (2) |
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Marc Benioff |
1,300,000 | $ | 111,615,352 | | | |||||||||||
Mark Hawkins |
277,453 | $ | 26,881,238 | 16,169 | $ | 1,574,722 | ||||||||||
Keith Block |
660,000 | $ | 59,407,692 | 8,270 | $ | 883,484 | ||||||||||
Parker Harris |
240,800 | $ | 22,444,862 | 20,709 | $ | 2,021,835 | ||||||||||
Alexandre Dayon |
316,382 | $ | 33,170,708 | 28,454 | $ | 2,744,785 |
(1) | The value realized on exercise is pre-tax and represents the difference between the market price of the shares of our common stock underlying the options when exercised and the applicable exercise price. |
(2) | The value realized on vesting is pre-tax and is determined by multiplying the number of vested restricted stock units by the closing price of the Companys common stock on the vesting date. |
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OUTSTANDING EQUITY AWARDS AT FISCAL 2018 YEAR-END TABLE
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OUTSTANDING EQUITY AWARDS AT FISCAL 2018 YEAR-END TABLE
The following table sets forth information with respect to the value of all outstanding equity awards held by our NEOs as of January 31, 2018.
OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||||||||
Name and Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable (1) |
Number of Securities Underlying Unexercised Options (#) Unexercisable (1) |
Option Exercise Price |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested (#) (2) |
Market That Have Not Vested |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) |
Equity That Have Not Vested |
||||||||||||||||||||||||
Marc Benioff |
||||||||||||||||||||||||||||||||
11/26/2013 |
1,849,441 | | $ | 52.30 | 11/26/2020 | | | | | |||||||||||||||||||||||
11/25/2014 |
1,556,700 | 409,658 | $ | 59.34 | 11/25/2021 | | | | | |||||||||||||||||||||||
11/22/2015 |
260,604 | 220,512 | $ | 80.99 | 11/22/2022 | | | | | |||||||||||||||||||||||
11/22/2016 |
44,059 | 106,998 | $ | 75.57 | 11/22/2023 | | | | | |||||||||||||||||||||||
11/22/2015 |
| | | | | | 191,382 | $ | 21,800,324 | |||||||||||||||||||||||
11/22/2016 |
| | | | | | 113,062 | $ | 12,878,892 | |||||||||||||||||||||||
Mark Hawkins |
||||||||||||||||||||||||||||||||
8/26/2014 |
| 60,372 | $ | 59.64 | 08/26/2021 | | | | | |||||||||||||||||||||||
11/22/2015 |
| 107,928 | $ | 80.99 | 11/22/2022 | | | | | |||||||||||||||||||||||
11/22/2016 |
| 112,710 | $ | 75.57 | 11/22/2023 | | | | | |||||||||||||||||||||||
8/26/2014 |
| | | | 5,628 | $ | 641,085 | | | |||||||||||||||||||||||
11/22/2015 |
| | | | 7,409 | $ | 843,959 | | | |||||||||||||||||||||||
11/22/2016 |
| | | | 14,888 | $ | 1,695,892 | | | |||||||||||||||||||||||
11/22/2016 |
| | | | | | 39,700 | $ | 4,522,227 | |||||||||||||||||||||||
Keith Block |
||||||||||||||||||||||||||||||||
11/25/2014 |
345,121 | 124,139 | $ | 59.34 | 11/25/2021 | | | | | |||||||||||||||||||||||
11/22/2015 |
265,731 | 224,850 | $ | 80.99 | 11/22/2022 | | | | | |||||||||||||||||||||||
11/22/2016 |
77,349 | 187,849 | $ | 75.57 | 11/22/2023 | | | | | |||||||||||||||||||||||
11/22/2016 |
| | | | 24,812 | $ | 2,826,335 | | | |||||||||||||||||||||||
11/22/2016 |
| | | | | | 66,164 | $ | 7,536,741 | |||||||||||||||||||||||
Parker Harris |
||||||||||||||||||||||||||||||||
11/26/2013 |
217,014 | | $ | 52.30 | 11/26/2020 | | | | | |||||||||||||||||||||||
11/25/2014 |
264,167 | 69,518 | $ | 59.34 | 11/25/2021 | | | | | |||||||||||||||||||||||
11/22/2015 |
127,551 | 107,928 | $ | 80.99 | 11/22/2022 | | | | | |||||||||||||||||||||||
11/22/2016 |
61,879 | 150,279 | $ | 75.57 | 11/22/2023 | | | | | |||||||||||||||||||||||
11/25/2014 |
| | | | 6,049 | $ | 689,042 | | | |||||||||||||||||||||||
11/22/2015 |
| | | | 7,409 | $ | 843,959 | | | |||||||||||||||||||||||
11/22/2016 |
| | | | 19,850 | $ | 2,261,114 | | | |||||||||||||||||||||||
11/22/2016 |
| | | | | | 52,932 | $ | 6,029,484 | |||||||||||||||||||||||
Alexandre Dayon |
||||||||||||||||||||||||||||||||
11/25/2014 |
83,419 | 69,518 | $ | 59.34 | 11/25/2021 | | | | | |||||||||||||||||||||||
11/22/2015 |
170,068 | 143,904 | $ | 80.99 | 11/22/2022 | | | | | |||||||||||||||||||||||
11/22/2016 |
61,879 | 150,279 | $ | 75.57 | 11/22/2023 | | | | | |||||||||||||||||||||||
11/25/2014 |
| | | | 6,049 | $ | 689,042 | | | |||||||||||||||||||||||
