UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ Preliminary Proxy Statement
☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material Pursuant to §240.14a-2
BOX, INC. |
(Name of Registrant as Specified In Its Charter) |
Payment of Filing Fee (Check all boxes that apply):
☒ | | | No fee required | |||
☐ | | | Fee paid previously with preliminary materials | |||
☐ | | | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 | |||
| | | We thank you for your continued support as we execute on our strategy of profitable growth and further our mission of powering how the world works together. | | |  | |
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—Aaron Levie | | |||||
| | | We exited fiscal 2022 in the strongest financial position in our history and we are confident in our ability to deliver long-term value for all Box stakeholders. | | |  | |
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—Bethany Mayer | | |||||
May 27, 2022
Dear Fellow Stockholders,
It is our pleasure to invite you to attend the 2022 annual meeting of stockholders of Box, Inc. More details on the annual meeting can be found in the enclosed notice for the annual meeting and proxy materials.
Fiscal 2022 was a phenomenal year at Box, as we executed on our strategy to increase profitability while investing for growth. This has led Box to the strongest financial position in its history. Our fiscal 2022 results, with accelerating quarterly revenue growth, record operating margins and consistent free cash flow generation has led to significant value creation for Box stockholders over the past year. This was accomplished while we continued to bring advancements to our category-defining Content Cloud platform.
In fiscal 2022 we delivered 13% annual revenue growth, an acceleration from 11% a year ago, and drove significant margin expansion to achieve a (3) % operating margin and a 20% non-GAAP operating margin, up from 15% a year ago. We improved our Net Retention Rate to 111%, up from 102% in fiscal 2021. Net cash provided by operating activities was $235 million, and we generated free cash flow of $170 million and ended fiscal 2022 with $587 million in cash and investments. We executed on our share repurchase plans, and for the full year of fiscal 2022, we repurchased 22.6 million shares for approximately $567 million. And we exceeded our commitment to achieve a revenue growth rate plus free cash flow margin of 30%, ultimately delivering 33% versus 26% a year ago.(1)
Driving Profitable Growth with our Differentiated Content Cloud Strategy
Our strong fiscal 2022 results underscore that our focus on delivering profitable growth is working, and our strategy is aligned with the key trends that are driving the future of work. The dynamics around COVID forced a broad digital shift overnight and accelerated the necessity for the cloud to become the foundation of all work. In this new digital-first era, employees must be able work from anywhere, every business process that interacts with a customer or partner is going fully digital, and companies need to ensure their most important information is kept safe and secure.
(1) | For further discussion regarding, and a reconciliation of, our non-GAAP to GAAP financial measures, please see pages 63-65 of our Annual Report on Form 10-K filed with the SEC on March 16, 2022. |
Box’s Content Cloud delivers a platform-oriented approach that powers the full lifecycle of an enterprise’s most important content including creation, classification, collaboration, workflow automation, e-signature, publishing, analytics, retention, and more; all in a single platform. In fiscal 2022, we continued to deliver product innovation to our customers, most notably with the worldwide launch of Box Sign, our native e-signature product offering. We made significant product enhancements to Box Shield and Box Governance, as security and compliance remains a top priority for customers. We significantly strengthened our data migration offering with an all new Box Shuttle and delivered additional enhancements across collaboration and workflow automation. And with the growing functionality of our end-to-end Content Cloud platform, we are now going after an expanded $74 billion market.(2)
A critical part of our product strategy is to leverage our interoperability to build on strong partnerships with leading technology companies across the SaaS landscape. In fiscal 2022 we launched deeper integrations with Cisco Webex, IBM, Microsoft, Salesforce, ServiceNow, Zoom and many others, ensuring that our customers can access to their content from nearly any device and any application.
We continued to optimize our go-to-market strategy, focusing on ensuring our customers can take advantage of the full power of the Box platform in their enterprise. We are targeting high value and repeatable use-cases where Box is differentiated from competitors by delivering reduced costs or major productivity improvements in their critical business processes. We are expanding our ecosystem of system integrators and partners to bring Box to market for larger enterprises. We are doubling down in key regions and segments, and we are leveraging our digital channel for growth. To ensure we’re bringing the most relevant offering to market for customers, we’ve expanded our focus on key industries which include life sciences, financial services and the federal government. Our latest multi-product suite, Enterprise Plus, has driven more new and existing customers to access Box’s full suite of capabilities.
We’ve built the leading Content Cloud, with well over 100,000 customers on our platform, and we have an exciting roadmap to continue our industry leadership going forward.
Delivering Value with Environmental, Social and Governance Commitments
Another key priority for Box is our Environmental, Social and Governance, or ESG, commitments. They are to protect our planet (E), invest in people and communities (S), and act with integrity (G). We formally launched these commitments and principals over a year ago. Leading positive change in the world is a key priority for us and aligns with our mission to power how the world works together. By leveraging our platform to easily and securely share ideas, businesses can connect with customers, governments can better serve citizens, and nonprofits can make a greater impact.
In addition to our initiatives to keep our workplace green, we believe that our ability to move organizations from legacy and paper-based processes to the cloud allows customers to work securely and efficiently from anywhere, reducing both office waste and the environmental impact of commuting. Box enables customers to move away from energy intensive on-premise servers and decrease use of paper, which means trees saved and more carbon captured - an important lever in slowing climate change.
At Box, we invest in our people and communities. That means putting our company values and culture first. And cultivating communities where people connect and thrive - including our 10 Employee Resource Communities - while celebrating each other’s unique backgrounds and experiences. We are proud to be ranked #5 by Glassdoor in the category of “Best Places to Work in 2022". We have also been recognized by Great Place to Work® and Fortune® magazine as one of the 100 Best Companies to Work For. Box earned the #48 spot on the list for 2022. We have found that our culture and our people, have been and continue to be our greatest retention and recruiting tools.
In Corporate Governance we are proud of the breadth of backgrounds and expertise that our board brings to Box, with a particular focus on SaaS and enterprise software, and a powerful track record of maximizing stockholder value. At the end of fiscal 2022, 70% of our directors have been on our board for three years or less. Also, in fiscal 2022, we adopted several corporate governance enhancements which are described in more detail in this proxy statement. We remain committed to the highest standards of corporate governance, compliance, and ethics.
We strongly believe that our workforce strategy, our incredible culture and values, combined with our efforts in ESG, will enable us to build long-term value for our stockholders, customers, teams, communities, and the planet.
(2) | Total addressable market size by CY25. Source: Company estimates and industry reports. |
In summary, our strong results in fiscal 2022 are a testament to our execution in delivering to customers the platform they need to meet the demands of the new digital age. Our Content Cloud platform is delivering rapid innovation to our customers, enabling them to use Box for more and higher value use cases, and accelerating their ability to delight their customers and achieve their goals. In fiscal 2023 we are on track to deliver approximately $1 billion in revenue, while continuing to generate margin expansion. We could not be more confident in our ability to achieve our goals and increase stockholder value. The future of work is here, and at Box we are enabling it by powering how the world works together.
We have a number of important proposals for your consideration at this year’s annual meeting. We are asking for you to vote to: (1) re-elect three of our directors—Kim Hammonds, Dan Levin, and Bethany Mayer; (2) approve, on an advisory basis, the compensation of our named executive officers; (3) approve, on an advisory basis, the frequency of future stockholder advisory votes on the compensation of our named executive officers; and (4) ratify the appointment of Ernst & Young LLP as our independent accountant for fiscal year 2023. More information on the annual meeting, the Board’s recommendations and our company can be found in the enclosed proxy materials or other materials we may send you regarding the annual meeting. We encourage you to read these materials carefully when deciding how to vote your shares at the annual meeting.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the annual meeting, we hope you will vote as soon as possible so that your voice is heard.
Thank you for your ongoing support and for being a part of our journey to transform how the world works together and pioneer our industry going forward.
| | | |  AARON LEVIE Cofounder and CEO Box, Inc. | | |  BETHANY MAYER Chair of the Board Box, Inc. | |
For important information regarding our use of forward-looking statements, please see page 66 of this proxy statement.
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| | NOTICE OF ANNUAL MEETING OF STOCKHOLDERS | |
To Be Held at 1:30 p.m. Pacific Time on Thursday, July 14, 2022
DATE AND TIME: | | | Thursday, July 14, 2022 at 1:30 p.m. Pacific Time |
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PLACE: | | | Similar to the past six years, the 2022 annual meeting of stockholders of Box, Inc. (“Box” or the “Company”) (including any postponements, adjournments or continuations thereof, the “Annual Meeting”) will be a completely virtual meeting of stockholders. You can attend the Annual Meeting by visiting http://www.virtualshareholdermeeting.com/BOX2022 where you will be able to listen to the meeting live, submit questions and vote online. |
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ITEMS OF BUSINESS: | | | 1. To elect three Class II directors to serve until the 2025 annual meeting of stockholders and until their successors are duly elected and qualified; |
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| | | 2. To approve, on an advisory basis, the compensation of our named executive officers; | |
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| | | 3. To approve, on an advisory basis, the frequency of future stockholder advisory votes on the compensation of our named executive officers; | |
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| | | 4. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending January 31, 2023; and | |
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| | | 5. To transact such other business that may properly come before the Annual Meeting or any adjournments or postponements thereof. | |
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RECORD DATE: | | | Our Board of Directors has fixed the close of business on May 16, 2022 as the record date for the Annual Meeting. Only holders of record of the company’s shares of Class A common stock and Series A Convertible Preferred Stock on May 16, 2022 are entitled to notice of and to vote at the Annual Meeting. Further information regarding voting rights and the matters to be voted upon is presented in the accompanying Proxy Statement. |
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PROXY VOTING: | | | YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual Meeting, we urge you to submit your vote via the Internet, telephone or mail as soon as possible to ensure your shares are represented. For additional instructions on voting by telephone or the Internet, please refer to your proxy card. Returning the proxy does not deprive you of your right to attend the Annual Meeting and to vote your shares at the Annual Meeting. |
On or about May 27, 2022, we expect to mail to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement and annual report. The Notice provides instructions on how to vote via the Internet and includes instructions on how to receive a paper copy of our proxy materials by mail. To view the accompanying proxy statement and our annual report please visit the following website: www.proxyvote.com. You will be asked to enter the sixteen-digit control number located on your Notice or proxy card. The materials can also be accessed without a control number at the following website: https://materials.proxyvote.com/10316T.
We appreciate your continued support of Box.
May 27, 2022 Redwood City, California | | | By order of the Board of Directors,  David Leeb Chief Legal Officer and Corporate Secretary |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on July 14, 2022 |
The Notice of Annual Meeting, Proxy Statement and Annual Report for the fiscal year ended January 31, 2022 are available free of charge in the “SEC Filings” subsection of the “Financial Information” section of Box’s Investor Relations website at http://www.box.com/investors or at https://materials.proxyvote.com/10316T. |
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| | PROXY SUMMARY | |
This section highlights information contained in other parts of this Proxy Statement. We encourage you to review the entire Proxy Statement for more detail on these items, as well as our Annual Report for the fiscal year ended January 31, 2022.
MATTERS TO BE VOTED ON
| | Proposal Number | | | Description | | | Board Recommendation | |
| | 1 | | | Election of Directors | | | FOR ALL the Company’s Nominees | |
| | | | To elect three Class II directors to serve until the 2025 annual meeting of stockholders and until their successors are duly elected and qualified. | | | | ||
| | 2 | | | Advisory Vote on the Compensation of our Named Executive Officers | | | FOR | |
| | | | To approve, on an advisory basis, the compensation of our named executive officers. | | | | ||
| | 3 | | | Advisory Vote on the Frequency of Future Advisory Votes on the Compensation of our Named Executive Officers | | | FOR ONE YEAR | |
| | | | To approve, on an advisory basis, to hold future stockholder advisory votes on the compensation of our named executive officers every one year. | | | | ||
| | 4 | | | Ratification of Appointment of Independent Registered Public Accounting Firm | | | FOR | |
| | | | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending January 31, 2023. | | | |
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| | PROXY SUMMARY | |
The following table provides summary information about each director nominee and our other directors as of May 1, 2022.
| | Name | | | Age | | | Director Since | | | Independent | | | Class | | | Current Term Expires | | | AC | | | CC | | | NCGC | | | OC | | | Skills and Experience | |
| | DIRECTOR NOMINEES* | | ||||||||||||||||||||||||||||||
| | Kim Hammonds | | | 55 | | | 2018 | | | Yes | | | II | | | 2022 | | | | | | |  | | | | | |  | | ||
| | Dan Levin | | | 58 | | | 2010 | | | Yes | | | II | | | 2022 | | | | | | | | | | |  | | ||||
| | Bethany Mayer (Chair) | | | 60 | | | 2020 | | | Yes | | | II | | | 2022 | | | | |  | | | | | | | |  | | ||
| | CONTINUING DIRECTORS: | | | | | | | | | | | | | | | | | | ||||||||||||||
| | Sue Barsamian | | | 63 | | | 2018 | | | Yes | | | III | | | 2023 | | | | | | | | | | | | |  | | ||
| | Jack Lazar | | | 56 | | | 2020 | | | Yes | | | III | | | 2023 | | |  | | | | | | |  | | |  | | ||
| | John Park | | | 39 | | | 2021 | | | Yes | | | III | | | 2023 | | | | | | | | | | | | |  | | ||
| | Dana Evan | | | 62 | | | 2011 | | | Yes | | | I | | | 2024 | | | | | | | | | | | | |  | | ||
| | Peter Leav | | | 51 | | | 2019 | | | Yes | | | I | | | 2024 | | | | | | | | | | | |  | | |||
| | Aaron Levie (CEO) | | | 37 | | | 2005 | | | No | | | I | | | 2024 | | | | | | | | | | |  | | ||||
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| | | Chairperson | | |  | | | Executive Management and Leadership |
| | | Member | | |  | | | Technology |
* | | | If elected, term will expire in 2025 | | |  | | | Operations |
AC | | | Audit Committee | | |  | | | Go-To-Market |
CC | | | Compensation Committee | | |  | | | Corporate Governance/Public Company Board |
NCGC | | | Nominating and Corporate Governance Committee | | |  | | | Finance/Investment/Accounting |
OC | | | Operating Committee | | |  | | | Enterprise IT |
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| | PROXY SUMMARY | |
CORPORATE GOVERNANCE HIGHLIGHTS
| | Recent Governance Improvements | | |||
| | ✔ | | | Separation of Board Chair and CEO roles | |
| | ✔ | | | Robust duties and responsibilities for independent Board Chair role | |
| | ✔ | | | Women serving as Board Chair and chair of 3 Board committees | |
| | ✔ | | | Majority of Board has joined since 2018 | |
| | ✔ | | | Elimination of supermajority stockholder vote requirements in the Bylaws | |
| | ✔ | | | Elimination of all supermajority stockholder vote requirements in the Charter | |
| | ✔ | | | Majority voting standard in uncontested director elections with a director resignation policy | |
| | ✔ | | | Proxy access for stockholders | |
| | ✔ | | | Corporate Governance Guidelines reflect the Nominating and Corporate Governance Committee’s commitment to actively seeking highly qualified women and individuals from underrepresented communities to include in the initial pool from which director candidates are selected | |
| | ✔ | | | Average Board tenure goal of ten years or less for independent directors to encourage director refreshment | |
| | Historical Governance Practices | | |||
| | ✔ | | | 8 of 9 directors are independent | |
| | ✔ | | | Each Board Committee is composed of independent directors | |
| | ✔ | | | Annual performance evaluations of directors | |
| | ✔ | | | Ongoing comprehensive succession planning for CEO and key executive officers | |
| | ✔ | | | Board is composed of 44% women and 22% of directors from underrepresented communities | |
| | ✔ | | | Limitation on director service on other public company boards | |
| | ✔ | | | All directors attend 75% or more of all Board meetings | |
| | ✔ | | | Meaningful stock ownership and retention guidelines for directors and CEO | |
| | ✔ | | | Policy prohibiting hedging of Company stock by directors and officers | |
| | ✔ | | | Clawback provisions for both cash and equity awards | |
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PROXY STATEMENT
FOR 2022 ANNUAL MEETING OF STOCKHOLDERS
To Be Held at 1:30 p.m. Pacific Time on Thursday, July 14, 2022
This proxy statement and the enclosed form of proxy are being provided to you in connection with the solicitation of proxies by our board of directors (the “Board of Directors”) for use at the 2022 annual meeting of stockholders of Box, Inc., a Delaware corporation, and any postponements, adjournments or continuations thereof (the “Annual Meeting”). The Annual Meeting will be held virtually on Thursday, July 14, 2022 at 1:30 p.m. Pacific Time. You can attend the Annual Meeting by visiting http://www.virtualshareholdermeeting.com/BOX2022, where you will be able to listen to the meeting live, submit questions and vote online. The Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access this proxy statement and our annual report is first being mailed on or about May 27, 2022 to all stockholders entitled to vote at the Annual Meeting.
The information provided in the “question and answer” format below is for your convenience only and is merely a summary of the information contained in this proxy statement. You should read this entire proxy statement carefully. Information contained on, or that can be accessed through, our website is not intended to be incorporated by reference into this proxy statement and references to our website address in this proxy statement are inactive textual references only.
Why are we holding a virtual Annual Meeting?
Similar to previous years, this year we have implemented a virtual format for our Annual Meeting, which will be conducted via live audio webcast and online stockholder tools. We believe a virtual format helps to facilitate stockholder attendance and participation by enabling stockholders to participate fully, and equally, from any location around the world, at no cost (other than any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies). A virtual Annual Meeting makes it possible for more stockholders (regardless of size, resources or physical location) to have direct access to information more quickly, while saving the company and our stockholders time and money, especially as physical attendance at meetings has dwindled. We also believe that the online tools we have selected will increase stockholder communication. For example, the virtual format allows stockholders to communicate with us during the Annual Meeting so they can ask questions of our board of directors or management. During the Annual Meeting, we will only answer questions submitted to the extent relevant to the business of the Annual Meeting, as time permits.
Who is entitled to vote at the Annual Meeting?
Attendance at the Annual Meeting will be limited to stockholders of the company as of the close of business on May 16, 2022, the record date for the Annual Meeting (the “Record Date”). Only holders of record of our Class A common stock and Series A Convertible Preferred Stock, par value $0.0001 (the “Series A Preferred Stock”), at the close of business on the Record Date are entitled to vote at the Annual Meeting. On the Record Date, there were 145,598,135 of shares of Class A common stock issued and outstanding and 500,000 shares of Series A Preferred Stock issued and outstanding.
Holders of the Series A Preferred Stock are entitled to vote with the holders of the Class A common stock on an “as converted” basis as set out in the Certificate of Designations for the Series A Preferred Stock (the “Series A Certificate of Designations”). The Series A Preferred Stock is convertible, in whole or in part, at any time at the option of the holder, into shares of Class A common stock at an initial conversion rate of 37.037 shares of Class A
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common stock per share of Series A Preferred Stock, subject to certain adjustments described in the Series A Certificate of Designations. As of the Record Date, the Series A Preferred Stock was convertible in the aggregate into 18,588,694 shares of Class A common stock and provides approximately 37.18 votes per share of Series A Preferred Stock.
The Class A common stock together with the Series A Preferred Stock is referred to herein as “Voting Stock.” The Voting Stock votes together as a single class unless otherwise provided.
Each stockholder of record is entitled to one vote per share of Class A common stock and one vote per each share of Class A common stock underlying a share of Series A Preferred Stock on an “as converted” basis.
What matters am I voting on?
You will be voting on:
• | the election of three Class II directors to serve until our 2025 annual meeting of stockholders and until their successors are duly elected and qualified; |
• | a proposal to approve, on an advisory basis, the compensation of our named executive officers; |
• | a proposal to approve, on an advisory basis, the frequency of future stockholder advisory votes on the compensation of our named executive officers; |
• | a proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending January 31, 2023; and |
• | any other business as may properly come before the Annual Meeting or any adjournments or postponements thereof. |
How does the Board of Directors recommend I vote on these proposals?
Our Board of Directors recommends a vote:
• | “FOR ALL” the company’s nominees Kim Hammonds, Dan Levin, and Bethany Mayer to be elected as Class II directors; |
• | “FOR” the approval, on an advisory basis, of the compensation of our named executive officers; |
• | To hold future stockholder advisory votes on the compensation of our named executive officers every “ONE YEAR”; and |
• | “FOR” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending January 31, 2023. |
How many votes are needed for approval of each proposal?
• | Proposal No. 1: Each director nominee will be elected by a vote of the majority of the votes cast. A majority of the votes cast means the number of votes cast “For” such nominee’s election exceeds the number of votes cast “Against” that nominee. You may vote “For,” “Against,” or “Abstain” with respect to each director nominee. Broker non-votes and abstentions, if any, will have no effect on the outcome of the election. |
• | Proposal No. 2: The approval, on an advisory basis, of the compensation of our named executive officers, requires the affirmative vote of at least a majority of the voting power of our Voting Stock present virtually or by proxy at the Annual Meeting and entitled to vote thereon to be approved. You may vote “For,” “Against,” or “Abstain” with respect to this proposal. Abstentions are considered votes present and entitled to vote on this proposal, and thus, will have the same effect as a vote “Against” this proposal. Any broker non-votes will have no effect on the outcome of this proposal. However, because this proposal is an advisory vote, the result will not be binding on our Board of Directors or our company. Our Board of Directors and our Compensation Committee will consider the outcome of the vote when determining named executive officer compensation in the future. |
• | Proposal No. 3: For the approval, on an advisory basis, of the frequency of future stockholder advisory votes on the compensation of our named executive officers, the frequency receiving the highest number of votes from the holders of shares present virtually or by proxy at the Annual Meeting and entitled to vote thereon will be considered the frequency preferred by the stockholders. If you “Abstain” from voting on this proposal, it will have no effect on the outcome. Broker non-votes also will have no effect on the outcome of this proposal. However, because this proposal is an advisory vote, the result will not be |
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binding on our Board of Directors or our company. Our Board of Directors and our Compensation Committee will consider the outcome of the vote when determining how often we should submit to stockholders an advisory vote to approve the compensation of our named executive officers.
