UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(RULE 14A-101)

Information Required in Proxy Statement

Schedule 14A Information

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

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☐	Preliminary Proxy Statement

 

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☒	Definitive Proxy Statement

 

☐	Soliciting Material Pursuant to §240.14a-12

AVAYA HOLDINGS CORP.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

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4655 Great America Parkway

Santa Clara, California 95054

 

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD MARCH 4, 2020

 

 

 

To the Stockholders of Avaya Holdings Corp.:

The Annual Meeting of Stockholders (the “Annual Meeting”) of Avaya Holdings Corp. (the “Company” or “Avaya”) will be held virtually via live webcast at www.virtualshareholdermeeting.com/AVYA2020, on Wednesday, March 4, 2020, at 9:00 a.m. Eastern time. You will be able to attend the meeting online and submit questions during the meeting by visiting the website listed above. You will also be able to vote your shares electronically at the Annual Meeting. The meeting will be held online only, and will be held for the following purpose:

 

1.

To elect seven directors, each to serve until the next annual meeting of stockholders or until his or her successor is duly elected and qualified;

 

2.

To approve, on an advisory basis, the Company’s named executive officers’ compensation;

 

3.

To approve the Avaya Holdings Corp. 2019 Equity Incentive Plan;

 

4

To approve the Avaya Holdings Corp. 2020 Employee Stock Purchase Plan;

 

5.

To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2020; and

 

6.

To transact any other business as may properly come before the 2020 Annual Meeting and any adjournment or postponement thereof.

The foregoing items of business are more fully described in the proxy statement accompanying this notice. The Company’s board of directors (the “Board”) has fixed the close of business on January 6, 2020 as the record date for determining stockholders of the Company entitled to receive notice of and vote at the Annual Meeting and any adjournment or postponement thereof.

The Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully.

By Order of the Board of Directors,

 

 

Shefali Shah

Executive Vice President, Chief Administrative

Officer and General Counsel

January 17, 2020

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting

to be Held on March 4, 2020

The Notice of Annual Meeting, Proxy Statement and Form of Proxy are first being distributed and made available on or about January 17, 2020 to all stockholders entitled to vote at the Annual Meeting. This Proxy Statement and the enclosed Form of Proxy, the Notice of Annual Meeting of Stockholders, and the Company’s 2019 Annual Report are available on the Internet at http://materials.proxyvote.com/05351X, as well as the Annual Meeting website referenced below.

Virtual Meeting Admission

Stockholders of record as of January 6, 2020 will be able to participate in the Annual Meeting by visiting our Annual Meeting website at www.virtualshareholdermeeting.com/AVYA2020. To participate in the Annual Meeting, you will need the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials.

The Annual Meeting will begin promptly at 9:00 a.m. Eastern time on Wednesday, March 4, 2020. Online check-in will begin at 8:45 a.m. Eastern time, and you should allow approximately 15 minutes for the online check-in procedures.

Voting. Whether or not you plan to virtually attend the Annual Meeting and regardless of the number of shares of the Company’s common stock that you own, please cast your vote, at your earliest convenience, as instructed in the proxy card. Your vote is very important. Your vote before the Annual Meeting will ensure representation of your shares at the Annual Meeting even if you are unable to virtually attend. You may submit your vote by the Internet, telephone, mail or in person. Voting over the Internet or by telephone is fast and convenient, and your vote is immediately confirmed and tabulated. By using the Internet or telephone, you help us reduce postage, printing and proxy tabulation costs. We encourage all holders of record to vote in accordance with the instructions on the proxy card and/or voting instruction form prior to the Annual Meeting even if they plan on virtually attending the meeting in person. Submitting a vote before the Annual Meeting will not preclude you from voting your shares at the meeting should you decide to virtually attend. You may vote using the following methods:

 

		Prior to the Annual Meeting, visit the website listed on your proxy card/voting instruction form to vote via the Internet.   During the Annual Meeting, visit our Annual Meeting website at www.virtualshareholdermeeting.com/AVYA2020
		Sign, date and return your proxy card/voting instruction form to vote by mail.
		Call the telephone number on your proxy card/voting instruction form to vote by telephone.

Table of Contents

 

TABLE OF CONTENTS

 

 

 

			2020 Proxy Statement				i

Proxy Summary

 

PROXY SUMMARY

This summary highlights certain information contained in the Proxy Statement. This summary does not contain all the information that you should consider, and you should read the entire Proxy Statement before voting. For more complete information regarding the Company’s performance in the fiscal year which ended on September 30, 2019 (“Fiscal 2019”), please review the Company’s Annual Report on Form 10-K for the year ended September 30, 2019 (the “Form 10-K”) that accompanied this Proxy Statement.

 

2020 Annual Meeting Overview
Date and Time		March 4, 2020 at 9:00 a.m., Eastern time
Place		Virtually via webcast Participate in the Annual Meeting by visiting our Annual Meeting website at www.virtualshareholdermeeting.com/AVYA2020. There will not be a physical meeting in North Carolina, New York or anywhere else.
Record Date		January 6, 2020
Voting		Stockholders of record as of the close of business on the record date are entitled to vote for each director nominee and for each of the other proposals to be voted on. Each share of common stock of the Company (“Common Stock”) is entitled to one vote. Each share of Series A Convertible Preferred Stock of the Company (“Series A Stock”) is entitled to one vote for each share of Common Stock that would be issuable upon conversion of such Series A Stock immediately prior to the record date.
Common Stock Outstanding on Record Date		99,517,295 shares of Common Stock
Series A Stock Outstanding on Record Date		125,000 shares of Series A Stock entitled to vote on an as-converted to Common Stock basis for a total of 7,852,311 votes
Total Votes Comprised of Total Common Stock and as-converted Series A Stock Outstanding on the Record Date		107,369,606 votes
Registrar & Transfer Agent		American Stock Transfer & Trust Company LLC
Company’s State of Incorporation		Delaware

 

			2020 Proxy Statement				1

Proxy Summary  

 

Virtual Stockholder Meeting
Our 2020 Annual Meeting will be conducted exclusively online via live webcast, allowing all of our stockholders the option to participate in the live, online meeting from any location convenient to them, providing stockholder access to our Board and management, and enhancing participation. Stockholders at the close of business on January 6, 2020 will be allowed to communicate with us and ask questions in our virtual stockholder meeting forum before and during the meeting. All directors and key executive officers are expected to be available to answer questions. For further information on the virtual meeting, please see the “Proxy and Voting Information” section in this Proxy Statement.

 

2				2020 Proxy Statement

Proxy Summary  ›  Roadmap of Voting Matters

 

ROADMAP OF VOTING MATTERS

Stockholders are being asked to vote on the following matters at the 2020 Annual Meeting:

 

Proposals
Proposal		Board       Recommendation		More Information		Votes Required              for Approval
1. Election of Directors		FOR each Nominee		Page 21		The seven director nominees who receive the most affirmative votes of shares of our Common Stock virtually present or represented by proxy, and entitled to vote, will be elected to the Board
2. Advisory approval of the Company’s named executive officers’ compensation		FOR		Page 60		The affirmative vote of a majority of votes cast by the stockholders virtually present or represented by proxy, and entitled to vote, is necessary for approval of each of proposals 2-5
3. Approval of the Avaya Holdings Corp. 2019 Equity Incentive Plan (the “2019 Plan”)		FOR		Page 62
4. Approval of the Avaya Holdings Corp. 2020 Employee Stock Purchase Plan (“ESPP”)		FOR		Page 75
5. Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2020 (“Fiscal 2020”)		FOR		Page 88

 

			2020 Proxy Statement				3

Proxy Summary  ›  Governance Highlights

 

GOVERNANCE HIGHLIGHTS

We are committed to the highest standards of corporate governance, which we believe promotes the long-term interests of stockholders. The Corporate Governance section beginning on page 13 describes our governance framework, which includes the following highlights:

 

Governance Highlights
Board Practices		Stockholder Matters
✓ Non-Executive Chairman		✓ Recommended Annual “Say-on-Pay” Advisory Vote
✓ 6 of 7 Directors Are Independent		✓ Stockholders’ Right to Call Special Meeting in Accordance With Our Amended and Restated Bylaws
✓ Fully Independent Board Committees
✓ Regular Executive Sessions of Independent Directors		Other Best Practices
✓ Annual Election of All Directors		✓ Robust Share Ownership Guidelines
✓ Annual Board and Committee Self-Evaluations		✓ Prohibition on Executives Hedging and Pledging Stock
✓ Structured Process for Board’s Risk Oversight		✓ Executive Compensation Clawback Policy

 

4				2020 Proxy Statement

Proxy Summary  ›  Director Nominees

 

DIRECTOR NOMINEES

 

Snapshot of 2020 Director Nominees
William D. Watkins Chair of the Board Director since 2017 Independent   Former Chairman and Chief Executive Officer of Imergy Power Systems   Avaya Board Committees: NCGC   Other Public Company Boards: 2		James M. Chirico, Jr. Director since 2017   President and Chief Executive Officer of the Company   Avaya Board Committees: N/A   Other Public Company Boards: None		Stephan Scholl Director since 2017 Independent   Former President, of Infor, Inc.   Avaya Board Committees: CC; NCGC   Other Public Company Boards: None		Susan L. Spradley Director since 2017 Independent   Chief Executive Officer of Motion Intelligence, Inc.   Avaya Board Committees: AC; NCGC (Chair)   Other Public Company Boards: 2

Stanley J. Sutula, III Director since 2017 Independent   Executive Vice President and Chief Financial Officer of Pitney Bowes Inc.   Avaya Board Committees: AC (Chair)   Other Public Company Boards: None		Scott D. Vogel Director since 2017 Independent   Managing Member of Vogel Partners LLC   Avaya Board Committees: AC; CC (Chair)   Other Public Company Boards: 3		Jacqueline E. Yeaney Director since 2019 Independent   Executive Vice President, Marketing of Tableau Software   Avaya Board Committees: CC   Other Public Company Boards: None
AC = Audit Committee CC = Compensation Committee NCGC = Nominating and Corporate Governance Committee

 

			2020 Proxy Statement				5

Proxy Summary  ›  Business Overview and Fiscal 2019 Performance at a Glance

 

BUSINESS OVERVIEW AND FISCAL 2019 PERFORMANCE AT A GLANCE

The Company is a global leader in digital communications products, solutions and services for businesses of all sizes. We enable organizations around the globe to succeed by creating intelligent communications experiences for customers and employees. The Company builds open, converged and innovative solutions to enhance and simplify communications and collaboration in the cloud, on-premises or through a hybrid of both. Our global, experienced team of professionals delivers award-winning services, from initial planning and design, to seamless implementation and integration, to ongoing managed operations, optimization, training and support. As of September 30, 2019, we had a presence in approximately 175 countries worldwide and during the past four fiscal years we served more than 90% of the Fortune 100 organizations.

During Fiscal 2019, we demonstrated meaningful progress in advancing our transformation strategy to position the Company for future growth. Fiscal 2019 annual revenue was $2,887 million and non-GAAP annual revenue was $2,908 million. The Company continued to maintain its industry-leading business model, with gross margin of 54.6% and non-GAAP gross margin of 61.4% and Adjusted EBITDA margin of 24.3% for Fiscal 2019.* The Company generated cash flow from operations of $241 million and ended Fiscal 2019 with $752 million in cash and cash equivalents. In addition, the Company achieved each of its following strategic priorities:

 

1.

The Company continued its transformation into a software and services company, with non-GAAP recurring revenues increasing to 58.4% in Fiscal 2019 from 57.4% in the fiscal year ended September 30, 2018 (“Fiscal 2018”) and derived over 83.1% of its revenues from software and services in Fiscal 2019 up from 82.2% in Fiscal 2018.

 

2.

The Company entered into new strategic partnerships and expanded existing partnerships to broaden its cloud capabilities and extend its market reach. Notably, shortly after the end of Fiscal 2019, Avaya successfully concluded its comprehensive review of strategic alternatives culminating in a strategic partnership with RingCentral. Together with RingCentral, Avaya created a new solution - Avaya Cloud Office by RingCentral (“Avaya Cloud Office”) - combining RingCentral’s leading Unified Communications as a Service (“UCaaS”) platform with Avaya’s technology, services and migration capabilities enabling us to market and sell a highly differentiated UCaaS offering solution.

 

3.

The Company enhanced the breadth and depth of its cloud offerings with investments in ReadyNow, its private cloud offering, generating total contract value (“TCV”) of $90 million in Fiscal 2019. In addition, the Company achieved traction in its transformation to a cloud company increasing total cloud seats at the end of Fiscal 2019 to approximately 4 million, with over half a million public cloud seats, representing approximately 160% year-over-year growth.

