Letter from our Chair and Chief Executive Officer
May 16, 2024
Dear Fellow Stockholders,
As we celebrate our 25th year, I’ve never been more excited about the future of our company and our industry. We had another incredible year at Salesforce in fiscal year 2024, and we’re exceptionally well-positioned to continue delivering profitable growth and leading our customers into this new AI era. Salesforce brings together best-in-class CRM apps for sales, service, marketing, commerce, and more with trusted AI and data all on one integrated platform.
This has been a remarkable year of transformation for our company—restructuring our business for the short and long term; increasing productivity, profitability, and operational excellence across the board; doubling down on innovation and making our core products even better; and strengthening our relationships with all of you—our stockholders. Our transformation is reflected in the strong results you saw throughout fiscal year 2024.
Guided by our core values of trust, customer success, innovation, equality, and sustainability, we look forward to continuing our partnership with you, delivering on our commitments for profitable growth and leading our customers and industry into the next step of this AI revolution.
Accordingly, we would like to invite you to attend the 2024 Annual Meeting of Stockholders of Salesforce, Inc. on Thursday, June 27, 2024 at 11:00 a.m. Pacific Time. This year, building on the success of recent years, we are continuing to use a virtual meeting format to provide a consistent experience to all stockholders regardless of location and to reduce the environmental impact of our meeting. We will provide a live audio webcast of the annual meeting at www.virtualshareholdermeeting.com/CRM2024.
At this year’s meeting, we will vote on the election of directors, an amendment of our Restated Certificate of Incorporation to provide exculpation from liability for certain officers in accordance with recent amendments to Delaware law, an amendment and restatement of our 2013 Equity Incentive Plan, and the ratification of the selection of Ernst & Young LLP as Salesforce’s independent registered public accounting firm. We will also conduct a nonbinding advisory vote to approve the compensation of Salesforce’s named executive officers. If properly presented at the meeting, we will also consider three stockholder proposals as described in the Notice of 2024 Annual Meeting of Stockholders and Proxy Statement. Finally, we will transact such other business as may properly come before the meeting, and stockholders will have an opportunity to ask questions.
Your vote is important. Whether or not you plan to participate in the annual meeting, please vote as soon as possible. You may vote over the Internet or, if you requested printed copies of the proxy materials be mailed to you, by telephone or by mailing a completed proxy card or voting instruction form. Your vote by proxy will ensure your representation at the annual meeting regardless of whether you participate in the meeting. Details regarding the annual meeting and the business to be conducted are described in the accompanying Notice of 2024 Annual Meeting of Stockholders and Proxy Statement.
Thank you for your trust and ongoing support of Salesforce.
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Marc Benioff Chair of the Board of Directors Chief Executive Officer |
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Letter from our Lead Independent Director
May 16, 2024
Dear Fellow Stockholders,
As Lead Independent Director of the Salesforce Board of Directors, I have the privilege of sharing an update on the Board’s actions and priorities. As we approach the 2024 Annual Meeting and reflect on a truly extraordinary year for Salesforce, I thank you for your trust and investment in our company and long-term business strategy.
Oversight of Salesforce’s Transformation
In fiscal 2024, we made transformative change and innovated at a rapid pace while advancing our commitment to profitable growth and value creation for our stockholders in both the near and long term. Our Board, including through our dedicated Business Transformation Committee, has spent the last year closely overseeing management’s efforts to transform the business and strengthen our foundation for sustained operational excellence and value creation.
We are extremely proud of Salesforce’s commitment to improving operational efficiencies while also delivering incredible innovation for our customers and returns for our stockholders. In fiscal 2024, Salesforce achieved record margin growth and cash flow as the company continued to innovate across its entire portfolio of industry-leading products and deliver groundbreaking advancements, like Data Cloud and Einstein Copilot, to help our customers transform for the AI future. As a result of actions taken, including the progress made on the restructuring plan announced in late fiscal 2023, the company also saw significant improvements in its operating expenses across all operating categories and we expect to maintain this focus of operational discipline over the longer term.
With the emergence of the next generation of AI and the transformation of our broader industry, Salesforce is positioned to lead customers into an exciting new era of productivity and growth. Our Board is confident in Salesforce’s ability to drive innovation and advance our business while upholding the company’s core values of trust, customer success, innovation, equality, and sustainability.
Capital Allocation Framework
Our Board also continues to oversee substantial changes to Salesforce’s capital allocation framework, consistent with our commitment to drive long-term cash flow. In February 2024, our Board was pleased to declare Salesforce’s first-ever cash dividend program, building on our recently enhanced capital return strategy. Following the inauguration of Salesforce’s share repurchase program in late 2022, our Board has twice increased the authorized repurchases by $10.0 billion, most recently in February 2024, for an aggregate total authorization of $30.0 billion. And since the inception of this program, Salesforce has returned $11.7 billion of capital to stockholders through share repurchases as of the end of fiscal 2024. Our share repurchases fully offset our stock based compensation in fiscal 2024.
Stockholder Engagement
As you have heard from Marc, building even stronger relationships with our stockholders through our robust outreach program was a key priority for both the company and our Board. Oscar Munoz, Chair of our Business Transformation Committee, John Roos, Chair of our Compensation Committee, and I had the opportunity to directly engage with stockholders to discuss a range of matters over the past year, including our long-term growth strategy, financial and operational priorities, human capital management, and governance practices. We appreciate the insights shared and look forward to hearing your views as we continue to move forward. And as further discussed in the proxy statement, our Board continued to leverage our ongoing board evaluation process and director skills matrix to make sure our board composition is well-matched to the opportunities and needs of our business going forward.
Salesforce recently celebrated our first 25 years as a company. As we build on this quarter-century of innovation, Marc and I, on behalf of all our directors, are confident that Salesforce is well-positioned to continue delivering profitable growth for our customers, employees, communities, and investors over the coming years. We thank you for continuing to join us on this journey as we blaze a new trail in this rapidly changing industry.
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Robin Washington Lead Independent Director |
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Salesforce, Inc.
415 Mission Street
3rd Floor
San Francisco, California 94105
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NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS |
To be held Thursday, June 27, 2024
TO THE STOCKHOLDERS OF SALESFORCE, INC.:
NOTICE IS HEREBY GIVEN that the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of Salesforce, Inc., a Delaware corporation (“Salesforce”), will be held on Thursday, June 27, 2024 at 11:00 a.m. Pacific Time.
This year’s meeting is a virtual stockholder meeting conducted exclusively via a live audio webcast at www.virtualshareholdermeeting.com/CRM2024.
The items of business are:
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To elect Marc Benioff, Laura Alber, Craig Conway, Arnold Donald, Parker Harris, Neelie Kroes, Sachin Mehra, Mason Morfit, Oscar Munoz, John V. Roos, Robin Washington, Maynard Webb and Susan Wojcicki to serve as directors; |
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To amend our Restated Certificate of Incorporation to provide exculpation from liability for certain officers of Salesforce in accordance with recent amendments to Delaware law; |
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To amend and restate our 2013 Equity Incentive Plan to increase the number of shares reserved for issuance by 36 million shares and extend the plan term; |
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To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending January 31, 2025; |
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To approve, on an advisory basis, the fiscal 2024 compensation of our named executive officers; and |
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To consider and act upon three stockholder proposals described in the Proxy Statement, if properly presented at the meeting. |
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The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. We also will transact any other business that may properly come before the Annual Meeting. At this time we are not aware of any such additional matters.
Stockholders of record at the close of business on May 1, 2024 are entitled to receive notice of, and to vote at, the Annual Meeting as well as any and all adjournments, continuations or postponements thereof.
In the event of a technical malfunction or other situation that the meeting chair determines may affect the ability of the Annual Meeting to satisfy the requirements for a meeting of stockholders to be held by means of remote communication under the Delaware General Corporation Law, or that otherwise makes it advisable to adjourn the Annual Meeting, the meeting chair or secretary will convene the meeting at 12:00 p.m. Pacific Time on the date specified above and at the Company’s address specified above solely for the purpose of adjourning the meeting to reconvene at a date, time and physical or virtual location announced by the meeting chair. Under either of the foregoing circumstances, we will post information regarding the announcement on the Investors page of Salesforce’s website at investor.salesforce.com.
This Notice, the Notice of Internet Availability of Proxy Materials, the Proxy Statement and the 2024 Annual Report are first being made available to stockholders on May 16, 2024.
On behalf of the Board of Directors,
Sarah Dods
Secretary
San Francisco, California
May 16, 2024
WHETHER OR NOT YOU EXPECT TO PARTICIPATE IN THE VIRTUAL ANNUAL MEETING, PLEASE VOTE AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING. YOU MAY VOTE ONLINE OR, IF YOU REQUESTED PRINTED COPIES OF THE PROXY MATERIALS, BY TELEPHONE OR BY USING THE PROXY CARD OR VOTING INSTRUCTION FORM PROVIDED WITH THE PRINTED PROXY MATERIALS.
ABOUT THE ANNUAL MEETING
Who is soliciting my vote?
The Board of Directors of Salesforce, Inc. (the “Board”) is soliciting your vote at Salesforce’s 2024 Annual Meeting of Stockholders (the “Annual Meeting”). Unless otherwise indicated, references in this Proxy Statement to “Salesforce,” “we,” “us,” “our” and the “Company” refer to Salesforce, Inc.
When and where will the Annual Meeting take place?
The Annual Meeting will take place on Thursday, June 27, 2024 at 11:00 a.m. Pacific Time. The Annual Meeting will occur as a virtual meeting conducted exclusively via a live audio webcast at www.virtualshareholdermeeting.com/CRM2024.
Why are you holding a virtual Annual Meeting?