• | Proposal No. 4: The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending January 31, 2023, requires the affirmative vote of a majority of the voting power of the shares of our Voting Stock present virtually or by proxy at the Annual Meeting and entitled to vote thereon to be approved. Abstentions are considered votes present and entitled to vote on this proposal, and thus, will have the same effect as a vote “Against” this proposal. Any broker non-votes will have no effect on the outcome of this proposal. |
How do I vote if I am a stockholder of record?
If you are a stockholder of record, there are four ways to vote:
• | by Internet at www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on July 13, 2022 (have your Notice or proxy card in hand when you visit the website); |
• | by toll-free telephone until 11:59 p.m. Eastern Time on July 13, 2022 at 1-800-690-6903 if you are a “registered” stockholder or 1-800-454-8683 if you are a “beneficial” stockholder (be sure to have your Notice or proxy card in hand when you call); |
• | by completing and mailing your proxy card so it is received prior to the Annual Meeting (if you received printed proxy materials); or |
• | by attending the Annual Meeting by visiting http://www.virtualshareholdermeeting.com/BOX2022, where stockholders may vote and submit questions during the meeting (have your Notice or proxy card in hand when you visit the website). |
Even if you plan to attend the Annual Meeting, we recommend that you also vote by proxy so that your vote will be counted if you later decide not to attend the Annual Meeting.
How do I vote if I am a beneficial stockholder with my shares held in street name?
If you are a street name stockholder, you will receive voting instructions from your broker, bank or other nominee. You must follow the voting instructions provided by your broker, bank or other nominee in order to direct your broker, bank or other nominee on how to vote your shares. Street name stockholders should generally be able to vote by telephone or by Internet or by signing, dating and returning a voting instruction form. However, the availability of telephone and Internet voting will depend on the voting process of your broker, bank or other nominee. If you are a street name stockholder, you may not vote your shares by ballot at the Annual Meeting unless you obtain a legal proxy from your broker, bank or other nominee.
What is a proxy?
A proxy is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. Aaron Levie, Dylan Smith, and David Leeb have been designated as the company’s proxy holders by our Board of Directors for the Annual Meeting. When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted at the Annual Meeting in accordance with the instructions of the stockholder.
What is the effect of giving a proxy?
Proxies are solicited by and on behalf of our Board of Directors. Aaron Levie, Dylan Smith, and David Leeb have been designated as proxy holders by our Board of Directors. When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted at the Annual Meeting in accordance with the instructions of the stockholder. If no specific instructions are given, however, the shares will be voted in accordance with the recommendations of our Board of Directors as described above. If any matters not described in this proxy statement are properly presented at the Annual Meeting, the proxy holders will use their own judgment to determine how to vote the shares. If the Annual Meeting is adjourned, the proxy holders can vote the shares on the new Annual Meeting date as well, unless you have properly revoked your proxy instructions, as described above.
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Can I change my vote or revoke my proxy?
Yes. If you are a stockholder of record, you can change your vote or revoke your proxy any time before the Annual Meeting by:
• | entering a new vote by Internet or by telephone on a later date; |
• | completing and returning a later-dated proxy card; |
• | sending a written notice of revocation to our Secretary at Box, Inc., 900 Jefferson Ave., Redwood City, California 94063; or |
• | attending and voting at the Annual Meeting (although attendance at the Annual Meeting will not, by itself, revoke a proxy). |
If you are a street name stockholder, your broker, bank or other nominee can provide you with instructions on how to change your vote.
What do I need to do to attend the Annual Meeting?
Stockholders of record will be able to attend the Annual Meeting online, submit questions during the meeting and vote shares electronically at the meeting by visiting http://www.virtualshareholdermeeting.com/BOX2022. Individuals who log in under the guest feature will be able to attend the meeting, but will not be able to submit questions or vote shares. To participate in the Annual Meeting, stockholders will need the sixteen-digit control number included on your Notice or proxy card. The Annual Meeting webcast will begin promptly at 1:30 p.m. Pacific Time on July 14, 2022. We encourage you to access the meeting prior to the start time. Online check-in will begin at 1:15 p.m. Pacific Time, and you should allow ample time for the check-in procedures.
Why did I receive a Notice of Internet Availability of Proxy Materials instead of a full set of proxy materials?
In accordance with the rules of the Securities and Exchange Commission (“SEC”), we have elected to furnish our proxy materials, including this proxy statement and our annual report, primarily via the Internet. The Notice containing instructions on how to access our proxy materials is first being mailed on or about May 27, 2022 to all stockholders entitled to vote at the Annual Meeting. Stockholders may request to receive all future proxy materials in printed form by mail or electronically by e-mail by following the instructions contained in the Notice. We encourage stockholders to take advantage of the availability of our proxy materials on the Internet to help reduce the environmental impact and cost of our annual meetings of stockholders.
I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?
We have adopted a procedure called “householding,” which the SEC has approved. Under this procedure, we deliver a single copy of the Notice and, if applicable, our proxy materials to multiple stockholders who share the same address unless we have received contrary instructions from one or more of such stockholders. This procedure reduces our printing costs, mailing costs, and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, we will deliver promptly a separate copy of the Notice and, if applicable, our proxy materials to any stockholder at a shared address to which we delivered a single copy of any of these materials. To receive a separate copy, or, if a stockholder is receiving multiple copies, to request that we only send a single copy of the Notice and, if applicable, our proxy materials, such stockholder may contact us at the following address:
Box, Inc.
Attention: Investor Relations
900 Jefferson Ave.
Redwood City, California 94063
Tel: (877) 729-4269
Street name stockholders may contact their broker, bank or other nominee to request information about householding.
| | | | | | 7 |
How are proxies solicited for the Annual Meeting?
Our Board of Directors is soliciting proxies for use at the Annual Meeting. All expenses associated with this solicitation will be borne by us. We will reimburse brokers, banks or other nominees for reasonable expenses that they incur in sending our proxy materials to you if a broker, bank or other nominee holds shares of our common stock on your behalf. In addition, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Our directors and employees will not be paid any additional compensation for soliciting proxies.
How may my brokerage firm or other intermediary vote my shares if I fail to provide timely directions?
Brokerage firms and other intermediaries holding shares of our common stock in street name for their customers are generally required to vote such shares in the manner directed by their customers. In the absence of timely directions, your broker will have discretion to vote your shares on our sole “routine” matter: the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending January 31, 2023. Your broker will not have discretion to vote on any other proposals, which are “non-routine” matters, absent direction from you.
Will my shares be voted if I do nothing?
Pursuant to New York Stock Exchange rules applicable to brokers, the broker will be prohibited from exercising discretionary authority with respect to any of the proposals to be voted on (except as discussed in the preceding question) with respect to your account, unless you provide the broker with specific voting instructions. This is referred to as a “broker non-vote.” In these cases, those shares will not be considered votes cast on the proposals to be considered at the Annual Meeting. The broker may vote your shares without your specific instruction only with respect to Proposal No. 4, the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending January 31, 2023.
What is a quorum?
A quorum is the minimum number of shares required to be present at the Annual Meeting to properly hold an annual meeting of stockholders and conduct business under our amended and restated bylaws (our “Bylaws”) and Delaware law. Without a quorum, no business may be transacted at the Annual Meeting. The presence, virtually or by proxy, of a majority of the voting power of all issued and outstanding shares of our Voting Stock entitled to vote at the Annual Meeting will constitute a quorum at the Annual Meeting. Abstentions, withhold votes, and broker non-votes are counted as shares present and entitled to vote for purposes of determining a quorum.
How will the Annual Meeting be conducted?
The Annual Meeting will be a completely virtual meeting of stockholders. You can attend the Annual Meeting by visiting http://www.virtualshareholdermeeting.com/BOX2022, where you will be able to listen to the meeting live, submit questions and vote online.
Attendance at the Annual Meeting will be limited to stockholders of the company as of the Record Date and guests of the company. You will not be able to attend the Annual Meeting in person at a physical location.
• | Participating in the Virtual Annual Meeting. Stockholders of record as of the Record Date may participate in the Annual Meeting remotely by visiting the following website: |
http://www.virtualshareholdermeeting.com/BOX2022. Please have your proxy card or Notice of Annual Meeting containing the sixteen-digit control number available and fill in the appropriate fields to enter the virtual meeting. Street name stockholders who wish to vote at the Annual Meeting must also submit their vote by using their sixteen-digit control number as outlined above. Beneficial shareholders who did not receive a 16-digit control number from their bank or brokerage firm, who wish to attend the meeting should follow the instructions from their bank or brokerage firm, including any requirement to obtain a legal proxy. The meeting will be accessible for check in at 1:15 p.m. Pacific Time.
If you have any difficulty attending the virtual annual meeting, please call the technical support number that will be posted on the Virtual Shareholder Meeting log-in page.
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• | Technical Disruptions. In the event of any technical disruptions or connectivity issues during the course of the Annual Meeting, please allow for some time for the meeting website to refresh automatically, and/or for the meeting operator to provide updates through the phone bridge. |
• | Stockholder List. We will make available a list of registered stockholders as of the Record Date for inspection by stockholders for any purpose germane to the Annual Meeting from June 30, 2022 through July 14, 2022 at our headquarters located at 900 Jefferson Ave., Redwood City, California 94063. Due to the fact that the normal business hours of our headquarters have been affected due to the COVID-19 pandemic, if you wish to inspect the list, please submit your request, along with proof of ownership, by email to ir@box.com. The stockholder list will also be available electronically on the meeting website during the live webcast of the Annual Meeting. |
How can I ask questions during the Annual Meeting?
You may submit a question during the Annual Meeting using the “Ask A Question” box on the bottom left-hand corner of your screen, next to the slides with the heading “Ask A Question”. Enter your question in the box and hit the “SEND” button to submit it. Questions submitted during the meeting pertinent to meeting matters will be answered during the meeting, subject to time constraints. Stockholders of record may submit questions beginning at check in, fifteen minutes prior to the start of the Annual Meeting. Additional information regarding the ability of stockholders to ask questions during the Annual Meeting will be included in the rules of conduct that will be available on the Annual Meeting website.
If I can’t attend the Annual Meeting, can I vote later?
You do not need to attend the online Annual Meeting to vote if you submitted your vote via proxy in advance of the meeting. Whether or not stockholders plan to attend the Annual Meeting, we urge stockholders to vote and submit their proxy in advance of the Annual Meeting by one of the methods described in the proxy materials. Any votes submitted after the closing of the polls at the Annual Meeting will not be counted.
Who will count the votes?
A representative of Broadridge Financial Solutions, Inc will serve as the independent inspector of election (the “Inspector of Election”) and, in such capacity, will count and tabulate the votes.
Where can I find the voting results of the Annual Meeting?
We will announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a Current Report on Form 8-K that we will file with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Current Report on Form 8-K within four business days after the Annual Meeting, we will file a Current Report on Form 8-K to publish preliminary results and will provide the final results in an amendment to the Current Report on Form 8-K as soon as they become available.
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Our business affairs are managed under the direction of our Board of Directors, which is currently comprised of nine members. Eight of our directors are independent within the meaning of the listing standards of the New York Stock Exchange. Our Board of Directors is divided into three staggered classes of directors. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the same class whose term is then expiring.
The following table sets forth the names, ages as of May 1, 2022, and certain other information for each of the Board of Directors’ three nominees for election as a Class II director at the Annual Meeting, and each of the continuing members of our Board of Directors:
| | Name | | | Age | | | Director Since | | | Independent | | | Class | | | Current Term Expires | | | Expiration of Term for Which Nominated | | | Audit Committee | | | Compensation Committee | | | Nominating & Corporate Governance Committee | | | Operating Committee | |
| | Director Nominees: | | | | | | | | | | | | | | | | | | | | | | ||||||||||
| | Kim Hammonds | | | 55 | | | 2018 | | | Yes | | | II | | | 2022 | | | 2025 | | | | | | | | | | | | ||
| | Dan Levin | | | 58 | | | 2010 | | | Yes | | | II | | | 2022 | | | 2025 | | | | | | | | | | ||||
| | Bethany Mayer (Chair) | | | 60 | | | 2020 | | | Yes | | | II | | | 2022 | | | 2025 | | | | | | | | | | | | ||
| | Continuing Directors: | | | | | | | | | | | | | | | | | | | | | | ||||||||||
| | Sue Barsamian | | | 63 | | | 2018 | | | Yes | | | III | | | 2023 | | | | | | | | | | | | | | |||
| | Jack Lazar | | | 56 | | | 2020 | | | Yes | | | III | | | 2023 | | | | | | | | | | | | | | |||
| | John Park | | | 39 | | | 2021 | | | Yes | | | III | | | 2023 | | | | | | | | | | | | | | |||
| | Dana Evan | | | 62 | | | 2011 | | | Yes | | | I | | | 2024 | | | | | | | | | | | | |||||
| | Peter Leav | | | 51 | | | 2019 | | | Yes | | | I | | | 2024 | | | | | | | | | | | | | ||||
| | Aaron Levie (CEO) | | | 37 | | | 2005 | | | No | | | I | | | 2024 | | | | | | | | | | | |
| | | Committee Chairperson |
| | | Committee Member |
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 | | | Kim Hammonds Director Since: October 2018 Independent Board Committees: Nominating and Corporate Governance; Operating • Formerly served in numerous senior executive positions at Deutsche Bank and Boeing heading their respective Global Operations, and IT departments • Director of Tenable Holdings, Zoom, and UiPath Ms. Hammonds served in numerous senior executive roles at Deutsche Bank, a global financial services company, including as Group Chief Operating Officer from January 2016 to May 2018, Chief Information Officer and Global Co-Head Technology and Operations from 2013 to 2016, and as a member of the Management Board from August 2016 to May 2018. Earlier in her career, Ms. Hammonds served in a number of capacities at The Boeing Company, a global aerospace company, including most recently as Chief Information Officer / Vice President, Global Infrastructure, Global Business Systems from 2011 to 2013. She previously led IT systems development for manufacturing operations in the Americas, and directed global IT reliability and factory systems at Dell Inc. Ms. Hammonds has served on the board of directors of Tenable Holdings, Inc., a provider of cybersecurity solutions, since June 2018, Zoom Video Communications, Inc., an enterprise video communications company, since September 2018, and UiPath Inc., a robotic process automation company, since September 2020. She previously served as a director at Red Hat, Inc., a provider of open source solutions, from August 2015 until its sale to International Business Machines Corporation (IBM) in July 2019; Cloudera, a data management, machine learning, and advance analytics platform provider, from March 2017 to January 2020; and Cumulus Networks, an open source networking company, from November 2018 until its sale to NVIDIA Corporation in August 2020. Ms. Hammonds holds a B.S. in Mechanical Engineering from University of Michigan and an MBA in Marketing from Western Michigan University. Ms. Hammonds was selected to serve on our Board of Directors because of her extensive enterprise IT and global go-to-market strategy expertise as well as her significant experience serving as a public company board director at numerous enterprise software and data storage companies. |
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 | | | Dan Levin Director Since: January 2010 Independent • Chief Executive Officer of Degreed, Inc. • Former President and Chief Operating Officer of Box, Inc. • Former Vice President and General Manager, Healthcare at Intuit Inc. Mr. Levin has served as the Chief Executive Officer of Degreed Inc., an education technology company, since April 2021. Mr. Levin served as Box’s President and Chief Operating Officer from 2013 until August 2017, and solely as Chief Operating Officer prior to that beginning in 2010. During his tenure, Box’s revenue grew from $10 million to $500 million in annual revenue. He also served as the interim Chief Executive Officer of Picateers Inc., an online photo sales company from 2008 to 2009. Prior to this, Mr. Levin served as Vice President and General Manager, Healthcare, at Intuit Inc., a business and financial management solutions company. Mr. Levin holds a B.A. in the independent concentration of Applications of Computer Graphics to Statistical Data Analysis from Princeton University. Mr. Levin was selected to serve on our Board of Directors because of his extensive operations experience across technology companies, both public and private. |
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 | | | Bethany Mayer Chair Director Since: April 2020 Independent Board Committees: Compensation (Chair); Operating • Former President, Chief Executive Officer and Director of Ixia • Executive advisor with Siris Capital Group LLC • Former senior executive at Sempra Energy, HP, Blue Coat Systems, Cisco and Apple Computer • Director of LAM Research, Marvell Technology* and Sempra Energy She is currently an executive advisor with Siris Capital Group LLC, a private equity firm. Previously, Ms. Mayer served as Executive Vice President of Corporate Development and Technology of Sempra Energy, an energy infrastructure company, from November 2018 to January 2019. From 2014 through April 2017, she was the President and Chief Executive Officer of Ixia, a market leader in test, visibility and security solutions, until it was acquired by Keysight Technologies in April 2017. From 2011 through 2014, Ms. Mayer served as Senior Vice President and General Manager of HP’s Networking Business unit and the NFV business unit. From 2010 until 2011, she served as Vice President, Marketing and Alliances, for HP’s Enterprise Servers Storage and Networking Group. Prior to joining HP, she held leadership roles at Blue Coat Systems, Cisco and Apple Computer. She has served on the board of directors of LAM Research Corporation, a semiconductor equipment company, since May 2019; Marvell Technology Group*, an infrastructure semiconductor solutions company, since May 2018; and Sempra Energy, an energy services holding company, since June 2019. *Ms. Mayer has announced her intention to not stand for re-election to Marvell Technology’s board of directors when her current term expires in in June 2022. Ms. Mayer previously served on the board of directors of Sempra Energy from February 2017 to October 2018, when she resigned in advance of assuming her management role at Sempra Energy; Ixia from 2014 through April 2017; and Delphi Automotive PLC, an auto parts supplier, from August 2015 to April 2016. Ms. Mayer holds a B.S. in Political Science from Santa Clara University, an M.B.A. from California State University-Monterey Bay and an M.S. in Cybersecurity from New York University. Ms. Mayer was selected to serve on our Board of Directors because of her deep technology and leadership experience scaling multi-billion-dollar enterprises as well as her significant corporate governance expertise across a range of industries. |
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 | | | Sue Barsamian Director Since: May 2018 Independent Board Committees: Compensation; Operating (Chair) • Former Sales and Marketing Officer of HPE Software at Hewlett Packard Enterprise • Former General Manager of Enterprise Cybersecurity Products at Hewlett Packard Enterprise • Director of NortonLifeLock and Five9, Inc. Ms. Barsamian served as Chief Sales and Marketing Officer for HPE Software from 2016 to 2017 and General Manager of Enterprise Cybersecurity Products from 2015 to 2016 of Hewlett Packard. Additionally, she previously held various executive roles at Hewlett Packard between 2006 to 2015. She has served on the board of directors for NortonLifeLock Corporation, a consumer cyber safety company, since January 2019; Five9, Inc, a cloud contact center software company, since January 2021; and the Kansas State University Foundation. She served on the Board of the National Action Council for Minorities in Engineering (NACME) from 2012 to 2017, serving as Chairman of the Board from 2016 to 2017. Ms. Barsamian holds a B.S. with honors in electrical engineering from Kansas State University and completed her post-graduate studies at the Swiss Federal Institute of Technology in Zurich, Switzerland. Ms. Barsamian was selected to serve on our Board of Directors because of her extensive experience in enterprise software sales and global go-to-market strategy as well as her service in both executive and board positions for major cloud, computer and cybersecurity companies. |
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 | | | Dana Evan Director Since: December 2011 Independent Board Committees: Audit; Nominating and Corporate Governance (Chair) • Former CFO of VeriSign, Inc. • Former Venture Partner at Icon Ventures • Director of Domo, Inc., Farfetch Limited, and Momentive Global Inc. (formerly SVMK Inc. or SurveyMonkey) • 2019 Director of the Year (National Association of Corporate Directors) From 2013 to July 2020, Ms. Evan served as a Venture Partner at Icon Ventures, a venture capital firm, and since July 2007 has invested in and served on the boards of directors of companies in the internet, technology and media sectors. Ms. Evan served as Chief Financial Officer of VeriSign, Inc., a provider of intelligent infrastructure services for the internet and telecommunications network, from 1996 to 2007. Ms. Evan has served on the boards of directors of Domo, Inc., a business intelligence tools and data visualization company, since May 2018; Farfetch Limited, a global technology platform for the luxury fashion industry, since April 2015; and Momentive Global Inc. (formerly SVMK Inc. or SurveyMonkey), an online survey development cloud-based software, since March 2012. She previously served as director of Proofpoint, Inc., from June 2008 until its acquisition by Thoma Bravo in August 2021; Criteo S.A., a performance display advertising company, from March 2013 until June 2017; Fusion-io, Inc., a flash memory technology company, until it was acquired by SanDisk Corporation in July 2014; Omniture, Inc., an online marketing and web analytics company, until it was acquired by Adobe Systems Incorporated in October 2009; and Everyday Health, Inc., a provider of digital health and wellness solutions, until it was acquired by Ziff Davis, LLC in December 2016. Ms. Evan holds a B.S. in Commerce from Santa Clara University and is a certified public accountant (inactive). Ms. Evan was selected to serve on our Board of Directors because of her extensive experience in operations, strategy, accounting, financial management and investor relations at both publicly and privately held technology companies as well as her substantial corporate governance experience and experience as an investor in the internet, technology and media sectors. |
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 | | | Jack Lazar Director Since: March 2020 Independent Board Committees: Audit (Chair); Operating • Former Chief Financial Officer at GoPro, Inc. • Former Senior Vice President, Corporate Development and General Manager at Qualcomm Atheros, Inc. • Director of GlobalFoundries Inc., Resideo Technologies Inc., and ThredUP Inc. Mr. Lazar served as Chief Financial Officer at GoPro, Inc., a provider of wearable and mountable capture devices, from 2014 to 2016, and as Senior Vice President, Corporate Development and General Manager of Qualcomm Atheros, Inc., a developer of communications semiconductor solutions, from 2011 to 2013. He has also served as an independent business consultant since March 2016. Mr. Lazar has served on the boards of directors of GlobalFoundries Inc., a semiconductor contract manufacturing and design company, since October 2021; Resideo Technologies Inc., a provider of comfort and security solutions, since September 2018; and ThredUP Inc., an online marketplace for secondhand clothing, since June 2017. He previously served on the boards of TubeMogul, Inc., an enterprise software company for digital branding, from October 2013 until its sale to Adobe in December 2016; Quantenna Communications, Inc., a wireless semiconductor company, from July 2016 until its sale to ON Semiconductor Corp. in June 2019; and Mellanox Technologies, Ltd., a communications semiconductor company, from June 2018 until its sale to NVIDIA Corporation in April 2020; Casper Sleep, a provider of sleep centric products from April 2019 until its sale to Durational Capital in January 2022; and Silicon Labs, and analog and mixed signal semiconductor company from April 2013 to April 2022. Mr. Lazar is a certified public accountant (inactive) and holds a B.S. in Commerce with an emphasis in Accounting from Santa Clara University. Mr. Lazar was selected to serve on our Board of Directors because of his proven operational and financial expertise in both the enterprise and consumer technology markets, with particular experience in mergers & acquisitions and driving profitable growth. |
16 | | | | | |
 | | | Peter Leav Director Since: June 2019 Independent Board Committees: Compensation • President, Chief Executive Officer and Director of McAfee Corp. • Former President, Chief Executive Officer and Director of BMC Software, Inc. • Former President, Chief Executive Officer and Director of Polycom, Inc. Mr. Leav has served as President, Chief Executive Officer, and a member of the Board of Directors of McAfee Corp, a cybersecurity company, since February 2020. He served previously as President, CEO, and Director of BMC Software, Inc., a management solutions software company, from December 2016 to April 2019. Prior to joining BMC, Mr. Leav served as President, Chief Executive Officer, and Director of Polycom, Inc., a video, voice, and content solution company, from December 2013 through September 2016. Mr. Leav was a director of Proofpoint, Inc., a security-as-a-service provider, from July 2019 until January 2020, when he accepted his current role with McAfee; and HD Supply, Inc., an industrial distributor company, from October 2014 to July 2017. Additionally, earlier in his career, Mr. Leav served in variety of roles of increasing responsibility at NCR Corporation, Motorola, Inc., Symbol Technologies, Inc., and Cisco Systems, Inc. Mr. Leav holds a bachelor’s degree from Lehigh University. Mr. Leav was selected to serve on our Board of Directors because of his extensive c-suite and corporate governance experience across a range of publicly traded companies as well as his significant management, technology, communications and global go-to-market strategy and operations expertise. |
 | | | Aaron Levie Director Since: April 2005 • Co-founder and Chief Executive Officer of Box Mr. Levie is a pioneer of the content management industry for the cloud era. As Co-founder and Chief Executive Officer of Box, he has been the driving force behind Box’s evolution into a preferred content cloud provider and partner across the Fortune 500. Mr. Levie co-founded our company and has served as Chief Executive Officer and a member of our Board of Directors since April 2005. He previously served as Box’s Chairman from December 2013 to May 2021. Mr. Levie attended the University of Southern California from 2003 to 2005. Mr. Levie was selected to serve on our Board of Directors because of the perspective and experience he brings as one of our founders. |
| | | | | | 17 |
 | | | John Park Director Since: May 2021 Independent Board Committees: Audit; Compensation • Partner and Head of KKR’s technology industry team, Americas Private Equity • Director of Henry Schein One, a subsidiary of Henry Schein, Inc. Mr. Park joined KKR in 2013 and is a Partner and head of the technology industry team within KKR’s Americas Private Equity platform. He is also a member of the Investment Committee and Portfolio Management Committee for KKR’s Americas Private Equity. He currently serves as a director of Henry Schein One, a subsidiary of Henry Schein, Inc., as well as a number of private companies. Mr. Park previously served on the board of directors of GoDaddy Inc., an Internet domain registrar and web hosting company, from February 2015 to June 2019. Prior to joining KKR, Mr. Park was with Apax Partners LLP, where he focused on software investments around the world. He was also a member of the mergers & acquisitions practice at Morgan Stanley. Mr. Park holds an A.B., cum laude, in Economics from Princeton University and an M.B.A. from Harvard Business School. Mr. Park was selected to serve on our Board of Directors because of his extensive experience in advising technology companies with a focus on the cloud and his track record of helping companies drive disciplined growth and profitability. |
18 | | | | | |
Our Class A common stock is listed on the New York Stock Exchange. Under the listing standards of the New York Stock Exchange, independent directors must comprise a majority of a listed company’s board of directors. In addition, the listing standards of the New York Stock Exchange require that, subject to specified exceptions, each member of a listed company’s Audit, Compensation, and Nominating and Corporate Governance Committees be independent. Under the listing standards of the New York Stock Exchange, a director will only qualify as an “independent director” if, in the opinion of that listed company’s board of directors, that director does not have a material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship within the company).