 

4.

The Company continued to generate momentum by signing over 352 deals with a TCV over $1 million, 40 deals with a TCV over $5 million and 9 deals with a TCV over $10 million during Fiscal 2019.

 

*

Non-GAAP revenue, non-GAAP gross margin, Adjusted EBITDA and Adjusted EBITDA margin are financial performance metrics that are not calculated and presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”). See the “Reconciliation of GAAP to non-GAAP (Adjusted) Financial Measures” in Annex A at the end of this Proxy Statement for additional discussion of non-GAAP financial measures and a reconciliation to the most directly comparable GAAP measure.

 

6				2020 Proxy Statement

Proxy Summary  ›  Executive Compensation Highlights

 

EXECUTIVE COMPENSATION HIGHLIGHTS

The Compensation Committee successfully transitioned the Company’s Fiscal 2019 executive compensation program to better reflect certain best market practices, industry standards, operating environments and results, enhance the incentive and retentive elements of the program and create greater alignment with stockholders’ interests.

Each of the short- and long-term incentive programs for Fiscal 2019 were based, in part, on Company performance to enhance the linkage between pay and performance and further align the executive compensation program with stockholders’ interests. Consistent with the Company’s key objective of achieving revenue growth in Fiscal 2019, the Compensation Committee approved a Fiscal 2019 Executive Annual Incentive Plan (“AIP”) with funding determined by Fiscal 2019 revenue against established threshold, target and maximum levels; and further subject to achievement of a minimum level of Adjusted EBITDA. While the Company made meaningful progress to position the Company for future growth during Fiscal 2019, the AIP was not funded and no bonus awards were made to the Company’s employees under the AIP for Fiscal 2019 because the Company’s actual Fiscal 2019 performance was below the threshold level.

During Fiscal 2019, the Company’s Chief Executive Officer received his first ordinary course annual equity grant, consisting solely of performance-based restricted stock units (“PRSUs”) that vest based on stock price performance. The annual equity grants to the other Named Executive Officers consisted of a mix of time-based restricted stock units and PRSUs. As a result of the Company’s performance during Fiscal 2019 as measured against the applicable performance goals, none of the PRSUs that were eligible to be earned in respect of Fiscal 2019 were earned as of the end of Fiscal 2019.

In January 2020, at the request of our Chief Executive Officer, we amended Mr. Chirico’s employment agreement to remove the change of control excise tax gross-up provision, reduce his target annual cash incentive and adjust his maximum annual cash incentive. This amendment was principally based on Mr. Chirico’s and our Compensation Committee’s desires to reflect good corporate governance practices. No compensation or other benefits were provided in exchange for eliminating the excise tax gross-up benefit.

 

			2020 Proxy Statement				7

Proxy and Voting Information

 

PROXY AND VOTING INFORMATION

Why am I receiving these materials?

The Board of Directors (the “Board”) of Avaya Holdings Corp. (which we refer to in this Proxy Statement as we, our, us, our Company or the Company) is providing you these proxy materials in connection with the Board’s solicitation of proxies from our stockholders for our 2020 annual meeting of stockholders (the “Annual Meeting”) and any adjournments and postponements of the Annual Meeting. The Annual Meeting will be held exclusively virtually, conducted via a live audio webcast on Wednesday, March 4, 2020, at 9:00 a.m. Eastern time. These materials were first mailed to stockholders on or about January 17, 2020. You are invited to virtually attend the Annual Meeting and requested to vote on the items described in this Proxy Statement.

What is the purpose of the Annual Meeting?

You and our other stockholders entitled to vote at the Annual Meeting are requested to vote on proposals to (i) elect seven members of our Board of Directors to serve until our 2020 annual meeting of stockholders; (ii) to approve, on an advisory basis, our named executive officers’ compensation; (iii) to approve the 2019 Plan; (iv) to approve the ESPP; and (v) to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for Fiscal 2020.

Who is entitled to vote at the Annual Meeting?

Only holders of record of our Common Stock and our Series A Stock at the close of business on January 6, 2020, the record date for the Annual Meeting, are entitled to notice of, and to vote at, the Annual Meeting. Holders of the Series A Stock vote on an as-converted basis together with the Common Stock as a single class. A list of our stockholders will be available for review at our executive offices in Santa Clara, California during ordinary business hours for a period of ten (10) days prior to the meeting. Each stockholder is entitled to one vote for (i) each share of Common Stock held and (ii) each share of Common Stock that would be issuable upon conversion of Series A Stock held on the record date. Shares of our Common Stock represented virtually or by a properly submitted proxy will be voted at the Annual Meeting. At the close of business on the record date, 99,517,295 shares of our Common Stock and 125,000 shares of our Series A Stock (representing 7,852,311 shares of Common Stock on an as-converted basis) were outstanding representing a total of 107,369,606 votes eligible to be cast at the Annual Meeting.

When we refer to our stockholders in our proxy materials we are referring to the stockholders entitled to vote at the Annual Meeting consisting of holders of our Common Stock and Series A Stock.

Why are you holding a virtual meeting instead of a physical meeting?

We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings for our stockholders and our Company. We believe that hosting a virtual meeting will enable more of our stockholders to attend and participate in the meeting since our stockholders can participate from any location around the world with Internet access.

How can I attend the virtual Annual Meeting?

The Annual Meeting will be a completely virtual meeting of stockholders conducted exclusively by a live audio webcast.

 

 

8				2020 Proxy Statement

Proxy and Voting Information

 

If you are a stockholder of record as of the close of business on January 6, 2020, the record date for the Annual Meeting, you will be able to virtually attend the Annual Meeting, vote your shares and submit your questions online during the meeting by visiting www.virtualshareholdermeeting.com/AVYA2020. You will need to enter the 16-digit control number included on your notice, on your proxy card or on the instructions that accompanied your proxy materials.

If you are a stockholder holding your shares in “street name” as of the close of business on January 6, 2020, you may gain access to the meeting by following the instructions in the voting instruction card provided by your broker, bank or other nominee. You may not vote your shares electronically at the Annual Meeting unless you receive a valid proxy from your brokerage firm, bank, broker dealer or other nominee holder.

The online meeting will begin promptly at 9:00 a.m., Eastern time. We encourage you to access the meeting prior to the start time. Online check-in will begin at 8:45 a.m., Eastern time, and you should allow approximately 15 minutes for the online check-in procedures.

If you wish to submit a question for the Annual Meeting, you may do so in advance at www.virtualshareholdermeeting.com/AVYA2020, or you may type it into the dialog box provided at any point during the virtual meeting (until the floor is closed to questions).

What can I do if I need technical assistance during the Annual Meeting?

If you encounter any difficulties accessing the virtual Annual Meeting webcast please call the technical support number that will be posted on the Annual Meeting website log-in page.

If I cannot participate in the live Annual Meeting webcast, can I vote or listen to it later?

You may vote your shares electronically before the meeting by visiting www.proxyvote.com and following the instructions on your proxy card. You do not need to access the Annual Meeting webcast to vote if you submitted your vote via proxy in advance of the Annual Meeting. An audio replay of the Annual Meeting, including the questions answered during the meeting, will be available at https://investors.avaya.com until the 2021 Annual Meeting of Stockholders.

What constitutes a quorum?

The presence at the Annual Meeting, virtually or by proxy, of a majority in voting power of the issued and outstanding shares of our stock, including both Common Stock and Series A Stock (on an as-converted basis), entitled to vote at the Annual Meeting constitutes a quorum for the transaction of business at such meeting.

How are abstentions and broker non-votes counted?

Abstentions and broker non-votes (described below) will be counted for purposes of determining whether a quorum is present at the Annual Meeting. Abstentions will not affect the outcome of the election of directors. Abstentions will have the same effect as votes against any matter other than the election of directors.

Under the New York Stock Exchange (“NYSE”) rules, brokers are permitted to vote their clients’ proxies in their own discretion as to certain “routine” proposals. However, where a proposal is considered “non-routine,” a broker who has not received instructions from its client generally does not have discretion to vote its clients’ uninstructed shares on that proposal. When a broker indicates on a proxy that it does not have discretionary authority to vote certain shares on a particular proposal, the

 

			2020 Proxy Statement				9

Proxy and Voting Information

 

missing votes are referred to as “broker non-votes.” Those shares would be considered present for purposes of determining whether a quorum is present, but would not be counted in determining the number of votes present for, or determining the outcome of, the non-routine proposal. Under NYSE rules, only Proposal 5 (Ratification of Independent Accounting Firm) in this Proxy Statement is a routine matter. Therefore, no broker non-votes are expected on Proposal 5. Proposal 1 (Election of Directors), Proposal 2 (Say-on-Pay), Proposal 3 (Approval of the 2019 Plan) and Proposal 4 (Approval of the ESPP) are considered non-routine matters. Accordingly, your broker may not vote your shares with respect to these items if you have not provided instructions and broker non-votes will not affect the outcome of these proposals.

What vote is required to approve each item to be voted on at the Annual Meeting and how does the Board recommend I vote?

Only votes cast “For” a nominee will be counted in the election of directors. Votes that are withheld in respect of one or more nominees will result in those nominees receiving fewer votes but will not count as a vote against the nominees. Abstentions and broker non-votes (described above) are not counted for purposes of the election of directors and will not affect the outcome of such election. You have the right to vote “For” or “Against”, or to “Abstain” from voting in connection with Proposals 2, 3, 4 and 5. The following table summarizes each proposal, the Board’s recommendation, the affirmative vote required for approval and whether broker discretionary voting is allowed.

 

Proposal Number		Proposal		Board Recommendation		Affirmative Vote Required for Approval		Broker Discretionary Voting Allowed
1		Election of Directors		FOR ALL		Plurality vote		No
2		Advisory approval of the Company’s named executive officers’ compensation		FOR		Majority of votes cast		No
3		Approval of the 2019 Plan		FOR		Majority of votes cast		No
4		Approval of the ESPP		FOR		Majority of votes cast		No
5		Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for Fiscal 2020		FOR		Majority of votes cast		Yes

Will any other matters be voted on?

We are not aware of any other matters that will be brought before the stockholders for a vote at the Annual Meeting. If any other matter is properly brought before the Annual Meeting, your proxy will authorize each of Sara R. Bucholtz and Shefali Shah to vote on such matters in her discretion.

How do I vote?

Stockholders of record can vote as follows:

 

•

by telephone by calling the toll-free number 1-800-690-6903 (have your proxy card in hand when you call);

 

10				2020 Proxy Statement

Proxy and Voting Information

 

•

by Internet before the Annual Meeting at www.proxyvote.com (have your proxy card in hand when you access the website);

 

•

during the Annual Meeting at www.virtualshareholdermeeting.com/AVYA2020 by using the 16-digit control number included with these proxy materials; or

 

•

by completing, dating, signing and promptly returning the accompanying proxy card, in the enclosed postage-paid, pre-addressed envelope provided for such purpose. No postage is necessary if the proxy card is mailed in the United States (“US”). Date and sign your name exactly as it appears on your proxy card.

We recommend that you vote by proxy even if you plan to virtually attend the Annual Meeting. As described below, you can revoke your proxy or change your vote at the Annual Meeting.

The Internet and telephone voting procedures are designed to authenticate stockholders by use of a control number and to allow you to confirm that your instructions have been properly recorded. The deadline for voting by telephone or electronically over the Internet is 11:59 p.m., New York City time, on Tuesday, March 3, 2020. Mailed proxy cards with respect to shares held of record should be mailed to allow sufficient time for delivery and tabulation.

If you hold your shares through a bank, broker or other nominee (also known as “street name”), such entity/person will give you separate instructions for voting your shares. “Street name” stockholders who wish to vote virtually at the Annual Meeting will need to obtain a proxy form from the institution that holds their shares and those institutions will likely require your instructions to be submitted before the deadline listed above.

Can I change my vote after I return my proxy card?

Yes. Even after you have voted electronically through the Internet, by telephone or submitted your proxy card, you may change your vote at any time before the proxy is exercised at the Annual Meeting. You may change your vote by (i) sending written notice of revocation to Sara R. Bucholtz, Corporate Secretary, Avaya Holdings Corp., 4655 Great America Parkway, Santa Clara, CA 95054; (ii) submitting a valid proxy with a subsequent date by the Internet, telephone or mail; or (iii) virtually attending the Annual Meeting and voting. Your virtual attendance at the Annual Meeting will not by itself revoke a proxy that you have previously submitted. Stockholders who hold shares through a bank, broker or other nominee should consult with that party as to the procedures to be used for revoking a vote.