We are utilizing a virtual meeting format for our Annual Meeting to provide a consistent experience to all stockholders regardless of geographic location. A virtual meeting also enhances stockholder access and engagement and reduces the environmental impact of our Annual Meeting. In structuring our virtual Annual Meeting, our goal is to enhance rather than constrain stockholder participation in the meeting, and we have designed the meeting to provide stockholders with the same rights and opportunities to participate as they would have at an in-person meeting.
Where can I access the proxy materials?
Pursuant to the rules of the Securities and Exchange Commission (the “SEC”), we have provided access to our proxy materials primarily over the Internet. Accordingly, a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) has been mailed (or, if requested, emailed) to stockholders owning our stock as of the record date, May 1, 2024. Our proxy materials were mailed to those stockholders who have asked to receive paper copies. Instructions on how to access the proxy materials over the Internet, receive our proxy materials via email or request a printed copy by mail may be found in the Internet Notice.
By accessing the proxy materials on the Internet or choosing to receive your future proxy materials by email, you will reduce the cost of printing and mailing documents to you and will reduce the impact of the Annual Meeting on the environment. If you choose to receive future proxy materials by email, and you are a Salesforce stockholder as of the record date for next year’s annual meeting, you will receive an email next year with instructions containing a link to those materials. If you choose to receive future proxy materials by mail, you will receive a paper copy of those materials, including a form of proxy or voting instruction form. Your election to receive proxy materials by mail or email will remain in effect until you notify us that you are terminating such election.
How many votes do I have?
All of our stockholders have one vote for every share of Salesforce common stock owned as of our record date of May 1, 2024.
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SALESFORCE 2024 PROXY STATEMENT |
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FISCAL YEAR 2024 IN REVIEW (CONTINUED) |
Financial Highlights
At Salesforce, we believe in doing good and doing well. Together with our employees, partners and customers, we’ve been able to realize impressive business growth and success while staying true to the core values we’ve had since day one. Fiscal 2024 in particular was a highly successful year of transformation for Salesforce with strong performance across all key metrics, including:
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Revenue. Fiscal 2024 revenue was $34.9 billion, an increase of 11% year-over-year. |
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Operating Margin. Fiscal 2024 GAAP operating margin was 14.4%, up from 3.3% a year ago. Fiscal 2024 non-GAAP operating margin was 30.5%, up from 22.5% a year ago.1 |
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Income from Operations. Fiscal 2024 GAAP income from operations was $5.0 billion, compared to $1.0 billion from a year ago. Fiscal 2024 non-GAAP income from operations was $10.6 billion, compared to $7.1 billion from a year ago.1 |
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Earnings per Share. Fiscal 2024 diluted earnings per share was $4.20, compared to $0.21 from a year ago. |
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Cash Flow. Cash generated by operations for fiscal 2024 was $10.2 billion, an increase of 44% year-over-year. Total cash, cash equivalents and marketable securities as of January 31, 2024 was $14.2 billion. |
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Remaining Performance Obligation. Total remaining performance obligation, which represents all future revenue under contract yet to be recognized, as of January 31, 2024 was approximately $56.9 billion, an increase of 17% year-over-year. Current remaining performance obligation as of January 31, 2024 was approximately $27.6 billion, an increase of 12% year-over-year. |
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Share Repurchase Program. We repurchased approximately 36 million shares of our common stock during fiscal 2024, returning approximately $7.7 billion to stockholders. |
Human Capital Management
Salesforce is committed to a core set of values: trust, customer success, innovation, equality and sustainability. These core values are the foundation of our company culture, which we believe is fundamental to, and a competitive advantage in, our approach to managing our workforce. We believe our company culture fosters open dialogue, collaboration, recognition and a sense of belonging, all of which allow us to attract and retain the best talent, which is critical for our continued success.
We believe our efforts in managing our workforce have been effective. Our focus on our workplace environment and a strong company culture has led to recognition across the globe, as evidenced by the following awards: Ethisphere’s World’s Most Ethical Companies (2024 and for the 15th time), Fortune World’s Most Admired Companies (2024 and for the 10th year in a row), Fortune 100 Best Companies to Work For (2024 and for the 15th year in a row), Fortune America’s Most Innovative Companies (2024 and for the second year in a row), a score of 100 on the Human Rights Campaign Corporate Equality Index (2023 and for the seventh year in a row), a top-four software company on the American Opportunity Index (2023) and JUST Capital’s America’s Most JUST Companies (2024 and for the seventh year in a row).
As of January 31, 2024, we had 72,682 employees, of which approximately 51 percent were located in the United States and 49 percent were located internationally, and approximately 36 percent identified as women, 64 percent identified as men, and less than one percent identified as non-binary or other.
We continue to invest in equality, diversity and inclusion initiatives, development programs, employee engagement, and ongoing communications and feedback. Our Board, through one or more of its committees, continues to oversee the Company’s strategies and policies related to human capital management, including matters related to diversity, equity and inclusion, workplace environment, culture, employee retention, and leadership development.
Read more about our human capital management initiatives on page 33.
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See Appendix A for a reconciliation of GAAP to non-GAAP financial metrics and other information. |
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SALESFORCE 2024 PROXY STATEMENT |
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DIRECTORS AND CORPORATE GOVERNANCE (CONTINUED) |
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Board Independence
The Board believes that it should consist of a substantial majority of independent directors. The Board has adopted and applied the standards established by the NYSE to determine the independence of each of its directors. The Board has determined that, except for Marc Benioff, Parker Harris and Oscar Munoz, each of our director nominees has no material relationship with Salesforce and is independent within the meaning of the standards established by the NYSE, as currently in effect. We anticipate Mr. Munoz to be eligible to be considered independent under NYSE rules as of January 2025. Former directors Sanford Robertson and Alan Hassenfeld were also considered to be independent within the meaning of the standards established by the NYSE during the period they served on our Board. In making its determination regarding the independence of our directors, the Board considered all relevant facts and circumstances, including transactions in which we and any director had an interest, relationships between us and our directors or their family members, transactions involving payments made between us and other companies in the ordinary course of business where any of our directors or their family members is a director or an employee of the other company, and each director’s commercial, investment, banking, consulting, advisory, legal, accounting, charitable and familial relationships, as applicable.
Board Leadership Structure
Chair of the Board
The Company’s CEO, Marc Benioff, also serves as Chair of the Board. The Board believes that this leadership structure, coupled with a strong emphasis on Board independence, provides effective independent oversight of management while allowing both the Board and management to benefit from Mr. Benioff’s leadership and years of experience in the Company’s business and the technology industry. As Co-Founder and CEO, Mr. Benioff has been the director most capable of effectively identifying strategic priorities, coordinating the board agenda to focus on discussions critical to the success of the Company and executing the Company’s strategy and business plans, which is particularly important given the Company’s position as a global leader in customer relationship management technology and as the Company works to continue its strategic transformation plan to drive profitable growth. Mr. Benioff possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing the Company and its business. We believe the extensive Company-specific experience and industry expertise of Mr. Benioff, together with the outside experience, oversight and expertise of our independent directors, allows for differing perspectives and roles regarding strategy development that benefit our stockholders. Further, the Board believes that Mr. Benioff’s combined role enables decisive leadership, allows for clear accountability and enhances the Company’s ability to communicate its message and strategy clearly and consistently to our stockholders, employees and customers. Given our strong, long-term business, operational and financial performance, as well as our ongoing progress in the areas of financial discipline and profitable growth, the Board believes that stockholders are best served by continuing this leadership structure.
Lead Independent Director
Importantly, the Board has a strong and empowered Lead Independent Director, who is selected by the independent directors, to provide an effective independent voice in our Board leadership structure. In September 2022, Robin Washington succeeded Sanford Robertson as the Lead Independent Director. The independent directors’ decision to select Ms. Washington took into consideration the tenures and capabilities of each independent director, along with the potential candidates’ demonstrated leadership in the boardroom, as well as willingness and ability to serve as Lead Independent Director with the understanding that the position entails significant responsibility and time commitment. Throughout Ms. Washington’s tenure on our Board since 2013, including as Chair of the Nominating and Corporate Governance Committee and former Chair of the Audit and Finance Committee, she has worked closely with her fellow directors and is deeply trusted in the boardroom. The Board believes that, with her extensive experience in leading global finance and information technology organizations, as well as the significant responsibility and risk oversight that these other leadership roles on the Board have entailed, Ms. Washington is well positioned to guide the Board in its oversight of the Company’s strategy and risk management.
In September 2022, the Board expanded the scope of authority and responsibilities for the Lead Independent Director and updated the Company’s Corporate Governance Guidelines to expressly state those expanded duties. Among other things, the Lead Independent Director:
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presides at meetings of the Board at which the Chair is not present, including at executive sessions and meetings of the independent directors; |
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reviews and approves, or provides input and consults on, materials sent to the Board (including materials related to the Board’s risk oversight); |
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reviews and approves, or provides input and consults on, the agenda and schedule for Board meetings (including suggesting agenda items related to the Board’s risk oversight); |
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serves as a liaison between the Chair and the independent directors and as a liaison among the Committee Chairs; |
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is available for and frequently engages in consultation and communication with major stockholders and other stakeholders—having led numerous engagements with the Company’s top stockholders in FY24; |
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SALESFORCE 2024 PROXY STATEMENT |
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DIRECTORS AND CORPORATE GOVERNANCE (CONTINUED) |
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Identification and Evaluation of Director Nominees
The Governance Committee uses a variety of methods for identifying and evaluating director nominees. Candidates may come to the attention of the Governance Committee through directors, management, stockholders or third parties. Such candidates are appointed to the Board following a robust assessment and recruiting process guided by our Lead Independent Director, which has involved extensive candidate interviews as well as consultations with a third-party search firm. In connection with Mr. Morfit’s appointment, the Company entered into an agreement with ValueAct Capital, as described in Salesforce’s Current Report on Form 8-K filed with the SEC on January 27, 2023.