11/22/2015 |
| | | | 9,878 | $ | 1,125,203 | | | |||||||||||||||||||||||
11/22/2016 |
| | | | 19,850 | $ | 2,261,114 | | | |||||||||||||||||||||||
11/22/2016 |
| | | | | | 52,932 | $ | 6,029,484 |
38
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2018 Proxy Statement
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OUTSTANDING EQUITY AWARDS AT FISCAL 2018 YEAR-END TABLE (CONTINUED)
|
(1) | Options shown in this table were granted under the 2013 Equity Plan and vest over four years, with 25% of the total shares granted vesting on the first anniversary of the date of grant and the balance vesting in equal monthly installments over the remaining 36 months. |
(2) | Restricted stock unit awards shown in this table were granted under the 2013 Equity Plan and vest over four years, with 25% of the units vesting on the first anniversary of the date of grant and the balance vesting in equal quarterly installments over the remaining 36 months. |
(3) | The PRSUs shown in this table will vest depending on the Companys TSR over the Performance Period, relative to companies in the Index Group. If the Companys TSR over the Performance Period is at the 60th percentile when ranked against the Index Group TSRs, 100% of the target number of shares will vest. For every percentile by which the Companys TSR ranking within the Index Group exceeds the 60th percentile, shares vesting will increase by 2.5641%, up to a maximum payout of 200% of target if the Companys TSR ranking is at the 99th percentile. For every percentile by which the Companys TSR ranking within the Index Group is below the 60th percentile, shares vesting will decrease by 3.3333%, with no payout if the Companys TSR ranking is below the 30th percentile. If the Companys absolute TSR over the Performance Period is negative, the number of shares vesting will not exceed 100% of target. In accordance with SEC rules, based on the actual performance during the respective performance periods through the end of the last fiscal year, the PRSUs granted on November 22, 2015 are reported assuming achievement of target performance goals and the PRSUs granted on November 22, 2016 are reported assuming achievement of maximum performance goals. |
(4) | The market value of unvested RSUs and unearned PRSUs is based on the closing market price of the Companys common stock on January 31, 2018 of $113.91 per share. |
2018 Proxy Statement
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|
39
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|
EMPLOYMENT CONTRACTS AND CERTAIN TRANSACTIONS (CONTINUED)
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2018 Proxy Statement
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|
41
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|
EMPLOYMENT CONTRACTS AND CERTAIN TRANSACTIONS (CONTINUED)
|
Name
|
Salary and Bonus (1)
|
Value of Continuation of Benefits
|
Value of Accelerated Stock Options, RSUs and
|
Total (3)
|
||||||||||||
Marc Benioff
|
$
|
9,300,000
|
|
$
|
49,959
|
|
$
|
61,956,365(4)
|
|
$
|
71,306,324
|
| ||||
Mark Hawkins
|
$
|
2,250,000
|
|
$
|
27,925
|
|
$
|
16,592,730(5)
|
|
$
|
18,870,655
|
| ||||
Keith Block
|
$
|
3,450,000
|
|
$
|
12,703
|
|
$
|
27,973,163(6)
|
|
$
|
31,435,866
|
| ||||
Parker Harris
|
$
|
2,700,000
|
|
$
|
38,055
|
|
$
|
19,917,140(7)
|
|
$
|
22,655,195
|
| ||||
Alexandre Dayon
|
$
|
2,700,000
|
|
$
|
38,055
|
|
$
|
21,382,714(8)
|
|
$
|
24,120,769
|
|
(1) | Based on salary and bonus targets as of January 31, 2018. |
(2) | Represents acceleration of unvested options and acceleration of PRSUs at 100% of target as if the Companys TSR through the change of control ranked at the 60th percentile against the NASDAQ 100 Index Group (with amounts shown in the footnotes below assuming acceleration of PRSUs at the maximum amount as if the Companys TSR through the change of control was positive and ranked at the 99th percentile relative to TSR against the NASDAQ 100 Index Group). Based on a common stock price of $113.91, the closing market price of the Companys common stock on January 31, 2018, less the applicable exercise price for each option for which vesting would have been accelerated. |
(3) | The amounts presented reflect the maximum severance benefits that could have been paid out without giving effect to any potential reduction as a result of the best of provision of the Change of Control and Retention Agreements described above. |