If I dissent to any matter to be voted on, what are my rights?

None of Delaware law, our Certificate of Incorporation, as amended (including the Certificate of Designation for the Series A Stock), or our Bylaws, as amended, provides for appraisal or other similar rights for dissenting stockholders in connection with any of the proposals to be voted upon at the Annual Meeting. Accordingly, our stockholders will have no right to dissent and obtain payment for their shares.

What if I return a proxy card but do not make specific choices?

If we receive a signed and dated proxy card from you that does not specify how your shares are to be voted on one or more matters, your shares will be voted “For” the election of each of the director nominees and “For” Proposals No. 2, 3, 4 and 5. If any other mater is properly presented at the Annual Meeting, the individuals named as proxy holders on your proxy card will vote your shares in the manner recommended by the Board on all proposals presented in the Proxy Statement and as they may determine in their best judgment as to any other matters properly presented for vote at the Annual Meeting.

 

			2020 Proxy Statement				11

Proxy and Voting Information

 

What does it mean if I receive more than one proxy card or voting instruction form?

It means your shares are registered differently or are held in more than one account at the transfer agent and/or with one or more banks, brokers or other nominees. Please vote all your shares.

How will votes be recorded?

Votes will be tabulated by Broadridge, and the results will be certified by one or more Inspectors of Election, who are required to resolve impartially any interpretive questions as to the conduct of the vote. In tabulating votes, the Inspectors of Election will make a record of the number of shares voted for or against each nominee and each other matter voted upon, the number of shares abstaining with respect to each nominee or other matter, and the number of shares held of record by banks, brokers or other nominees and present at the Annual Meeting but not voting.

What is “householding” and how does it affect me?

We have adopted the “householding” procedure approved by the Securities and Exchange Commission (“SEC”), which allows us to deliver one set of documents to a household of stockholders instead of delivering a set to each stockholder in a household, unless we have been instructed otherwise. This procedure is more environmentally friendly and cost-effective because it reduces the number of copies to be printed and mailed. We and some banks, brokers or other nominees send household annual reports and proxy statements, delivering a single annual report and proxy statement to multiple stockholders sharing an address unless we have been instructed otherwise.

If, at any time, you no longer wish to participate in householding and would prefer to receive a separate annual report and proxy statement in the future, please notify your bank, broker or other nominee if your shares are held in a brokerage account or notify us at the address or telephone number below if you hold registered shares. Alternatively, if, at any time, you and another stockholder sharing the same address wish to participate in householding and prefer to receive a single copy of our annual report and proxy statement, please notify your bank, broker or other nominee if your shares are held in a bank or brokerage account or notify us if you hold registered shares.

At any time, you may request a separate copy of our annual report or proxy statement by sending a written request to the Corporate Secretary at Avaya Holdings Corp., 4655 Great America Parkway, Santa Clara, CA 95054, or by calling (908) 953-6000.

Who is paying for this proxy solicitation?

We will pay for the entire costs of soliciting proxies. In addition to these proxy materials, our directors, officers and employees may also solicit proxies in person, by phone or other means of communications. Directors, officers and employees will not be paid any additional compensation for soliciting proxies.

In addition, we have engaged D.F. King, a proxy solicitation firm, to assist us in the solicitation of proxies for a fee of approximately $8,500, plus reasonable out-of-pocket expenses.

Where can I find the voting results of the Annual Meeting?

We plan to announce preliminary voting results at the Annual Meeting and to publish the final results in a current report on Form 8-K following the Annual Meeting.

 

12				2020 Proxy Statement

Corporate Governance

 

CORPORATE GOVERNANCE

Overview

Our Board is responsible for providing oversight over the Company’s business and affairs, including the Company’s strategic direction, as well as the management and financial and operational execution that can best perpetuate the success of the business and support the long-term interests of our stockholders. To effectively support its responsibilities, the Board has three committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each of these Board committees is currently comprised solely of independent directors. These Board committees carry out responsibilities set out in specific committee charters approved by the Board that are consistent with applicable requirements of the NYSE and the SEC. The Board and each committee may from time to time form other committees for specified purposes. The Board and each committee may also, at its discretion, retain outside advisors at the Company’s expense in carrying out its responsibilities.

Our Board is committed to good corporate governance practices and seeks to represent stockholder interests through the exercise of sound judgment. To this end, the Board has adopted Corporate Governance Guidelines (“Guidelines”) that provides the framework for the governance of the Board and Company and a Code of Ethics and Business Conduct (“Code of Conduct”) that represents our commitment to the highest standards of ethics and integrity in the conduct of our business. The Board committee charters, the Guidelines and the Code of Conduct, as well as any amendments we may make to these documents from time to time, may be found in the Investor Relations section of our website under “Corporate Governance” at https://investors.avaya.com/corporate-governance/governance-policies, and, together with our charter and bylaws, serve as our governance and compliance framework. Information on our website, including the information on the Investor Relations section referenced here and below, is not considered part of this Proxy Statement.

Code of Conduct

Our Code of Conduct is designed to help directors and employees worldwide resolve ethical issues in an increasingly complex global business environment. The Code of Conduct applies to all directors and employees, including, without limitation, the Chief Executive Officer (“CEO”), the Chief Financial Officer, the Chief Accounting Officer, the Corporate Controller and any other employee with any responsibility for the preparation and filing of documents with the SEC. The Code of Conduct covers a variety of topics, including those required to be addressed by the SEC. Topics covered include, but are not limited to, conflicts of interest, confidentiality of information and compliance with applicable laws and regulations. Directors and employees of the Company receive periodic updates regarding corporate governance policies and are informed when there are any material changes to the Code of Conduct.

We will post amendments to or waivers of the provisions of the Code of Conduct made with respect to any of our directors and executive officers on the Investor Relations section of our website within four business days of effecting any such amendment or waiver. During Fiscal 2019, no amendments to or waivers of the provisions of the Code of Conduct were made with respect to any of our directors or executive officers.

Corporate Responsibility

In addition to upholding high ethical standards in the ways we conduct business, we recognize that our Company has opportunities to bring about positive social, environmental and economic change. We

 

			2020 Proxy Statement				13

Corporate Governance  ›  Overview

 

call this our corporate responsibility and work with our customers, partners, employees, and community to make a positive impact in the world. Our Corporate Responsibility Policy and annual Corporate Responsibility Report, which details our commitments, goals, and initiatives, are available on our website at https://www.avaya.com/en/about-avaya/corporate-responsibility.

 

Corporate Responsibility Highlights
Environment		•   Avaya is a member of We Are Still In, the largest climate action group in the US. •   Avaya tracks and reports its carbon emissions annually to the CDP (formerly known as the Carbon Disclosure Project). In 2015, we set a goal to reduce our Scope 1 and Scope 2 emissions by 15% cumulatively by 2020. We exceeded this goal and achieved a cumulative 40% reduction from 2014 to 2019. •   Avaya’s ISO 14001 certified Design for Environment (“DfE”) program focuses on continually reducing the environmental impact of our solutions and services; current initiatives include developing energy efficient products and eliminating single-use plastic packaging in our supply chain. Our commitment to demonstrating care for the environment through the DfE program is stated in our R&D Environmental Policy. •   Our technology helps our customers achieve their environmental goals. For example, the Avaya Equinox videoconferencing platform reduces or eliminates the need for business travel by enabling customers to host engaging and effective meetings remotely. This results in significant Scope 3 carbon emission reductions for our customers, which helps mitigate climate change.
Human Rights and Supply Chain Responsibility		•   Avaya is a member of the Responsible Business Alliance (“RBA”), the world’s largest industry coalition dedicated to upholding social, environmental, and ethical standards in global supply chains, and has adopted the Supplier Code of Conduct. •   Avaya has policies and programs in place to identify risks and prevent the use of child labor, slavery, and human trafficking in our business operations and supply chain, including our Code of Conduct, Human Rights Statement, and UK Modern Slavery Transparency Act Statement. •   Avaya has a Conflict Minerals Policy and submits an annual Conflict Minerals Report to the SEC all with the aim of eliminating the social and environmental harm brought from sourcing conflict minerals from the Democratic Republic of Congo.
Diversity and Inclusion		•   Avaya is a member of CEO Action for Diversity and Inclusion™, the largest CEO-driven business commitment to advance diversity and inclusion in the workplace. •   Avaya’s Diversity and Inclusion Policy states our commitment to promote diversity and foster a culture of inclusion within our company, industry, and communities. •   In March 2019, we launched our Avaya for Communities program to provide significantly discounted softphone solutions to Economically Disadvantaged Women-Owned Small Businesses in the US. •   Avaya’s Talent Exchange Program gives employees the opportunity to perform their job in other parts of the world in order to build cultural intelligence and foster a diverse workforce. •   Avaya has a Supplier Diversity Program to promote a network of diverse strategic supplier alliances to deliver exceptional products and services to our customers.

 

14				2020 Proxy Statement

Corporate Governance  ›  Overview

 

Corporate Responsibility Highlights
Community		•   We sponsor a Month of Giving each year in an effort to support fundraising and volunteering efforts by our worldwide employees, partners and customers. We raised nearly $175,000 in 2018 and collected over $100,000 to date in 2019 and, through the collective efforts of our global team, donated thousands of pounds of materials and contributed thousands of hours of volunteering to benefit charities around the world. We supported and partnered with well-respected organizations, including Save the Children, ALS Association, Doctors Without Borders, Save Our Shores, and the National Multiple Sclerosis Society. •   Avaya launched a Devices for Diversity marketing campaign to support girls who have been denied an education because of their gender and where they were born. For each Avaya multimedia device sold in the first quarter of Fiscal 2019, we made a contribution to Girls Educational Programming through our nonprofit partner, Save the Children.

Prohibition on Hedging or Pledging of Company Stock

Our Insider Trading Policy prohibits Covered Individuals (as defined below) (and such individuals’ immediate family and household members) from entering into hedging transactions involving our securities. “Covered Individuals” refers to our (i) directors, (ii) officers who are designated as being subject to Section 16 of the Securities Exchange Act of 1934, as amended, and (iii) certain other officers and key employees of the Company designated by our General Counsel (which currently includes Senior Vice Presidents, Vice Presidents and Senior Directors, and individuals involved in the preparation of internal and external financial reports and SEC reports). Covered Individuals (and such individuals’ immediate family and household members) are also prohibited under this policy from holding our stock in a margin account as collateral for a margin loan or otherwise pledging our stock as collateral for a loan.

Leadership Structure of the Board

Under our bylaws, our Board appoints our corporate officers, including the CEO. Our Board understands that there is no single, generally accepted approach to providing Board leadership and that given the dynamic and competitive environment in which we operate, the right Board leadership structure may vary as circumstances warrant. Currently, our bylaws provide that the chairman of the Board may not simultaneously serve as our CEO. The Board believes that the current Board leadership structure is best for Avaya and its stockholders at this time. Our Nominating and Corporate Governance Committee periodically reviews the Company’s governance structure and practices, including the provisions of our certificate of incorporation and our bylaws.

Board Independence

Among other considerations, the Board values independent board oversight as an essential component of strong corporate performance. On at least an annual basis, the Board undertakes a review of the independence of each director and considers whether any director has a material relationship with Avaya. The Board evaluates each director under the independence rules of the NYSE, the Guidelines and the audit committee independence requirements of the SEC.

The NYSE rules require listed company boards to have at least a majority of independent directors. Based on its evaluation, our Board determined that each of Messrs. Scholl, Sutula, Vogel and Watkins

 

			2020 Proxy Statement				15

Corporate Governance  ›  Overview

 

and Mses. Spradley and Yeaney, representing six of Avaya’s seven current directors, are independent directors as defined under the NYSE rules. Mr. Chirico, who serves as our President and CEO, is the only current member of the Board who is not independent.

Board Composition and Director Qualifications

The Company seeks to align Board composition with the Company’s strategic direction such that Board members bring skills, experience and backgrounds relevant to the strategic and operational issues that they will oversee and approve. Director candidates are typically selected based on their integrity and character, sound and independent judgment, track record of accomplishments in leadership roles, as well as based on their professional, corporate and industry expertise, skills and experience. More specifically, among others, the Nominating and Corporate Governance Committee and the Board considers the following criteria in the selection of director candidates:

 

•

the independence, judgment, strength of character, reputation in the business community, ethics and integrity of the individual;

 

•

the business or other relevant experience, skills and knowledge that the individual may have that will enable him or her to provide effective oversight of the Company’s business and to serve on or chair, as appropriate, relevant Board committees;

 

•

the fit of the individual’s skill set and personality with those of the other Board members so as to build a Board that works together effectively and constructively;

 

•

diversity with respect to experience, gender, race, ethnicity and age; and

 

•

the individual’s ability to devote sufficient time to carry out his or her responsibilities as a director in light of his or her occupation and the number of boards of directors and committees of other public companies on which he or she serves.