Audit Committee members must also satisfy the additional independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the listing standards of the New York Stock Exchange. Compensation Committee members must also satisfy the additional independence criteria set forth in Rule 10C-1 under the Exchange Act and the listing standards of the New York Stock Exchange.
Our Board of Directors has undertaken a review of the independence of each of our directors. Based on information provided by each director concerning their background, employment and affiliations, our Board of Directors has determined that none of Mses. Barsamian, Evan, Hammonds, and Mayer or Messrs. Lazar, Leav, Levin, or Park has a material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship within the company) and that each of these directors is “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing standards of the New York Stock Exchange. In making these determinations, our Board of Directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our Board of Directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director, and the transactions involving them described in the section titled “Related Person Transactions.”
Our Board of Directors evaluates its leadership structure and elects the Chair of the Board of Directors based on the criteria it deems to be appropriate and in the best interests of the company and its stockholders, given the circumstances at the time of such election. In May 2021, our Board of Directors appointed independent director Bethany Mayer to serve as the Chair of our Board of Directors. In making this decision, our Board of Directors determined that the best and most effective leadership structure for Box and its stockholders at this time is to have separate chief executive officer and chair roles. This structure enhances the Board of Directors’ ability to exercise independent oversight of the business and affairs of Box. The Board of Directors believes this structure is optimal for Box at this time because it allows Mr. Levie to focus on leading the company while allowing Ms. Mayer to focus on leading the Board, assisting the Board in reaching consensus on particular strategies and policies, and fostering robust evaluation processes. As the Chair, Ms. Mayer has the following duties and responsibilities that are set forth in our Corporate Governance Guidelines, and performs such additional duties as our Board of Directors otherwise determines and delegates.
| | Duties and Responsibilities of Independent Chair of our Board of Directors | | |||
| | ✔ | | | Presiding over stockholder meetings, Board meetings and executive sessions of directors, with authority to call meetings of the Board of Directors and of the independent directors | |
| | ✔ | | | Establishing the agenda for Board meetings in consultation with the chairs of applicable Board committees | |
| | ✔ | | | Approving information sent to the Board of Directors for Board meetings | |
| | ✔ | | | Approving meeting schedules for the Board of Directors | |
| | ✔ | | | Conferring with the CEO on matters of importance that may require Board of Directors action or oversight | |
| | ✔ | | | Promoting and facilitating effective communication and serving as a liaison between the independent directors and the CEO | |
| | ✔ | | | Leading the Board of Directors in discussions concerning CEO performance and CEO succession | |
| | ✔ | | | Being available for consultation and direct communication, if requested by major stockholders | |
| | ✔ | | | Serving as spokesperson for the company, as requested | |
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During our fiscal year ended January 31, 2022, our Board of Directors held nine meetings (including regularly scheduled and special meetings), and each incumbent director attended at least 75% of the aggregate of (i) the total number of meetings of our Board of Directors held during the period for which he or she has been a director and (ii) the total number of meetings held by all committees of our Board of Directors on which he or she served during the periods that he or she served.
Although we do not have a formal policy regarding attendance by members of our Board of Directors at annual meetings of stockholders, we encourage, but do not require, our directors to attend. Nine directors attended our 2021 annual meeting of stockholders.
Our Board of Directors has established an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, and an Operating Committee. The composition and responsibilities of each of the committees of our Board of Directors is described below. Members will serve on these committees until their resignation or until otherwise determined by our Board of Directors.
Audit Committee
Our Audit Committee consists of Ms. Evan and Messrs. Lazar and Park, with Mr. Lazar serving as the chair. Each member of our Audit Committee meets the requirements for independence for audit committee members under the listing standards of the New York Stock Exchange and SEC rules and regulations. Each member of our Audit Committee also meets the financial literacy and sophistication requirements of the listing standards of the New York Stock Exchange. In addition, our Board of Directors has determined that each of Ms. Evan and Mr. Lazar is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act of 1933, as amended. Our Audit Committee is, among other things, responsible for the following:
• | selecting and hiring our independent registered public accounting firm; |
• | evaluating the performance and independence of our independent registered public accounting firm; |
• | pre-approving the audit services and any non-audit services to be performed by our independent registered public accounting firm; |
• | reviewing our financial statements and related disclosures and reviewing our critical accounting policies and practices; |
• | reviewing the adequacy and effectiveness of our internal control policies and procedures and our disclosure controls and procedures; |
• | overseeing procedures for the treatment of complaints on accounting, internal accounting controls, or audit matters; |
• | reviewing and discussing with management and the independent registered public accounting firm the results of our annual audit and the financial statements included in our publicly filed reports; |
• | reviewing and approving any proposed related person transactions; and |
• | preparing the Audit Committee report included in our annual proxy statement. |
Our Audit Committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of the New York Stock Exchange. A copy of the charter of our Audit Committee is available on our website at http://www.box.com/investors. During our fiscal year ended January 31, 2022, our Audit Committee held four meetings.
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Compensation Committee
During our fiscal year ended January 31, 2022, our Compensation Committee consisted of Mses. Barsamian and Mayer and Messrs. Leav and Park, with Ms. Mayer serving as the chair. In May 2021, Mr. Park joined the Compensation Committee and Ms. Evan stepped off of the Committee. Our Compensation Committee consists of Mses. Barsamian and Mayer and Messrs. Leav and Park, with Ms. Mayer serving as the chair. Each member of our Compensation Committee meets the requirements for independence for compensation committee members under the listing standards of the New York Stock Exchange and SEC rules and regulations, including Rule 10C-1 under the Exchange Act. Each member of our Compensation Committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act. Our Compensation Committee is, among other things, responsible for the following:
• | reviewing and approving our Chief Executive Officer’s and other executive officers’ annual base salaries, incentive compensation plans, including the specific goals and amounts, equity compensation, employment agreements, severance arrangements and change in control agreements, and any other benefits, compensation, or arrangements; |
• | administering our equity compensation plans; |
• | overseeing our overall compensation philosophy, compensation plans, and benefits programs; and |
• | preparing the Compensation Committee report included in our annual proxy statement. |
Our Compensation Committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of the New York Stock Exchange. A copy of the charter of our Compensation Committee is available on our website at http://www.box.com/investors During our fiscal year ended January 31, 2022, our Compensation Committee held seven meetings.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee consists of Mses. Evan and Hammonds, with Ms. Evan serving as the chair. Each member of our Nominating and Corporate Governance Committee meets the requirements for independence under the listing standards of the New York Stock Exchange and SEC rules and regulations. Our Nominating and Corporate Governance Committee is, among other things, responsible for the following:
• | evaluating and making recommendations regarding the composition, organization and governance of our Board of Directors and its committees; |
• | overseeing annual performance evaluations of the Board of Directors and its committees; |
• | evaluating and making recommendations regarding the creation of additional committees or the change in mandate or dissolution of committees; |
• | reviewing and making recommendations with regard to our corporate governance guidelines; |
• | reviewing and approving conflicts of interest of our directors and corporate officers, other than related person transactions reviewed by our Audit Committee; and |
• | reviewing and discussing with management the company’s environmental, social and governance activities, programs and public disclosure, including in light of any feedback received from stockholders. |
Our Nominating and Corporate Governance Committee operates under a written charter that satisfies the applicable listing standards of the New York Stock Exchange. A copy of the charter of our Nominating and Corporate Governance Committee is available on our website at http://www.box.com/investors During our fiscal year ended January 31, 2022, our Nominating and Corporate Governance Committee held three meetings.
Operating Committee
Our Operating Committee was formed in March 2020 and consists of Mses. Barsamian, Hammonds, and Mayer and Mr. Lazar, with Ms. Barsamian serving as the chair. Although the listing standards of the New York Stock Exchange and SEC rules and regulations do not specify independence requirements applicable to our Operating Committee, each member of the Operating Committee meets the general requirements for independence under the listing standards of the New York Stock Exchange and SEC rules and regulations. Our Operating Committee is responsible for working with our Chief Executive Officer, Chief Financial Officer, and management to identify and recommend opportunities for further improvement in growth and margin performance. During our fiscal year ended January 31, 2022, our Operating Committee held four meetings.
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None of the members of our Compensation Committee is or has been an officer or employee of our company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee (or other board committee performing equivalent functions) of any entity that has one or more of its executive officers serving on our Board of Directors or Compensation Committee.
Our Nominating and Corporate Governance Committee uses a variety of methods for identifying and evaluating director nominees. In its evaluation of director candidates, our Nominating and Corporate Governance Committee will consider the current size and composition of our Board of Directors and the needs of our Board of Directors and the respective committees of our Board of Directors. Some of the qualifications that our Nominating and Corporate Governance Committee considers include, without limitation, issues of character, integrity, judgment, diversity of experience, independence, area of expertise, corporate experience, length of service, potential conflicts of interest and other commitments. Nominees must also have the ability to offer advice and guidance to our Chief Executive Officer based on past experience in positions with a high degree of responsibility and be leaders in the companies or institutions with which they are affiliated. Director candidates must have sufficient time available in the judgment of our Nominating and Corporate Governance Committee to perform all Board of Directors and committee responsibilities. Members of our Board of Directors are expected to prepare for, attend, and participate in all Board of Directors and applicable committee meetings. Other than the foregoing, there are no stated minimum criteria for director nominees, although our Nominating and Corporate Governance Committee may also consider such other factors as it may deem, from time to time, are in our and our stockholders’ best interests.
Our Board of Directors believes that our Board of Directors should be a diverse body, and our Nominating and Corporate Governance Committee considers a broad range of backgrounds and experiences. In making determinations regarding nominations of directors, our Corporate Governance Guidelines provide that our Nominating and Corporate Governance Committee may consider such factors as gender, race, ethnicity, sexual orientation, and cultural background. Our Nominating and Corporate Governance Committee also considers these and other factors as it oversees the annual Board of Directors and committee evaluations. Our Corporate Governance Guidelines were amended in 2021 to memorialize the Nominating and Corporate Governance Committee’s commitment to actively seeking highly qualified women and individuals from underrepresented communities to include in the initial pool from which director candidates are selected. After completing its review and evaluation of director candidates, our Nominating and Corporate Governance Committee recommends to our full Board of Directors the director nominees for selection.
Pursuant to our Nominating and Corporate Governance Committee Policies and Procedures for Director Candidates, our Nominating and Corporate Governance Committee will consider candidates for director recommended by stockholders holding at least one percent (1%) of the fully diluted capitalization of our company continuously for at least twelve (12) months prior to the date of the submission of the recommendation, so long as such recommendations comply with our Charter and Bylaws and applicable laws, rules and regulations, including those promulgated by the SEC. Our Nominating and Corporate Governance Committee will evaluate such recommendations in accordance with its charter, our Bylaws, our policies and procedures for director candidates, as well as the regular director nominee criteria described above. This process is designed to ensure that our Board of Directors includes members with diverse backgrounds, skills and experience, including appropriate financial and other expertise relevant to our business. Eligible stockholders wishing to recommend a candidate for nomination should contact our General Counsel or our Legal Department in writing. Such recommendations must include information about the candidate, a statement of support by the recommending stockholder, evidence of the recommending stockholder’s ownership of our Class A common stock and a signed letter from the candidate confirming willingness to serve on our Board of Directors. Our Nominating and Corporate Governance Committee has discretion to decide which individuals to recommend for nomination as directors.
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The Board of Directors values the input of stockholders and seeks the suggestions of stockholders on a regular basis. There are a number of avenues stockholders can utilize to communicate to Box, including by writing to our Board of Directors or to the particular member or members of our Board of Directors and mailing the correspondence to our General Counsel at Box, Inc., 900 Jefferson Ave., Redwood City, California 94063. If an interested party wishes to contact the independent members of our Board of Directors, the interested party should address such communication to the attention of the Chair of our Board of Directors at the address above. Our General Counsel, in consultation with appropriate members of our Board of Directors as necessary, will review all incoming communications and, if appropriate, all such communications will be forwarded to the appropriate member or members of our Board of Directors, or if none is specified, to the Chair of our Board of Directors.
As owners of Box, we value our stockholders’ opinions and feedback. Maintaining an active dialogue with our stockholders is consistent with our corporate values of transparency and accountability, and we intend to continue these efforts in the future.
Our stockholder outreach program includes post-earnings communications, conferences, roadshows, bus tours, one-on-one and group meetings, technology webcasts, and general availability to respond to stockholder inquiries.
Since our IPO in 2015, we’ve held an annual “Investor Day” to provide stockholders with a detailed update on our strategy and financial outlook as well as access to the executive team.
The feedback we receive from stockholders from our outreach program helps our Board of Directors, leadership team, and employees develop a mutual understanding and trust with our stockholders. Members of our Board of Directors and senior executives directly engage from time to time with stockholders to hear unfiltered concerns and perspectives that shape our core strategy. Employees receive quarterly updates on investor sentiment following our earnings calls to empower them to drive alignment with corporate financial objectives.
Our Board of Directors has adopted Corporate Governance Guidelines that address items such as the qualifications and responsibilities of our directors and director candidates and corporate governance policies and standards applicable to us in general. Our Corporate Governance Guidelines were amended in 2021 to (1) memorialize the Nominating and Corporate Governance Committee’s commitment to actively seeking highly qualified women and individuals from underrepresented communities to include in the initial pool from which director candidates are selected; (2) describe the responsibilities of the Chair of the Board of Directors; (3) adopt a position on average director tenure of ten years or less for independent directors; and (4) adopt a director resignation policy requiring any director who does not receive a majority of the votes cast in an uncontested director election to submit his or her resignation to the Board of Directors for the Board of Directors to accept or reject.
In addition, our Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers, and directors, including our Chief Executive Officer, Chief Financial Officer, and other executive and senior financial officers. The full text of our Corporate Governance Guidelines and our Code of Business Conduct and Ethics is posted on the Corporate Governance portion of our website at http://www.box.com/investors We will post amendments to our Code of Business Conduct and Ethics or waivers of our Code of Business Conduct and Ethics for directors and executive officers on the same website.
Risk is inherent with every business, and we face a number of risks, including strategic, financial, business and operational, cyber security, legal and compliance, and reputational. We have designed and implemented processes to manage risk in our operations. Management is responsible for the day-to-day management of risks
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the company faces, while our Board of Directors, as a whole and assisted by its committees, has responsibility for the oversight of risk management. In its risk oversight role, our Board of Directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are appropriate and functioning as designed.
Our Board of Directors believes that open communication between management and our Board of Directors is essential for effective risk management and oversight. Our Board of Directors meets with our Chief Executive Officer and other members of our senior management team at quarterly meetings of our Board of Directors, where, among other topics, they discuss strategy and risks facing the company, as well at such other times as they deem appropriate.
While our Board of Directors is ultimately responsible for risk oversight, our board committees assist our Board of Directors in fulfilling its oversight responsibilities in certain areas of risk. Our Audit Committee assists our Board of Directors in fulfilling its oversight responsibilities with respect to risk management in the areas of internal control over financial reporting and disclosure controls and procedures, legal and regulatory compliance, and discusses with management and the independent auditor guidelines and policies with respect to risk assessment and risk management. Our Audit Committee also reviews our major financial risk exposures, cyber security risks, and the steps management has taken to monitor and control these exposures. Our Audit Committee also monitors certain key risks on a regular basis throughout the fiscal year, such as risk associated with internal control over financial reporting and liquidity risk. Our Nominating and Corporate Governance Committee assists our Board of Directors in fulfilling its oversight responsibilities with respect to the management of risk associated with board organization, membership and structure, and corporate governance. Our Compensation Committee assesses risks created by the incentives inherent in our compensation policies. Finally, our full Board of Directors reviews strategic and operational risk in the context of reports from the management team, receives reports on all significant committee activities at each regular meeting, and evaluates the risks inherent in significant transactions.
Leading positive change in the world has always been a key priority at Box. Our mission is to power how the world works together, and we believe that by making it easy to securely share ideas, businesses are able to connect with customers, governments can better serve citizens, and nonprofits make a greater impact. We aim to create a better future for generations to come, while building long-term value for our stakeholders, communities, customers, teams, and the planet.
Our Board of Directors supports our corporate focus on environmental, social, and governance, and our Nominating and Corporate Governance Committee periodically receives updates from our management on, and reviews and discusses with our management, the company’s environmental, social and governance activities, programs and public disclosure, including feedback received from stockholders. Box’s commitment to environmental, social, and governance (ESG) initiatives focuses on the following key areas outlined below. For more information, we encourage you to visit our website at https://www.box.com/about-us/esg and review our ESG framework for fiscal 2023.
Environmental
We are committed to making our world a better and more sustainable place. We take to heart our responsibility to safeguard the planet and believe it is critical to identify and address our opportunities to operate in a more sustainable manner, protect our environment, and build a lasting future that all can thrive in. We have a shared interest with our many different stakeholders – our employees, customers, stockholders, and the planet, among others – in ensuring that we operate in an environmentally sustainable manner.