The Governance Committee regularly assesses the appropriate size, composition and needs of the Board and its respective committees and the qualifications of candidates in light of these needs. The Governance Committee believes that it is important to maintain and consistently refresh a list of qualified potential candidates for nomination and engages a third-party search firm to assist in identifying such candidates. The evaluation of these candidates may be based solely upon information provided to the Governance Committee or may also include discussions with persons familiar with the candidate, one or more interviews of the candidate or other actions the Governance Committee deems appropriate, including the use of third parties to review candidates.
The Governance Committee evaluates and recommends candidates for membership on the Board consistent with criteria established by the committee. Directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of our stockholders. They must have an inquisitive and objective perspective and mature judgment. They must also have experience in positions with a high degree of responsibility and be leaders in the companies or institutions with which they are affiliated. Director candidates also must have sufficient time available in the judgment of the Governance Committee to perform all Board and committee responsibilities. Members of the Board are expected to prepare for, attend and participate in Board and applicable committee meetings.
The Governance Committee also focuses on diversity, including diversity of gender, race and ethnicity, education, professional experience and differences in viewpoints and skills. While the Governance Committee does not have a formal policy with respect to diversity, the Board and the Governance Committee believe that it is essential that the Board members represent diverse viewpoints. The Governance Committee assesses its effectiveness in this regard as part of the annual Board evaluation process described on page 30.
Other than the foregoing, there are no stated minimum criteria for director nominees, although the Governance Committee may also consider such other factors as it may deem, from time to time, are in the best interests of the Company and its stockholders. The Governance Committee will also seek appropriate input from the CEO from time to time in assessing the needs of the Board for relevant background, experience, diversity and skills of its members.
Stockholders may recommend director candidates for general consideration by the Governance Committee by submitting the individual’s name, qualifications and the other information set forth in our Bylaws applicable to director nominees by stockholders to the Corporate Secretary of the Company. The Governance Committee evaluates candidates recommended by stockholders against the same criteria and pursuant to the same policies, procedures and processes applicable to the evaluation of candidates proposed by other sources.
As noted elsewhere in our proxy statement, stockholders may, pursuant to applicable law and the requirements of the Company’s Bylaws, directly nominate candidates to stand for election to the Board by stockholders, and the Company respects such stockholder rights. With respect to such Bylaw provisions, the Company will not, without a stockholder vote, adopt new amendments (except as noted below) that would expressly (1) require nominating investment fund stockholders to disclose the confidential identities of their less than five percent “passive” third-party limited partners who are not otherwise involved in the nomination, campaign or the Company solely on account of such member’s economic interests in the nominating fund, or (2) require nominating stockholders to disclose unrelated information regarding their confidential future plans for nominating other candidates to other public company boards or prior nominations of other candidates and proposals previously privately submitted to other public companies in the past. If the Board, in its exercise of its fiduciary responsibilities, deems it to be in the best interests of the Company and its stockholders to adopt such a provision without the delay due to the time required to seek a stockholder vote, the Board will publicly disclose such Bylaw amendment in accordance with applicable law and either subsequently submit such bylaw provision to stockholders for ratification or cause the bylaw amendment to expire within one year.
Proxy Access
The Company’s Bylaws provide procedures that allow a stockholder or a group of up to 20 stockholders that has continuously owned 3% or more of the Company’s common stock for at least three years to nominate and include in the Company’s proxy materials for an annual meeting of stockholders up to the greater of two directors or 20% of the total number of directors serving on the Board, provided the stockholder(s) and the nominee(s) satisfy the requirements specified in the Bylaws.
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SALESFORCE 2024 PROXY STATEMENT |
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DIRECTORS AND CORPORATE GOVERNANCE (CONTINUED) |
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Privacy Committee, oversees the various cybersecurity risks facing the Company and the Company’s efforts to mitigate those risks. The Cybersecurity & Privacy Committee receives regular presentations, reports and updates from our Chief Trust Officer and other members of management on developments regarding the Company’s cybersecurity program, broader cybersecurity trends, evolving industry standards, the threat environment and other topics. The Cybersecurity & Privacy Committee also receives periodic reports from an experienced outside consultant with information security expertise providing insights on key focus areas to aid in the Committee’s oversight of the Company’s cybersecurity program. After each quarterly meeting of the Cybersecurity & Privacy Committee, the Board receives a report from its Chair with an update on the Company’s oversight of cybersecurity risks and mitigation efforts. In addition to regular meetings and reports, the Company’s policy is for the Board and Committee to receive prompt and timely information regarding any cybersecurity risk (including any incident) that meets pre-established reporting thresholds, as well as ongoing updates regarding any such risk.
The Company regularly provides mandatory employee training on security-related duties and responsibilities, which is designed to provide the Company’s employees with effective tools to address cybersecurity threats and to communicate the Company’s evolving information security policies, standards, processes and practices. We also undergo periodic testing, audits and reviews, including routine internal and external penetration testing, to identify, assess and address cybersecurity risks and events. Reflective of our commitment to Trust, we also hold various security-related industry certifications and attestations that have been validated by external auditors. The Company publishes attestations of its various certifications, audits and penetration tests on its global compliance webpage at compliance.salesforce.com.
In fiscal 2024, we did not identify any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that materially affected us. In the normal course of business, however, we face ongoing and increasing malicious cyberattack attempts, including from bad actors that are becoming more sophisticated and effective over time, and have experienced other security incidents. We discuss our exposure to information security risk, including third-party information security risk, in more detail in the Company’s 2024 Annual Report on Form 10-K filed with the SEC on March 6, 2024.
Annual Board Evaluation Process
The Board recognizes the importance of regularly evaluating its performance to ensure that the Board and its committees operate effectively and efficiently. The Governance Committee, with oversight from our Lead Independent Director, leads a formal self-evaluation process on an annual basis. In fiscal 2024, the Board engaged an independent third-party consultant, experienced in corporate governance matters, to facilitate a robust assessment process. This process was designed to assess the performance of the Board, as well as each committee and director individually, and to identify opportunities to improve processes and effectiveness. The following describes the process by which our Board currently carried out its evaluations in fiscal 2024.
All directors completed a written questionnaire prepared by an independent third-party consultant, which asked for feedback on the performance of the Board, each committee and each director, including themselves. Directors were asked to provide feedback on a variety of matters, including board and committee composition, board alignment and strategy, meeting agendas, culture and conduct, risk oversight, board-management dynamics, board and committee leadership and succession planning. Additionally, members of each committee were asked to provide feedback on their respective committee’s size, composition, culture, independence, meeting agendas, materials, and access to information.
Once the questionnaires were completed by all directors, our Lead Independent Director reviewed the feedback with the independent third-party to identify key trends and topics for further discussion. The independent third party then interviewed each director individually to discuss the identified topics to gain additional insight and perspective. Each director had the opportunity to provide confidential commentary on each of their peers’ contributions and effectiveness.
Once all questionnaires and director interviews were complete, the independent third party synthesized the feedback received, highlighting results and identifying recommendations, which was presented to and discussed by both the Governance Committee and the Board. The review and discussion of the results will continue to inform Board and Board-committee related matters going forward.
Compensation of Directors
Under our fiscal 2024 compensation policy for non-employee directors, on February 16, 2023, each non-employee director serving at such time received a restricted stock unit (“RSU”) grant with a grant date fair value of approximately $360,000 and, on April 1, 2023, each non-employee director appointed to the Board on March 1, 2023 received a pro-rated RSU grant with a grant date fair value of $332,234. The RSU grants generally vest in four equal installments on February 22, May 22, August 22 and November 22, 2023, subject to each non-employee director’s continued service through each such date. The value of the RSU grant was pro-rated for non-employee directors who, at the time of grant, had notified the Company that they did not intend to stand for reelection at our 2023 annual meeting of stockholders, and, as described above, was also pro-rated for any non-employee directors whose appointment or election to the Board began after the beginning of fiscal 2024. Pro-rated RSUs vested on the same vesting dates as above, subject to adjustment based on the last day of service for departing non-employee directors or the grant date for new non-employee directors. All RSU awards were made pursuant to our 2013
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SALESFORCE 2024 PROXY STATEMENT |
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ESG AT SALESFORCE*
At Salesforce, we believe that focusing on environmental, social and governance (“ESG”) excellence guides us in being an ethical, resilient company to deliver value to our stakeholders now and in the future. Our core values of Trust, Customer Success, Innovation, Equality and Sustainability inform our strategy and operations across the Company. Transparency is a key pillar of our commitment to ESG excellence. We believe companies should clearly report progress and consistently communicate decision-useful information on ESG topics to their key stakeholders. It’s our belief that comparable, consistent, and verified ESG disclosure is critical to understanding the long-term health and resilience of a business.
For over ten years, we have published an annual Stakeholder Impact Report detailing our ESG strategy, programs, goals and commitments, and key metrics. Our ESG disclosures are guided by ESG materiality assessments, which identify the topics most important to our stakeholders and to our success as a business. We also look to leading third-party ESG disclosure frameworks and standards when identifying key ESG performance indicators to report against. Read more about these initiatives in our Stakeholder Impact Report at salesforce.com/stakeholder-impact-report.
Environment
Salesforce envisions a net zero, nature positive future for all. We continue to operationalize environmental sustainability into our core business decisions, as supported by rigorous data, to drive efficiency and innovation. We aspire to help the world achieve a just and equitable transition to net zero emissions, in line with a 1.5°C future.