(4) | If the maximum PRSU amount possible were accelerated in connection with a change of control and qualifying termination, the resulting total value of accelerated equity awards would be $90,196,135. |
(5) | If the maximum PRSU amount possible were accelerated in connection with a change of control and qualifying termination, the resulting total value of accelerated equity awards would be $18,853,843. |
(6) | If the maximum PRSU amount possible were accelerated in connection with a change of control and qualifying termination, the resulting total value of accelerated equity awards would be $31,741,534. |
(7) | If the maximum PRSU amount possible were accelerated in connection with a change of control and qualifying termination, the resulting total value of accelerated equity awards would be $22,931,882. |
(8) | If the maximum PRSU amount possible were accelerated in connection with a change of control and qualifying termination, the resulting total value of accelerated equity awards would be $24,397,456. |
42
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2018 Proxy Statement
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EMPLOYMENT CONTRACTS AND CERTAIN TRANSACTIONS (CONTINUED)
|
2018 Proxy Statement
|
|
43
|
|
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
|
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Report of the Compensation Committee of the Board of Directors
We, the Compensation Committee of the Board of Directors of Salesforce, have reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on such review and discussion, we have recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and in Salesforces Annual Report on Form 10-K for the fiscal year ended January 31, 2018.
THE COMPENSATION COMMITTEE
John V. Roos (Chair)
Craig Conway
Maynard Webb
44
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2018 Proxy Statement
|
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS (CONTINUED)
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46
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2018 Proxy Statement
|
PROPOSAL 2 AMENDMENT AND RESTATEMENT OF THE COMPANYS CERTIFICATE OF INCORPORATION (CONTINUED)
|
Vote Required and Board of Directors Recommendation
The Board of Directors Recommends a Vote FOR the Amendment and Restatement of the Companys Amended and Restated Certificate of Incorporation.
2018 Proxy Statement
|
|
49
|
|
PROPOSAL 3 APPROVAL OF AN AMENDMENT OF THE EQUITY INCENTIVE PLAN TO INCREASE PLAN SHARES RESERVED FOR ISSUANCE
|
PROPOSAL 3 APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE EQUITY INCENTIVE PLAN TO, AMONG OTHER THINGS, INCREASE PLAN SHARES RESERVED FOR ISSUANCE
Increasing the Number of Shares Reserved for Issuance under the 2013 Plan
50
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2018 Proxy Statement
|
PROPOSAL 3 APPROVAL OF AN AMENDMENT OF THE EQUITY INCENTIVE PLAN TO INCREASE PLAN SHARES RESERVED FOR ISSUANCE (CONTINUED)
|
2018 Proxy Statement
|
|
51
|
|
PROPOSAL 3 APPROVAL OF AN AMENDMENT OF THE EQUITY INCENTIVE PLAN TO INCREASE PLAN SHARES RESERVED FOR ISSUANCE (CONTINUED)
|
2018 Proxy Statement
|
|
53
|
|
PROPOSAL 3 APPROVAL OF AN AMENDMENT OF THE EQUITY INCENTIVE PLAN TO INCREASE PLAN SHARES RESERVED FOR ISSUANCE (CONTINUED)
|
54
|
2018 Proxy Statement
|
PROPOSAL 3 APPROVAL OF AN AMENDMENT OF THE EQUITY INCENTIVE PLAN TO INCREASE PLAN SHARES RESERVED FOR ISSUANCE (CONTINUED)
|
2018 Proxy Statement
|
|
55
|
|
PROPOSAL 3 APPROVAL OF AN AMENDMENT OF THE EQUITY INCENTIVE PLAN TO INCREASE PLAN SHARES RESERVED FOR ISSUANCE (CONTINUED)
|
56
|
2018 Proxy Statement
|
PROPOSAL 3 APPROVAL OF AN AMENDMENT OF THE EQUITY INCENTIVE PLAN TO INCREASE PLAN SHARES RESERVED FOR ISSUANCE (CONTINUED)
|
Individual Award Limitations (including Non-Employee Director Award Limitations)
The 2013 Plan contains annual grant limits. Specifically, subject to the adjustment provisions of the 2013 Plan, the maximum number of Shares or dollars that can be subject to awards granted to any one employee in any fiscal year is:
Award Type | Annual Number of Shares or Dollar Value |
Additional Shares or Dollar Value in Connection with New Hire* |
Maximum Number of Shares and/or Dollars |