Board and Committee Meetings

Our Board met 40 times during Fiscal 2019. During Fiscal 2019, each current Board member attended 75% or more of the meetings of the Board and each of the committees on which he or she served (during the period he or she served on the Board and on such committees.) In addition, our Board met in executive session without management present during many of its meetings, including but not limited to its three regularly scheduled in-person meetings in Fiscal 2019. Our chairman of the Board presides over the executive sessions of the Board. Committees of the Board also meet in executive session as they deem appropriate.

We encourage our directors to attend our annual meetings of stockholders and we anticipate that each director will virtually attend our Annual Meeting.

 

16				2020 Proxy Statement

Corporate Governance  ›  Board Committees

 

Board Committees

 

 

 

Each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee is currently comprised of independent directors. In addition, each member of the Audit Committee is financially literate and two members of the Audit Committee qualify as audit committee financial experts pursuant to SEC rules. The composition and some of the key responsibilities of each of these committees are described below. In addition to the responsibilities listed below, each Board committee conducts an annual performance self-evaluation and an annual review of its committee charter. Each of these committees has authority under its respective charter to access such internal and external resources, including retaining legal, financial or other advisors, as the committee deems necessary or appropriate to fulfill its responsibilities. To view each committee’s full responsibilities, see the specific committee charters under “Corporate Governance” in the Investor Relations section of our website at https://investors.avaya.com/corporate-governance/governance-policies.

 

Committees and Membership		Key Committee Responsibilities
AUDIT   Stanley J. Sutula, III, Chair* Susan L. Spradley Scott D. Vogel*   * Qualifies as an audit committee financial expert   Meetings in Fiscal 2019: 16		•   Select, and evaluate the performance of, the Company’s independent registered public accounting firm (including its qualifications, performance and independence);   •   Review and discuss with management and our independent registered public accounting firm the content of our financial statements prior to filing our quarterly reports on Form 10-Q, and the annual audited financial statements, including disclosures made in management’s discussion and analysis of financial condition and results of operations, and recommend to our Board whether the audited financial statements should be included in our annual report on Form 10-K;   •   Oversee the Company’s systems of internal accounting and financial controls and review the activities and qualifications of the Company’s internal audit function;   •   Review and discuss risk management and controls, including policies and guidelines with respect to risk assessment and risk management;   •   Review and approve related party transactions for potential conflicts of interest; and   •   Oversee the processes for handling complaints relating to accounting, internal accounting controls and auditing matters.

 

			2020 Proxy Statement				17

Corporate Governance  ›  Board Committees

 

Committees and Membership		Key Committee Responsibilities
COMPENSATION   Scott D. Vogel, Chair Stephan Scholl Jacqueline E. Yeaney   Meetings in Fiscal 2019: 7		•   Approve the compensation of each of the Company’s senior officers who are, as determined from time to time by our Board, subject to the provisions of Section 16 of the Exchange Act (the “Senior Executives” or “Section 16 Officers”), and approve (as appropriate) employment agreements and severance plans;   •   Review the CEO’s individual goals and objectives and set the CEO’s compensation after evaluating his performance;   •   Review, approve and make recommendations to the Board regarding equity-based plans and incentive compensation plans in which the CEO and the other Senior Executives may participate;   •   Approve grants of stock options, restricted stock awards and/or other awards under equity-based plans;   •   Recommend to the Board compensation of the non-employee Board members and committee members;   •   Monitor compliance with the Company’s share ownership guidelines;   •   Develop and periodically review with the Board succession plans with respect to the CEO and other senior executives; and   •   Administer the Company’s clawback policy.
NOMINATING AND CORPORATE GOVERNANCE   Susan L. Spradley, Chair Stephan Scholl William D. Watkins   Meetings in Fiscal 2019: 2		•   Evaluate the performance, size and composition of the Board to determine the qualifications and areas of expertise needed to further enhance the composition of the Board and working with management in attracting candidates with those qualifications;   •   Identify individuals qualified to become directors and review the qualifications of prospective nominees, including nominees recommended by stockholders, and recommend to the Board candidates for election at the Company’s Annual Meeting of Stockholders and to fill Board vacancies;   •   Recommend to the Board committee chairs and members, as well as changes in number or function of committees;   •   Establish procedures, subject to the Board’s approval, for the annual performance self-evaluation of the Board and its committees; and   •   Develop and oversee a Company orientation program for new directors and an education program for all directors.

Compensation Committee Interlocks and Insider Participation

Each current member of the Compensation Committee is an independent director. No individual who was a member of the Compensation Committee during Fiscal 2019: (i) was an officer or employee of the Company or any of its subsidiaries during Fiscal 2019; (ii) was formerly an officer of the Company or any of its subsidiaries; or (iii) served on the board of directors of any other company any of whose executive officers served on the Company’s Compensation Committee or its Board.

 

18				2020 Proxy Statement

Corporate Governance  ›  Selection of Board Nominees

 

Selection of Board Nominees

The Nominating and Corporate Governance Committee is responsible for identifying, evaluating and recommending qualified candidates for election to the Board. To fulfill these responsibilities, the Nominating and Corporate Governance Committee reviews the composition of the Board to determine the qualifications and areas of expertise needed to further enhance the composition of the Board and works with management to attract candidates with those qualifications.

To identify new director candidates, the Nominating and Corporate Governance Committee seeks advice and names of candidates from its members, other members of the Board, members of management and other public and private sources. The Nominating and Corporate Governance Committee, in formulating its recommendation of candidates to the Board, considers each candidate’s personal qualifications and how such personal qualifications effectively address the then perceived current needs of the Board and its committees, including the criteria described above under “Board Composition and Director Qualifications.” The selection process includes, among other things, interviews with Board members, the CEO and other members of senior management, as appropriate, and reference checks of identified candidates. The Nominating and Corporate Governance Committee gives the same consideration to director candidates submitted by stockholders. See the procedures described in this Proxy Statement under the heading “Process for Director Nominations and Stockholder Proposals” for more details.

The Nominating and Corporate Governance Committee has sole authority under its charter to retain and terminate, at the Company’s expense, any search firm or advisor to be used to identify director candidates and has sole authority to approve the search firm’s or advisor’s fees and other retention terms. After the Nominating and Corporate Governance Committee completes its evaluation, it presents its recommendations to the Board for consideration and approval.

In May 2018, the Board engaged Heidrick & Struggles International, Inc., a worldwide executive search firm (“Heidrick & Struggles”), to help the Board identify individuals to possibly join the Board to fill the vacancy created by Ronald A. Rittenmeyer’s resignation from the Board, which was effective April 30, 2018. In addition, the Board appointed an ad hoc committee of the Board, comprised of Messrs. Chirico, Scholl and Watkins, to evaluate potential director candidates and recommend candidates to the Nominating and Corporate Governance Committee. This committee considered director candidates identified by Heidrick & Struggles and the directors interviewed certain director candidates based upon the committee’s recommendation. After consideration of a recommendation from the Nominating and Corporate Governance Committee, the Board elected Ms. Yeaney to serve on the Board, effective as of March 18, 2019. Ms. Yeaney was then re-elected by the Company’s stockholders at the Company’s 2019 Annual Meeting.

The Nominating and Corporate Governance Committee evaluated the director nominees and recommended that the Board nominate each director nominee named above for re-election.

RingCentral Board Nominee

In connection with our strategic partnership with RingCentral, Inc. (“RingCentral”) and RingCentral’s acquisition of the Series A Stock, in October 2019 we entered into an Investor Rights Agreement with RingCentral. This agreement entitles RingCentral to nominate one person (the “RingCentral Nominee”) to our Board until such time as RingCentral and its affiliates no longer hold or beneficially own, in the aggregate, shares of Series A Stock that can be converted into more than 4,759,339 shares of our Common Stock assuming conversion of all Series A Stock then held. In addition, the RingCentral

 

			2020 Proxy Statement				19

Corporate Governance  ›  Selection of Board Nominees

 

Nominee has the option (i) to serve on our Audit and Nominating and Corporate Governance Committees or (ii) to attend (but not vote at) all of Board committee meetings. We anticipate that the RingCentral Nominee will be identified by RingCentral and nominated to our Board at some point after the Annual Meeting. For further information on our relationship with RingCentral, please see the “Certain Relationships and Related Transactions” section in this Proxy Statement.

Board Oversight of Risk Management

While the Board has the ultimate oversight responsibility for the risk management process, its committees oversee risk in certain specified areas. In particular, our Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation plans and arrangements and the incentives created by the compensation awards it administers. Our Audit Committee oversees management of enterprise risks and receives and reviews briefings concerning the Company’s information security and technology risks (including cyber security), financial risks and potential conflicts of interests. Pursuant to the Board’s instruction, management regularly reports on applicable risks to the relevant committee or the Board, as appropriate, with additional review or reporting on risks conducted as needed or as requested by the Board and its committees.

Communications with the Board

Stockholders or interested parties may contact the Board, the Non-Executive Chairman and/or independent directors about corporate governance or other matters related to the Board by writing to the following address (indicating by name or title to whom the correspondence should be directed):

Avaya Holdings Corp. Board of Directors

Attention: Corporate Secretary

4655 Great America Pkwy

Santa Clara, CA 95054

Communications may also be sent by email to bdofdirectors@avaya.com. The Corporate Secretary manages all communications received as set forth above to determine whether the contents represent a message to the Board, its committees or any member, group or committee of the Board.

 

20				2020 Proxy Statement

Proposal 1 Election of Directors

 

PROPOSAL 1 – ELECTION OF DIRECTORS

Under our bylaws, our Board shall consist of at least seven directors and not more than nine. All directors will be in one class. Currently our Board has seven members. At each annual meeting of stockholders, the directors will be elected to serve until the earlier of their death, resignation, retirement, disqualification, removal or incapacity or until their successors have been elected and qualified.

Upon the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated James M. Chirico, Jr., Stephan Scholl, Susan L. Spradley, Stanley J. Sutula, III, Scott D. Vogel, William D. Watkins and Jacqueline E. Yeaney for election as directors, each to serve until the next annual meeting of stockholders or until his or her successor is duly elected and qualified, except in the case of their earlier death, resignation, retirement, disqualification, removal or incapacity. Each nominee is currently serving as a director and has consented to serve for the new term. Should any nominee become unavailable for election, your proxy authorizes the named proxies to vote for such other person, if any, as the Board may recommend.

The following table identifies the experience and qualifications that our director nominees bring to the Board. As described above under “Board Composition and Director Qualifications,” the Nominating and Corporate Governance Committee formulates its recommendation of candidates to the Board after consideration of each candidate’s personal qualifications and how such personal qualifications effectively address the then perceived current needs of the Board and its committees.

 

Directors

Experience/Skills

Chirico

Scholl

Spradley

Sutula

Vogel

Watkins

Yeaney

Senior Leadership

●

●

●

●

●

●

●

Finance, Accounting or Financial Reporting

●

●

●

●

●

Corporate Governance

●

●

●

●

Executive Compensation

●

●

●

International Experience

●

●

●

●

●

●

Other Public Company Board experience

●

●

●

●

Risk Management

●

●

●

●

●

●

Strategic Planning, Business Development, Business Operations

●

●

●

●

●

●

●

 

 

 

			2020 Proxy Statement				21

Proposal 1 Election of Directors

 

Each director to be elected by stockholders is elected by a plurality of votes, which means that the seven nominees receiving the most “for” votes will be elected. Votes withheld from any nominee will have no effect on the outcome of the election of directors. Votes may not be cast “against” the election of a nominee. Abstentions and broker non-votes will not be counted for any purpose in determining whether a nominee is elected. Directors may be removed, with or without cause, upon the affirmative vote of the holders of at least a majority of our voting stock. Directors need not be stockholders but are subject to certain share ownership requirements as described in the “Compensation Discussion & Analysis” below.

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE

“FOR” EACH OF THE DIRECTOR NOMINEES NAMED BELOW.