We are focused on continuing to reduce our carbon footprint through green initiatives led by Box employees, reducing waste at our offices, making it easier for Boxers to utilize public transportation, and reexamining and cutting back on our business travel where a video conference will do. Some highlights of our environmental sustainability initiatives include:
• | Sustainable offices: Our Redwood City, San Francisco and Austin offices are all LEED Gold certified; our New York office is LEED Silver certified; and our London office is BREEAM certified. |
• | Reducing greenhouse gas emissions: By making on-site electric vehicle charging stations free to employees, we have cut over 260,000 kg in greenhouse gas emissions since December 2014. |
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• | Public transit incentives: We provide subsidized transportation benefits to all eligible U.S. employees. |
• | Avoiding tech waste: In November 2021, our first tech donation drive diverted over 1,700 pounds of e-waste from landfills and provided foster children with devices such as laptops, ipads, and phones. |
• | Energy efficient data centers: We use data centers that have achieved or have committed to achieve 100% renewable energy targets. |
Over the past two years, we’ve seen a fundamental shift in how organizations get work done, enabling employees to work remotely. Our cloud content management platform helps our customers digitize their businesses and facilitate remote work for their employees, which contributes to the reduction of paper-based processes, work commuting, and all of the attendant environmental impacts they cause. Through our ability to enable remote work, our technology supports plans for business continuity in times of natural disaster or in the face of a pandemic, including the ability to work securely from anywhere on any device.
Social
Diversity, Equity, and Inclusion
One of our core values is creating a space where all Box employees can “Bring your (_____) Self to Work.” We take great pride in celebrating our differences, and we strive to hire the best talent from all backgrounds. We want to build teams that are as diverse as our customers and the world we live in, with a broad representation of gender, ethnicity, sexual orientation, religion, backgrounds, and perspectives — among many other dimensions of diversity. By being intentional about community and belonging, we also believe we can drive even better results. Our diversity, equity and inclusion (DEI) work focuses on three key areas:
• | Hiring: Sourcing top, underrepresented talent through proactive, external relationship building; promoting our external brand; and driving consistency with the interview and selection process. |
• | Thriving: Ensuring that Box employees have exceptional career experiences; and monitoring career development and progression processes to reinforce consistency and fairness. |
• | Belonging: Creating space where all Box employees can bring their whole selves to work; removing blind spots that unintentionally cause harm; and nurturing healthy, diverse communities. |
Our hiring philosophy is centered around the belief that building diverse teams enables us all to do our best work and deliver the best business results. We seek to drive consistency throughout our interviewing and selection process. Our recruiters and managers complete unconscious bias training and we also offer training on unconscious bias and interviewing best practices to all of our employees. When recruiting executives, our policy is to interview at least one candidate from underrepresented backgrounds before making a hiring decision. We have also instituted programs to connect with underrepresented student groups and create a more fair and equitable hiring process. For example, our Box Business Fellowship provides students of historically underrepresented backgrounds with an opportunity to explore business careers in the tech industry. This program helps students develop the skills to succeed in tech industry roles and provides them with insights into available career opportunities. In addition, participants in this program are also invited to an expedited interview process for available roles at Box.
We hold ourselves accountable, which is why we signed the California Equal Pay Pledge. As part of our continued commitment, we conduct an annual companywide gender pay analysis on hiring and promotion procedures to reduce unconscious bias and structural barriers to equitable compensation. In addition, we externally benchmark the compensation we provide for each role to ensure pay parity, and provide regular pay equity updates to our Compensation Committee. Our analyses indicate that, as of August 2021, we had pay equity across gender globally for employees in similar jobs, accounting for factors such as role, level and location.
We also ensure that Boxers can Bring their (_____) Self to Work by creating safe spaces for engagement and providing opportunities for networking and development, while promoting a culture of learning and allyship to ensure that the needs of underrepresented employees are being met. We support a dynamic array of employee-led resource communities for historically underrepresented groups and different communities at Box, including Box Women’s Network, Black Excellence Network, Latinx, Pride, and Box Vets, among others.
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We are honored to receive external recognition for these efforts, as reflected by the following awards:
• | Glassdoor Best Places to Work 2022, ranked #5 |
• | HRC Best Places to Work for LGBTQ Equality 2022, 100% Corporate Equality Index |
• | Great Place to Work’s Best Workplaces for Parents 2021 |
• | Fortune 100 Best Companies to Work For 2022 |
• | Fortune Best Workplaces for Millennials 2021 |
• | Fortune Best Workplaces in the Bay Area 2021 |
• | Fortune Best Workplaces in Technology 2021 |
• | PEOPLE Companies that Care 2021 |
Our commitment to diversity, equity, and inclusion is also evident within our Board of Directors, which is composed of 44% women and 22% directors from underrepresented communities. In addition, our Corporate Governance Guidelines were amended in 2021 to memorialize the Nominating and Corporate Governance Committee’s commitment to actively seeking highly qualified women and individuals from underrepresented communities to include in the initial pool from which director candidates are selected.
For more information about our diversity, equity, and inclusion initiatives, we encourage you to visit our website at https://www.box.com/about-us/diversity-and-inclusion.
Employee Health and Safety
The health and safety of our employees is one of our top priorities. We strive to create an environment where Boxers are physically and mentally safe and healthy. We offer a comprehensive health and wellness benefits package to all full-time employees. Additionally, in an effort to combat digital burnout and stress, Box launched company-wide mental health holidays, a meeting efficiency program, and other mental health benefits.
Our Commitment to Our Communities through Box.org
Every day we focus on leveraging the strengths of Box for greater good, powering how the world works together – from organizations delivering COVID-19 vaccines, to those protecting foster children, and working on the front lines of disaster response. We deploy our technology, employees and company resources to create a positive impact in our communities, while making digital work inclusive.
We’ve supported and empowered our communities through Box.org product discounting and donation programs to over 10,000 nonprofits with over $40M of in-kind and charitable gifts over the last three years. Additionally, 75% of our Boxers engage in social impact by volunteering with a cause they care about, making a donation to an organization and/or providing pro-bono consulting to a nonprofit.
This commitment to community shapes our Box culture and is an important reason why Box employees have voted us onto the 2022 Fortune 100 Best Companies to Work For list, which makes us proud.
Governance
In addition to the corporate governance policies, procedures and best practices we have implemented, as described in the above sections titled “Corporate Governance Highlights” and “Board of Directors and Corporate Governance”, and our approach to strong governance is demonstrated in the following areas:
Compliance and Ethics
Among our core values, our goal to “Make Mom Proud” means we act with integrity, make ethical decisions, and use good judgment. Our culture of integrity starts with our Code of Business Conduct and Ethics and our compliance program, which includes risk assessment, development of policies and procedures, training, auditing and monitoring, and investigations and remediation of potential compliance matters. A copy of the Code of Business Conduct and Ethics is available on our website at http://www.box.com/investors.
The Code of Business Conduct and Ethics applies to all Box directors and employees, including our executive officers. The Code of Business Conduct and Ethics is reviewed on an annual basis for any changes to law or policy and updated as appropriate. All new employees are required to complete training on the Code of Business
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Conduct and Ethics, and our employees must complete additional training on the Code of Business Conduct and Ethics and a compliance certification each year. Throughout the year, Box employees are required to complete supplemental trainings to address compliance risks associated with particular roles and functions at Box.
In addition, we are subject to the UK Modern Slavery Act of 2015 (the “Modern Slavery Act”) and voluntarily report on our compliance for Australia’s Modern Slavery Act of 2018. As part of our adherence to these acts, we publish an annual statement detailing our efforts to combat modern slavery and human trafficking, which is available on our website at http://www.box.com/investors.
We strive to create a culture where open, honest communications are the expectation, not the exception. We want all employees to feel comfortable approaching their manager or any member of the Box leadership team in instances where our value “Make Mom Proud” has not been upheld. In January 2021, we began partnering with AllVoices to provide our employees with a platform where Boxers can safely and anonymously share feedback with company leadership, including complaints and concerns regarding possible violations of, or non-compliance with, the Code of Business Conduct and Ethics, a written statement of company policy or a law or regulation, or retaliatory acts against anyone who makes such a complaint or assists in the investigation of such a complaint. Reports may be made by phone or web reporting using our hotline at box.allvoices.co. Reports may be made anonymously and confidentially.
Political Contributions
Box employees must comply with all local, state, federal, foreign, and any other applicable laws and regulations regarding political contributions. Company funds or assets cannot be used for, or contributed to, political campaigns or practices under any circumstances unless pre-approved by Box’s General Counsel and, if appropriate, the Nominating and Corporate Governance Committee. However, it is acceptable for Box employees to make lawful personal political contributions. More information regarding our policies on political contributions can be found in the Code of Business Conduct and Ethics, which is available on our website at http://www.box.com/investors.
Data, Privacy, Security, and Compliance
Data security and privacy have never been more important. At their heart, digital security and privacy are about trust and transparency. We have established a multi-pronged approach to building and maintaining cloud-based security and privacy solutions for our customers.
Our data privacy and security practices include:
• | Maintaining a transparent website and platform, including privacy and cookie notices, to inform our customers about how we collect, use, share, disclose, retain, and protect personal information in compliance with data protection laws, principles and certifications; |
• | Enabling our customers to make data subject requests globally regardless of their location, thereby ensuring user data control and transparency around how we use, collect, and share user data; |
• | Providing annual data protection and security training to all employees, supplemented with targeted/role specific data protection, privacy, and/or security training, as needed; and |
• | Maintaining many of the most comprehensive security and privacy certifications available globally, that are assessed annually by third-party auditors, independent third-party assessors and/or internally to verify our compliance. |
In addition, Box enables customers to secure their data in a number of ways, including:
• | Frictionless security enabled by built-in controls such as granular permissions, strong user authentication, and AES 256-bit encryption; |
• | The ability of customers to manage their own encryption keys using Box KeySafe; |
• | Simplified information governance that allows customers to easily set policies that retain, dispose of, and preserve content; |
• | Box Zones, which enables organizations to address data residency obligations across multiple geographies; and |
• | Box Shield, which automatically scans files and classifies them based on admin-defined policies, enabling organizations to better manage highly sensitive data at scale. |
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Outside Director Compensation Policy
Under our Outside Director Compensation Policy, members of our Board of Directors who are not employees of Box (“outside directors”) receive compensation in the form of equity and cash, as described below.
On a periodic basis, our Compensation Committee consults with Compensia, a nationally recognized independent compensation consulting firm, regarding the compensation paid to our outside directors. Following the end of fiscal years 2021 and 2022, as part of the reviews, our Compensation Committee reviewed data provided by Compensia regarding the compensation provided to outside directors of our peer companies.
In May 2021, because the Board of Directors appointed a separate Chair of our Board (previously Mr. Levie was both CEO and Chair), based on data provided by Compensia regarding the compensation provided to individuals in similar positions, our Board of Directors approved an amendment to our Outside Director Compensation Policy to provide that, effective May 1, 2021, the Chair of our Board shall be paid an annual cash retainer of $50,000.
In September 2021, the Compensation Committee, in consultation with Compensia, recommended and the Board of Directors approved (i) the grant to Ms. Mayer, as Chair of our Board, of an award of time based Company restricted stock units (“RSUs”) with a value of $100,000 (as indicated in the “Director Compensation for Fiscal Year 2022” table below), which RSUs would vest in full on the earlier of (a) twelve months from today or (b) the date of the 2022 annual stockholder meeting and (ii) an amendment to our Outside Director Compensation Policy to provide that annually, starting at the 2022 annual stockholder meeting, the non-executive Chair of the Board will receive an additional $100,000 in time-based RSUs, which RSUs would be granted at the annual stockholder meeting of that year and would vest at the earlier of (a) twelve months from the date of grant or (b) the date of the subsequent year’s annual stockholder meeting.
In March 2022, the Compensation Committee, in consultation with Compensia, recommended and the Board of Directors approved an amendment to our Outside Director Compensation Policy, increasing the annual retainer for our Board of Directors from $35,000 to $40,000, effective March 24, 2022.
Cash Compensation
Under our Outside Director Compensation Policy in effect during fiscal year 2022, each outside director was eligible to receive a cash retainer of $35,000 for serving on our Board of Directors. In addition, each year, our Chair was eligible to receive an additional cash retainer of $50,000, and our Lead Independent Director was eligible to receive an additional cash retainer of $20,000, and outside directors were also eligible to receive the following additional cash fees for service on the committees of our Board of Directors. We began fiscal year 2022 with Ms. Evan serving as our Lead Independent Director; however, Ms. Evan ceased being Lead Independent Director when Ms. Mayer was appointed Chair of our Board.
| | Committee | | | Committee Member Annual Retainer | | | Committee Chair Annual Retainer | |
| | Audit Committee | | | $10,000 | | | $20,000 | |
| | Compensation Committee | | | $8,000 | | | $20,000 | |
| | Nominating and Corporate Governance Committee | | | $5,000 | | | $10,000 | |
| | Operating Committee | | | $8,000 | | | $20,000 | |
Cash retainers and fees are pro-rated for partial years of service.
Equity Compensation
Upon joining our Board of Directors, a newly-elected outside director is eligible to receive an initial equity award with a value of $400,000, comprised entirely of RSUs (collectively, “Initial Equity Award”). The Initial Equity Award vests generally over a three-year period, subject to continued service through each vesting date. In accordance with the policies of KKR, Mr. Park declined his initial equity award.
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On the date of each annual meeting of our stockholders, each outside director is eligible to receive an annual equity award with a value of $200,000 (“Annual Equity Award”). The Annual Equity Award is composed entirely of RSUs. The Annual Equity Award fully vests upon the earlier of the 12-month anniversary of the grant date or the next annual meeting, in each case, subject to continued service through the vesting date. An outside director is not eligible for an Annual Equity Award unless the outside director had been a director for at least one full calendar year or since the previous year’s annual meeting of stockholders.
In addition, at each annual stockholder meeting (starting at the 2022 annual stockholder meeting), the non-executive Chair of the Board will receive an additional award of RSUs with a value of $100,000. The award would vest at the earlier of (a) twelve months from the date of grant or (b) the date of the subsequent year’s annual stockholder meeting. Notwithstanding the vesting schedules described above, the vesting of the Initial Equity Awards, the Annual Equity Awards, and the additional awards to the non-executive Chair of the Board will accelerate in full upon a change in control of the company.
The number of RSUs subject to an Initial Equity Award or Annual Equity Award is determined by dividing the specified value of the award by the average closing price of a share of our Class A common stock for the 30-trading day period ending the trading day before the grant date.
Other Compensation
In September 2021, the Compensation Committee, in consultation with Compensia, recommended and the Board of Directors approved that that members of the special purpose Strategy Committee, which was formed in January 2021 and dissolved in December 2021, receive a cash award in the amount of $25,000 in recognition of that committee’s service and contributions throughout much of calendar year 2021. The Board of Directors formed the Strategy Committee to lead a review of a wide range of strategic options to maximize stockholder value.
Stock Ownership Guidelines
Our Board of Directors believes that our directors should hold a meaningful financial stake in the company in order to further align their interests with those of our stockholders. As such, our Board of Directors adopted stock ownership guidelines in December 2019. Under these guidelines, our non-employee directors are required to achieve specified ownership levels by the later of (i) five years of such individual’s appointment, election or promotion date, as applicable, and (ii) July 2, 2024. Under these guidelines, each non-employee director must own company stock with a value of three times the annual cash retainer for Board service. As of January 31, 2022, all of our non-employee directors met, exceeded, or were on track to meet these ownership guidelines within the time frames set out above based on their respective rates of stock accumulation.
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Director Compensation for Fiscal Year 2022
The following table provides information regarding the total compensation that was earned by each of our non-employee directors with respect to our fiscal year ended January 31, 2022.
| | Director | | | Fees Earned or Paid in Cash ($)(1) | | | Option Awards ($)(2) | | | Stock Awards ($)(2) | | | Total ($) | |
| | Sue Barsamian(3) | | | 63,676 | | | — | | | 187,596 | | | 251,272 | |
| | Carl Bass(4) | | | 64,140 | | | — | | | 187,596 | | | 251,736 | |
| | Dana Evan(3) | | | 84,848 | | | — | | | 187,596 | | | 272,444 | |
| | Kim Hammonds(3) | | | 48,546 | | | — | | | 187,596 | | | 236,142 | |
| | Jack Lazar(3) | | | 85,733 | | | — | | | 187,596 | | | 273,329 | |
| | Peter Leav(3) | | | 42,284 | | | — | | | 187,596 | | | 229,880 | |
| | Dan Levin(3) | | | 34,284 | | | — | | | 187,596 | | | 221,880 | |
| | Bethany Mayer(3)(5) | | | 125,388 | | | — | | | 283,147 | | | 408,535 | |
| | John Park(6) | | | — | | | — | | | — | | | — | |
(1) | The fees reported include a payout of Strategic Committee fees in the amount of $25,000 for each of Mses. Evan and Mayer and Messrs. Bass and Lazar before the Board of Directors dissolved the Strategy Committee in December 2021. |
(2) | The amounts reported represent the aggregate grant-date fair value of the stock options and RSUs awarded to the director, calculated in accordance with FASB ASC Topic 718. The grant date fair value of the RSUs is determined by multiplying the closing stock price on the date of grant by the number of shares of Class A common stock subject to the RSU award. The assumptions used in calculating the grant-date fair value of the stock options reported in this column are set forth in Note 12 to our audited consolidated financial statements included in our Annual Report on Form 10-K, as filed with the SEC on March 16, 2022. |
(3) | As of January 31, 2022, each of Mses. Barsamian, Evan, Hammonds and Mayer and Messrs. Bass, Lazar, Leav and Levin held 7,949 RSUs. 100% of the shares of our Class A common stock underlying the RSUs will vest on September 9, 2022, subject to the director’s continued service through such date. |
(4) | Mr. Bass ceased serving on our Board of Directors on March 21, 2022. His stock awards have subsequently been canceled and will not vest on September 2, 2022. |
(5) | As of January 31, 2022, Ms. Mayer also held 4,066 RSUs. 100% of the shares of our Class A common stock underlying the RSUs will vest on September 29, 2022, subject to the director’s continued service through such date. |
(6) | Pursuant to the Investment Agreement described below in “Related Person Transactions,” Mr. Park is not entitled to receive any compensation from Box for his service on our Board of Directors. |
Our directors who are also our employees receive no additional compensation for their service as directors. During our fiscal year ended January 31, 2022, Mr. Levie was an employee. See the section titled “Executive Compensation” for additional information about the compensation paid to Mr. Levie.
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Our Board of Directors is comprised of nine members. In accordance with our Charter, our Board of Directors is divided into three staggered classes of directors. At the Annual Meeting, three Class II directors will be elected for a three-year term to succeed the same class whose term is then expiring.
Each director’s term continues until the election and qualification of his or her successor, or such director’s earlier death, resignation, or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of our directors. This classification of our Board of Directors may have the effect of delaying or preventing changes in control of our company.
| | THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE FOLLOWING DIRECTORS TO THE BOARD: | | ||||||
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| | ✔ Kim Hammonds | | | ✔ Dan Levin | | | ✔ Bethany Mayer | |
Our Nominating and Corporate Governance Committee has recommended, and our Board of Directors has approved, Kim Hammonds, Dan Levin, and Bethany Mayer as nominees for election as Class II directors at the Annual Meeting. If elected, each of Ms. Hammonds, Mr. Levin, and Ms. Mayer will serve as Class II directors until our 2025 annual meeting of stockholders and until their respective successors are duly elected and qualified. Each of the nominees is currently a director of our company. For information concerning the nominees, please see the section titled “Board of Directors and Corporate Governance.”
If you are a stockholder of record and you sign your proxy card or vote by telephone or over the Internet but do not give instructions with respect to the voting of directors, your shares will be voted “For” the election of Ms. Hammonds, Mr. Levin, and Ms. Mayer. We expect that each of Ms. Hammonds, Mr. Levin, and Ms. Mayer will accept such nomination; however, in the event that a director nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee designated by our Board of Directors to fill such vacancy. If you are a street name stockholder and you do not give voting instructions to your broker, bank or other nominee, your broker, bank or other nominee will leave your shares unvoted on this matter.
Each director nominee will be elected by a vote of the majority of the votes cast. A majority of the votes cast means the number of votes cast “For” such nominee’s election exceeds the number of votes cast “Against” that nominee. You may vote “For,” “Against,” or “Abstain” with respect to each director nominee. Broker non-votes and abstentions, if any, will have no effect on the outcome of the election.
| | | | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES NAMED ABOVE. | | | ✔ | |
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The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), enables stockholders to approve, on an advisory and non-binding basis, the compensation of our named executive officers as disclosed pursuant to Section 14A of the Exchange Act. This proposal, commonly known as a “Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole and our executive compensation philosophy, policies, and practices described in this Proxy Statement.
With this Say-on-Pay proposal, we are offering our stockholders an opportunity to cast an advisory vote to approve the compensation of our named executive officers, as disclosed in this Proxy Statement. Although the vote is non-binding, we value continuing and constructive feedback from our stockholders on compensation and other important matters. The Board of Directors and the Compensation Committee will consider the voting results when making future compensation decisions. At our 2021 annual meeting of stockholders, approximately 75% of votes cast by our stockholders approved the compensation of our named executive officers as disclosed in the 2021 proxy statement.
At our 2016 annual meeting of stockholders, our stockholders recommended that we hold a Say-on-Pay vote each year. Accordingly, we expect that the next Say-on-Pay vote after this year’s vote will take place at our 2023 annual meeting of stockholders and that we will hold a Say-on-Pay vote on an annual basis for the foreseeable future.
We believe that the information provided in the section titled “Executive Compensation,” and in particular the information discussed in the section titled “Executive Compensation—Compensation Discussion and Analysis—Compensation Philosophy,” demonstrates that our executive compensation program was designed appropriately and is working to align management’s interests with our stockholders’ interests to support long-term value creation. Accordingly, we ask our stockholders to vote “For” the following resolution at the Annual Meeting:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation paid to the named executive officers, as disclosed in the Proxy Statement for the Annual Meeting pursuant to the compensation disclosure rules of the SEC, including the compensation discussion and analysis, compensation tables and narrative discussion, and other related disclosure.”
Approval of the advisory vote on the compensation of our named executive officers requires the approval of a majority of the voting power of the shares of our Voting Stock present virtually or by proxy and entitled to vote at the Annual Meeting. Abstentions are treated as shares present virtually or by proxy and entitled to vote at the Annual Meeting and, therefore, will have the same effect as a vote “Against” this proposal. Any broker non-votes will have no effect on the outcome of the vote.