Climate Action Progress
In fiscal 2024, Salesforce maintained net zero residual emissions and procured electricity or the claims to electricity from renewable energy resources equivalent to 100% of the electricity we used globally. As an early adopter of science-based target-setting through the Science Based Targets Initiative, we are committed to reducing our combined scope 1 and scope 2 market-based method (“MBM”) emissions by 50%, reducing our scope 3 MBM emissions from fuel and energy-related activities (“FERA”) by 50%, and engaging with suppliers representing 60% of our applicable scope 3 location-based method (“LBM”) emissions to set their own science-based targets (“SBTs”). We achieved our scope 1 and scope 2 MBM emissions goal in fiscal 2023, and we exceeded our initial goal by ending fiscal 2024 with a cumulative 58% reduction. We remained on track to achieve our scope 3 FERA MBM emissions goal, with a 27% emission reduction by the end of fiscal 2024. Suppliers that have set SBTs comprised 25% of our applicable scope 3 LBM emissions, and suppliers with commitments to set SBTs comprised an additional 14%. Additionally, we have set a more ambitious climate target of reducing absolute, location-based emissions (without any compensation like renewables or carbon credit purchases) by 50% by fiscal 2031, and by 90% by fiscal 2041 across our entire value chain (scope 1, 2, and 3 emissions).
Our Task Force on Climate-Related Financial Disclosures (“TCFD”) Report was released in fiscal 2022, and we have detailed our climate action strategy in our Climate Action Plan. Read more about our Climate Action Plan at salesforce.com/sustainability and find our TCFD Report at investor.salesforce.com/tcfdreport.
Global Collaboration and Initiatives
Salesforce actively engages with policymakers, peers, partners, suppliers and customers to accelerate collective environmental progress up and down our value chains. In fiscal 2024, we focused on advancing four key campaigns through climate policy engagement: (1) accelerating the energy transition, (2) advocating for strong policies to conserve and restore ecosystems, (3) advancing best-in-class standards of transparency for corporate climate action, and (4) prioritizing equity and justice in climate action. For example, we supported the passage of California’s SB 253, Climate Corporate Data Accountability Act, requiring large companies to disclose greenhouse gas emissions and set science-based reduction targets, and the adoption of SEC rules to enhance and standardize climate-related disclosures.
We are also committed to developing a comprehensive program to address the nature crisis. In fiscal 2024, we accelerated 1t.org, a global tree movement we co-founded in 2020, and supported the Mangrove Breakthrough, a new collaborative framework designed to secure the future of the world’s mangroves. We invested in eight mangrove restoration projects, bringing our cumulative total to 52 million trees funded in support of our 100 million tree commitment.
* |
Company goals are aspirational and may change. Statements regarding the Company’s goals are not guarantees or promises that they will be met. Content available at websites and in documents referenced in this section are not incorporated herein and are not part of this Proxy Statement. |
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SALESFORCE 2024 PROXY STATEMENT |
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ESG AT SALESFORCE (CONTINUED) |
Governance
Our governance strategy focuses on creating long-term value for all stakeholders by setting high standards that go above compliance and working with the Salesforce ecosystem to achieve them. We lead by example, spearheading initiatives in corporate governance, business ethics, privacy and security, ethical and inclusive product, supply chain responsibility, government affairs and civic engagement.
Corporate Governance
Our core values of Trust, Customer Success, Innovation, Equality and Sustainability shape how we do business every day, and our corporate governance and business ethics practices are what support these values. Salesforce is committed to conducting business in accordance with the laws and regulations that apply to us, and we strive to be one of the most ethical companies in the world.
Our Board of Directors has oversight over ESG initiatives and promotes our cohesive ESG strategy to deliver impact throughout the Company in an integrated way. Our Governance Committee oversees our corporate governance generally, meeting regularly with our Chief Compliance Officer, and periodically reviews our ESG programs, as set forth in its charter. Our Audit Committee oversees certain ESG-related disclosures and metrics, as well as Ernst & Young LLP’s limited assurance review thereof. Our Cybersecurity & Privacy Committee oversees our cybersecurity matters, meeting regularly with our Chief Trust Officer, and oversees our privacy and ethical use of technology matters, meeting regularly with our Chief Ethical & Humane Use Officer.
To strengthen accountability and accelerate progress in our ESG initiatives, we have, for the second year in a row, included ESG goals as part of our executive compensation programs. For fiscal 2024, 10% of the target cash incentive opportunity for executive vice presidents and above is tied to achieving quantified ESG measures. These measures include two equality measures and two sustainability measures, each weighted equally.
The success of our employees, customers and stockholders depends on our ability to manage our business ethically, transparently and responsibly. Our Code of Conduct and Business Conduct Principles are both publicly available and, in conjunction with other internal policies, communicate our values and expectations for employees and key stakeholders. Our Corporate Governance Guidelines, which detail our corporate governance practices with respect to our Board and its committees, are reviewed periodically by our Governance Committee. Read more about our corporate governance practices, including our publicly available Corporate Governance Guidelines, at investor.salesforce.com/corporate-governance.
Privacy and Security
Both privacy and security play an essential role at Salesforce in empowering us to live our core values. At Salesforce, we recognize privacy as a fundamental human right and integral to trusted relationships between organizations and their stakeholders. Nothing is more important than the success of our customers and the privacy of their customers’ data. Our Board’s Cybersecurity and Privacy Committee oversees Salesforce’s privacy matters and meets regularly with our privacy senior management. Read more about our commitment to privacy at salesforce.com/company/privacy.
When a company purchases Salesforce offerings, they gain a trusted digital advisor who works together with them in a joint effort to protect customer data. We aim to provide the most secure and compliant enterprise cloud on the market, and we work to build trust and in-depth defense into all of our systems. Among other things, we employ a diverse, experienced team of cybersecurity professionals, engage in community events, and offer free online cybersecurity incident prevention training so our customers can focus on their business, knowing their data is safe and accessible as needed. Read more about our cybersecurity program, best practices for customers and our system status and security at trust.salesforce.com.
Ethical and Inclusive Products
At Salesforce, we recognize that we have a responsibility to society, and we aspire to create technology that has a profound positive impact on our society and the world at large. Our Office of Ethical and Humane Use ensures Salesforce technologies are designed, deployed and used in an ethical, accessible and inclusive way, and regularly engages with stakeholders and experts in furtherance of this commitment. We champion intentional innovation that considers unintended consequences in product and policy and aims to prevent harm and create better product experiences for everyone. In fiscal 2024, we sought to make our AI products the most ethical and trusted in the industry by refining our guidelines for responsible generative AI and updating our AI Acceptable Use Policy to specifically address customer use of AI, including generative AI. Read about our commitment to the ethical and inclusive design, development and use of technology at salesforce.com/company/intentional-innovation.
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SALESFORCE 2024 PROXY STATEMENT |
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A LETTER FROM OUR COMPENSATION COMMITTEE |
A LETTER FROM OUR COMPENSATION COMMITTEE
May 16, 2024
Dear Fellow Stockholders,
Fiscal 2024 was a transformative year for Salesforce. At this time last year, the Company accelerated progress on our goals to restructure the business for the short and long term, increase productivity, and achieve operational excellence. Over the last year, our management team has not only achieved these goals, but has outperformed on key metrics, while delivering continued innovation across core categories and rapidly bringing new Data and AI solutions to market. And, importantly, our management team continued to build relationships with you, our stockholders. We are proud of our executive team’s effort, which has driven significant value for stockholders at a rapid pace.
In particular, we would highlight that the Company:
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Achieved non-GAAP operating margin that exceeded our fiscal year goal and reflected unprecedented margin growth for the Company |
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Achieved operating cash flow of $10.2 billion, up 44% year-over-year and the highest cash flow in Salesforce’s history |
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Declared Salesforce’s first ever dividend in its 25-year history |
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Reduced stock-based compensation expense as a percentage of revenue from 10.5% in fiscal 2023 to 8% in fiscal 2024 |
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Fully offset dilution from our stock-based compensation with share repurchases |
These results reflect tremendous discipline and position Salesforce for sustainable long-term value creation.
We have long anchored our compensation philosophy in pay for performance and, consistent with this philosophy, the equity award granted to Mr. Benioff early in fiscal 2024 was significantly reduced from prior years and targeted well below market, in light of Company performance in fiscal 2023. Subsequently, however, the Company significantly exceeded expectations in fiscal 2024. In light of the Company’s extraordinary fiscal 2024 performance, along with Mr. Benioff’s leadership as sole CEO during fiscal 2024 and the importance of retaining his continued leadership, particularly as the Company navigates complex, generational opportunities in the new era of data and AI, at the end of fiscal 2024, the Compensation Committee acted to close the gap between the $15 million value of Mr. Benioff’s initial fiscal 2024 equity award and an appropriately competitive equity opportunity. To achieve this, the Committee approved a second fiscal 2024 award for Mr. Benioff that provides an incremental equity opportunity of $20 million, delivered 60% in PRSUs and 40% in stock options. This decision reflects our pay for performance philosophy and brought Mr. Benioff’s aggregate fiscal 2024 equity opportunity to $35 million, which is between the 50th and 75th percentiles of market.
Our broader fiscal 2024 executive compensation program reflects feedback from stockholders, and we believe this program has served well to motivate our executives to drive profitable growth and sustainable long-term value creation. When we set the compensation program for fiscal 2024, we introduced non-GAAP operating margin as a PRSU metric, weighted at 50% in order to link a meaningful portion of executive pay to the Company’s margin progression, in complement to our three-year relative TSR metric, also weighted at 50%. For Executive Officers other than the CEO and COO, we eliminated the use of stock options and increased the PRSU component of the long-term equity incentive program from 25% to 50%. Our annual cash incentive program continued to emphasize the three financial measures we believe are key indicators of profitable growth: revenue, operating cash flow, and non-GAAP income from operations. Lastly, we also made changes to our compensation program for fiscal 2025 that calibrate executive compensation opportunities by role and more closely align the value of our cash and equity programs with market. The resulting increase in target compensation for our Named Executive Officers is weighted heavily towards variable compensation, consistent with our pay for performance philosophy.
As we reflect on Salesforce’s outstanding fiscal 2024 performance, we want to recognize our management team’s success in driving the Company’s transformation. We are excited about the significant opportunities for profitable growth in fiscal 2025 and beyond.
Thank you for your continued support and investment in Salesforce.