 

Director Nominees
James M. Chirico, Jr.   Director since 2017   Age 62     Committees: N/A		Mr. Chirico has been our President and CEO since October 1, 2017 and a member of our Board since December 15, 2017. Prior to that, from September 1, 2016 through September 30, 2017, he served as our Executive Vice President and Chief Operating Officer and was also named Head of Global Sales in November 2016. Previously he served as our Executive Vice President, Business Operations and Chief Restructuring Officer from June 14, 2010 through August 31, 2016. He served as President, Operations from January 2008 until June 14, 2010 and was appointed Chief Restructuring Officer on February 3, 2009. Prior to joining Avaya, from February 1998 to November 2007, Mr. Chirico held various senior management positions at Seagate Technology, a designer, manufacturer and marketer of hard disc drives, including Executive Vice President, Global Disc Storage Operations, from February 2006 until November 2007, and Senior Vice President and General Manager, Asia Operations, from September 2000 to February 2006. In addition, Mr. Chirico served on the Board of Directors of Caraustar Industries, Inc., an integrated manufacturer of 100% recycled paperboard and converted paperboard products, from 2009 until 2013.   Experience, Qualifications, Attributes and Skills Mr. Chirico’s role as CEO, the management perspective he brings to Board deliberations and his extensive management experience at Avaya, as well as other companies, led to the conclusion that he should serve as a director of our Company.

 

22				2020 Proxy Statement

Proposal 1 Election of Directors

 

Stephan Scholl   Director since 2017   Age 49     Committees: ◾ Compensation ◾ Nominating & Corporate Governance		Mr. Scholl joined our Board on December 15, 2017. Mr. Scholl currently sits on the boards of EG Software and 1010 Data and is an advisor to several private equity firms. Prior to that, from April 2012 until July 11, 2018, he served as President of Infor, Inc., a privately held provider of enterprise software products and services. Previously, from 2011 until 2012, he served as President and Chief Executive Officer of Lawson Software, Inc. He helped merge Lawson into Infor in 2012. He joined Infor in 2010 as Executive Vice President of Global Sales and Consulting. Earlier, Mr. Scholl held various leadership roles at Oracle Corporation, including Senior Vice President and General Manager of the Tax and Utilities Business and before that as Senior Vice President of the North America Consulting business. He joined Oracle in 2005 with the company’s acquisition of PeopleSoft.   Experience, Qualifications, Attributes and Skills Mr. Scholl’s experience in software and services, including with a cloud business, his service as an executive officer of companies including as President and Chief Executive Officer, as well as his independence from the Company, led to the conclusion that he should serve as a director of our Company.

 

			2020 Proxy Statement				23

Proposal 1 Election of Directors

 

Susan L. Spradley   Director since 2017   Age 58     Committees: ◾ Audit ◾ Nominating & Corporate Governance (Chair)		Ms. Spradley joined our Board on December 15, 2017. Ms. Spradley is Chief Executive Officer of Motion Intelligence, Inc., a SaaS company specializing in mobile device location and identification services, a position she has held since December 2017. Ms. Spradley is also the principal of Spradley Consulting LLC, a consulting firm that she founded in February 2017 that offers management consulting and leadership and talent coaching. Previously, she was a partner in the Tap Growth Group, a senior executive consulting firm focused on helping new ventures and Fortune 500 companies drive growth, from August 2017 until June 2019. In addition, she served in senior executive roles at Viavi Solutions (formerly JDSU), a publicly-traded provider of strategic network solutions. She was Executive Vice President and General Manager of Product Line Management and Design from 2015 to January 2017, and before that she was Senior Vice President and General Manager of the Communications Test & Measurement Business Unit from 2013 to 2015. From April 2011 to December 2012, Ms. Spradley was the CEO/Executive Director of US Ignite, a White House and National Science Foundation initiative focused on applications for smart city implementation. Prior to serving at US Ignite, Ms. Spradley was President of the North America region at Nokia Siemens Networks and an Executive Board Member. She served in a variety of roles at Nortel before her work at Nokia Siemens Networks, most recently as President of Global Services. Ms. Spradley currently sits on two public company boards: Qorvo, a global provider of RF systems and semiconductor technologies, a position she has held since January 2017, and NetScout Systems, Inc., a leading provider of service assurance, security and business analytics, a position she has held since April 2018. Additionally, from 2012 through January 2020, Ms. Spradley served as Chairman of the board of directors of US Ignite, a non-profit organization. From October 2011 until November 2012, she served on the board of directors of EXFO Inc.   Experience, Qualifications, Attributes and Skills Ms. Spradley’s experience in the wireless telecommunications industry, including broad operating experience in sales, product portfolio management, and research and development for multiple global communications-related companies and her extensive public company executive leadership experience, as well as her independence from the Company, led to the conclusion that she should serve as a director of our Company.

 

24				2020 Proxy Statement

Proposal 1 Election of Directors

 

Stanley J. Sutula, III   Director since 2017   Age 54     Committees: ◾ Audit (Chair)		Mr. Sutula joined our Board on December 15, 2017. Mr. Sutula is currently an Executive Vice President and the Chief Financial Officer of Pitney Bowes Inc., a global technology company that provides commerce solutions in the areas of ecommerce, shipping, mailing and data, and has served in this capacity since February 2017. From January 2015 to January 2017, he was Vice President and Controller of International Business Machines Corporation (IBM), a global company that creates value for clients through integrated solutions and products that leverage data, information technology, deep expertise in industries and business processes, and a broad ecosystem of partners and alliances. From January 2014 to January 2015, he served as Vice President and Treasurer of IBM and from May 2008 to January 2014 he served as Vice President – Finance and Planning (Chief Financial Officer) of IBM’s Global Technology Services business. From 1988 to 2008, he held a number of positions at IBM including several leadership positions in the US and Europe.   Experience, Qualifications, Attributes and Skills Mr. Sutula’s experience in senior finance positions, including as Chief Financial Officer and Controller, and his experience with software and global management, as well as his independence from the Company, led to the conclusion that he should serve as a director of our Company.

 

Scott D. Vogel   Director since 2017   Age 44     Committees: ◾ Audit ◾ Compensation (Chair)		Mr. Vogel joined our Board on December 15, 2017. Mr. Vogel is currently a Managing Member of Vogel Partners LLC, a private investment firm and has served in that capacity since July 2016. From 2002 through July 2016, he was a Managing Director at Davidson Kempner Capital Management, L.L.C., investing in distressed debt securities. From 1999 to 2001, he worked at MFP Investors, L.L.C. investing in special situations and turnaround opportunities. Prior to MFP Investors, he was an investment banker at Chase Securities. Mr. Vogel has served on numerous boards during his career, including the boards of Arch Coal, Inc. from October 2016 until May 2019 and Key Energy Services, Inc. from December 2016 until April 2019. Currently, he is on the Board of Directors of the following public companies: Contura Energy, Inc. since December 2019, Seadrill Ltd. since July 2018 and Bonanza Creek Energy, Inc. since April 2017. Mr. Vogel is a member of the Olin Alumni Board of Washington University and a member of the Advisory Board of Grameen America.   Experience, Qualifications, Attributes and Skills Mr. Vogel’s mix of experience with executive management oversight, finance and capital markets, human resources and compensation and strategic planning, as well as his independence from the Company, led to the conclusion that he should serve as a director of our Company.

 

			2020 Proxy Statement				25

Proposal 1 Election of Directors

 

William D. Watkins   Chair of the Board of   Directors   Director since 2017   Age 67     Committees: ◾ Nominating & Corporate Governance		Mr. Watkins joined our Board and became Chair of the Board on December 15, 2017. Mr. Watkins was most recently Chairman and Chief Executive Officer of Imergy Power Systems, a privately held energy storage solutions company, from January 2015 and September 2013, respectively, until August 2016. Previously, he served as Chairman of the Board at Bridgelux, Inc., from February 2013 to December 2013 and as its Chief Executive Officer from 2010 to February 2013. Prior to that, he served as Chief Executive Officer and Board Member at Seagate Technology, a publicly traded provider of electronic data storage technologies and systems, from 2004 until 2009, and before that he was Seagate’s President and Chief Operating Officer. He joined Seagate in 1996 with the company’s acquisition of Conner Peripherals. Mr. Watkins currently sits on two public company boards: FLEX LTD., an electronics design manufacturer, since April 2009; and Maxim Integrated Products, Inc., a manufacturer of linear and mixed-signal integrated circuits, since August 2008. In January 2019, Mr. Watkins joined the Board of Directors as Chairman at Bright Machines, Inc., a privately held software design manufacturing company. Mr. Watkins previously served as a Board Member at Seagate Technology from 2000 until 2009. He was a Non-Executive Director at MEMC Electronic Materials, Inc. from 2002 until 2004.   Experience, Qualifications, Attributes and Skills Mr. Watkins’ experience in the technology industry, his operational and management experience, his experience as an executive officer of companies including as Chief Executive Officer, President and Chief Operating Officer, his expertise and familiarity with financial statements, as well as his independence from the Company, led to the conclusion that he should serve as a director of our Company.

 

26				2020 Proxy Statement

Proposal 1 Election of Directors

 

Jacqueline E. Yeaney   Director since 2019   Age 51     Committees: ◾ Compensation		Ms. Yeaney joined our Board on March 18, 2019. Ms. Yeaney is Executive Vice President, Marketing of Tableau Software, a privately held self-service analytics platform, a position she has held since July 30, 2019. Prior to that Ms. Yeaney was the Senior Vice President and Chief Marketing Officer of Ellucian, a privately held provider of software and services for higher education management, from January 2017 until April 1, 2019. She served as the Executive Vice President, Strategy and Marketing of Red Hat, Inc., a publicly traded provider of open source software solutions, from 2011 to 2016 after serving as a consultant to Red Hat in 2008. Prior to that she served as the chief marketing officer at Premiere Global Services, Inc., EarthLink, Inc. and HomeBanc Mortgage Corporation. Ms. Yeaney was also a Captain in the US Air Force where she held the highest level security clearance. Previously Ms. Yeaney served as a Non-Executive Director at Promethean World Limited from 2014 to 2015.   Experience, Qualifications, Attributes and Skills Ms. Yeaney’s experience with global public company technology companies, including experience with strategy, marketing and transformation in the cloud and software industries, and her executive leadership experience, as well as her independence from the Company, led to the conclusion that she should serve as a director of our Company.

 

			2020 Proxy Statement				27

Stock Ownership

 

STOCK OWNERSHIP

Security Ownership of Certain Beneficial Owners and Management

The following table presents information as to the beneficial ownership of our Common Stock as of January 6, 2020 for:

 

•

each stockholder known by us to be the beneficial owner of more than 5% of our Common Stock;

 

•

each of our directors and director nominees;

 

•

each named executive officer as set forth in the summary compensation table in this Proxy Statement; and

 

•

all current executive officers, directors and director nominees as a group.

Percentage ownership of our Common Stock in the table is based on 99,517,295 shares of Common Stock outstanding as of January 6, 2020. Shares of Common Stock that may be acquired within 60 days of January 6, 2020 pursuant to the exercise of options or warrants, and restricted stock units (“RSUs”) that vest, or conversion of Series A Stock are deemed to be outstanding for the purpose of computing the percentage ownership of such holder but are not deemed to be outstanding for computing the percentage ownership of any other person shown in the table. For instance, as of January 6, 2020, RingCentral owns 125,000 shares of our Series A Stock, which could be converted into 7,852,311 shares of our outstanding Common Stock as of such date. In calculating the “Percent of Class Owned” in the table below, we have assumed the conversion of the Series A Stock to Common Stock for RingCentral but have not assumed such conversion with regards to the other beneficial owners.

Beneficial ownership of shares is determined under the SEC rules and generally includes any shares over which a person exercises sole or shared voting or investment power. Except as noted by footnote, and subject to community property laws where applicable, we believe based on the information provided to us that the persons and entities named in the table below have sole voting and investment power with respect to all shares of our Common Stock shown as beneficially owned by them. Unless otherwise noted below, the address of each of the individuals and entities named below is c/o Avaya Holdings Corp., 4655 Great America Parkway, Santa Clara, California 95054.

 

Name and Address of Beneficial Owner

Title of Class

Amount and Nature of Beneficial Ownership

Percent of Class Owned

5% Stockholder:

Davidson Kempner Capital Management LP and other Reporting Persons

Common Stock

10,871,113(1)

10.9%

c/o Davidson Kempner Capital Management LP

520 Madison Avenue, 30th Floor New York, NY 10022

The Vanguard Group

Common Stock

9,985,183(2)

10.0%

100 Vanguard Blvd.   Malvern, Pennsylvania 19355

JPMorgan Chase & Co.