As an advisory vote, this proposal is non-binding. Although the vote is non-binding, our Board of Directors and our Compensation Committee value the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers.
| | | | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. | | | ✔ | |
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PROPOSAL NO. 3 — ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
The Dodd-Frank Act and Section 14A of the Exchange Act enable our stockholders to indicate their preference at least once every six years regarding how frequently we should solicit a non-binding advisory vote on the compensation of our named executive officers as disclosed in our proxy statement. Accordingly, we are asking our stockholders to indicate whether they would prefer an advisory vote every one year, two years or three years. Alternatively, stockholders may abstain from casting a vote.
After considering the benefits and consequences of each alternative, our Board of Directors recommends that the advisory vote on the compensation of our named executive officers continue to be submitted to the stockholders every year. In formulating its recommendation, our Board of Directors considered that compensation decisions are made annually and that an annual advisory vote on executive compensation will allow stockholders to provide more frequent and direct input on our compensation philosophy, policies and practices.
The alternative among one year, two years or three years that receives the highest number of votes from the holders of shares of our common stock present virtually or by proxy and entitled to vote at the Annual Meeting will be deemed to be the frequency preferred by our stockholders. Abstentions and broker non-votes will have no effect on this proposal.
While our Board of Directors believes that its recommendation is appropriate at this time, the stockholders are not voting to approve or disapprove that recommendation, but are instead asked to indicate their preference, on an advisory basis, as to whether non-binding advisory votes on the compensation of our named executive officers should be held every year, two years or three years.
Our Board of Directors and our Compensation Committee value the opinions of our stockholders in this matter and, to the extent there is any significant vote in favor of one time period over another, will take into account the outcome of this vote when making future decisions regarding the frequency of holding future advisory votes on the compensation of our named executive officers. However, because this is an advisory vote and therefore not binding on our Board of Directors or our company, our Board of Directors may decide that it is in the best interests of our stockholders that we hold an advisory vote on the compensation of our named executive officers more or less frequently than the option preferred by our stockholders. The results of the vote will not be construed to create or imply any change or addition to the fiduciary duties of our Board of Directors.
| | | | THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO HOLD ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS EVERY “ONE YEAR.” | | | ✔ | |
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Our Audit Committee has appointed Ernst & Young LLP (“EY”), independent registered public accountants, to audit our consolidated financial statements for our fiscal year ending January 31, 2023. During our fiscal year ended January 31, 2022, EY served as our independent registered public accounting firm.
Notwithstanding the appointment of EY and even if our stockholders ratify the appointment, our Audit Committee, in its discretion, may appoint another independent registered public accounting firm at any time during our fiscal year if our Audit Committee believes that such a change would be in the best interests of our company and our stockholders. At the Annual Meeting, our stockholders are being asked to ratify the appointment of EY as our independent registered public accounting firm for our fiscal year ending January 31, 2023. Our Audit Committee is submitting the appointment of EY to our stockholders because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate governance. Representatives of EY will be present at the Annual Meeting, and they will have an opportunity to make a statement and will be available to respond to appropriate questions from our stockholders.
If our stockholders do not ratify the appointment of EY, our Board of Directors may reconsider the appointment.
The following table presents fees for professional audit services and other services rendered to our company by EY for our fiscal years ended January 31, 2021 and 2022, respectively.
| | | | 2021 | | | 2022 | | |
| | Audit Fees(1) | | | $3,022,500 | | | $2,675,542 | |
| | Tax Fees(2) | | | $275,280 | | | $632,417 | |
| | Total Fees | | | $3,297,780 | | | $3,307,959 | |
(1) | Audit Fees consist of professional services provided in connection with the audit of our annual consolidated financial statements and the audit of internal control over financial reporting, including the review of our unaudited quarterly consolidated financial statements, and audit services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for those fiscal years. |
(2) | Tax Fees consist of fees for professional services for tax compliance, tax advisory and tax planning. These services include assistance regarding federal, state and international tax compliance. |
Pursuant to its charter and the policy described further below, our Audit Committee pre-approves audit and non-audit services rendered by our independent registered public accounting firm, EY. Our Audit Committee has determined that the rendering of non-audit services for tax compliance, tax planning and tax advisory by EY is compatible with maintaining the independence of EY.
Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
Our Audit Committee has established a policy governing our use of the services of our independent registered public accounting firm. Under this policy, our Audit Committee is required to pre-approve all audit and non-audit services performed by our independent registered public accounting firm in order to ensure that the provision of such services does not impair the public accountants’ independence. All fees paid to EY for our fiscal years ended January 31, 2021 and 2022 were pre-approved by our Audit Committee.
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The ratification of the appointment of EY as our independent registered public accounting firm requires the affirmative vote of a majority of the voting power of the shares of our Voting Stock present virtually or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions are treated as shares present virtually or by proxy and entitled to vote at the Annual Meeting and, therefore, will have the same effect as a vote “Against” this proposal. Any broker non-votes will have no effect on the outcome of the vote.
| | | | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP. | | | ✔ | |
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The Audit Committee is a committee of the Board of Directors comprised solely of independent directors as required by the listing standards of the New York Stock Exchange and rules and regulations of the SEC. The Audit Committee operates under a written charter approved by the Board of Directors, which is available on the company’s website at http://www.box.com/investors. The composition of the Audit Committee, the attributes of its members and the responsibilities of the Audit Committee, as reflected in its charter, are intended to be in accordance with applicable requirements for corporate audit committees. The Audit Committee periodically reviews and assesses the adequacy of its charter and the Audit Committee’s performance.
With respect to the company’s financial reporting process, the management of the company is responsible for (1) establishing and maintaining internal controls and (2) preparing the company’s consolidated financial statements. The company’s independent registered public accounting firm, Ernst & Young LLP (“EY”), is responsible for performing an independent audit of the company’s consolidated financial statements and of the company’s internal control over financial reporting in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) and to issue a report thereon. It is the responsibility of the Audit Committee to oversee these activities. It is not the responsibility of the Audit Committee to prepare the company’s financial statements. These are the fundamental responsibilities of management. In the performance of its oversight function, the Audit Committee has:
• | reviewed and discussed the audited financial statements with management and EY; |
• | discussed with the independent auditors the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC; and |
• | received the written disclosures and the letter from EY required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence and has discussed with EY its independence. |
Based on the Audit Committee’s review and discussions with management and EY, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended January 31, 2022 for filing with the Securities and Exchange Commission.
Respectfully submitted by the members of the Audit Committee of the Board of Directors:
• | Jack Lazar (Chair) |
• | Dana Evan |
• | John Park |
This report of the Audit Committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (“Securities Act”), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act.
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The following table identifies certain information about our executive officers as of May 1, 2022. Our executive officers are appointed by, and serve at the discretion of, our Board of Directors. There are no family relationships among any of our directors or executive officers.
| | Name | | | Age | | | Position | |
| | Aaron Levie | | | 37 | | | Chief Executive Officer | |
| | Dylan Smith | | | 36 | | | Chief Financial Officer | |
| | Stephanie Carullo | | | 54 | | | Chief Operating Officer | |
Aaron Levie co-founded our company, and has served as our Chief Executive Officer and a member of our Board of Directors since April 2005. Mr. Levie also served as Chair of our Board of Directors from December 2013 to May 2021. Mr. Levie attended the University of Southern California from 2003 to 2005.
Dylan Smith co-founded our company and has served as our Chief Financial Officer since April 2005. Mr. Smith holds a B.A. in Economics from Duke University.
Stephanie Carullo has served as our Chief Operating Officer since August 2017. Prior to joining Box, from June 2016 to August 2017, Ms. Carullo served as an advisor at several privately held companies. From September 2015 to May 2016, Ms. Carullo was Head of Partnerships at Hampton Creek Inc., a food company. From September 2011 to August 2015, Ms. Carullo served as Vice President of U.S. Education Sales at Apple, Inc. Previously, Ms. Carullo served in various go-to-market leadership roles, including Vice President of Data Center and Virtualization Sales at Cisco, and sales leadership, general management, and consulting positions at IBM in Asia. Ms. Carullo holds a Bachelor of Arts Degree with Honors in Economic History from Monash University, Australia.
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This Compensation Discussion and Analysis describes the material elements of our executive compensation program for our named executive officers. For our fiscal year ended January 31, 2022, our named executive officers were:
• | Aaron Levie, our Chief Executive Officer; |
• | Dylan Smith, our Chief Financial Officer; and |
• | Stephanie Carullo, our Chief Operating Officer. |
Box is the Content Cloud: one secure, cloud-native platform for managing the entire content journey. Content – from blueprints to wireframes, videos to documents, proprietary formats to PDFs – is the source of an organization’s unique value. Our cloud content management platform enables our customers, including 67% of the Fortune 500, to securely manage the entire content lifecycle, from the moment a file is created or ingested to when it’s shared, edited, published, approved, signed, classified, and retained. Box keeps content secure and compliant, while also allowing easy access and sharing of this content from anywhere, on any device.
With our Software-as-a-Service (SaaS) platform, users can collaborate on content both internally and with external parties, automate content-driven business processes, develop custom applications, and implement data protection, security and compliance features to comply with legal and regulatory requirements, internal policies and industry standards and regulations. Box provides a single content platform that accelerates business processes, improves employee productivity, enables secure remote work, and protects an organization’s most valuable data. Our platform enables a broad set of high-value business use cases across enterprises, hundreds of file formats and media types, and user experiences. Our platform integrates with leading enterprise business applications, such as those offered by Microsoft, Salesforce, Google, IBM, Cisco and ServiceNow, and is compatible with multiple application environments, operating systems and devices, ensuring that workers can securely access their critical business content whenever and wherever they need it.
Fiscal 2022 Performance
Our fiscal year ended January 31, 2022 marked substantial progress across all facets of our business – strategically, operationally and financially. Key financial results for our fiscal year 2022 included the following:
• | Revenue: Our revenue in fiscal year 2022 was $874.3 million, an increase of 13% from fiscal year 2021. |
• | Remaining Performance Obligations (RPO): Our remaining performance obligations as of January 31, 2022 were $1.1 billion, an increase of 19% from our remaining performance obligations as of January 31, 2021. |
• | Non-GAAP Operating Income: Our non-GAAP operating income in fiscal year 2022 was $173.4 million, or 20% of revenue, an improvement over our prior fiscal year non-GAAP operating income of $118.8 million, or 15% of revenue. |
Revenue and non-GAAP operating income were elements of our incentive compensation plan for fiscal year 2022. Please see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on March 16, 2022, for a more detailed discussion of our fiscal year 2022 financial results and, beginning on page 63 of that Annual Report on Form 10-K, a discussion regarding, and reconciliation of, our non-GAAP to GAAP financial measures.
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Fiscal 2022 Executive Compensation Highlights
For our fiscal year ended January 31, 2022, the key highlights of our executive compensation program included:
• | Below Market Short-Term and Long-Term CEO Compensation. Throughout his tenure as our Chief Executive Officer, Mr. Levie has expressed a preference to our Compensation Committee that his short-term compensation be modest to allow us to invest more in other areas of the business. Mr. Levie maintained this preference in fiscal year 2022 and as such, his base salary and target total short-term compensation remained well below the 25th percentile in our compensation peer group. Additionally, Mr. Levie has declined to receive equity grants in all but one year since our initial public offering to allow any equity awards he would have otherwise been granted in prior fiscal years to be re-allocated to the overall equity budget used for issuance to our employees. Mr. Levie maintained that preference in fiscal year 2022 and did not receive any equity grants (other than with respect to his fiscal year 2021 executive bonus plan compensation, which was paid out in the form of RSUs in lieu of cash in line with our executive bonus plan). |
• | Pay for Performance – Fiscal 2022 Executive Bonus Plan Payouts. Our named executive officers participated in the Fiscal 2022 Executive Bonus Plan (as defined below), which we believe promotes our pay for performance philosophy. Awards earned under this incentive compensation plan were calculated in dollar amounts and were then converted (based on the average closing price of a share of our Class A common stock for the 30-trading day period ending the trading day before the grant approval date) and paid out in fully vested shares of Class A common stock having an equivalent cash value to the award earned. For Fiscal 2023 Executive Bonus Plan payouts, our Compensation Committee currently intends to pay any awards earned by our named executive officers in an equal mix of cash and fully vested shares of our Class A common stock. |
• | Peer Group. We modified our compensation peer group to add five new companies and remove three former members of the compensation peer group that had been acquired or were no longer deemed by the Compensation Committee to be comparable to Box. Consistent with commonly viewed best practices, the five new companies were selected based on their revenue, market capitalization, growth trajectory and headquarters location when the compensation peer group was determined. |
• | No Changes to Salaries and Target Short-Term Compensation. In fiscal year 2022, we maintained the salaries and target bonus percentages of our named executive officers. |
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Overview
The Compensation Committee reviews on an ongoing basis the company’s executive compensation program to evaluate whether it supports the company’s executive compensation philosophies and objectives and is aligned with stockholder interests. Our executive compensation practices include the following, each of which the Compensation Committee believes reinforces our executive compensation objectives and are aligned with stockholder interests:
| | What we do | | | What we don’t do | | ||||||
| | ✔ | | | Modest CEO compensation. Our Chief Executive Officer receives modest short-term compensation and minimal equity compensation grants. | | | ✘ | | | No single-trigger benefits. We do not provide our named executive officers with any payments or benefits that vest or are paid solely upon a change in control. | |
| | ✔ | | | Annual Say-on-Pay votes. We hold an annual Say-on-Pay vote, and our Compensation Committee considers the results of the vote when evaluating our executive compensation program. | | | ✘ | | | No guaranteed salary increases. We do not guarantee our named executive officers any salary increases. | |
| | ✔ | | | Stock ownership requirements. We have adopted policies with respect to minimum stock ownership requirements for our named executive officers and members of our Board of Directors. | | | ✘ | | | No special perquisites. We do not provide our named executive officers with perquisites or other personal benefits that are not generally offered to all other employees. | |
| | ✔ | | | Clawback policy. We adopted a policy that allows us to recover any cash or equity-based incentive compensation from our named executive officers when the payment of such compensation was based upon financial results that were subsequently the subject of a financial restatement. | | | ✘ | | | No tax gross-ups. We do not provide our named executive officers with any tax gross-ups. | |
| | ✔ | | | Significant amount of compensation at-risk. A significant portion of our named executive officers’ compensation is at-risk compensation that is tied to achievement of corporate goals pursuant to our Executive Bonus Plan or our stock price. | | | ✘ | | | No special retirement plans. We do not provide our named executive officers with any special executive retirement plans. | |
| | ✔ | | | Peer group review. We engage an outside compensation consultant to assist us in annually developing and updating a group of peer companies based on our selection criteria to help us determine named executive officer compensation. | | | | | | ||
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Compensation Philosophy
Our executive compensation program is structured to provide compensation plans, policies, and programs that attract and retain the best talent for positions of substantial responsibility, provide incentives for such persons to perform to the best of their abilities, and to promote the success of our business. The following table identifies the main elements of our Fiscal 2022 executive compensation program and the reasons for each:
| | Element | | | Reasons for Providing Element | |
| | Base Salary | | | Provide our named executive officers compensation for their services based on their knowledge, skills, past performance, and experience | |
| | Performance-based Bonuses | | | Encourage our named executive officers to achieve short-term individual and company goals that drive our growth | |
| | Time-based Equity Awards | | | Provide long-term retention and incentives to our named executive officers that align their interests with our stockholders’ interests | |
| | Welfare and Other Employee Benefits | | | Provide for our named executive officers’ health and well-being consistent with the benefits received by our other employees | |
| | Change in Control and Severance Benefits | | | Provide our named executive officers with a measure of security in order to minimize any distractions related to termination of employment and/or change in control and allow our named executive officers to focus on their duties and responsibilities to maximize stockholder value | |
Impact of 2021 Stockholder Advisory Vote on Compensation of Named Executive Officers
We conducted a Say-on-Pay vote at our 2021 annual meeting of stockholders. Approximately 75% of the votes cast by stockholders were in favor of approving the compensation of our named executive officers. While evaluating our executive compensation program in fiscal year 2022, our Compensation Committee considered the results and maintained the compensation philosophy and objectives and general approach to executive compensation from the prior year.
Our Compensation Committee is responsible for the compensation program for our executive officers and reports to our Board of Directors on its discussions, decisions and other actions.
Involvement of Management
In fiscal year 2022, our Chief Executive Officer, Chief People Officer, and certain other management team members typically attended Compensation Committee meetings and were involved in the determination of compensation for our other executives. These senior executives made recommendations to our Compensation Committee regarding short-term and long-term compensation for all executives (other than with respect to their own compensation) based on our results, an individual executive’s contribution toward these results, and each individual’s performance against their individual goals. Our Compensation Committee then reviewed the recommendations and other data provided by outside compensation advisors and management and made decisions as to the compensation for each executive.
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Use of Outside Advisors
Our Compensation Committee is authorized to retain the services of executive compensation advisors, as it sees fit, for the establishment of our compensation programs and related policies and adjustments to the compensation elements and amounts. For our fiscal year ended January 31, 2022, our Compensation Committee retained Compensia, a national compensation consulting firm, to provide it with information, recommendations, and other advice relating to executive compensation on an ongoing basis. Compensia serves at the discretion of our Compensation Committee. Among other things, our Compensation Committee engaged Compensia to assist in developing and updating a group of peer companies to help us determine the level of overall compensation for our executives and assess each separate element of compensation, with a goal of providing compensation that is competitive, fair, motivating and retentive. The Compensation Committee reviewed the independence of Compensia under New York Stock Exchange and SEC rules and concluded that the work of Compensia has not raised any conflict of interest.
Stockholder Engagement
As owners of Box, we value our stockholders’ opinions and feedback on topics of interest to our stockholders, including on our executive officer and director compensation program and environmental, social and governance matters. Maintaining an active dialogue with our stockholders is consistent with our corporate values of transparency and accountability, and we intend to continue these efforts in the future.
The feedback we receive from stockholders from our outreach program helps our Board of Directors, leadership team, and employees develop a mutual understanding and trust with our stockholders. Members of our Board of Directors and senior executives directly engage from time to time with stockholders to hear unfiltered concerns and perspectives that shape our core strategy and other decisions on matters of interest to our stockholders. As discussed below, after receiving feedback that stockholders would like to see a portion of the equity compensation for our named executive officers to be in the form of performance-based awards, for fiscal 2023 awards the equity grants made to Mr. Smith and Ms. Carullo were equally split between time-based awards and performance-based awards.
With Compensia’s assistance, our Compensation Committee approved a group of public companies to be used when conducting a competitive market analysis of executive officer compensation. For our compensation decisions made on or before June 2021, which included our named executive officers’ equity awards approved in March 2021, our compensation peer group was made up of publicly-traded companies in the software industry that generally had revenues between $290 million and $1.8 billion, a market capitalization between $850 million and $8.4 billion, a three-year compound annual growth rate (“CAGR”) below 20%, and generally were headquartered in California.
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In June 2021, our Compensation Committee re-assessed our compensation peer group based on an updated set of compensation peer group selection criteria. Using that updated criteria, our Compensation Committee approved an updated compensation peer group made up of publicly-traded companies in the software industry that generally had revenues between $300 million and $1.9 billion, a market capitalization between $1.1 billion and $10.7 billion, a three-year CAGR below 20%, and generally are headquartered in California. The two compensation peer groups used in fiscal year 2022 were:
| | Compensation Peer Group Entering Fiscal Year 2022 | | | | | Compensation Peer Group Revised in Fiscal Year 2022 for Decisions after June 2021 | | |
| | 8x8 Inc. | | | | | 8x8 Inc. | | |
| | Cloudera, Inc. | | | | | Cloudera, Inc. | | |
| | Cornerstone OnDemand Inc. | | | | | Cornerstone OnDemand Inc. | | |
| | | | Added | | | Dropbox, Inc. | | |
| | FireEye, Inc. | | | | | FireEye, Inc. | | |
| | Five9 Inc. | | | | | Five9 Inc. | | |
| | ForeScout Technologies, Inc. | | | Removed | | | | |
| | Guidewire Software, Inc. | | | | | Guidewire Software, Inc. | | |
| | HubSpot, Inc. | | | Removed | | | | |
| | | | Added | | | Medallia, Inc. | | |
| | Momentive Global Inc. (formerly SVMK Inc.) | | | | | Momentive Global Inc. | | |
| | New Relic, Inc. | | | | | New Relic, Inc. | | |
| | Nutanix, Inc. | | | | | Nutanix, Inc. | | |
| | | | Added | | | PagerDuty, Inc. | | |
| | Proofpoint Inc. | | | | | Proofpoint Inc. | | |
| | Qualys, Inc. | | | | | Qualys, Inc. | | |
| | RealPage, Inc. | | | Removed | | | | |
| | SolarWinds Inc. | | | | | SolarWinds Inc. | | |
| | | | Added | | | Stamps.com Inc. | | |
| | | | Added | | | Verint Systems Inc. | | |
| | Zendesk, Inc. | | | | | Zendesk, Inc. | | |
| | Zuora, Inc. | | | | | Zuora, Inc. | |
Our Compensation Committee believed these companies were appropriate for our compensation peer group because they were viewed as similarly sized, operated in the same or similar industries as us, had similar growth trajectories, and reflected our competitive market for senior executives.
In setting the elements of compensation for our named executive officers, our Compensation Committee reviewed base salary, target annual incentive compensation opportunity, target total short-term compensation (i.e., base salary plus target incentive opportunity), annual long-term incentive, and total direct compensation values for our named executive officers and those of similarly situated executives of our compensation peer group. Compensia provided data at the 25th, 50th, 60th, and 75th percentiles for such compensation, and our Compensation Committee used this data as a reference. Our Compensation Committee did not benchmark any compensation element to a specific percentile, and our Compensation Committee instead set our named executive officers’ compensation at levels it deemed appropriate after considering other factors, such as each of our named executive officers’ contributions, our short-term and long-term objectives, and prevailing market conditions.