Sincerely,
The Compensation Committee
John V. Roos (Chair)
Craig Conway
Neelie Kroes
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SALESFORCE 2024 PROXY STATEMENT |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED) |
Performance-Based Restricted Stock Units
Relative TSR PRSU Component. For PRSUs that vest based on relative TSR (“Relative TSR PRSUs”), we measure our TSR percentile rank over a three-year performance period relative to the PRSU Index Group to determine the final payout percentage, which ranges from 0% to 200% of target. There is no payout if our relative TSR rank is below the 25th percentile and target payout requires TSR outperformance at the 60th percentile compared to the PRSU Index Group over the three-year performance period. Payouts are capped at 100% of target if our absolute TSR is negative, regardless of our relative TSR percentile ranking.
Any earned Relative TSR PRSUs are eligible to “cliff” vest on (or shortly after) the third anniversary of grant, subject to the NEO’s continuous employment through the vesting date. Additional vesting rules apply in the event of a change of control of the Company, as described under “Employment Contracts and Certain Transactions—Performance-Based Restricted Stock Units” below.
Operating Margin PRSU Component. For PRSUs that vest based on our non-GAAP operating margin performance (“Operating Margin PRSUs”), we measure non-GAAP operating margin performance annually over a three-year performance period to determine a final payout percentage, which can range from 0% to 200% of target. There is no payout if performance is below threshold. Threshold and maximum levels are equal to ~85% and ~115% of target, respectively (actual levels may differ slightly due to rounding to the tenth decimal). The final payout percentage is an average of the annual payout percentages for each fiscal year period. For the Operating Margin PRSUs granted in April 2023, the Compensation Committee approved non-GAAP operating margin goals for fiscal 2024 and fiscal 2025 at grant. The Compensation Committee set these goals consistent with our external guidance and financial plan at the time of grant, and therefore believed the goals were rigorous and would require substantial performance for achievement. As shown below, the fiscal 2024 non-GAAP operating margin target approved by the Compensation Committee was 27.0%, consistent with external guidance published at the beginning of fiscal 2024.
Based on fiscal 2024 performance, the annual payout percentage for the fiscal 2024 tranche of the Operating Margin PRSUs is 185%. Following the end of the applicable three-year performance period, the average of the annual payout percentages for each fiscal year of the performance period will be used to determine the final payout percentage for the Operating Margin PRSUs.
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Performance Level |
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Fiscal 2024 Non-GAAP Operating Margin(1) Goals |
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Actual Fiscal 2024 Performance |
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Threshold |
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23.0% |
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30.5% |
Target |
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27.0% |
Maximum |
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31.1% |
(1) |
Non-GAAP operating margin for each fiscal year means the proportion of non-GAAP income from operations for the applicable fiscal year as a percentage of GAAP revenue for the applicable fiscal year, rounded to the nearest 1/10th percent. GAAP revenues for the applicable fiscal year are defined as GAAP revenues for the applicable fiscal year as reported by the Company in its financial statements on Form 10-K filed with the SEC. Non-GAAP income from operations for the applicable fiscal year is defined as GAAP income from operations for the applicable fiscal year as reported by the Company in its financial statements on Form 10-K filed with the SEC, excluding the impact of stock-based compensation expense (excluding stock-based compensation expense associated with a formal restructuring plan(s)), amortization of acquisition-related intangibles, and charges related to a formal restructuring plan(s) for the applicable fiscal year as reported by the Company in its financial statements on Form 10-K filed with the SEC. See also Appendix A for a reconciliation of GAAP to non-GAAP financial metrics. |
When setting the fiscal 2025 target, the Compensation Committee considered the level of difficulty and the meaningful level of performance required to achieve it. We are not disclosing the fiscal 2025 non-GAAP operating margin target at this time due to potential competitive harm. To maintain goal rigor and alignment with our externally communicated fiscal year guidance, the Compensation Committee determined to wait to approve the fiscal 2026 non-GAAP operating margin goals until after grant to have greater alignment with externally communicated financial projections and better visibility on the Company’s continued financial discipline and profitable growth progress. We believe this timing better enables the Compensation Committee to set targets that continue to motivate our Executive Officers and require substantial performance.
Any earned Operating Margin PRSUs are eligible to “cliff” vest on (or shortly after) the third anniversary of the grant date, subject to the NEO’s continuous employment through the vesting date. Additional vesting rules apply in the event of a change of control of the Company, as described under “Employment Contracts and Certain Transactions—Performance-Based Restricted Stock Units” below.
Stock Options
We have historically granted, and may continue to grant, stock options to certain of our Executive Officers to align their interests with those of our stockholders. As discussed above, beginning in fiscal 2024, the Compensation Committee eliminated stock options from the award mix for NEOs below the CEO level, except for Mr. Millham, whose award mix is governed by his pre-existing retention agreement through March 2025 as described in “—Pre-existing Retention Agreement with Mr. Millham” below. The Compensation Committee continues to grant stock options to Mr. Benioff, rather than RSUs, to maximize the alignment of his pay with performance. Because stock options generate value only to the extent that the market price of our common stock increases during the period that the option is outstanding, the Compensation Committee believes they are inherently performance-based and provide a strong incentive to build stockholder value over time.
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SALESFORCE 2024 PROXY STATEMENT |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED) |
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Restricted Stock Units (RSUs)
We also grant RSUs to our NEOs other than our CEO. RSUs align the interests of our NEOs with those of our stockholders and help manage the dilutive effect of our equity compensation program. Our RSUs are subject to service-based vesting. Because RSUs have value to the recipient even in the absence of stock price appreciation, RSUs help us retain and incentivize employees during periods of market volatility and require us to grant fewer shares of common stock than stock options of equivalent grant date fair value. Our RSUs typically vest over a four-year period, and we believe that, like stock options, they help incentivize our NEOs to build value that can be sustained over time.
Fiscal 2024 Long-Term Equity Award Decisions
When making its annual compensation decisions, the Compensation Committee reviews Company and individual performance over the prior year, as well as a comprehensive analysis of our executive compensation program using comparative market and peer group data to evaluate the long-term incentives and target total direct compensation of our NEOs. Below is a summary of the long-term equity awards granted to our NEOs in fiscal 2024.
Target Values of Fiscal 2024 Long-Term Equity Awards(1)
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NEO |
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Fiscal 2024 PRSUs ($) |
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Fiscal 2024 Stock Options ($) |
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Fiscal 2024 RSUs ($) |
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Marc Benioff |
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21,000,000 |
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14,000,000 |
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— |
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Amy Weaver |
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5,500,000 |
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— |
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5,500,000 |
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Srinivas Tallapragada |
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5,500,000 |
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— |
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5,500,000 |
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Brian Millham |
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— |
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6,000,000 |
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6,000,000 |
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Sabastian Niles |
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5,500,000 |
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— |
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5,500,000 |
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(1) |
The values are the intended total target values of fiscal 2024 annual long-term equity awards and differ from the values reflected in the Fiscal 2024 Summary Compensation Table, which must be reported in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”), as described in the footnotes to the Fiscal 2024 Summary Compensation Table below. |
Fiscal 2024 Equity Awards for Mr. Benioff
As discussed above, fiscal 2024 was a meaningful inflection point for Salesforce. When the Compensation Committee approved an initial annual long-term equity award for Mr. Benioff during the first quarter of the fiscal year, it set the total target value of that award at $15 million, which was significantly lower than the prior year’s equity award value and reflected a greater reduction than for other executives. This reduction took into consideration the Company’s fiscal 2023 financial performance and business conditions in early fiscal 2024 and competitive market levels. The award was delivered 60% in PRSUs and 40% in stock options.
In early fiscal 2024 and throughout the year, the Company took decisive action to enhance its commitment to financial discipline and profitable growth. In fiscal 2024, under Mr. Benioff’s leadership, the Company delivered on this commitment. The Company set and exceeded strong operating margin goals and meaningfully adjusted the cost structure of the business; delivered on a capital allocation strategy benefitting stockholders, including share repurchase programs; made disciplined, targeted investments in growth, innovation, and productivity; and continued to focus on customer success. As a result, under Mr. Benioff’s leadership, the Company delivered significant value to stockholders in fiscal 2024, with strong financial performance across key metrics, including record revenue as well as record cash flow and margins.
Near the end of our fiscal year, in light of the Company’s transformation and strong performance during the year, the Compensation Committee undertook another review of Mr. Benioff’s overall fiscal 2024 compensation. In that review, the Compensation Committee considered the value of the initial fiscal 2024 long-term equity award, market and peer company data provided by its independent compensation consultant, and the comparative market positioning of Mr. Benioff’s pay. Following this review, the Compensation Committee approved a second fiscal 2024 long-term equity incentive award for Mr. Benioff. This award had a total target value of $20 million, and like the earlier fiscal 2024 equity award, was delivered 60% in PRSUs and 40% in stock options. The PRSUs have the same design as the initial grant, with performance measured over a three-year period beginning with fiscal 2025, and cliff vesting in March 2027. When combined with the earlier fiscal 2024 long-term equity award, this second equity award brought Mr. Benioff’s total fiscal 2024 equity compensation to a level between the 50th and 75th percentile of CEO equity awards at peer companies.
In making this decision, the Compensation Committee considered the relatively low value of the initial fiscal year 2024 equity award for Mr. Benioff, which was positioned at a level significantly below the 25th percentile of peer company CEO equity pay; the magnitude of initial fiscal 2024 equity award reduction; the Company’s successful transformation actions and strong financial performance in the fiscal year; and individual performance considerations.
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SALESFORCE 2024 PROXY STATEMENT |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED) |
As discussed in more detail under “—Fiscal 2024 LTI Program Mix and Program Changes” above, Mr. Benioff’s fiscal 2024 equity compensation consisted of 60% PRSUs and 40% stock options. PRSUs reward performance over a three-year performance period based on relative TSR and non-GAAP operating margin performance, equally weighted. Stock options deliver value only to the extent the Company’s stock price appreciates over time between the grant and exercise dates, directly aligning Mr. Benioff’s pay opportunity with stockholder interests.