Common Stock

9,421,223(3)

9.5%

383 Madison Avenue New York, NY 10179

 

28				2020 Proxy Statement

Stock Ownership   ›  Security Ownership of Certain Beneficial Owners and Management

 

Name and Address of Beneficial Owner		Title of Class				Amount and Nature of Beneficial Ownership				Percent of Class Owned
BlackRock, Inc.			Common Stock				7,469,484	(4)		7.5%
55 East 52nd Street New York, New York 10055
RingCentral, Inc.			Common Stock	(5)			7,852,311			7.3%
20 Davis Drive Belmont, CA 94002
Directors:
James M. Chirico, Jr.			Common Stock				862,036	(6)		*
Stephan Scholl			Common Stock				33,733	(7)		*
Susan L. Spradley			Common Stock				33,733	(7)		*
Stanley J. Sutula, III			Common Stock				33,733	(7)		*
Scott D. Vogel			Common Stock				33,733	(7)		*
William D. Watkins			Common Stock				33,733	(7)		*
Jacqueline E. Yeaney			Common Stock				19,731	(8)		*
Named Executive Officers (other than James M. Chirico, Jr.):
Shefali Shah			Common Stock				89,698	(9)		*
Kieran J. McGrath			Common Stock				85,927	(10)		*
Edward Nalbandian			Common Stock				—	(11)		*
Patrick J. O’Malley, III			Common Stock				—	(12)		*
Gaurav Passi			Common Stock				—	(13)		*
All Current Directors and Executive Officers as a Group (11 persons)(6), (7), (8), (9), (10), (14)			Common Stock				1,231,427			1.2%

 

*	Represents beneficial ownership of less than one percent of the outstanding shares of Common Stock.

 

(1)

The information was based upon a Schedule 13G/A filed with the SEC on February 11, 2019 by (i) M. H. Davidson & Co. (“CO”); (ii) Davidson Kempner Partners (“DKP”); (iii) Davidson Kempner Institutional Partners, L.P. (“DKIP”); (iv) Davidson Kempner International, Ltd. (“DKIL”); (v) Davidson Kempner Distressed Opportunities Fund LP (“DKDOF”); (vi) Davidson Kempner Distressed Opportunities International Ltd. (“DKDOI”); (vii) DKSOF IV Trading Subsidiary LP (“DKSOF”); (viii) Davidson Kempner Capital Management LP (“DKCM”); and (ix) Messrs. Thomas L. Kempner, Jr. and Anthony A. Yoseloff, and confirmed to the Company on October 24, 2018. CO has shared voting and dispositive power with respect to 206,733 of these shares. DKP has shared voting and dispositive power with respect to 1,213,419 of these shares. DKIP has shared voting and dispositive power with respect to 2,693,630 of these shares. DKIL has shared voting and dispositive power with respect to 2,953,527 of these shares. DKDOF has shared voting and dispositive power with respect to 784,694 of these shares. DKDOI has shared voting and dispositive power with respect to 1,396,916 of these shares. DKSOF has shared voting and

 

			2020 Proxy Statement				29

Stock Ownership  ›  Security Ownership of Certain Beneficial Owners and Management

 

dispositive power with respect to 1,622,194 of these shares. DKCM, Messrs. Kempner and Yoseloff have shared voting and dispositive power with respect to all of these shares.

 

(2)

The information was based upon a Schedule 13G filed with the SEC on February 11, 2019 by The Vanguard Group. The Vanguard Group has sole voting power with respect to 103,295 of these shares, shared voting power with respect to 13,672 of these shares, sole dispositive power with respect to 9,879,988 of these shares and shared dispositive power with respect to 105,195 of these shares. The Vanguard Group’s Schedule 13G indicates that (i) 91,523 of these shares are beneficially owned by Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, as a result of its serving as investment manager of collective trust accounts and (ii) 25,444 of these shares are beneficially owned by Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, as a result of its serving as investment manager of Australian investment offerings.

 

(3)

The information was based upon a Schedule 13G filed with the SEC on January 8, 2020 by JPMorgan Chase & Co. JPMorgan Chase & Co. has sole voting power with respect to 3,193,072 of these shares and sole dispositive power with respect to 9,403,355 of these shares. JPMorgan Chase & Co.’s Schedule 13G indicates that the shares beneficially owned are held by its subsidiaries J.P. Morgan Investment Management Inc., JPMorgan Chase Bank, National Association, JPMorgan Asset Management (UK) Limited and J.P. Morgan Trust Company of Delaware.

 

(4)

The information was based upon a Schedule 13G filed with the SEC on February 11, 2019 by BlackRock, Inc. BlackRock, Inc. has sole voting power with respect to 7,212,224 of these shares and sole dispositive power with respect to 7,469,484 of these shares. BlackRock, Inc.’s Schedule 13G indicates that each of the following subsidiaries owns at 5% or greater of the shares reported on this Schedule 13G: BlackRock Advisors, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock Investment Management (Australia) Limited; BlackRock (Netherlands) B.V.; BlackRock Fund Advisors; BlackRock Asset Management Ireland Limited; BlackRock Institutional Trust Company, National Association; BlackRock Financial Management, Inc.; BlackRock Asset Management Schweiz AG; and BlackRock Investment Management, LLC.

 

(5)	The information was based upon a Schedule 13D filed with the SEC on November 12, 2019 by RingCentral, Inc. RingCentral, Inc. has sole voting and dispositive power with respect to 125,000 shares of Series A Stock, currently convertible into 7,852,311 shares of Common Stock.

 

(6)	Includes (i) 324,653 shares of Common Stock issuable upon the exercise of outstanding stock options that are exercisable or will become exercisable within 60 days of January 6, 2020.

 

(7)

Includes (i) 12,847 shares of Common Stock issuable in respect of RSUs that have vested but have had their settlement deferred until the earliest to occur of: (x) December 15, 2020, (y) the recipient’s separation of service from the registrant and (z) a “change in control” of the registrant, as defined in the Avaya Holdings Corp. 2017 Equity Incentive Plan; (ii) 4,040 shares of Common Stock issuable in respect of RSUs that have vested but have had their settlement deferred until the earliest to occur of: (x) February 12, 2022, (y) the recipient’s separation of service from the registrant and (z) a “change in control” of the registrant, as defined in the Avaya Holdings Corp. 2017 Equity Incentive Plan; and (iii) 16,846 shares of Common Stock issuable in respect of RSUs that have vested but have had their settlement deferred until the earliest to occur of: (x) May 15, 2022, (y) the recipient’s separation of service from the registrant and (z) a “change in control” of the registrant, as defined in the Avaya Holdings Corp. 2017 Equity Incentive Plan. All of the RSUs can only be settled with Common Stock.

 

30				2020 Proxy Statement

Stock Ownership  ›  Security Ownership of Certain Beneficial Owners and Management

 

(8)

Includes (i) 2,885 shares of Common Stock issuable in respect of RSUs that have vested but have had their settlement deferred until the earliest to occur of: (x) March 18, 2022, (y) the recipient’s separation of service from the registrant and (z) a “change in control” of the registrant, as defined in the Avaya Holdings Corp. 2017 Equity Incentive Plan; and (ii) 16,846 shares of Common Stock issuable in respect of RSUs that have vested but have had their settlement deferred until the earliest to occur of: (x) May 15, 2022, (y) the recipient’s separation of service from the registrant and (z) a “change in control” of the registrant, as defined in the Avaya Holdings Corp. 2017 Equity Incentive Plan. These RSUs can only be settled with Common Stock.

 

(9)	Includes (i) 27,054 shares of Common Stock issuable upon the exercise of outstanding stock options that are exercisable or will become exercisable within 60 days of January 6, 2020 and (ii) 13,426 shares of Common Stock issuable upon the vesting of RSUs within 60 days of January 6, 2020.

 

(10)	Includes 85,927 shares of Common Stock issuable upon the vesting of RSUs within 60 days of January 6, 2020.

 

(11)	We are unable to provide a current address or confirm Mr. Nalbandian’s beneficial ownership because Mr. Nalbandian’s service as our Senior Vice President and President, Services ended effective October 1, 2019.

 

(12)	We are unable to provide a current address or confirm Mr. O’Malley’s beneficial ownership because Mr. O’Malley’s service as our Senior Vice President, Growth Initiatives ended effective October 7, 2019.

 

(13)	We are unable to provide a current address or confirm Mr. Passi’s beneficial ownership because Mr. Passi’s service as our Senior Vice President and President, Cloud ended effective November 19, 2019.

 

(14)	All current directors and executive officers includes: the seven directors listed above, Anthony F. Bartolo, Kieran J. McGrath, Shefali Shah and Kevin Speed.

 

			2020 Proxy Statement				31

Director Compensation

 

DIRECTOR COMPENSATION

Members of the Board who are Company employees do not receive any additional compensation for their service as directors.

Fiscal 2019 Non-Employee Director Compensation Program

In August 2018, upon the recommendation of the Compensation Committee with input from the Committee’s independent consultant, the Board reduced the annual cash retainer for non-employee directors from $100,000 to $75,000 in order to better align with our Compensation Peer Group, and established additional retainers for the Non-Executive Chair and each committee chair. Effective for Fiscal 2019 and thereafter, the program consists of the following:

 

Annual Cash Retainer		$75,000
Additional Cash Retainers for Leadership Positions		Non-Executive Chair: $75,000 Audit Committee Chair: $25,000 Compensation Committee Chair: $15,000 Nominating & Corporate Governance Committee Chair: $10,000
Meetings fees		$2,000 per Board or committee meeting in excess of 20 aggregate meetings during the fiscal year
Annual Equity Grant		$250,000 in RSUs, which will be granted after each Annual Meeting to those who are elected to the Board at the Annual Meeting
Initial Equity Grant for Any Non-Employee Director Joining the Board of Directors Before the next Annual General Meeting		$250,000 in RSUs, pro-rated to reflect service as a non-employee director for the portion of the fiscal year served until the next Annual Meeting

The annual cash retainer was paid in arrears to the non-employee directors as four quarterly payments of $18,750, beginning March 2019. The additional cash fees for serving as committee chairs were similarly paid in arrears in four quarterly installments, beginning in March 2019. The meeting fees were paid in arrears at the end of the 2019 fiscal year. RSUs granted to non-employee directors in Fiscal 2019 were vested in full on the grant date, while the delivery of the underlying shares is deferred until the earliest to occur of: (i) the third anniversary of the grant date; (ii) the recipient’s separation from the Company; or (iii) a change in control of the Company, as defined in the 2017 Equity Incentive Plan.

Total compensation provided to our non-employee directors for service during Fiscal 2019 was elevated due to (1) the impact of the combination of meeting fees and the extraordinary number of Board meetings required to facilitate the Company’s review of strategic alternatives during the year, and (2) a one-time 25% increase in the equity award value to compensate for the transition from granting equity at the beginning of our fiscal year to the date of the annual meeting and the associated four month delay in grant timing in Fiscal 2019. Total compensation for Fiscal 2020 is expected to be lower than for Fiscal 2019, because the strategic review process concluded in the first quarter of Fiscal 2020 and the transition equity awards were not repeated.

 

 

32				2020 Proxy Statement

Director Compensation

 

Non-Employee Director Compensation Paid in Fiscal 2019

The following table details the total compensation paid to our non-employee directors for Fiscal 2019:

 

Name		Fees Earned or Paid in Cash ($)(1)				Stock Awards ($)(2)		Total ($)
Stephan Scholl			121,250			312,500			433,750
Susan L. Spradley			150,750			312,500			463,250
Stanley J. Sutula, III			164,000			312,500			476,500
Scott D. Vogel			174,500			312,500			487,000
William D. Watkins			177,500			312,500			490,000
Jacqueline E. Yeaney			39,500			312,500			352,000

 

(1)

Cash compensation for each of Ms. Spradley and Messrs. Scholl, Sutula, Vogel and Watkins consist of one quarterly $25,000 installment of the $100,000 annual cash retainer in effect during Fiscal 2018, plus three quarterly installments of the $75,000 annual cash retainer in effect beginning March 2019. Ms. Yeaney received two quarterly installments of the $75,000 annual cash retainer following her joining the Board in February 2019. Additional cash retainers for leadership positions were paid in three quarterly installments of the annual leadership retainer listed above, with $7,500 to Ms. Spradley for her leadership of the Nominating and Corporate Governance Committee, $18,750 to Mr. Sutula for his leadership of the Audit Committee, $11,250 to Mr. Vogel for his leadership of the Compensation Committee, and $56,250 to Mr. Watkins for his leadership as Non-Executive Chair. The table above also includes meeting fees paid for Fiscal 2019 consisting of $40,000 for Messrs. Watkins and Scholl, $62,000 for Ms. Spradley, $64,000 for Mr. Sutula, $82,000 for Mr. Vogel, and $2,000 for Ms. Yeaney.