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The following sections describe each element of our executive compensation program, provide the rationale for each such element, and explain how our Compensation Committee determined compensation amounts and awards for our fiscal year ended January 31, 2022.
Base Salary
Base salary is the main fixed element of our named executive officers’ short-term compensation. Base salary compensates our named executive officers for services they provide to us during the fiscal year. Our Compensation Committee typically performs an annual review during which it considers adjustments to our named executive officers’ base salaries after considering such factors as the prevailing market conditions and the named executive officer’s responsibilities, knowledge, skills, experience, and performance. These adjustments allow us to remain competitive in attracting and retaining executive talent.
In fiscal year 2022, our Compensation Committee did not make any adjustments to the base salaries of our named executive officers.
The base salaries of our named executive officers during fiscal year 2022 are listed in the table below.
| | Named Executive Officer | | | Base Salary For Fiscal 2022 | |
| | Mr. Levie | | | $180,000 | |
| | Ms. Carullo | | | $370,000 | |
| | Mr. Smith | | | $370,000 | |
The total base salaries earned by our named executive officers during our fiscal year ended January 31, 2022 are listed in the “Summary Compensation Table for Fiscal Year 2022” below.
Non-Equity Incentive Plan Compensation
We use performance-based incentives to motivate our named executive officers to achieve our annual financial and operational objectives, while making progress towards our longer-term strategic and growth goals. Typically, near the beginning of each fiscal year, our Compensation Committee adopts the performance criteria and targets for the incentive compensation plan for that fiscal year, which identifies the plan participants and establishes the target incentive opportunity for each participant, the performance measures and the associated target levels for each measure, and the potential payouts based on actual performance for the fiscal year. Payments under our incentive compensation plan for fiscal year 2022 were made in RSUs. For fiscal 2023 Executive Bonus Plan payouts, our Compensation Committee currently intends to pay any awards earned by our named executive officers in an equal mix of cash and fully vested shares of our Class A common stock.
Fiscal Year 2022 Bonus Plan
• | Overview and Structure. In March 2021, our Compensation Committee adopted and approved our omnibus Executive Incentive Plan for fiscal year 2022 (the “Fiscal 2022 Executive Bonus Plan”). The Fiscal 2022 Executive Bonus Plan provided for potential performance-based incentive payouts to our named executive officers based on the achievement of pre-established corporate financial objectives. The financial objectives were set at target levels determined to be challenging and requiring substantial skill and effort by senior management to achieve. |
• | Target Annual Incentive Compensation Opportunities. In March 2021, in connection with its review of our executive compensation program, our Compensation Committee approved the target annual incentive compensation opportunities of our named executive officers, as set forth in the table below. In setting the target annual incentive compensation opportunities, our Compensation Committee considered each named executive officer’s performance, individual contributions, responsibilities, experience, prior annual incentive compensation amount, and peer group market data. Our Compensation Committee has set the target annual incentive compensation opportunities for our named executive officers as percentages of their base salaries paid throughout the year. |
For fiscal year 2022, our Compensation Committee maintained the percentages for our named executive officers from those determined for fiscal year 2021.
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The target annual incentive compensation opportunities established for fiscal year 2022 for our named executive officers were:
| | Named Executive Officer | | | Fiscal Year 2022 Target Annual Incentive Compensation Opportunity (as a % of base salary for Fiscal 2022) | | | Fiscal Year 2022 Target Annual Incentive Compensation Opportunity | |
| | Mr. Levie | | | 55% | | | $99,000 | |
| | Ms. Carullo | | | 55% | | | $203,500 | |
| | Mr. Smith | | | 55% | | | $203,500 | |
• | Corporate Performance Measures. To measure the performance of our named executive officers for the Fiscal 2022 Executive Bonus Plan, our Compensation Committee selected revenue and non-GAAP operating income as those measures were deemed as best supporting the achievement of our annual operating plan and enhancing long-term value creation. We define (i) “revenue” as GAAP revenue as reflected in our quarterly and annual financial statements; and (ii) non-GAAP operating income as GAAP operating income as reflected in our quarterly and annual financial statements adjusted to exclude expenses related to stock-based compensation, intangible assets amortization, and other special non-recurring items. Each element was weighted equally under the Fiscal 2022 Executive Bonus Plan. |
The targets required for 100% achievement under our Fiscal 2022 Executive Bonus Plan and our results were:
| | Performance Measure | | | Target (in millions) | | | Result (in millions) | | | Achievement of Target | |
| | Revenue | | | $844.0 | | | $874.3 | | | 103.6% | |
| | Non-GAAP Operating Income | | | $139.9 | | | $173.4 | | | 124.0% | |
• | Methodology. Our Compensation Committee assesses performance and determines payouts under our Fiscal 2022 Executive Bonus Plan in a two-part process: first, our Compensation Committee measures actual performance against the pre-established goals for the annual performance period; and second, after the end of the performance period, our Compensation Committee exercises discretion to determine the actual payout. As a threshold matter, our named executive officers were eligible for annual incentive compensation payouts with respect to the revenue component only if we met or exceeded 95% of the revenue target for our fiscal year ended January 31, 2022 and with respect to the non-GAAP operating income component only if we met or exceeded 80% of the non-GAAP operating income target for our fiscal year ended January 31, 2022. High thresholds are required to ensure that significant achievement is a prerequisite to receive any incentive payment. With respect to the revenue performance measure, the payment percentage equals the percentage of the revenue target that was achieved until 103% achievement, and achievement over 103% may be rewarded using an “accelerator” where each point of performance above 103% achievement increases the payout percentage by two percentage points. With respect to the non-GAAP operating income component, achievement at 80% equals a payout percentage of 25%, and the payout percentage is increased (1) by 3.75 percentage points for each point of performance above 80% (until a payout percentage of 100% for performance at 100%) and (2) by 0.133 percentage points for each point of performance above 100%, up to a maximum payout percentage of 110%. The payout curves for the revenue and non-GAAP operating income metrics are illustrated below. |
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• | Caps on Payment. The cap on total payouts of the non-GAAP operating income component was set to manage potential incentive compensation costs and maintain appropriate incentives for our named executive officers. |
• | Performance in Fiscal Year 2022 and Related Payout. For fiscal year 2022, we achieved approximately 103.6% of target revenue and approximately 124.0% of target non-GAAP operating income. The revenue measure achievement resulted in a payout percentage of 104.2% of target and the non-GAAP operating income measure achievement resulted in a payout percentage of 103.2% of target. As each metric was weighted 50%, this resulted in a calculated payout percentage of approximately 103.7%, and our Compensation Committee did not make any adjustment to this payout percentage. |
The intended values of the total payouts to our named executive officers under the Fiscal 2022 Executive Bonus Plan were:
| | Named Executive Officer | | | Target Annual Incentive Compensation Opportunity | | | Actual Incentive Compensation | |
| | Mr. Levie | | | $99,000 | | | $102,653 | |
| | Ms. Carullo | | | $203,500 | | | $211,009 | |
| | Mr. Smith | | | $203,500 | | | $211,009 | |
The payouts were made in the form of fully vested RSUs. The number of RSUs each named executive officer received equaled the dollar value of their actual award payment divided by the average closing price of a share of our Class A common stock for the 30-trading day period ending the trading day before the grant approval date.
The value of the RSUs received in settlement of these bonuses under the Fiscal 2022 Executive Bonus Plan are listed in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table for Fiscal Year 2022” below. Since the intended payout values above were converted into a number of RSUs based on the 30-trading day average closing price described above, the values set forth in the Summary Compensation Table for fiscal year 2022 (which were instead calculated based on the closing price of our Class A common stock on the date the RSUs were granted, in accordance with FASB ASC Topic 718) are different from the payout values set forth in the table above.
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Equity Awards
Our Compensation Committee grants equity awards to our named executive officers in order to align their long-term interests with our stockholders’ interests.
Our Compensation Committee determines the size of the equity awards we grant to our named executive officers in connection with their hire through arm’s-length negotiation, considering such factors as prevailing market conditions, market data for new-hire awards, the named executive officer’s expected short-term compensation, the equity award’s potential incentive and retention value, and the named executive officer’s prospective role and responsibilities.
Our Compensation Committee also periodically grants equity awards to our named executive officers for promotions, as additional incentive to continue service with us, or to recognize exceptional corporate and individual performance. The Compensation Committee does not apply a fixed formula when determining the size of these equity awards because we grant an amount of equity that it believes properly rewards the named executive officer for their contributions to the growth in our long-term stockholder value. In doing so, the Compensation Committee considers factors such as the economic value of the named executive officer’s unvested equity awards and the ability of this equity to satisfy our retention objectives; the named executive officer’s performance, contributions, responsibilities, and experience; the equity awards granted by our compensation peer group to similarly situated executives; a compensation analysis performed by Compensia; and other internal equity considerations.
For fiscal year 2022 grants, granted in April 2021, in light of the reduced predictability in business outcomes during the recovery from the COVID-19 pandemic, the Compensation Committee decided to focus on retention and stability and accomplished these goals by awarding long-term compensation through time-based RSUs. After considering the peer group data provided by Compensia, the unvested equity award holding value and the anticipated future contributions of our named executive officers, our Compensation Committee approved the grant of annual equity awards to Mr. Smith and Ms. Carullo at a level deemed competitive with the annual long-term incentives provided by the companies in our compensation peer group to similarly situated executives, as follows: (i) an award of 175,000 RSUs to Mr. Smith, and (ii) an award of 150,000 RSUs to Ms. Carullo. Mr. Levie requested that any equity awards he would have otherwise been granted be re-allocated to the overall equity budget for issuance to our employees.
Mr. Smith’s and Ms. Carullo’s awards of RSUs each was scheduled to vest as to one-sixthteenth of the award on June 20, 2021 and as to one-sixthteenth of the award each quarter thereafter, subject to their continued service with us through the applicable vesting date.
In response to stockholder feedback, for fiscal 2023 Mr. Smith and Ms. Carullo were awarded annual equity awards split equally between awards that vest solely based on service and awards that have an additional performance requirement based on performance against revenue and non-GAAP operating income targets for fiscal 2023. Mr. Levie received no fiscal 2023 equity awards because he requested that any awards he would have otherwise been granted be re-allocated to the overall equity budget for issuance to our employees.
Employee Benefit Plans
Our named executive officers participate in our employee benefits programs on the same terms as our other U.S.-based, full-time employees with no special executive programs.
We have a 401(k) Savings Plan (the “401(k) Plan”). Under the 401(k) Plan, participating employees may elect to contribute up to 100% of their eligible compensation, subject to certain limitations. We have not made any matching contributions to date.
We maintain other welfare benefit plans, including health, dental and vision insurance; medical and dependent care flexible spending accounts; short- and long-term disability insurance; life insurance; and accidental death and dismemberment insurance, which we believe are generally consistent with those offered by companies we compete with for employees. For our fiscal year ended January 31, 2022, we also paid certain amounts on behalf of our named executive officers for basic life insurance, as indicated in the “Summary Compensation Table for Fiscal Year 2022” below.
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Perquisites and Other Personal Benefits
We currently do not provide perquisites or other personal benefits to our named executive officers, but we may provide perquisites or other personal benefits in the future for purposes of recruitment, motivation, or retention; to assist an individual named executive officer in the performance of their duties; and in other limited circumstances. Our Compensation Committee will periodically review and approve all future practices concerning perquisites and other personal benefits.
Change in Control and Severance Arrangements
We have entered into change in control and severance agreements with our named executive officers, which require us to make specific payments and benefits in connection with the termination of such named executive officers’ employment under certain circumstances. We believe that these change in control agreements provide retention value by encouraging our named executive officers to continue service with us and increase stockholder value by reducing any potential distractions caused by the possibility of an involuntary termination of employment or a potential change in control, allowing our named executive officers to focus on their duties and responsibilities. Under these arrangements, a change in control is generally defined as a change in more than 50% of the total voting power of our stock, certain changes in the majority composition of the Board during a 12-month period, or a change in the ownership of a substantial portion of the company’s assets.
In June 2021, our Compensation Committee approved an amendment to our 2015 Equity Incentive Plan to provide that if the service of a participant (including each named executive officer) ceases as a result of the participant’s death or disability, the vesting of all of his or her outstanding awards granted under our 2015 Equity Incentive Plan will accelerate.
For a summary of the material terms and conditions of these severance and change in control arrangements and this vesting acceleration provision under our 2015 Equity Incentive Plan, see the section titled “Potential Payments upon Termination or Change in Control” contained in this Proxy Statement.
Stock Ownership Guidelines
Our Board of Directors believes that our named executive officers should hold a meaningful financial stake in the company in order to further align their interests with those of our stockholders. As such, our Board of Directors has adopted stock ownership guidelines that require our executive officers to achieve specified ownership levels by the later of (i) five years of such individual’s appointment or promotion date, as applicable, and (ii) July 2, 2024. A full description of our current stock ownership guidelines is available on our website at http://www.box.com/investors and is summarized as follows:
• | our Chief Executive Officer must own company stock with a value of four times his annual base salary; and |
• | all other named executive officers (except for the Chief Executive Officer) must own company stock with a value of one times their annual base salary. |
As of January 31, 2022, all of our named executive officers met, exceeded, or were on track to meet these ownership guidelines within the time frames set out above based on their respective rates of stock accumulation.
Clawback Policy
Our Board has also adopted a clawback policy (the “Clawback Policy”) permitting the company to seek the recovery of cash-based incentive compensation or performance-based equity compensation paid to certain current and former officers of the company who are subject to Section 16 of the Exchange Act. The Clawback Policy provides that the company may seek recovery if (i) the company materially restates all or a portion of its financial statements; (ii) the amount of cash incentive compensation or performance-based equity compensation that was paid or is payable based on achievement of financial or operating results paid to a participant would have been less if the financial statements had been correct at the time the incentive compensation was originally calculated or determined; (iii) no more than three years have elapsed since the original filing date of the financial statements upon which the incentive compensation was calculated or determined; and (iv) our Compensation Committee concludes, in its sole discretion, that the gross negligence, intentional misconduct or fraud by such participant caused or partially caused the material restatement of all or a portion of the financial statement(s) and that such participant should repay to the company all of the recoverable compensation.
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Our insider trading policy prohibits all directors and employees (including our named executive officers) from engaging in the following activities with respect to our common stock: trading in derivative securities, hedging transactions, short sales, pledging stock as collateral, or holding stock in a margin account. From time to time, our officers and directors may elect to enter into 10b5-1 trading plans. As of the date of this Proxy Statement, Ms. Hammonds and Mr. Smith had active 10b5-1 trading plans.
Authoritative accounting guidance on stock compensation requires measurement of the compensation expense for all share-based awards made to employees (such as our named executive officers) and directors based on the grant date “fair value” of the awards. Our Compensation Committee considers the accounting expense associated with equity awards. Even though our named executive officers and directors may realize no value from their equity awards, these values have been calculated for accounting purposes and reported in the tables below. This guidance also requires us to recognize the compensation cost of share-based awards in our income statements over the period that the named executive officer or director is required to continue service with us in order for the equity award to vest.
Our Compensation Committee reviews and discusses with management the risks arising from our compensation philosophy and practices applicable to all employees to determine whether they encourage excessive risk-taking and to evaluate compensation policies and practices that could mitigate such risks. In addition, our Compensation Committee has engaged Compensia to independently review the risks associated with our executive compensation program. Based on these reviews, our Compensation Committee structures our executive compensation program to encourage our named executive officers to focus on both short-term and long-term success. We do not believe that our executive compensation program creates risks that are reasonably likely to have a material adverse effect on us.
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| | How We Manage Risks Related to Our Compensation Program | | |||
| | Incentive compensation designed to be aligned with creation of long-term value for stockholders | | | • Payouts under our Fiscal 2022 Executive Bonus Plan are based on achievement of revenue and non-GAAP operating income targets. These performance measures are viewed as supportive of our annual operating plan and create incentives for our named executive officers to create long-term value for our stockholders. | |
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| | Clawback policy | | | • Our Clawback Policy applies to certain current and former officers of the company who are subject to Section 16 of the Exchange Act. | |
| | • Under the Clawback Policy, cash-based incentive compensation or performance-based equity compensation may be recovered from covered individuals if: | | |||
| | ○ the company materially restates all or a portion of its financial statements; | | |||
| | ○ the amount of cash incentive compensation or performance-based equity compensation that was paid or is payable based on achievement of financial or operating results paid to a participant would have been less if the financial statements had been correct at the time the incentive compensation was originally calculated or determined; | | |||
| | ○ no more than three years have elapsed since the original filing date of the financial statements upon which the incentive compensation was calculated or determined; and | | |||
| | ○ the Compensation Committee concludes, in its sole discretion, that the gross negligence, intentional misconduct or fraud by such participant caused or partially caused the material restatement of all or a portion of the financial statement(s) and that such participant should repay to the company all of the recoverable compensation. | | |||
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| | Hedging and pledging policies | | | • Our insider trading policy prohibits all directors and employees, including our named executive officers, from engaging in the following activities with respect to our common stock: trading in derivative securities, hedging transactions, short sales, pledging stock as collateral, or holding stock in a margin account. | |
| | • These policies are intended to prevent a misalignment, or appearance of misalignment, of interests with stockholders. | | |||
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| | Stock ownership guidelines | | | • Our executive officers and non-employee directors are required to achieve levels of ownership of company stock with the following values within the later of (i) five years of such individual’s appointment, election or promotion date, as applicable, and (ii) July 2, 2024: | |
| | ○ Non-employee directors: three times the annual cash retainer for Board service | | |||
| | ○ Chief Executive Officer: four times annual base salary | | |||
| | ○ Other named executive officers: one times annual base salary. | | |||
| | • As of January 31, 2022, all of our directors and named executive officers met, exceeded, or were on track to meet these ownership guidelines within the time frames set out above based on their respective rates of stock accumulation. | | |||
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Compensation Committee Report
Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis provided above with management. Based on such review and discussion, our Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and our Annual Report on Form 10-K for our fiscal year ended January 31, 2022.
Respectfully submitted by the members of our Compensation Committee of the Board of Directors:
• | Bethany Mayer (Chair) |
• | Sue Barsamian |
• | Peter Leav |
• | John Park |
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| | Name and Principal Position | | | Year | | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)(1) | | | Option Awards ($)(1) | | | Non-Equity Incentive Plan Compensation ($)(2) | | | All Other Compensation ($)(3) | | | Total Compensation ($) | |
| | Aaron Levie Chief Executive Officer | | | 2022 | | | 180,000 | | | — | | | — | | | — | | | 112,301 | | | 213 | | | 292,514 | |
| | 2021 | | | 180,000 | | | — | | | — | | | — | | | 108,027 | | | 217 | | | 288,244 | | |||
| | 2020 | | | 180,000 | | | — | | | — | | | — | | | 52,426 | | | 289 | | | 232,715 | | |||
| | Stephanie Carullo Chief Operating Officer | | | 2022 | | | 370,000 | | | | | 3,598,500 | | | | | 230,797 | | | 820 | | | 4,200,117 | | ||
| | 2021 | | | 370,000 | | | — | | | 1,803,750 | | | — | | | 222,027 | | | 443 | | | 2,396,220 | | |||
| | 2020 | | | 370,000 | | | — | | | — | | | 1,600,000 | | | 107,765 | | | 308 | | | 2,078,073 | | |||
| | Dylan Smith Chief Financial Officer | | | 2022 | | | 370,000 | | | | | 4,198,250 | | | | | 230,797 | | | 438 | | | 4,799,485 | | ||
| | 2021 | | | 370,000 | | | — | | | 2,886,000 | | | — | | | 222,027 | | | 446 | | | 3,478,473 | | |||
| | 2020 | | | 366,667 | | | — | | | — | | | 2,400,000 | | | 106,824 | | | 308 | | | 2,873,799 | |
(1) | The amounts reported represent the grant date fair value of the awards granted to the named executive officers during fiscal years 2022, 2021 and 2020 (other than the RSUs granted in settlement of incentive compensation awards under the Executive Incentive Plan for fiscal years 2021, 2020 and 2019, which, in the case of such RSUs granted in fiscal years 2022 and 2021, are included in the “Non-Equity Incentive Plan Compensation” column for the prior fiscal year) as computed in accordance with FASB ASC Topic 718. The grant date fair value of RSUs granted is based on the closing stock price on the date of grant. The assumptions used in calculating the grant date fair value of option awards are set forth in Note 12 to our audited consolidated financial statements included in our Annual Report on Form 10-K for our fiscal year ended January 31, 2022. For fiscal years 2022, 2021 and 2020, Mr. Levie requested that any equity awards he would have otherwise been granted be re-allocated to the overall equity budget for issuance to our employees. Our Compensation Committee honored his request and, as such, he did not receive any equity awards in fiscal year 2022, 2021 or 2020. |
(2) | The amounts reported represent incentive compensation awards earned in fiscal years 2022, 2021 and 2020 by the named executive officers under the Executive Incentive Plan. The material terms of the incentive compensation awards are described in the section titled “Executive Compensation Program Elements—Non-Equity Incentive Plan Compensation.” The incentive compensation awards were paid in the form of fully vested RSUs, and the amounts reported reflect the grant date fair value of such RSUs, as computed in accordance with FASB ASC Topic 718 based on the closing stock price on the date of grant. The number of such RSUs granted in fiscal 2022 (in settlement of the incentive awards granted under the fiscal 2021 Executive Bonus Plan) is set forth in “Grants of Plan-Based Awards in Fiscal Year 2022” table below. |
(3) | The amounts reported represent amounts paid on behalf of the named executive officers for basic life insurance as well as employee gift cards for Ms. Carullo. |
The following table sets forth information regarding grants of plan-based awards made to our named executive officers during fiscal year 2022.
| | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards ($)(1) | | ||||||||||||||
| | Name | | | Grant Date | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | ||||||||||||
| | Aaron Levie | | | — | | | — | | | 99,000(2) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | 04/01/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 4,503(3) | | | — | | | — | | | 108,027(4) | | |||
| | Stephanie Carullo | | | — | | | — | | | 203,500(2) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | 04/01/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 9,255(3) | | | — | | | — | | | 222,027(4) | | |||
| | 04/02/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 150,000(5) | | | — | | | — | | | 3,598,500 | | |||
| | Dylan Smith | | | — | | | — | | | 203,500(2) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | 04/01/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 9,255(3) | | | — | | | — | | | 222,027(4) | | |||
| | 04/02/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 175,000(5) | | | — | | | — | | | 4,198,250 | | |||
(1) | The amounts reported represent the grant date fair value of the awards granted to the named executive officers as computed in accordance with FASB ASC Topic 718, calculated based on the closing stock price on the date of grant. |
(2) | This amount represents the target value of the named executive officer’s bonus under our Fiscal 2022 Executive Bonus Plan. There is no threshold amount under our Fiscal 2022 Executive Bonus Plan because our Compensation Committee exercises discretion to determine the actual payouts and, therefore, there is no minimum amount payable for a certain level of performance. |
(3) | The amounts reported represent the number of fully vested RSUs issued to Ms. Carullo and Messrs. Levie and Smith in our fiscal year ended January 31, 2022 in settlement of the incentive awards granted under the Fiscal 2021 Executive Bonus Plan. |
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(4) | The amounts reported represent the grant date fair value of the fully vested RSUs issued to Ms. Carullo and Messrs. Levie and Smith in our fiscal year ended January 31, 2022 in settlement of the incentive awards granted under the Fiscal 2021 Executive Bonus Plan, as computed in accordance with FASB ASC Topic 718 based on the closing stock price on the date of grant. These amounts are reflected as fiscal year 2021 compensation in the Summary Compensation Table for Fiscal Year 2022. |
(5) | The amounts reported represent the number of RSUs issued as merit awards to Ms. Carullo and Mr. Smith in our fiscal year ended January 31, 2022. |
The following table provides information regarding equity awards held by our named executive officers as of January 31, 2022.
| | | | | | Option Awards | | | | | Stock Awards | | |||||||||||||||
| | Name | | | Grant Date | | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | | Number of Securities Underlying Unexercised Unearned Options | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares of Stock that Have Not Vested (#) | | | Market Value of Shares of Stock That Have Not Vested ($)(1) | |
| | Aaron Levie | | | 04/02/2012(2) | | | 770,000 | | | — | | | — | | | 1.16 | | | 04/01/2022 | | | — | | | — | |
| | 04/02/2012(2) | | | 820,000 | | | — | | | — | | | 4.00 | | | 04/01/2022 | | | — | | | — | | |||
| | 04/27/2012(2) | | | 410,000 | | | — | | | — | | | 4.00 | | | 04/27/2022 | | | — | | | — | | |||
| | 04/10/2018(3) | | | | | | | 400,000 | | | 20.28 | | | 04/10/2018 | | | | | | |||||||
| | Stephanie Carullo | | | 08/01/2017(2) | | | 400,000 | | | — | | | — | | | 19.01 | | | 07/30/2027 | | | — | | | — | |
| | 04/03/2019(4) | | | — | | | — | | | 200,000 | | | 20.12 | | | 04/03/2029 | | | — | | | — | | |||
| | 04/03/2020(5) | | | — | | | — | | | — | | | — | | | — | | | 70,313 | | | 1,837,279 | | |||
| | 04/02/2021(6) | | | — | | | — | | | — | | | — | | | — | | | 121,875 | | | 3,184,594 | | |||
| | Dylan Smith | | | 02/07/2013(2) | | | 140,000 | | | — | | | — | | | 4.63 | | | 02/07/2023 | | | — | | | — | |
| | 04/03/2014(2) | | | 140,000 | | | — | | | — | | | 17.85 | | | 04/03/2024 | | | — | | | — | | |||
| | 01/02/2015(2) | | | 120,000 | | | — | | | — | | | 14.05 | | | 01/02/2025 | | | — | | | — | | |||
| | 06/18/2015(2) | | | 34,000 | | | — | | | — | | | 17.52 | | | 06/18/2025 | | | — | | | — | | |||
| | 04/09/2017(2) | | | 450,000 | | | | | | | 16.68 | | | 04/09/2027 | | | — | | | — | | |||||
| | 04/10/2018(3) | | | | | | | 250,000 | | | 20.28 | | | 04/10/2018 | | | | | | |||||||
| | 04/03/2019(4) | | | — | | | — | | | 300,000 | | | 20.12 | | | 04/03/2029 | | | — | | | — | | |||
| | 04/03/2020(5) | | | — | | | — | | | — | | | — | | | — | | | 112,500 | | | 2,939,625 | | |||
| | 04/02/2021(6) | | | — | | | — | | | — | | | — | | | — | | | 142,188 | | | 3,715,372 | | |||
(1) | This column represents the market value of the shares underlying the RSUs as of January 31, 2022, based on the closing price of our Class A common stock, as reported on the New York Stock Exchange, of $26.13 per share on January 31, 2022, the last trading day of fiscal year 2022. |
(2) | The stock option is fully vested and exercisable. |
(3) | One fourth of the shares subject to the option were scheduled to vest on March 20, 2019, and one forty-eighth of the shares were scheduled to vest monthly thereafter, subject to both (i) continued service to Box through each applicable vesting date, and (ii) prior to April 11, 2022, the closing stock price of our Class A common stock having closed at or above $28.00 for 30 consecutive trading days. The performance metric was not met by April 11, 2022 and as a result, the option was forfeited without any shares vesting. |
(4) | One fourth of the shares subject to the option vested on March 20, 2020 and one forty-eighth of the shares vest monthly thereafter, subject to both (i) continued service to Box through each applicable vesting date, and (ii) the closing stock price of our Class A common stock must have closed at a level 25% higher than the 30-trading day trailing average closing price prior to April 3, 2019, which was $20.49, for 30 consecutive trading days prior to April 4, 2023. If the performance condition in clause (ii) is not met prior to April 4, 2023, then no options will vest and all will be forfeited. The performance condition in clause (ii) has been satisfied. |
(5) | One sixteenth of the shares underlying the RSUs vested on June 20, 2020 and one sixteenth of the shares vest quarterly thereafter, subject to continued service to us. |
(6) | One sixteenth of the shares underlying the RSUs vested on June 20, 2021 and one sixteenth of the shares vest quarterly thereafter, subject to continued service to us. |
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The following table sets forth the number of shares of Class A common stock acquired during our fiscal year 2022 by our named executive officers upon the exercise of stock options and the vesting of RSU awards and the value realized upon such exercise or vesting.
| | | | Options Awards | | | Stock Awards | | |||||||
| | Name | | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)(2) | |
| | Aaron Levie | | | 25,000 | | | 592,000 | | | 4,503 | | | 103,389 | |
| | Stephanie Carullo | | | — | | | — | | | 106,130 | | | 2,543,929 | |
| | Dylan Smith | | | 397,362 | | | 9,321,978 | | | 92,067 | | | 2,232,028 | |
(1) | The value realized on exercise is the difference between the market price of the shares of our Class A common stock underlying the options when exercised and the applicable exercise price. |
(2) | Calculated by multiplying (i) the market value of our Class A common stock on the vesting date, which was determined using the closing price on the New York Stock Exchange of a share of our Class A common stock on the date of vesting, or if such day is a holiday, on the immediately preceding trading day, by (ii) the number of shares of our Class A common stock acquired upon vesting. |
We did not provide any defined benefit pension plans or nonqualified deferred compensation plans during our fiscal year ended January 31, 2022.
We have entered into change of control and severance agreements (“change in control agreements”) with our named executive officers, which require us to make specific payments and benefits in connection with the termination of such named executive officers’ employment under certain circumstances. These change in control agreements superseded any other agreement or arrangement relating to severance benefits with these named executive officers or any terms of their option agreements related to vesting acceleration or other similar severance-related terms.
The descriptions that follow describe such payments and benefits that may be owed by us to each of our named executive officers upon the named executive officer’s termination under certain circumstances, pursuant to the named executive officer’s change in control agreement.
The change in control agreements will remain in effect for an initial term of three years. At the end of the initial term, each agreement will automatically renew for an additional one-year period unless either party provides notice of nonrenewal within 90 days prior to the date of the automatic renewal. The change in control agreements also acknowledge that each of these named executive officers is an at-will employee, whose employment can be terminated at any time.
In order to receive the severance benefits described below, each of these named executive officers is obligated to execute a release of claims against us, provided such release of claims becomes effective and irrevocable no later than 60 days following such named executive officer’s termination date, and to continue to comply with the terms of the named executive officer’s confidential information and intellectual property assignment agreement with us.
In the event of a termination of employment without “cause” (as generally defined below) outside of the “change in control period” (as generally defined below), such named executive officer will receive the following:
• | a lump-sum payment of base salary for six months; and |
• | paid COBRA benefits for six months. |
54 | | | | | |
In the event of a termination of employment without “cause” or a resignation for “good reason” (as generally defined below) during the “change in control period,” such named executive officer will receive the following:
• | a lump-sum payment of 12 months of base salary; |
• | a lump-sum payment equal to 100% of his or her target bonus; |
• | paid COBRA benefits for 12 months; and |
• | 100% acceleration of equity awards. |
In the event any payment to one of these named executive officers is subject to the excise tax imposed by Section 4999 of the Code (as a result of a payment being classified as a “parachute payment” under Section 280G of the Code), the named executive officer will be entitled to receive such payment as would entitle the named executive officer to receive the greatest after-tax benefit of either the full payment or a lesser payment which would result in no portion of such severance benefits being subject to excise tax.
For the purpose of the change in control agreements, “cause” means generally the occurrence of any of the following:
• | an act of dishonesty by the named executive officer in connection with the named executive officer’s responsibilities as an employee; |
• | the named executive officer’s conviction of, or entry of a plea of guilty or nolo contendere to, a felony or any crime involving fraud or embezzlement; |
• | the named executive officer’s gross misconduct; |
• | the unauthorized use or disclosure by the named executive officer of our proprietary information or trade secrets or those of any other party to whom the named executive officer owes an obligation of nondisclosure as a result of the named executive officer’s relationship with us; |
• | the named executive officer’s willful breach of any obligations under any written agreement or covenant with us; |
• | the named executive officer’s failure to cooperate with an investigation by a governmental authority; or |
• | the named executive officer’s continued failure to perform his or her duties after notice and a cure period. |
For the purpose of the change in control agreements with Messrs. Levie and Smith, “good reason” means generally the named executive officer’s voluntary termination of employment following the expiration of any cure period following the occurrence of one or more of the following without the named executive officer’s consent:
• | a material reduction of the named executive officer’s duties, authorities or responsibilities other than a reduction following a change in control where the named executive officer assumes similar functional duties for a stand-alone business unit due to the company becoming part of a larger entity; provided that a reduction resulting from the company not being a stand-alone business unit following a change in control will affirmatively be grounds for good reason; |
• | a material reduction of the named executive officer’s base salary; or |
• | a material change in the geographic location of the named executive officer’s primary work facility or location. |
For the purpose of the change in control agreement with Ms. Carullo, “good reason” means generally the named executive officer’s voluntary termination of employment following the expiration of any cure period following the occurrence of one or more of the following without the named executive officer’s consent:
• | a material reduction of the named executive officer’s duties, authorities or responsibilities other than a reduction following a change in control due to the company being part of a larger entity where the named executive officer assumes similar functional duties; |
• | a material reduction of the named executive officer’s base salary; or |
• | a material change in the geographic location of the named executive officer’s primary work facility or location. |
For the purpose of the change in control agreements, “change in control period” means generally the period beginning three months prior to, and ending 12 months following, a change in control of the company. In addition, under these arrangements, a change in control is generally defined as a change in more than 50% of the total voting power of our stock, certain changes in the majority composition of the Board of Directors during a 12-month period, or a change in the ownership of a substantial portion of the company’s assets.
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The following table provides information concerning the estimated payments and benefits that would be provided in the circumstances described above for each of the named executive officers serving as of the end of fiscal year 2021 pursuant to the change in control agreements in effect at that time. Payments and benefits are estimated assuming that the triggering event took place on the last business day of our fiscal year ended January 31, 2021, and the price per share of our Class A common stock is the closing price of the New York Stock Exchange as of that date. There can be no assurance that a triggering event would produce the same or similar results as those estimated below if such event occurs on any other date or at any other price, or if any other assumption used to estimate potential payments and benefits is not correct. Due to the number of factors that affect the nature and amount of any potential payments of benefits, any actual payments and benefits may be different.
| | Executive | | | Payment Elements | | | Termination Without Cause or Termination for Good Reason Within Change in Control Period ($) | | | Termination Without Cause Outside of Change in Control Period ($) | |
| | Aaron Levie | | | Salary | | | 180,000 | | | 90,000 | |
| | Bonus | | | 99,000 | | | — | | |||
| | Stock Options(1) | | | 2,340,000 | | | — | | |||
| | Stock Awards(2) | | | — | | | — | | |||
| | Health Coverage(3) | | | 28,703 | | | 14,351 | | |||
| | Total | | | 2,647,703 | | | 104,351 | | |||
| | Stephanie Carullo | | | Salary | | | 370,000 | | | 185,000 | |
| | Bonus | | | 203,500 | | | — | | |||
| | Stock Options(1) | | | 1,202,000 | | | — | | |||
| | Stock Awards(2) | | | 5,021,872 | | | — | | |||
| | Health Coverage(3) | | | 16,103 | | | 8,051 | | |||
| | Total | | | 6,813,475 | | | 193,051 | | |||
| | | | Salary | | | 370,000 | | | 185,000 | | |
| | Dylan Smith | | | Bonus | | | 203,500 | | | — | |
| | Stock Options(1) | | | 3,265,500 | | | — | | |||
| | Stock Awards(2) | | | 6,654,998 | | | — | | |||
| | Health Coverage(3) | | | 29,070 | | | 14,535 | | |||
| | Total | | | 10,523,068 | | | 199,535 | |
(1) | Value represents the estimated benefit amount of unvested stock options (including the performance-based options forfeited in April 2022 due to failure to achieve the applicable performance metric) calculated by multiplying the number of unvested stock options subject to acceleration held by the applicable named executive officer by the difference between the exercise price of the option and the closing price of our Class A common stock on the New York Stock Exchange on January 31, 2022, which was $26.13 per share. Does not reflect any dollar value associated with the acceleration of unvested stock options with exercise prices in excess of $26.13 per share. The dollar value of the acceleration of stock options (excluding such forfeited options) is zero for Mr. Levie, $1,202,000 for Ms. Carullo, and $1,803,000 for Mr. Smith. |
(2) | Value represents the estimated benefit amount of unvested RSUs calculated by multiplying the number of RSUs subject to acceleration held by the applicable named executive officer by the closing price of our Class A common stock on the New York Stock Exchange on January 31, 2022, which was $26.13 per share. |
(3) | Represents 12 months of Box-paid COBRA benefits in the case of termination without cause or a termination of employment for good reason within the change in control period and six months of Box-paid COBRA benefits in the case of a termination of employment without cause outside of the change in control period. |
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Under SEC rules, we are required to provide the following information regarding the relationship between the annual total compensation of Mr. Levie, our Chief Executive Officer, and the median annual total compensation of our employees (other than Mr. Levie) for fiscal year 2022:
• | Mr. Levie’s annual total compensation, as reported in the “Summary Compensation Table for Fiscal Year 2022” table included in this Proxy Statement, was $292,514. |
• | The median of the annual total compensation of all employees (other than Mr. Levie) of the company (including our consolidated subsidiaries) was $196,300. |
• | Based on the above, for fiscal year 2022, the ratio of Mr. Levie’s annual total compensation to the median of the annual total compensation of all employees was 1.49 to 1. |
We believe that this pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Securities Act of 1933, as amended.
The median employee used for our fiscal year 2022 analysis is the same employee used for our fiscal year 2021 analysis, who was substituted as described in our proxy statement filed July 6, 2021 for the median employee determined with respect to our fiscal year 2020 analysis as of January 31, 2020 by using fiscal year 2020 annualized base salaries, bonuses earned, commissions earned and equity compensation. We are using the same median employee because there have been no changes in our employee population or employee compensation arrangements that we believe would significantly impact the pay ratio. Such employee’s annual total compensation in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, yielding the median annual total compensation disclosed above. With respect to the annual total compensation of Mr. Levie, we used the amount reported in the “Total Compensation” column in the “Summary Compensation Table for Fiscal Year 2022” table included in this Proxy Statement.
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The following table summarizes our equity compensation plan information as of January 31, 2022. Information is included for equity compensation plans approved by our stockholders. We do not have any equity compensation plans not approved by our stockholders.
| | Plan Category | | | Class of Common Stock | | | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | | (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(1) | | | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(2) | |
| | Equity compensation plans approved by stockholders | | | Class A | | | 20,567,806 | | | $11.74 | | | 34,107,340 | |
| | Equity compensation plans not approved by stockholders | | | | | — | | | — | | | — | | |
| | Total | | | Class A | | | 20,567,806 | | | $11.74 | | | 34,107,340 | |
(1) | The weighted average exercise price is calculated based solely on outstanding stock options. It does not take into account the shares of our common stock underlying RSUs, which have no exercise price. |
(2) | Includes: 26,828,445 shares from the Box, Inc. 2015 Equity Incentive Plan (2015 Plan) and 7,278,895 shares from the Box, Inc. 2015 Employee Stock Purchase Plan (ESPP). Our 2015 Plan provides that on the first day of each fiscal year, the number of shares of Class A common stock available for issuance thereunder is automatically increased by a number equal to the least of (i) 12,200,000 shares, (ii) 5% of the outstanding shares of our capital stock as of the last day of our immediately preceding fiscal year, or (iii) such other amount as our Board of Directors may determine. On February 1, 2022, the number of shares of Class A common stock available for issuance under our 2015 Plan increased by 7,278,447 pursuant to the provision. The increase is not reflected in the table above. Our ESPP evergreen provision was eliminated and a one-time increase of 6,000,000 shares was approved by the Company’s stockholders at our annual meeting held on September 9, 2021. |
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The table on the following page sets forth certain information with respect to the beneficial ownership of our capital stock as of May 1, 2022 for:
• | each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of our Class A common stock or Series A Preferred Stock; |
• | each of our named executive officers; |
• | each of our directors; and |
• | all of our current executive officers and directors as a group. |
We have determined beneficial ownership in accordance with the rules and regulations of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to applicable community property laws.
Applicable percentage ownership is based on 145,598,135 shares of our Class A common stock outstanding as of May 1, 2022. In computing the number of shares of capital stock beneficially owned by a person and the percentage ownership of such person, we deemed to be outstanding all shares of our capital stock subject to options held by the person that are currently exercisable or exercisable within 60 days of May 1, 2022 and issuable upon the vesting of RSUs held by the person within 60 days of May 1, 2022. However, we did not deem such shares of our capital stock outstanding for the purpose of computing the percentage ownership of any other person. There were 500,000 shares of our Series A Preferred Stock outstanding as of May 1, 2022.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Box, Inc., 900 Jefferson Ave., Redwood City, California 94063. The information provided in the table is based on our records, information filed with the SEC and information provided to us, except where otherwise noted.