In light of the Company’s successful transformation actions, strong financial performance under Mr. Benioff’s leadership as sole CEO, and the importance of Mr. Benioff’s continued leadership and strategic vision to the Company’s continued success, the Compensation Committee believes that the size and structure of the fiscal 2024 equity awards appropriately align Mr. Benioff’s long-term compensation opportunity with the Company’s financial performance and, as with Mr. Benioff’s overall compensation arrangements, are in the best interests of the Company and its stockholders.
Fiscal 2024 Equity Awards for Other Continuing NEOs
As part of its annual review of executive compensation, during the first quarter of fiscal 2024 the Compensation Committee approved fiscal 2024 annual long-term equity awards for all NEOs then in service. After considering the factors discussed above, particularly Company performance in fiscal 2023, the Compensation Committee made across-the-board reductions (compared to fiscal 2023 values) to the intended total target values of the fiscal 2024 annual long-term equity awards for such NEOs, other than as contractually required (a reduction of ~40% for Mr. Benioff’s initial fiscal 2024 equity award, and a reduction of ~21% for such other NEOs). The resulting target values of the fiscal 2024 long-term equity awards for Ms. Weaver and Mr. Tallapragada were $11 million each.
Mr. Millham’s fiscal 2024 compensation was governed by his pre-existing retention agreement. As required under this agreement, he was granted stock options and RSUs in March and April 2023, respectively, with a total target value of $12 million. See “Pre-existing Retention Agreement with Mr. Millham” below for additional information.
For information on Mr. Niles’ new hire equity award, granted in August 2023, see below under “New Hire Compensation Arrangement for Mr. Niles.”
Pre-existing Retention Agreement with Mr. Millham
In February 2021, prior to becoming an Executive Officer, Mr. Millham received an exceptionally strong offer for a high-profile leadership position at a high growth company. The CEO and other members of management then met with the Compensation Committee and discussed, among other things, Mr. Millham’s extraordinary contributions to the Company throughout his over twenty-year tenure, his deep relationships with key customers, his leadership of the Company’s distribution organization, the potential for him to take on additional responsibilities as part of broader leadership team succession planning, and the potential adverse impacts to the Company if he were to depart. The Compensation Committee agreed that it was in the best interests of stockholders and the Company to retain Mr. Millham. Accordingly, the CEO and other members of management negotiated a competitive retention package with Mr. Millham (the “Millham Agreement”), subject to the Compensation Committee’s approval. The Compensation Committee then reviewed relevant market data comparisons, received input from its independent advisor, and considered the factors outlined above and approved the Millham Agreement.
Under the Millham Agreement, through March 22, 2025, Mr. Millham’s annual equity grants are required to have a value of no less than $12 million per year, split evenly between options and RSUs. Annual equity awards in excess of that amount may be granted in the form of PRSUs. The Millham Agreement provides for a one-time retention bonus payable in four equal annual installments of $2.5 million each through 2025, subject to Mr. Millham’s continued employment through each applicable payment date. Mr. Millham received the first and second payments of the retention bonus in September 2022 and 2023, respectively. As previously disclosed and included in the applicable compensation tables below, Mr. Millham was granted a retention equity award in February 2021 consisting of an option that vests over four years, subject to Mr. Millham’s continued service through each applicable vesting date. Mr. Millham also is entitled to payments and benefits upon certain qualifying terminations of employment in accordance with the terms of the Millham Agreement, as described below under “—Employment Contracts and Certain Transactions—Millham Agreement.”
Subsequently, Mr. Millham was promoted to President and Chief Operating Officer in August 2022, a role that entails significantly expanded duties over multiple critical organizations spanning a majority of our employee base. Mr. Millham also took on certain responsibilities of our former co-CEO Mr. Taylor after Mr. Taylor’s departure and has been a driving force behind our ongoing transformation. No additional cash or equity compensation was awarded to Mr. Millham in connection with his promotion or the expansion of his responsibilities.
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SALESFORCE 2024 PROXY STATEMENT |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED) |
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New Hire Compensation Arrangement for Mr. Niles
The Compensation Committee may approve compensation during the fiscal year to attract new executive officers and incentivize them to join the Company. In connection with hiring Mr. Niles as President and Chief Legal Officer, the Compensation Committee approved a market competitive new-hire compensation arrangement after considering the estimated value of compensation that Mr. Niles would forfeit if he joined Salesforce, the compensation paid to similarly situated executives based on peer and market data, and the importance of creating immediate alignment with our stockholders through long-term equity incentives. After reviewing comparative market data, peer data, internal pay structures, and additional information regarding Mr. Niles’ compensation program at his previous employer, the Compensation Committee approved the following new hire compensation package for Mr. Niles.
New Hire Sign-On Bonus
To compensate Mr. Niles for the value of annual cash compensation that he would immediately forfeit upon joining Salesforce, the Compensation Committee approved a one-time sign-on bonus of $3 million which was paid upon hire. If Mr. Niles voluntarily resigns or the Company terminates his employment for cause within two years after his start date, Mr. Niles is required to repay a pro rata amount of the one-time sign on bonus, calculated based on the number of months and days employed during such two-year period. The Compensation Committee, in consultation with its independent compensation consultant, determined that the amount of the sign-on bonus was appropriate to offset a portion of annual compensation he would forfeit upon joining Salesforce.
New Hire Long-Term Equity Award
In addition, the Compensation Committee approved a one-time new hire equity award for Mr. Niles with a grant date fair value of $11 million, granted in August 2023. The Compensation Committee believed it was important to put a significant portion of Mr. Niles’ compensation at risk and immediately align his interests with our stockholders. 50% of the target grant date fair value of the new hire equity award was delivered in the form of performance-based equity tied to our relative TSR and non-GAAP operating margin performance over a three-year performance period. The new hire award has a similar design to the fiscal 2024 PRSU awards granted to other NEOs in April 2023, with relative TSR performance measured over a three-year period beginning in August 2023, and earned PRSUs eligible to vest in September 2026 (instead of April 2026), subject to Mr. Niles’ continued employment through such date. The remaining 50% was delivered in the form of RSUs that vest over four years, with 25% vesting on the first anniversary of the grant date, and the remainder vesting in twelve equal quarterly installments thereafter, subject to continued service on each vesting date.
The Compensation Committee, in consultation with its independent compensation consultant, determined the target grant date value for the new hire equity award to induce Mr. Niles to join Salesforce and in consideration of the remaining value of annual compensation that Mr. Niles would forfeit upon joining Salesforce as well as the lost opportunity to receive certain long-term benefits from his former employer. The Compensation Committee considered market and peer compensation paid to similarly situated executives at his level and caliber, the long-term nature of our equity compensation program, internal pay alignment, and the competitive landscape.
In addition, per the terms of his offer letter, Mr. Niles is entitled to certain cash severance benefits upon a qualifying termination of employment. For more information, see “Employment Contracts and Certain Transactions” below.
Vesting of Prior Performance Awards with Performance Periods Ending in Fiscal 2024
PRSUs granted to our NEOs in fiscal 2021 were eligible to vest based on our TSR relative to the PRSU Index Group for the three-year performance period beginning in April 2020, with any earned PRSUs vesting in May 2023 after the end of the three-year performance period. The Company’s TSR for the three-year performance period ending on April 22, 2023 was at the 21st percentile of the PRSU Index Group. As a result, none of the target PRSUs granted to our fiscal 2024 NEOs vested on May 15, 2023.
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Target PRSU Shares Granted in Fiscal 2021 |
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Earned PRSU Shares Vested in Fiscal 2024 |
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Award Value on Vesting Date |
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Marc Benioff |
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86,344 |
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0 |
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$0 |
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Amy Weaver |
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17,989 |
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0 |
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$0 |
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Srinivas Tallapragada |
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19,788 |
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0 |
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$0 |
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Brian Millham |
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12,592 |
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0 |
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$0 |
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SALESFORCE 2024 PROXY STATEMENT |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED) |
Other Benefits and Programs
Mr. Benioff’s Security Program and Aircraft Use
Security Program and Outside Security Study. We began providing a security program for Mr. Benioff in fiscal 2012 and continued to do so in fiscal 2024. The program includes security measures in addition to those provided while at work or on business travel. The Compensation Committee believes that costs associated with this security program have been and continue to be reasonable and for the Company’s benefit, and that they are a necessary and appropriate business expense. Because certain components of Mr. Benioff’s security program may be viewed as conveying a personal benefit to him, we have included those costs in amounts reported in the “All Other Compensation” column of the Summary Compensation Table.
Over the past year, the Company sought specific feedback from our major institutional investors on this topic, as it has done in the past. Overall, our stockholders agreed that a comprehensive personal security program for Mr. Benioff is an appropriate component of his overall executive compensation program, and that any such program should align with the executive’s security profile.
The Company periodically assesses the security risk profiles of its senior executives, the external security environment, and appropriate executive protection measures. In connection with this ongoing assessment, in fiscal 2024, the Compensation Committee directed the Company to engage an outside firm with security expertise to conduct a study of Mr. Benioff’s security profile and program, as well as that of certain other NEOs (the “Outside Security Study”). The Outside Security Study concluded that the comprehensive security measures in place for Mr. Benioff are essential and commensurate with his risk profile.
Factors contributing to an executive’s security profile include the size, location and activities of the company, the prominence of the company or the executive, overall public visibility and accessibility of the executive, and whether the company or executive is associated with controversial topics. Taking these factors into consideration, trends in the overall security climate, and the conclusions of the Outside Security Study, the Compensation Committee believes that a comprehensive personal security program for Mr. Benioff continues to be the right approach for his safety and for the Company and its stockholders.