 

(2)

The stock awards listed show the fair market value of two awards to each non-employee director in Fiscal 2019. RSU awards for each of Ms. Spradley and Messrs. Scholl, Sutula, Vogel and Watkins consisting of an annual grant award of $250,000, awarded on May 15, 2019 following their election at the 2019 Annual General Meeting, and a special award of $62,500, awarded on February 12, 2019, intended to cover the period between the initial awards on January 23, 2018 and the awards on May 15, 2019. Ms. Yeaney received two RSU awards as well, an annual grant award of $250,000, awarded on May 15, 2019 following the 2019 Annual General Meeting, and an initial award of $62,500, awarded on February 12, 2019, upon her election to the Board. Amounts shown represent the grant date fair value of each award as calculated in accordance with ASC 718. See Note 17 of the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019 for an explanation of the assumptions used in the valuation of these awards.

Fiscal 2020 Non-Employee Director Compensation Program Changes

On November 13, 2019, the Board adopted the 2019 Plan, subject to the approval of our stockholders. The 2019 Plan includes a provision which limits the amount of compensation we can pay non-employee members of our Board in a single fiscal year, without additional stockholder approval. If the 2019 Plan is approved at the Annual Meeting, the maximum total compensation (including awards under the 2019 Plan, determined based on the fair market value of such awards as of the grant date, plus annual retainer fees)) that may be paid to any non-employee director in respect of a single fiscal year would be limited to $750,000. For more information about this change, see “PROPOSAL 3 –APPROVAL OF THE AVAYA HOLDINGS CORP. 2019 EQUITY INCENTIVE PLAN” in this Proxy Statement.

 

			2020 Proxy Statement				33

Director Compensation

 

Non-Employee Director Share Ownership Guideline

Non-employee directors are expected to own shares equivalent to six times the value of the annual cash retainer for Board service (not the additional cash retainers for leadership positions). Until the guideline is achieved, the director must hold at least 50% of net shares received upon vesting of an award. As of the end of fiscal year 2019, all non-employee directors were in compliance with these ownership guidelines.

 

34				2020 Proxy Statement

Compensation Discussion and Analysis

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Compensation “Best Practices”

The Compensation Committee has utilized the following key compensation design and governance practices to support alignment between pay and performance:

 

•

Multiple performance metrics – Short-term bonuses for Fiscal 2019 were based on achievement of Non-GAAP revenue and subject to an Adjusted EBITDA threshold and long-term incentive performance-based equity awards are tied to stock price for the Chief Executive Officer (“CEO”) and based on Adjusted EBITDA and relative total shareholder return (“TSR”) for the other Named Executive Officers (“NEOs”).

 

•

Balanced approach to long-term incentives – Long-term incentive awards in Fiscal 2019 for (1) our CEO were 100% performance-based and required stock appreciation of more than 50% for the awards to vest and (2) our other continuing NEOs were comprised of a combination of 50% time-based restricted stock units (“RSUs”) and 50% performance-based restricted stock units (“PRSUs”) requiring attainment of annual Adjusted EBITDA levels and subject to a relative TSR modifier that caps award vesting when the absolute TSR is negative, linking executive compensation with increased stockholder value over time.

 

•

Thresholds, staged goals, and maximum payouts – Annual bonuses and performance equity awards are subject to a minimum threshold level of performance below which no payout is earned and are limited to a specified maximum payout, with staged goals in between.

 

•

Use of formulaic compensation design with payouts tied to pre-established performance targets.

 

•

Exercise limited or no discretion to adjust formulaic payouts.

 

•

Clawback provisions in our compensation plans and agreements.

 

•

Stock ownership guidelines for executive officers and directors.

 

•

Limited perquisites.

 

•

No “Golden Parachute” Tax Reimbursements to provide any tax reimbursement payments (including “gross-ups”) on any tax liability that our NEOs might owe as a result of the application of Sections 280G or 4999 of the Internal Revenue Code (“Code”).

 

			2020 Proxy Statement				35

Compensation Discussion and Analysis  ›  Stockholder Engagement & Results of Say on Pay Vote

 

•

A policy prohibiting all hedging and pledging in our securities by “Covered Individuals”, as described later in this section.

Stockholder Engagement & Results of Say on Pay Vote

At our 2019 Annual Meeting, we held a “Say-on-Pay” advisory vote on the executive compensation program of the named executive officers for Fiscal 2018. We were disappointed that only approximately 50% of stockholder votes cast were in favor of our executive compensation program for Fiscal 2018. However, based on dialogue with stockholders, we believe that this outcome is largely a result of the fact that our compensation program for Fiscal 2018 was transitionary due to our balance sheet restructuring and reflected decisions made by the pre-emergence Compensation Committee.

Our Board of Directors and senior management have developed and maintain a robust stockholder engagement program. Throughout the year, we engage with a significant and diverse portion of stockholders on any topics our stockholders wish to raise with us, including our business results and initiatives, matters of strategy, capital allocation, corporate governance and executive compensation. We believe this program of regular stockholder engagement has been productive and provides for an open exchange of ideas and perspectives for both management and our stockholders.

Our Board of Directors and senior management are committed to addressing the stockholder concerns regarding our executive compensation program reflected by the results of the Say-on-Pay advisory vote held at the 2019 Annual Meeting. In response, we implemented an enhanced stockholder engagement program to proactively solicit feedback on executive compensation. We reached out to 25 of our largest stockholders representing more than 70% of our outstanding shares to invite them to discuss their feedback on the compensation program and to provide them with an update on our transformation progress. During the fall of 2019, we had discussions with 9 stockholders representing approximately 30% of our outstanding shares. The Chair of our Compensation Committee and members of senior management participated in these telephonic discussions, which resulted in highly constructive dialogue with our stockholders. Feedback received from our stockholders throughout the year is regularly shared with the Board of Directors and the Compensation Committee when related to our compensation programs and practices.

Stockholders generally supported the overall structure of the program and acknowledged the challenges related to executive rewards, retention and Board and management continuity when emerging from Chapter 11. Meanwhile, there was a clear and consistent message that appropriate action was expected to align the compensation levels of our CEO and other executive officers with market practice for a reasonably defined peer group, and to align real pay delivery with financial and strategic performance that drives future stockholder value creation. As we value the feedback provided by these stockholders, the Compensation Committee took action to specifically address their concerns while still maintaining a compensation program focused on retaining and motivating our valued executives.

 

36				2020 Proxy Statement

Compensation Discussion and Analysis  ›  Stockholder Engagement & Results of Say on Pay Vote

 

The Compensation Committee believes that the compensation changes described in the table below reflect our Board’s ongoing commitment to stockholder engagement and responsiveness.

 

Stockholder Feedback		Compensation Committee Response
Concern regarding alignment of NEO compensation structure with Company performance and stockholder value creation, in particular use of guaranteed bonuses and time-based vesting incentive equity awards in Fiscal 2018		The short-and long-term incentive programs for our NEOs in Fiscal 2019 are substantially performance-based:   •   No annual cash bonus awards were guaranteed and awards based upon attainment of Fiscal 2019 revenue and subject to a minimum level of Adjusted EBITDA – no bonuses were awarded in Fiscal 2019 as Company performance was below the threshold level   •   100% of the incentive equity award to our CEO was subject to performance-based vesting requiring stock appreciation of more than 50% for the award to vest and 50% of the incentive equity awards to the other NEOs were subject to performance-based vesting tied to attainment of annual Adjusted EBITDA over three-year performance period against levels set at the time grant and subject to further adjustment based on total shareholder return over the three-year performance period
Concern regarding size of Fiscal 2018 CEO incentive equity awards		In recognition of the size of the Fiscal 2018 incentive equity awards made to our CEO, the value of the Fiscal 2019 incentive equity award was approximately 90% lower than the value of the Fiscal 2018 incentive equity awards and the Fiscal 2019 award was 100% performance-based as noted above
Concern regarding the excise tax gross-up provision in the CEO’s employment agreement, established in connection with our emergence from Chapter 11		On January 3, 2020, at the CEO’s request, we and the CEO amended the CEO’s employment agreement to eliminate the excise tax gross-up provision and we do not intend to provide for any similar provisions in the future

The Compensation Committee believes these changes have enhanced our executive compensation practices and help align executive compensation with our Company’s business and strategic objectives, as well as support long-term stockholder value creation. The Compensation Committee continues to evaluate its approach to executive compensation, specifically for our CEO. The Compensation Committee will continue to consider the outcome of our say-on-pay votes when making future compensation decisions for the named executive officers. We welcome input from our stockholders on our compensation policies and compensation program at any time.

 

			2020 Proxy Statement				37

Compensation Discussion and Analysis  ›  Fiscal 2019 Named Executive Officers

 

Fiscal 2019 Named Executive Officers

This Compensation Discussion and Analysis (the “CD&A”) explains the key elements of the compensation of our NEOs and describes the objectives and principles underlying our Company’s executive compensation program for Fiscal 2019. For Fiscal 2019, our NEOs were:

 

Name		Title
James M. Chirico, Jr.		President and CEO
Kieran McGrath		Senior Vice President and Chief Financial Officer
Shefali Shah		Senior Vice President, General Counsel and Chief Administrative Officer
Edward Nalbandian (1)		Former Senior Vice President and President, Services
Patrick J. O’Malley, III (2)		Former Senior Vice President, Growth Initiatives,   and former Senior Vice President and Chief Financial Officer
Gaurav Passi (3)		Former Senior Vice President and President, Cloud

 

(1)	Mr. Nalbandian retired from the Company, effective October 1, 2019

 

(2)	Mr. O’Malley resigned from the Company, effective October 7, 2019

 

(3)	Mr. Passi separated from the Company, effective November 19, 2019

Key Elements of Our Executive Compensation Program

Base Salaries

There were no changes to the base salaries from Fiscal 2018 for the continuing NEOs. Base salaries for executives hired in Fiscal 2019 were set as a part of the arm’s length negotiation of the applicable employment arrangements, taking into consideration our executive compensation principles and competitive market practices. The Fiscal 2019 base salaries for the NEOs are set forth below:

 

Named Executive Officer		Fiscal 2019 Base Salary ($)
James M. Chirico, Jr.		1,250,000
Kieran McGrath (1)		650,000
Shefali Shah		600,000
Edward Nalbandian		500,000
Patrick J. O’Malley III		650,000
Gaurav Passi (2)		500,000

 

(1)	Mr. McGrath was hired in Fiscal 2019 on January 31, 2019.

 

(2)	Mr. Passi was hired in Fiscal 2019 on November 5, 2018.

Short-Term Incentives

Annual cash bonus opportunities for each NEO in respect of Fiscal 2019 were 100% based on achievement of performance goals. The Company’s Board-approved Fiscal 2019 financial plan served as the basis for the Executive Annual Incentive Plan (“AIP”), our annual cash incentive plan, as approved by the Compensation Committee. The AIP was designed to drive the Company’s objective of revenue growth in Fiscal 2019. The funding for the AIP was determined based on Fiscal 2019

 

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non-GAAP revenue as measured against pre-established threshold, target and maximum levels, and further subject to achievement of a minimum of $750 million in Fiscal 2019 Adjusted EBITDA,* representing an increase to the Fiscal 2018 Adjusted EBITDA of $746 million. The funding metrics for the Fiscal 2019 AIP are shown in the tables below:

 

Non-GAAP Revenue Corporate Financial Goals
Threshold				$3,000 million
Target				$3,125 million
Max				$3,200 million
Actual:				$2,908 million

 

Minimum Level of Fiscal 2019           Adjusted EBITDA		Actual
$750 million		$706 million

*Non-GAAP revenue and Adjusted EBITDA are financial performance metrics that are not calculated and presented in accordance with GAAP. See the “Reconciliation of GAAP to non-GAAP (Adjusted) Financial Measures” in Annex A at the end of this Proxy Statement for additional discussion of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP measure.

Our CEO’s bonus payout opportunity under the AIP was based 100% on the corporate financial goals, and the bonus payout opportunities to other NEOs were based 80% on the corporate financial goals and 20% on achievement of pre-established, individual performance objectives (MBOs), based on the CEO’s recommendations to the Compensation Committee. For Fiscal 2019, two of the MBOs were common among all senior vice presidents of the Company and were based upon achievement of certain operational-based goals during Fiscal 2019. The other two MBOs for the senior vice presidents who were NEOs, other than the Gaurav Passi, Senior Vice President, Cloud (whose specific objectives were the same as the common objectives and established when he joined the company in Fiscal 2019) were based on specific objectives critical to the executive’s individual role, including enhancing internal controls over financial reporting, enhancing efficiencies in the corporate support structure, overseeing the launch of new strategic projects, and operationalizing identified revenue growth drivers.