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| | Name of Beneficial Owner | | | Number of Class A Shares Beneficially Owned | | | Percent of Class A Shares Beneficially Owned | | | Number of Series A Preferred Shares Beneficially Owned+ | | | Percent of Series A Preferred Shares Beneficially Owned | |
| | 5% Stockholders: | | | | | | | | | | ||||
| | The Vanguard Group, Inc.(1) | | | 16,338,287 | | | 11.2% | | | — | | | — | |
| | BlackRock, Inc.(2) | | | 12,972,191 | | | 8.9% | | | — | | | — | |
| | Entities Affiliated with KKR(3) | | | — | | | — | | | 149,999 | | | 30.0% | |
| | Entities Affiliated with Centerbridge(4) | | | — | | | — | | | 116,667 | | | 23.3% | |
| | Kennedy Lewis Capital Partners Master Fund II L.P(5) | | | — | | | — | | | 116,667 | | | 23.3% | |
| | Oak Hill Advisor Entities(6) | | | — | | | — | | | 116,667 | | | 23.3% | |
| | | | | | | | | | | |||||
| | Named Executive Officers and Directors: | | | | | | | | | | ||||
| | Aaron Levie | | | 3,225,186 | | | 2.2% | | | — | | | — | |
| | Dylan Smith(7) | | | 2,319,908 | | | 1.6% | | | — | | | — | |
| | Stephanie Carullo(8) | | | 783,437 | | | * | | | — | | | — | |
| | Sue Barsamian(9) | | | 53,149 | | | * | | | — | | | — | |
| | Dana Evan(10) | | | 176,819 | | | * | | | — | | | — | |
| | Kim Hammonds | | | — | | | — | | | — | | | — | |
| | Jack Lazar(11) | | | 34,304 | | | * | | | — | | | — | |
| | Peter Leav(12) | | | 45,943 | | | * | | | — | | | — | |
| | Dan Levin(13) | | | 869,295 | | | * | | | — | | | — | |
| | Bethany Mayer | | | 19,492 | | | * | | | — | | | — | |
| | John Park | | | — | | | — | | | — | | | — | |
| | All executive officers and directors as a group (11 persons)(14) | | | 7,527,533 | | | 5.2% | | | — | | | — | |
* | Represents beneficial ownership of less than one percent (1%). |
+ | None of the holders of Series A Preferred Shares beneficially owns more than 5% of the Class A Shares. |
(1) | According to a Schedule 13G/A filed with the SEC on February 9, 2022, The Vanguard Group, Inc. (“Vanguard”), as investment advisor, has sole voting power with respect to none of the reported shares, shared voting power with respect to 271,239 of the reported shares, sole dispositive power with respect to 15,932,575 of the reported shares and shared dispositive power with respect to 405,712 of the reported shares. The address of Vanguard is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. |
(2) | According to a Schedule 13G/A filed with the SEC on February 7, 2022, BlackRock, Inc. (“BlackRock”), has sole voting power with respect to 12,492,798 of the reported shares and sole dispositive power with respect to all of the reported shares. BlackRock’s address is 55 East 52nd Street, New York, New York, 10055. |
(3) | Represents 113,240 shares held by Powell Investors III L.P., 20,293 shares held by Tailored Opportunistic Credit Fund, 7,379 shares held by KKR-NYC Credit C L.P., 6,088 shares held by KKR-Milton Credit Holdings L.P. and 2,999 shares held by CPS Holdings (US) L.P. As of May 1, 2022, the Series A Preferred Shares held by these KKR-affiliated entities are convertible into 5,555,510 shares of Class A common stock. KKR Special Situations Fund III Limited is the general partner of Powell Investors III L.P. KKR Dislocation Opportunities (EEA) Fund SCSp is the sole shareholder of KKR Special Situations Fund III Limited. KKR Associates Dislocation Opportunities SCSp is the general partner of KKR Dislocation Opportunities (EEA) Fund SCSp. KKR Dislocation Opportunities S.a r.l. is the general partner of KKR Associates Dislocation Opportunities SCSp. KKR Dislocation Opportunities Limited is the sole shareholder of KKR Dislocation Opportunities S.a r.l. KKR-NYC Credit C GP LLC is the general partner of KKR-NYC Credit C L.P. KKR-NYC SL GP MH LLC is the sole member of KKR-NYC Credit C GP LLC. KKR Associates Milton Strategic L.P. is the general partner of KKR-Milton Credit Holdings L.P. KKR Milton Strategic Limited is the general partner of KKR Associates Milton Strategic L.P. CPS Holdings (US) GP LLC is the general partner of CPS Holdings (US) L.P. CPS Managers Fund (US) L.P. is the sole member of CPS Holdings (US) GP LLC. CPS Associates (US) L.P. is the general partner of CPS Managers Fund (US) L.P. CPS (US) LLC is the general partner of CPS Associates (US) L.P. KKR Credit Fund Advisors LLC is an investment advisor to Powell Investors III L.P. and KKR-NYC Credit C L.P. and is a wholly-owned subsidiary of KKR Credit Advisors (US) LLC., which, along with KKR Australia Investment Management Pty Limited, is the investment advisor to Tailored Opportunistic Credit Fund and KKR-Milton Credit Holdings L.P. KKR Australia Pty Limited is the sole shareholder of KKR Australia Investment Management Pty Limited. KKR Asia LLC is the sole shareholder of KKR Australia Pty Limited. Kohlberg Kravis Roberts & Co. L.P. is the holder of all of the outstanding equity interests in KKR Credit Advisors (US) LLC and KKR Asia LLC and is the investment advisor to CPS Managers Fund (US) L.P. KKR & Co. GP LLC is the general partner of Kohlberg Kravis Roberts & Co. L.P. KKR Holdco LLC is the sole member of KKR & Co. GP LLC. KKR Group Partnership L.P. is the sole shareholder of each of KKR Dislocation Opportunities Limited and KKR Milton Strategic Limited and the sole member of each of KKR-NYC SL GP MH LLC, CPS (US) LLC and KKR Holdco LLC. KKR Group Holdings Corp. is the general partner of KKR Group Partnership L.P. KKR & Co. Inc. is the sole shareholder of KKR Group Holdings Corp. KKR Management LLP is the Series I preferred stockholder of KKR & Co. Inc. Messrs. Henry R. Kravis and George R. Roberts are the founding partners of KKR Management LLP. The principal business address of each of the entities and persons identified above, other than Kohlberg Kravis Roberts & Co. L.P., KKR & Co. GP LLC, KKR Holdco LLC, KKR Group Partnership L.P., KKR Group Holdings Corp., KKR & Co. Inc., KKR Management LLP and Messrs. Kravis and Roberts is |
60 | | | | | |
555 California Street, 50th Floor, San Francisco, CA 94104, the principal business address of the other entities and Mr. Kravis is c/o Kohlberg Kravis Roberts & Co. L.P., 30 Hudson Yards, New York, NY 10001 and the principal business address of Mr. Roberts is c/o Kohlberg Kravis Roberts & Co. L.P., 2800 Sand Hill Road, Suite 200, Menlo Park, CA 94025.
(4) | Represents 25,167 shares held by Centerbridge Credit Partners Master, L.P. and 91,500 shares held by Centerbridge Special Credit Partners III-Flex, L.P. As of May 1, 2022, the Series A Preferred Shares held by these Centerbridge-affiliated entities are convertible into 4,320,995 shares of Class A common stock. Centerbridge Credit GP Investors, L.L.C. (“Credit GP Investors”) is the sole director of Centerbridge Credit Cayman GP, Ltd. (“Credit Cayman GP”), which is the general partner of Centerbridge Credit Partners Offshore General Partner, L.P. (“Credit Partners Offshore GP”), which is the general partner of Centerbridge Credit Partners Master, L.P. (“Credit Partners Master”), and may be deemed to share beneficial ownership over the securities held of record by Credit Partners Master. As the managing member of Credit GP Investors, Jeffrey H. Aronson may be deemed to share beneficial ownership with respect to the securities held of record by Credit Partners Master. Such persons and entities expressly disclaim beneficial ownership of the securities held of record by Credit Partners Master, except to the extent of any proportionate pecuniary interest therein. The address of each of Credit GP Investors, Credit Cayman GP, Credit Partners Offshore GP, Credit Partners Master and Mr. Aronson, respectively, is 375 Park Avenue, 11th Floor, New York, New York 10152. CSCP III Cayman GP Ltd. (“CSCP III Cayman GP”) is the general partner of Centerbridge Special Credit Partners General Partner III, L.P. (“Special Credit III GP”), which is the general partner of Centerbridge Special Credit Partners III-Flex, L.P. (“SC III-Flex”), and may be deemed to share beneficial ownership over the securities held of record by SC III-Flex. As the director of CSCP III Cayman GP, Jeffrey H. Aronson may be deemed to share beneficial ownership with respect to the securities held of record by SC III-Flex. Such persons and entities expressly disclaim beneficial ownership of the securities held of record by SC III-Flex, except to the extent of any proportionate pecuniary interest therein. The address of each of CSCP III Cayman GP, Special Credit III GP, SC III-Flex and Mr. Aronson, respectively, is 375 Park Avenue, 11th Floor, New York, New York 10152. |
(5) | As of May 1, 2022, the Series A Preferred Shares held by Kennedy Lewis Capital Partners Master Fund II L.P. are convertible into 4,320,995 shares of Class A common stock. Kennedy Lewis GP II LLC is the general partner of Kennedy Lewis Capital Partners Master Fund II L.P. and Kennedy Lewis Management LP is the Investment Advisor of Kennedy Lewis Capital Partners Master Fund II L.P. and share voting and investment control with respect to the securities held of record by Kennedy Lewis Capital Partners Master Fund II L.P. Darren Richman and David Chene are the principals of Kennedy Lewis GP II LLC and Kennedy Lewis Management LP. The address of Kennedy Lewis Capital Partners Master Fund II L.P. is 111 West 33rd Street, Suite 1910, New York, NY 10120. |
(6) | Interests shown are held by entities advised and/or managed by Oak Hill Advisors, L.P. or its affiliate (each, an “Oak Hill Advisors Entity”). Interests shown consists of 900 shares held by ALOHA European Credit Fund, L.P., 2,800 shares held by Future Fund Board of Guardians, 900 shares held by Illinois State Board of Investment, 1,400 shares held by Indiana Public Retirement System, 2,800 shares held by OHA AD Customized Credit Fund (International), L.P., 4,100 shares held by OHA Artesian Customized Credit Fund I, L.P., 700 shares held by OHA BCSS SSD II, L.P., 8,800 shares held by OHA Black Bear Fund, L.P., 5,300 shares held by OHA Centre Street Partnership, L.P., 8,800 shares held by OHA Credit Solutions Master Fund II SPV, L.P., 6,500 shares held by OHA Delaware Customized Credit Fund Holdings, L.P., 1,100 shares held by OHA Delaware Customized Credit Fund-F, L.P., 5,900 shares held by OHA Dynamic Credit ORCA Fund, L.P., 800 shares held by OHA Enhanced Credit Strategies Master Fund, L.P., 5,200 shares held by OHA KC Customized Credit Master Fund, L.P., 800 shares held by OHA MPS SSD II, L.P., 4,200 shares held by OHA SA Customized Credit Fund, L.P., 21,500 shares held by OHA Strategic Credit Master Fund II, L.P., 3,600 shares held by OHA Structured Products Master Fund D, L.P., 28,567 shares held by OHA Tactical Investment Master Fund, L.P., 1,200 shares held by OHAT Credit Fund, L.P. and 800 shares held by The Coca-Cola Company Master Retirement Trust. As of May 1, 2022, the Series A Preferred Shares held by these Oak Hill Advisors entities are convertible into 4,320,984 shares of Class A common stock. The business address for the Oak Hill Advisors Entities is One Vanderbilt Avenue 16th Floor New York, NY 10017. Glenn R. August is the Founder, Senior Partner and Chief Executive Officer of Oak Hill Advisors, L.P. The interests beneficially owned by the Oak Hill Advisors Entities may also be deemed to be beneficially owned by Mr. August. Mr. August disclaims beneficial ownership of our Series A Preferred Shares beyond his pecuniary interest in the Oak Hill Advisors Entities for purposes of Section 16 under the Exchange Act. |
(7) | Consists of (i) 1,163,565 shares held by Mr. Smith, (ii) 85,000 shares held by Mr. Smith, as Trustee of the DCS GRAT of 2014, (iii) 1,127,750 shares subject to options exercisable within 60 days of May 1, 2022 and (iv) 28,593 shares issuable upon the vesting of RSUs within 60 days of May 1, 2022. |
(8) | Consists of (i) 199,064 shares held by Ms. Carullo, (ii) 562,499 shares subject to options exercisable within 60 days of May 1, 2022 and (iii) 21,874 shares issuable upon the vesting of RSUs within 60 days of May 1, 2022. |
(9) | Consists of (i) 24,423 shares held by Ms. Barsamian and (ii) 28,726 shares subject to options held by Ms. Barsamian that are exercisable within 60 days of May 1, 2022. |
(10) | Consists of (i) 119,457 shares held by Ms. Evan and (ii) 57,362 shares subject to options held by Ms. Evan that are exercisable within 60 days of May 1, 2022. |
(11) | Consists of (i) 10,555 shares held by Mr. Lazar and (ii) 23,749 shares subject to options held by Mr. Lazar that are exercisable within 60 days of May 1, 2022. |
(12) | Consists of (i) 18,034 shares held by Mr. Leav, (ii) 23,922 shares subject to options held by Mr. Leav that are exercisable within 60 days of May 1, 2022, and (iii) 3,987 shares issuable upon the vesting of RSUs within 60 days of May 1, 2022. |
(13) | Consists of (i) 21,166 shares held by Mr. Levin and (ii) 848,129 shares subject to options held by Mr. Levin that are exercisable within 60 days of May 1, 2022. |
(14) | Consists of (i) 4,800,942 shares outstanding as of May 1, 2022, (ii) 2,672,137 shares subject to options exercisable within 60 days of May 1, 2022 and (iii) 54,454 shares issuable upon the vesting of RSUs within 60 days of May 1, 2022. |
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We describe below transactions and series of similar transactions, since the beginning of our last fiscal year, to which we were a party or will be a party, in which:
• | the amounts involved exceeded or will exceed $120,000; and |
• | any of our directors, nominees for director, executive officers or beneficial holders of more than 5% of any class of our outstanding capital stock, or any immediate family member of, or person sharing the household with, any of these individuals or entities (each, a related person), had or will have a direct or indirect material interest. |
On April 7, 2021, the company entered into an Investment Agreement (the “Investment Agreement”) with investment vehicles managed or advised by KKR Credit Advisors (US) LLC, or affiliates thereof. (collectively, “KKR”), relating to the issuance and sale by the company to KKR and certain other parties (collectively with KKR, the “Investors”) of 500,000 shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”) for an aggregate purchase price of $500 million, or $1,000 per share (the “Issuance”). Cumulative preferred dividends accrue daily on the Series A Preferred Stock at a rate of 3.0% per year. The Issuance was consummated on May 12, 2021 (the “Closing Date”) for an aggregate purchase price of $500 million. Our Board of Directors unanimously approved the Investment Agreement and Issuance. As of the Record Date, the Investors held 500,000 shares of Series A Preferred Stock.
The holders of our Series A Preferred Stock are entitled to vote with the holders of our Class A common stock on an as-converted basis, voting together as a single class. Holders of the Series A Preferred Stock are also entitled to a separate class vote with respect to, among other things, amendments to the company’s organizational documents that have an adverse effect on the Series A Preferred Stock, authorizations or issuances by the company of securities that are senior to, or equal in priority with, the Series A Preferred Stock, and payments of special dividends in excess of an agreed upon amount. On May 13, 2021, the company waived compliance by the Investors with the provisions of the Investment Agreement requiring the Investors to vote in the same manner as recommended by the Board of Directors with respect to certain proposals, resulting in the Investors being able to vote their shares of Series A Preferred Stock without restriction.
Pursuant to the Investment Agreement, the company agreed to increase the size of its Board of Directors in order to appoint, as of the Closing Date, one individual designated by KKR, who shall initially be John Park, to our Board of Directors for a term expiring at the 2023 annual meeting of the company’s stockholders. So long as KKR beneficially owns at least 50% of the shares of Series A Preferred Stock that it purchased at the closing of the Issuance on an as-converted basis, KKR will have the right to designate a director nominee for election to the Board of Directors.
For further information regarding the Investment Agreement, including a description of certain obligations and restrictions binding on the parties thereto and the terms of the Series A Preferred Stock, please refer to the Company’s Current Reports on Form 8-K filed with the SEC on April 8, 2021 and May 18, 2021.
We have entered into change in control and severance agreements with certain of our executive officers that, among other things, provide for certain severance and change in control benefits. See the section titled and “Executive Compensation—Potential Payments upon Termination or Change in Control.”
We have entered into indemnification agreements with our directors and executive officers. The indemnification agreements and our Charter and Bylaws require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware law.
Other than as described above, since February 1, 2021, we have not entered into any transactions, nor are there any currently proposed transactions, between us and a related party where the amount involved exceeds, or would exceed, $120,000, and in which any related person had or will have a direct or indirect material interest. We believe the terms of the transactions described above were comparable to terms we could have obtained in arm’s-length dealings with unrelated third parties.
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Our Audit Committee has the primary responsibility for reviewing and approving transactions with related persons. Our Audit Committee charter provides that our Audit Committee shall review any related person transactions. Our Board of Directors has adopted a formal written policy providing that we are not permitted to enter into any transaction that exceeds $120,000 and in which any related person has a direct or indirect material interest without the consent of our Audit Committee. In approving or rejecting any such transaction, our Audit Committee is to consider the relevant facts and circumstances available and deemed relevant to our Audit Committee, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.
The company is not aware of any related person transactions required to be reported under applicable SEC rules since the beginning of the last fiscal year where our policies and procedures did not require review, or where such policies and procedures were not followed.
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The SEC has adopted rules that permit companies and intermediaries (such as brokers and banks) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders.
Once you have received notice from your bank or broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, please notify your bank or broker and direct your request to:
Box, Inc.
Attention: Investor Relations
900 Jefferson Ave.
Redwood City, California 94063
Tel: (877) 729-4269
Stockholders who currently receive multiple copies of this Proxy Statement at their address and would like to request householding of their communications should contact their bank or broker.
We will make available a list of stockholders of record as of the Record Date for inspection by stockholders for any purpose germane to the Annual Meeting from June 30, 2022 through July 14, 2022 at our headquarters located at 900 Jefferson Ave., Redwood City, California 94063. Due to the fact that the normal business hours of our headquarters have been affected due to the COVID-19 pandemic, if you wish to inspect the list, please submit your request, along with proof of ownership, by email to ir@box.com. The list will also be available electronically on the meeting website during the live webcast of the Annual Meeting.
Stockholder Proposals
Stockholders may present proper proposals for inclusion in our proxy statement and for consideration at next year’s annual meeting of stockholders pursuant to Rule 14a-8 under the Exchange Act by submitting their proposals in writing to our Secretary in a timely manner. For a Rule 14a-8 stockholder proposal to be considered for inclusion in our proxy statement for the 2023 annual meeting of stockholders, our Secretary must receive the written proposal at our principal executive offices not later than January 27, 2023. In addition, such stockholder proposals must comply with the requirements of Rule 14a-8 under the Exchange Act regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Stockholder proposals should be addressed to:
Box, Inc.
Attention: Corporate Secretary
900 Jefferson Ave.
Redwood City, California 94063
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Our Bylaws also establish an advance notice procedure for stockholders who wish to present a proposal before an annual meeting of stockholders but do not intend for the proposal to be included in our proxy statement pursuant to Rule 14a-8 under the Exchange Act. Our Bylaws provide that the only business that may be conducted at an annual meeting of stockholders is business that is (i) specified in our proxy materials with respect to such annual meeting, (ii) otherwise properly brought before such annual meeting by or at the direction of our Board of Directors, or (iii) properly brought before such meeting by a stockholder of record entitled to vote at such annual meeting who has delivered timely written notice to our Secretary, which notice must contain the information specified in our Bylaws. To be timely for our 2023 annual meeting of stockholders, our Secretary must receive the written notice at the address set forth above:
• | not earlier than March 13, 2023; and |
• | not later than the end of the day on April 12, 2023. |
In the event that we hold the 2023 annual meeting of stockholders more than 30 days before or more than 60 days after the one-year anniversary of the Annual Meeting, notice of a stockholder proposal that is not intended to be included in our proxy statement must be received no earlier than the close of business on the 120th day before the 2023 annual meeting of stockholders and no later than the close of business on the later of the following two dates:
• | the 90th day prior to the 2023 annual meeting of stockholders; or |
• | the 10th day following the day on which public announcement of the date of our 2023 annual meeting of stockholders is first made. |
If a stockholder who has notified us of his, her, or its intention to present a proposal at an annual meeting of stockholders does not appear to present his, her, or its proposal at such annual meeting and otherwise comply with our Bylaws, we are not required to present the proposal for a vote at such annual meeting.
Nomination of Director Candidates
Holders of our Class A common stock may propose director candidates for consideration by our Nominating and Corporate Governance Committee. Any such recommendations should include the nominee’s name and qualifications for membership on our Board of Directors and should be directed to our Secretary at the address set forth above. For additional information regarding stockholder recommendations for director candidates, see the section titled “Board of Directors and Corporate Governance — Stockholder Recommendations for Nominations to the Board of Directors” beginning on page 22 of this Proxy Statement.
In addition, our Bylaws permit stockholders to nominate directors for election at an annual meeting of stockholders. To nominate a director, the stockholder must provide the information required by our Bylaws. In addition, the stockholder must give timely notice to our Secretary in accordance with our Bylaws, which, in general, require that the notice be received at the address set forth above within the time periods described above under the section titled “Stockholder Proposals” for stockholder proposals that are not intended to be included in a proxy statement.
In 2021, our board of directors amended our bylaws to provide our stockholders with proxy access provisions. Under our bylaws, a stockholder, or a group of up to 20 stockholders, owning at least 3% of our outstanding common stock continuously for at least three years, may nominate and include in our proxy materials director nominees constituting up to the greater of two individuals or 20% of our board of directors, subject to certain limitations and provided that the stockholders and the nominees satisfy the requirements specified in our Bylaws. To be timely for our 2023 annual meeting of stockholders, our Secretary must receive the written notice at the address set forth above not earlier than December 28, 2022 and not later than the end of the day on January 27, 2023.
Availability of Bylaws
A copy of our Bylaws is available on our website at http://www.box.com/investors. You may also contact our Corporate Secretary at the address set forth above for a copy of the relevant Bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates.
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Our financial statements for our fiscal year ended January 31, 2022 are included in our Annual Report on Form 10-K, which we will make available to stockholders at the same time as this Proxy Statement. This Proxy Statement and our annual report are posted on our website at http://www.box.com/investors and are available from the SEC at its website at www.sec.gov. You may also obtain a copy of our annual report without charge by sending a written request to Box, Inc., Attention: Investor Relations, 900 Jefferson Ave., Redwood City, California 94063.
This Proxy Statement, along with the accompanying stockholder letter, contains forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. All statements relating to events or results that may occur in the future, including, but not limited to, statements in the stockholder letter regarding our expectation that our roadmap will enable us to continue our industry leadership going forward and our expectation that we are on track to deliver approximately $1 billion in revenue for fiscal 2023, and underlying assumptions of any of the foregoing are forward-looking statements.
When used in this Proxy Statement, terms such as “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should” or “will” or the negative of those terms or other comparable terms are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause us to fall short of our expectations or may cause us to deviate from our current plans, as expressed or implied by these statements. The known risks that could cause our results to differ, or may cause us to take actions that are not currently planned or expected, are described in the company’s reports and filings with the SEC including, without limitation, the company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2022, under the heading Item 1A – “Risk Factors.” Unless required by law, the company does not intend, and undertakes no obligation, to update or publicly release any revision to any forward-looking statements, whether as a result of the receipt of new information, the occurrence of subsequent events, the change of circumstance or otherwise. Each forward-looking statement contained in this Proxy Statement is specifically qualified in its entirety by the aforementioned factors. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Proxy Statement.
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The Board of Directors does not know of any other matters to be presented at the Annual Meeting. If any additional matters are properly presented at the Annual Meeting, the persons named in the enclosed proxy card will have discretion to vote the shares of our Voting Stock they represent in accordance with their own judgment on such matters.
It is important that your shares of our Class A common stock and/or Series A Preferred Stock be represented at the Annual Meeting, regardless of the number of shares that you hold. You are, therefore, urged to vote by telephone or by using the Internet as instructed on the enclosed proxy card or execute and return, at your earliest convenience, the enclosed proxy card in the envelope that has also been provided.
| | | | THE BOARD OF DIRECTORS Redwood City, California May 27, 2022 | |
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