The total costs associated with Mr. Benioff’s security program include security measures to protect Mr. Benioff on a 24-hour basis. Historically, the Company paid various costs relating to surveillance, monitoring, and security services including at Mr. Benioff’s residences, and Mr. Benioff covered certain expenses relating to security personnel and installation and maintenance of security equipment. The Compensation Committee determined that the personal security costs previously paid by Mr. Benioff are appropriate to be borne by the Company, beginning with fiscal 2024, consistent with the findings of the Outside Security Study. The Compensation Committee reviews these costs periodically throughout the year to assess whether they are reasonable.
Aircraft Use. Travel on private aircraft provides significant benefits in terms of safety, security, efficiency, privacy, confidentiality, flexibility and productivity, and is a component of the overall security program recommended for Mr. Benioff in the Outside Security Study. The Compensation Committee believes Mr. Benioff’s use of private aircraft is appropriate, including for travel between Mr. Benioff’s permanent residence and Company headquarters or other business destinations. The Compensation Committee considers this travel to be business-related and the associated costs to be appropriate business expenses directly related to Mr. Benioff’s duties as CEO of a global public company. However, because certain portions of this travel may be deemed to be in the nature of commuting, and therefore compensatory and reportable as a perquisite under SEC rules, we have reported the aggregate incremental cost to the Company related to such travel in the “All Other Compensation” column of the Summary Compensation Table.
On occasion, for security, efficiency, and logistical reasons, we also may provide NEOs with limited personal use of corporate aircraft and from time to time, guests may accompany an NEO on corporate aircraft used for business purposes, typically at no aggregate incremental cost to the Company. NEOs generally are subject to imputed income at the applicable Standard Industrial Fare Level (SIFL) rates for this use, and the Company does not provide tax gross-ups for this imputed income.
Additional Benefits and Programs
Like other employees, our Executive Officers, including our NEOs, are eligible to participate in our employee benefit and welfare plans, including medical and dental care plans, a fitness reimbursement plan and a 401(k) plan. We generally do not provide our Executive Officers, including our NEOs, with additional retirement benefits or pensions, and except as described above, we offer limited executive benefit programs to our Executive Officers. The executive benefit programs we offer consist of financial counseling benefits and reimbursement of fees for home security arrangements, including periodic monitoring services. During fiscal 2024, Ms. Weaver and Mr. Millham received reimbursements for home security monitoring. We believe the limited security benefits provided to Ms. Weaver and Mr. Millham are appropriate given their respective security profiles and the findings of the Outside Security Study. We occasionally provide certain other benefits on an ad hoc basis, as noted for our NEOs in our Summary Compensation Table, if we believe that doing so is appropriate, reasonable and serves the interests of the Company.
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SALESFORCE 2024 PROXY STATEMENT |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED) |
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NEO Compensation-Setting Process
Role of the Compensation Committee
The Compensation Committee oversees and administers our executive compensation program in accordance with its charter, which can be viewed in the Corporate Governance section of our Investor Relations website at investor.salesforce.com/corporate-governance. The Compensation Committee’s role includes oversight of our equity and incentive-based plans. The Compensation Committee meets regularly throughout the year, and it met 27 times in fiscal 2024. At least annually, it reviews the NEO compensation program overall, and approves the target total direct compensation for our NEOs, including base salaries, target annual performance cash bonus opportunities and long-term equity grants for the fiscal year. In setting these elements of compensation, the Compensation Committee reviews the total target compensation for our NEOs and considers market and peer practices. Specifically, the Compensation Committee is provided with competitive positioning data for similarly situated executives at companies in our peer group, as well as summary consolidated information about our NEOs’ total compensation and pay history to use in setting individual compensation elements and making decisions on total NEO compensation levels.
Role of Committee Advisors
The Compensation Committee has the authority to engage its own advisors to assist in carrying out its responsibilities. As in the past, the Compensation Committee continued to engage the services of Compensia, Inc., an independent, national compensation consulting firm (the “compensation consultant”), in fiscal 2024. Pursuant to the factors set forth in Item 407 of Regulation S-K of the Securities Exchange Act of 1934, as amended, the Compensation Committee has reviewed the independence of the compensation consultant and conducted a conflicts of interest assessment (taking into consideration factors specified in the NYSE listing standards). No other fees were paid to the compensation consultant except fees related to its services to the Compensation Committee and the Governance Committee. The compensation consultant provides the Compensation Committee with guidance regarding the amount and types of compensation that we provide to our Executive Officers and how these compare to peer company compensation practices, as well as advice regarding other compensation-related matters. The compensation consultant also provides the Compensation Committee with advice related to our equity plans and provides the Governance Committee with data and advice regarding the Board’s compensation program.
Representatives of the compensation consultant attend meetings of the Compensation Committee and the Governance Committee, as requested, and also communicate with the Compensation Committee and the Governance Committee outside of meetings. The compensation consultant reports to the Compensation Committee and the Governance Committee rather than to management, although representatives of the firm may meet with members of management, including our CEO, and individuals in our Employee Success (human resources) department, for purposes of gathering information on proposals that management may make to the Compensation Committee or Governance Committee. During fiscal 2024, the compensation consultant met with various members of management to collect data and obtain management’s perspective on our compensation program for Executive Officers and non-employee directors. The Compensation Committee may replace its compensation consultant or hire additional advisors at any time.
Role of Executive Officers
Mr. Benioff provided input to the Compensation Committee on the performance and compensation of Executive Officers. The Compensation Committee considers his input when determining and approving Executive Officer compensation. Executive leaders in our Legal and Employee Success organizations provide general administrative support to the Compensation Committee throughout the year, including providing legal advice and overseeing the documentation of equity plans and awards as approved by the Compensation Committee or its authorized delegate, and attending Compensation Committee meetings as requested.
Role of Peer Companies
The Compensation Committee regularly reviews the appropriateness of the compensation peer group used by the compensation consultant to generate competitive pay data for the Compensation Committee’s review in connection with Executive Officer compensation decisions. The compensation consultant regularly analyzes our group of peer companies based on various financial and other measures, such as industry, revenue, market capitalization, number of employees and growth history and potential, as well as competition for executive officers. The peer group used to evaluate the competitiveness and appropriateness of our fiscal 2024 compensation program (the “2024 Peer Group”) was selected by the Compensation Committee after considering the input of the compensation consultant.
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2024 Peer Group |
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• Accenture plc |
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• Cisco Systems, Inc. |
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• Microsoft Corporation |
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• Adobe Inc. |
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• Dell Technologies Inc. |
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• Oracle Corporation |
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• Alphabet Inc. |
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• International Business Machines |
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• PayPal Holdings, Inc. |
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• Amazon.com, Inc. |
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Corporation |
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• SAP SE |
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• Apple Inc. |
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• Intuit Inc. |
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• Service Now, Inc. |
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• Block, Inc. |
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• Meta Platforms, Inc. |
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• Workday, Inc. |
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SALESFORCE 2024 PROXY STATEMENT |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED) |
Comparative Market Data
Peer and market data is a helpful reference for the Compensation Committee to assess the competitiveness and appropriateness of our Executive Officer compensation program within our industry sector and the broader business community. Ultimately, the Compensation Committee applies its own business judgment and experience to determine the individual compensation elements, the amount of each compensation element and total target compensation. Depending upon Company and individual performance, as well as the various other factors discussed in this Compensation Discussion and Analysis, target and actual total direct compensation of our NEOs, as well as individual compensation elements, may be within, below or above the market range for their positions.
In addition, as part of its Executive Officer compensation planning process, the Compensation Committee reviewed aggregated survey data, which provided additional context regarding executive compensation practices in the marketplace, drawn from a Radford Custom Compensation Survey. The Compensation Committee also periodically reviews compensation data from certain other companies in the market for the executive talent for whom we compete.
Summary Information on Fiscal 2025 Compensation Decisions
Below is summary information on Compensation Committee decisions for fiscal 2025 compensation for our NEOs to date. Our Proxy Statement for the 2025 Annual Meeting will provide additional detail on fiscal 2025 NEO compensation.
In March 2024, as part of its regular annual compensation review, the Compensation Committee evaluated market and peer data, overall compensation, internal compensation alignment, and Company and individual performance over fiscal 2024. Following its review, the Compensation Committee made the following decisions for fiscal 2025 compensation for our NEOs.
Fiscal 2025 Base Salaries and Target Bonus Opportunities
To reinforce the importance of performance-based compensation and to reduce the gap in total compensation to a competitive position compared to our peers, the Compensation Committee increased target bonus opportunities for our NEOs. The Compensation Committee made changes to Mr. Millham’s base salary and target bonus opportunity to reflect the significant increase in his responsibilities as President and Chief Operating Officer. Fiscal 2025 base salaries and target bonus opportunities, expressed as a percentage of base salary, are set forth below.
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NEO |
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Fiscal 2025 Base Salary |
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Change in Base Salary from Fiscal 2024 |
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Fiscal 2025 Target Cash Bonus Opportunity (as % of Base Salary) |
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Change in Target Cash Bonus Percentage from Fiscal 2024 |
Marc Benioff |
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$1,550,000 |
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No change |
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225% |
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13% |
Amy Weaver |
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$1,050,000 |
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5% |
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150% |
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50% |
Srinivas Tallapragada |
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$1,000,000 |
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No change |
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150% |
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50% |
Brian Millham |
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$1,100,000 |
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22% |
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175% |
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75% |
Sabastian Niles |
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$ 900,000 |
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No change |
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125% |
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25% |
Fiscal 2025 Long-Term Equity Incentive Awards
Additionally, as part of its March 2024 annual compensation review, the Compensation Committee approved fiscal 2025 long-term equity incentive awards for our NEOs. Consistent with fiscal 2024, we maintained a 60% PRSU weighting for our CEO, with the remaining 40% delivered in stock options. The equity award mix for our other NEOs was split 50/50 between PRSUs and RSUs, except that Mr. Millham’s fiscal 2025 award, up to his contractually required award amount, was split evenly between stock options and RSUs to comply with his pre-existing agreement, with the excess over that amount delivered in PRSUs. In making its decisions, the Compensation Committee evaluated market and peer data and the factors described above and endeavored to deliver market-competitive fiscal 2025 long-term equity incentive opportunities that were generally set between the 50th and 75th percentiles of peer company pay levels. The intended target values of fiscal 2025 annual long-term equity incentive awards are shown below.