Our CEO’s target bonus opportunity under the AIP was 200% of base salary and maximum bonus opportunity was 250% of base salary pursuant to the terms of his Executive Employment Agreement (each as in effect prior to the amendment thereto effective on January 3, 2020 and described later in this CD&A) and the target and maximum bonus opportunities for Messrs. McGrath, Nalbandian and Passi and Ms. Shah were 100% of base salary, prorated as applicable for time in service in that position, and 200% of that bonus target, respectively. The target and maximum bonus opportunity for Mr. O’Malley were 100% and 200% of base salary, respectively until February 15, 2019, when he was appointed as Senior Vice President, Growth Initiatives, at which time his target and maximum bonus opportunity were revised to 80% and 160% of base salary, respectively.

As shown in the table above, Company did not achieve threshold Non-GAAP revenue or the minimum Adjusted EBITDA level under the AIP in Fiscal 2019. As a result, no payouts were made under the AIP in respect of Fiscal 2019.

New Hire Sign-on Bonuses

In connection with their hire, each of Messrs. McGrath and Passi received a one-time sign-on bonus of $650,000 and $250,000, respectively.

 

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Compensation Discussion and Analysis  ›  Key Elements of Our Executive Compensation Program

 

Equity Awards

For Fiscal 2019, the Compensation Committee designed and implemented a performance-based equity award program pursuant to the Avaya Holdings Corp. 2017 Equity Incentive Plan (the “2017 Equity Incentive Plan”). In Fiscal 2019, 100% of Mr. Chirico’s equity award was performance-based and the equity awards to the other NEOs continuing from Fiscal 2018 (i.e., other than Messrs. McGrath and Passi) were 50% performance-based and 50% time-based in the form of RSUs. In connection with their hire in Fiscal 2019, Messrs. McGrath and Passi each received only time-based RSUs. The time-based RSUs vest one-third on the first anniversary of the grant date and then in equal, quarterly installments over the next two years, subject to continued employment.

In Fiscal 2019, the NEOs received RSU and PRSU equity awards in respect of the underlying shares of the Company’s common stock with grant date fair values detailed below that have been approximated and therefore differ slightly from those set forth in the Summary Compensation Table. It is important to note that the values shown below represent target opportunities, meaning that these amounts represent the “target” levels of compensation that may be earned in the future based on the value of the underlying shares, and are not actual earned amounts. The amounts actually earned (if any) will be determined on the date(s) on which the awards actually vest, based on continued employment and performance against the performance goals (if applicable) as described below. For more information on grants to the NEOs during Fiscal 2019, see “Executive Compensation—Grants of Plan-Based Awards in Fiscal 2019.”

 

Named Executive Officer		RSU Award Opportunity as of Grant Date ($)				Common Stock Underlying RSU Award (#)				PRSU Award Opportunity as of Grant Date ($)				Common Stock Underlying PRSU Award (#)				Total Equity Award Opportunity as of Grant Date ($)				Common Stock Underlying Total Equity Award (#)
James M. Chirico, Jr.			—				—				3,000,000				274,223				3,000,000				274,223
Kieran McGrath			4,000,000				257,731				—				—				4,000,000				257,731
Shefali Shah			625,000				40,270				625,000				40,270				1,250,000				80,540
Edward Nalbandian			375,000				24,162				375,000				24,162				750,000				48,324
Patrick O’Malley, III			375,000				24,162				375,000				24,162				750,000				48,324
Gaurav Passi			2,000,000				126,262				—				—				2,000,000				126,262

The Fiscal 2019 PRSU award to our CEO will be earned if the average closing price of the Company’s common stock equals or exceeds $23.50 for 60 consecutive days within three years of the grant date (representing appreciation in the stock price of more than 50% from the date of grant), subject to Mr. Chirico’s continued employment.

The PRSU awards to the other NEOs (other than Messrs. McGrath and Passi) will be earned if Adjusted EBITDA is achieved against pre-established threshold, target, and maximum levels established for each of the three separate fiscal years included in the total performance period (i.e., fiscal years 2019, 2020 and 2021). The applicable threshold, target and maximum levels for each fiscal year were established at the beginning of the total three-year performance period. With respect to each

 

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fiscal year within the total three-year performance period, PRSUs are eligible to be earned in respect of performance achieved as follows: 0% below threshold, 75% at threshold, 100% at target, and 150% at maximum level, with points in between being linearly interpolated; provided, that the Compensation Committee has the discretion to equitably adjust Adjusted EBITDA for any performance year to reflect the impact of special or non-recurring events not known as of the grant date in order to prevent the enlargement or dilution of benefits under the award. At the end of the total three-year performance period, the percentage of PRSUs eligible to vest may be adjusted up or down by 25% based on a relative TSR modifier using the Russell 2000 Index in effect on the date of grant for achievement in the top or bottom quartile, respectively, and no change for achievement in the second or third quartile. If at the end of the total three-year performance period the Company’s absolute TSR is negative, then no more than the target number of PRSUs granted will be eligible to vest. Earned PRSUs, both for our CEO and the other NEOs, will not be settled until the end of the applicable three-year performance period, subject to satisfaction of service-based vesting requirements set forth in the applicable award agreement.

At the end of Fiscal 2019, our CEO PRSU stock price goal had not yet been achieved. Fiscal 2019 Adjusted EBITDA was $706 million, which was below the “threshold” level of Adjusted EBITDA established for the other PRSU awards in respect of Fiscal 2019, which was $712 million (with a target level of $750 million (representing an increase from the Fiscal 2018 Adjusted EBITDA of $746 million) and maximum level of $791 million). As such, no PRSUs granted in Fiscal 2019 vested during Fiscal 2019.

Fiscal 2020 Compensation Actions

The Compensation Committee approved the Fiscal 2020 executive compensation structure for certain of the NEOs in the first quarter of Fiscal 2020. For Fiscal 2020, there were no changes made to base salaries or target bonus opportunities for the NEOs, other than with respect to the CEO, whose target bonus opportunity was adjusted from 200% of base salary to 150% of base salary and whose maximum bonus opportunity was adjusted from 250% of base salary to 300% of base salary upon effectiveness of the amendment to the Executive Employment Agreement on January 3, 2020. These changes were made to more closely align our CEO’s target bonus opportunity with those of our peer group.

Consistent with the Company’s continuing objective of achieving profitable revenue growth, the Compensation Committee approved a short-term incentive plan for Fiscal 2020 with funding determined 70% by Fiscal 2020 Non-GAAP revenue against established threshold, target and maximum levels and 30% by Fiscal 2020 Adjusted EBITDA against established threshold, target and maximum levels (the “Fiscal 2020 AIP”). The CEO’s Fiscal 2020 award will be based 50% on corporate financial goals under the Fiscal 2020 AIP and 50% upon attainment of the Company’s Fiscal 2020 Cloud and Alliance Partners Revenue against established threshold, target and maximum levels. The Fiscal 2020 awards for the other NEOs will be based 100% on achievement of corporate financial performance goals.

 

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Compensation Discussion and Analysis  ›  Key Elements of Our Executive Compensation Program

 

Annual equity grants were also approved, which consist of a mix of time-based and performance-based RSUs with a grant date value that was in line with annual equity awards by our Compensation Peer Group. The following NEOs received equity awards with approximate grant date fair values as detailed below.

 

Named Executive Officer (1)		Fiscal 2020 RSU Award ($)				Fiscal 2020 PRSU Award ($)				Total Fiscal 2020 Equity Award ($)
James M. Chirico, Jr			3,250,000				3,250,000				6,500,000
Kieran McGrath			875,000				875,000				1,750,000
Shefali Shah			625,000				625,000				1,250,000

 

(1)	The other NEOs did not receive equity grants in the first quarter of Fiscal 2020.

Messrs. Chirico and McGrath and Ms. Shah received equity grants consisting of 50% time-based RSUs and 50% PRSUs, which awards have substantially the same design as the Fiscal 2019 awards.

Determination of NEO Compensation

Our executive compensation principles reflect the following core beliefs:

 

•

Pay-for-performance

 

•

Annual incentives tied to the successful achievement of challenging pre-established financial and non-financial operating goals that support our annual business plans

 

•

Long-term incentives that provide opportunities for executives to earn equity compensation for multi-year employment retention and achieving challenging financial and strategic goals that drive our longer-term stockholder value, while aligning the interests of senior executives with stockholders through Company ownership

The Company’s executive compensation program is governed by the Compensation Committee with the support of management and the Compensation Committee’s independent compensation consultant. The chart below sets forth the key characteristics of the program for Fiscal 2019, many of which represent “best practices” from a compensation and governance perspective.

 

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Executive Compensation Practices
What We Do				What We Don’t Do
+		We Do have a pay-for-performance philosophy, which ties compensation to pre-established performance goals		-		We Don’t allow discounting, reloading or repricing of stock options without stockholder approval
+		We Do use multiple performance metrics for annual incentive programs		-		We Don’t have “single trigger” vesting of outstanding equity-based awards based solely on a CIC
+		We Do use an independent compensation consultant		-		We Don’t maintain compensation policies or practices that encourage unreasonable risk taking
+		We Do have reasonable severance and change in control (“CIC”) protections that require involuntary termination (i.e., are “double trigger” protections)		-		We Don’t have employment agreements with our NEOs other than our CEO
+		We Do have a clawback policy and policies prohibiting hedging/pledging of the Company’s stock		-		We Don’t guarantee portions of annual incentive bonuses
+		We Do have robust stock ownership guidelines for our NEOs		-		We Don’t offer excessive perquisites

Summarized below are roles and responsibilities of the parties that participate in development of the Company’s executive compensation program.

Compensation Committee

The Compensation Committee is responsible for overseeing our executive compensation program with responsibilities set forth in its charter, including:

 

•

Developing our executive compensation philosophy;

 

•

Approving base salaries, short and long-term programs and opportunities for senior executives;

 

•

Assessing performance and approving earned incentives for senior executives;

 

•

Approving long-term incentive grants, including performance goals and award terms;

 

•

Approving severance programs for senior executives and executive participation;

 

•

Approving policies and practices that mitigate compensation-related risks to the Company; and

 

•

Producing a compensation committee report to be included in the Company’s annual proxy statement or annual report on Form 10-K.

 

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Compensation Discussion and Analysis  ›  Determination of NEO Compensation

 

Management

Our CEO reviews the performance of the other NEOs and makes recommendations to the Compensation Committee on their base salary and short- and long-term opportunities. Our CEO does not provide input regarding his own compensation. Our human resources team also supports the Compensation Committee in the design, implementation and administration of our compensation program.

Independent Compensation Consultants

Pursuant to its charter, the Compensation Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other advisor and is directly responsible for the appointment, compensation arrangements and oversight of the work of any such person. Any such engagement may only be made after taking into consideration of all factors relevant to that person’s independence from management and the Company, as outlined the applicable NYSE rules. For Fiscal 2019, the Compensation Committee engaged an independent compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”), after assessing its independence in accordance with applicable NYSE rules. FW Cook does not provide any other services to us and its work in support of the Compensation Committee did not raise any conflicts of interest or independence concerns. FW Cook provides the Compensation Committee with competitive market data, assistance on evaluation of the peer group composition, input to incentive program design and information on relevant market trends.

Competitive Market Information

Talent for senior-level management positions and key roles in the organization can be acquired across a spectrum of high-tech and software companies. As such, we utilize competitive compensation information from both high-tech and software company compensation surveys, as well as from a group of companies of similar size and/or complexity (the “Compensation Peer Group”), in the following ways:

 

•

As an input in developing base-salary ranges, short- and long-term equity award ranges

 

•

To evaluate share utilization by reviewing overhang levels and annual run rates

 

•

To evaluate the form and mix of equity awarded to NEOs

 

•

To evaluate share ownership guidelines

 

•

To assess the competitiveness of total direct compensation awarded to NEOs

 

•

As an input in designing compensation plans, benefits and perquisites

In addition to the Compensation Peer Group, the Compensation Committee also reviews pay data from the Radford Global Compensation Survey, with a focus on technology companies of a comparable revenue size to our Company. The survey data provides a significant sample size, includes information for management positions below senior executives, and is used to supplement the pay data from the Compensation Peer Group. While the Compensation Committee examines executive compensation data from surveys and the Compensation Peer Group, competitive compensation information is not the sole factor in its decision-making process.

Compensation Peer Group

The Compensation Peer Group for Fiscal 2019 was approved by the Compensation Committee in May 2018. In May 2019, the Compensation Committee conducted an assessment of our Compensation Peer Group with guidance from FW Cook. For Fiscal 2020, three companies were removed and two were added. The peer group changes were made to address peer group M&A activity (removal of CA, Inc. and Red Hat, Inc.), refining industry criteria (removal of Juniper Networks, a

 

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