|||||||||
Stock Options, Stock Appreciation Rights or Combination Thereof |
20,000,000 shares | 8,000,000 shares | 28,000,000 shares | |||||||||
Restricted Stock, Restricted Stock Units, Performance Shares or Combination Thereof |
10,000,000 shares | 4,000,000 shares | 14,000,000 shares | |||||||||
Performance Units |
$ | 15,000,000 | $ | 5,000,000 | $ | 20,000,000 |
* | May be granted in the Companys fiscal year in which the employees employment with the Company (or a parent or subsidiary corporation of the Company or an affiliate of the Company) first commences. |
2018 Proxy Statement
|
|
57
|
|
PROPOSAL 3 APPROVAL OF AN AMENDMENT OF THE EQUITY INCENTIVE PLAN TO INCREASE PLAN SHARES RESERVED FOR ISSUANCE (CONTINUED)
|
2018 Proxy Statement
|
|
59
|
|
PROPOSAL 3 APPROVAL OF AN AMENDMENT OF THE EQUITY INCENTIVE PLAN TO INCREASE PLAN SHARES RESERVED FOR ISSUANCE (CONTINUED)
|
Number of Awards Granted to Employees, Consultants, and Directors
Detailed Three-Year Average Burn Rate Calculation
FY16 | FY17 | FY18 | Average | |||||||||||||
Options granted under all plans (1) |
7,119,327 | 7,773,636 | 1,212,731 | |||||||||||||
Restricted stock units and awards granted under all plans (1) |
9,736,623 | 14,498,921 | 3,519,847 | |||||||||||||
Performance-based restricted stock units granted under all plans (2) |
191,382 | 208,711 | | |||||||||||||
|
|
|||||||||||||||
Total granted |
17,047,332 | 22,481,268 | 4,732,578 | |||||||||||||
Weighted Average # of Common Shares Outstanding |
661,646,615 | 687,797,104 | 714,919,399 | |||||||||||||
Burn Rate |
2.6% | 3.3% | 0.7% | 2.17% |
(1) | This table does not include appreciation and full value awards assumed in acquisitions. |
(2) | The performance-based restricted stock units noted in the table were granted in the year indicated but none have vested or been earned to date; such performance stock units vest, if at all, following a three-year performance period from the date of grant. |
Vote Required and Board of Directors Recommendation
Approval of this proposal requires the affirmative vote of a majority of the votes cast.
The Board of Directors Recommends a Vote FOR the Proposal to Amend and Restate the 2013 Equity Incentive Plan to, Among Other Things, Increase the Number of Plan Shares Reserved for Issuance.
60
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2018 Proxy Statement
|
PROPOSAL 4 RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
|
PROPOSAL 4 RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Engagement Letter and Fee Disclosure
Fiscal 2018
|
Fiscal 2017
| |||
Audit Fees, plus consultations (1)
|
$10,731,000
|
$10,155,246
| ||
Audit-Related Fees (2)
|
$ 232,000
|
$ 846,233
| ||
Tax Fees (3)
|
$ 2,554,000
|
$ 2,021,948
| ||
All Other Fees
|
|
| ||
Total
|
$13,517,000
|
$13,023,427
|
(1) | Audit Fees consist of fees incurred for professional services rendered for the integrated audit of our annual consolidated financial statements, review of the quarterly consolidated financial statements and foreign statutory audits and services that are normally provided by Ernst & Young LLP in connection with statutory and regulatory filings or engagements. Audit fees also include accounting consultations and research related to the integrated audit. |
(2) | Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Companys consolidated financial statements and are not reported under Audit Fees. These include fees for the audit of our employee benefit (401(k)) plan and service organization control examinations. |
(3) | Tax Fees consist of fees billed for tax compliance, consultation and planning services. |
Pre-Approval of Audit and Non-Audit Services
2018 Proxy Statement
|
|
61
|
|
PROPOSAL 4 RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS (CONTINUED)
|
Vote Required and Board of Directors Recommendation
Approval of this proposal requires the affirmative vote of a majority of the votes cast on this proposal.
The Board of Directors Recommends a Vote FOR Ratification of the Appointment of Ernst & Young LLP as Our
Independent Registered Public Accounting Firm.
62
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2018 Proxy Statement
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PROPOSAL 5 ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION (CONTINUED)
|