Target Value of Fiscal 2025 Long-Term Equity Incentive Awards(1)
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NEO |
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Fiscal 2025 PRSUs |
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Fiscal 2025 Stock Options |
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Fiscal 2025 RSUs |
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Total Fiscal 2025 Intended Target Equity Value |
|
Marc Benioff |
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$ |
26,100,000 |
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|
$ |
17,400,000 |
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|
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— |
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|
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$43,500,000 |
|
Amy Weaver |
|
$ |
7,500,000 |
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|
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— |
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|
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$7,500,000 |
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|
|
$15,000,000 |
|
Srinivas Tallapragada |
|
$ |
7,500,000 |
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|
|
— |
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|
|
$7,500,000 |
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|
|
$15,000,000 |
|
Brian Millham |
|
$ |
6,000,000 |
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|
$ |
6,000,000 |
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$6,000,000 |
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|
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$18,000,000 |
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Sabastian Niles |
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$ |
5,000,000 |
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|
|
— |
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$5,000,000 |
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$10,000,000 |
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(1) |
Values are intended target values of fiscal 2025 annual equity awards and, in accordance with FASB ASC Topic 718, may differ from values reported in the Summary Compensation Table for fiscal 2025 or the values actually realized. These awards were granted on March 22, 2024. Stock options were granted with a per share exercise price of $307.77. |
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SALESFORCE 2024 PROXY STATEMENT |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED) |
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Other Compensation Policies
Stock Ownership Guidelines
We maintain a stock ownership policy for our Executive Officers, including our NEOs, as set forth in our Corporate Governance Guidelines (the “Guidelines”). The Guidelines provide that our CEO must attain ownership of, by the fifth anniversary of his or her appointment as CEO, and maintain ownership throughout his or her tenure, a number of shares of our common stock equal to the lesser of 112,000 shares or the number of shares equivalent in value to four times his or her annual salary. The Guidelines also provide that each other Executive Officer must attain ownership of a number of shares equivalent in value to 1.5x his or her annual salary. Executive Officers must meet these requirements by the fifth anniversary from the date he or she becomes an Executive Officer and maintain ownership throughout his or her tenure as an Executive Officer. We do not count unexercised stock option awards, whether vested or unvested, and do not count other unvested or unearned equity awards toward these ownership requirements. With ownership of over 12.9 million shares as of April 15, 2024, Mr. Benioff significantly exceeds his ownership requirements under these guidelines. Each of our other NEOs is in compliance with the stock ownership policy.
We also maintain a stock ownership policy for our non-employee directors, as described earlier in “Directors and Corporate Governance—Compensation of Directors” above and as set forth in our Guidelines.
Executive Officer Incentive Compensation Recovery “Clawback” Policy
The Company adopted the Executive Officer Incentive Compensation Recovery Policy (the “Clawback Policy”) in 2023 in accordance with SEC rules and NYSE listing standards. The Clawback Policy mandates the recovery of certain erroneously paid performance-based incentive compensation that may be received by our Executive Officers on or after October 2, 2023, if we have a qualifying financial restatement during the three completed fiscal years immediately preceding the fiscal year in which a financial restatement determination is made, subject to limited exceptions. Recovery is required regardless of whether the Executive Officer was involved in the preparation of the relevant financial statements.
Prohibition on Hedging and Pledging Transactions
Our insider trading policy prohibits employees (including our Executive Officers) and directors from, among other things, engaging in short sales, hedging of stock ownership positions, and transactions involving derivative securities relating to our common stock (other than stock options and other awards granted pursuant to the Company’s equity plans). Executive Officers and directors also are not permitted to pledge our securities.
Equity Award Grant Practices
The majority of our equity awards are granted on an annual basis, typically in March. New hire and ad hoc awards are generally granted monthly throughout the fiscal year, typically on the 22nd day of the month.
Executive Officer Cash Severance Limitation Policy
In March 2024, our Compensation Committee adopted the Executive Officer Cash Severance Limitation Policy, which restricts the Company from entering into any new employment agreement or severance agreement with any Executive Officer—or establishing any new severance plan or policy covering any Executive Officer—that provides for cash severance benefits exceeding 2.99 times the sum of the Executive Officer’s base salary plus target annual bonus opportunity, without stockholder ratification of such agreement, plan or policy.
Post-Employment Compensation
We recognize that it is possible that we may be involved in a transaction involving a change of control of the Company, and that this possibility could result in the departure or distraction of our NEOs to the detriment of our business. The Compensation Committee and the Board believe that the prospect of such a change of control transaction would likely result in our NEOs facing uncertainties about their future employment and distractions resulting from concern over how the potential transaction might affect them.
To allow our NEOs to focus solely on making decisions that are in the best interests of our stockholders in the event of a possible, threatened or pending change of control transaction, and to encourage them to remain with us despite the possibility that a change of control might affect them adversely, we have entered into Change of Control and Retention Agreements with each of our Executive
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SALESFORCE 2024 PROXY STATEMENT |
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COMPENSATION DISCUSSION AND ANALYSIS (CONTINUED) |
Officers, including our NEOs, that provide them with certain payments and benefits in the event of the termination of their employment within the three-month period prior to, or the 18-month period following, a change of control of the Company (referred to as the “change of control period”). Severance payments and benefits under these agreements are conditioned on the NEOs’ signing a release of claims in favor of the Company. The Compensation Committee and the Board believe that these “double-trigger” agreements serve as an important retention tool to ensure that personal uncertainties do not dilute our NEOs’ focus on building stockholder value.
Upon a qualifying termination of employment during the change of control period, these agreements provide each of our current NEOs with a payment equal to 150% (or 200% for Mr. Benioff) of his or her annual base salary and target cash bonus, Company-paid premiums for health care continuation coverage for a period of up to 18 months (or 24 months for Mr. Benioff) following termination of employment, and the full and immediate vesting of all outstanding and unvested equity awards, with the number of PRSUs that vest determined as set forth under “Employment Contracts and Certain Transactions—Performance-Based Restricted Stock Units” below.
In establishing these terms and conditions, the Compensation Committee and the other independent directors considered competitive market data and governance best practices information provided by the compensation consultant. They also evaluated the cost of these arrangements and the potential payout levels to each affected NEO under various scenarios. In approving these agreements, they determined that the cost to us and our stockholders was reasonable and not excessive, given the benefit conferred to us. The Compensation Committee and the Board believe that these agreements will help to maintain the continued focus and dedication of our NEOs to their assigned duties without the distraction that could result from the possibility of a change of control of the Company.
Mr. Niles is entitled to cash severance upon a termination of employment by the Company other than for cause per the terms of his offer letter. Mr. Millham is entitled to payments and benefits upon certain qualifying terminations of employment in accordance with the terms of the Millham Agreement.
For a summary of the material terms and conditions of agreements in effect during fiscal 2024, see “Employment Contracts and Certain Transactions” below.
Tax and Accounting Considerations
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code imposes limitations on the deductibility for corporate federal income tax purposes of remuneration in excess of $1 million paid to any person who has served as chief executive officer, chief financial officer and each of the three next most highly compensated executive officers of a public company. As a result, we expect that compensation awarded to our NEOs will not be deductible by the Company to the extent it exceeds the $1 million threshold.
Taxation of “Parachute” Payments and Deferred Compensation
Sections 280G and 4999 of the Internal Revenue Code provide that executive officers, directors who hold significant equity interests, and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change of control of the Company that exceed certain prescribed limits, and that we (or our successor) may forfeit a deduction on the amounts subject to this additional tax. We did not provide any Executive Officers, including any NEO, with a “gross-up” or other reimbursement payment for any tax liability that the executive might owe because of the application of Sections 280G or 4999 during fiscal 2024 and we have not agreed and are not otherwise obligated to provide any NEO with such a “gross-up” or other reimbursement.
Section 409A of the Internal Revenue Code imposes significant additional taxes if an executive officer, director or service provider receives “deferred compensation” that does not comply with the requirements of Section 409A of the Internal Revenue Code. We have structured deferred compensation in a manner intended to comply with or be exempt from Section 409A of the Internal Revenue Code and applicable regulations and guidance.
Accounting for Stock-Based Compensation
We follow FASB ASC Topic 718 in connection with the financial reporting of our stock options and other stock-based awards. FASB ASC Topic 718 requires companies to calculate the grant date “fair value” of their stock option grants using a variety of assumptions, as well as the grant date “fair value” of their other stock-based awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our executives may never realize any value from their options or other stock-based awards. FASB ASC Topic 718 also requires companies to recognize the compensation cost of their stock option grants and other stock-based awards in their income statements over the period in which an executive is required to render service in exchange for vesting of the option or other award. When determining the types and amounts of equity compensation granted to the NEOs, the Compensation Committee considers the advantages and disadvantages of various equity vehicles, such as stock options, RSUs and PRSUs. As part of this consideration, the Compensation Committee considers the overall program cost, which includes the associated compensation expense for financial reporting purposes.
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SALESFORCE 2024 PROXY STATEMENT |
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EMPLOYMENT CONTRACTS AND CERTAIN TRANSACTIONS |
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EMPLOYMENT CONTRACTS AND CERTAIN TRANSACTIONS
Executive Officer Offer Letters and Agreements. Each NEO is an “at-will” employee. Our offer letters with our NEOs provide for one or more of the following: annual base salary, an annual bonus opportunity based on Company and individual performance, initial grants of equity awards and participation in our Company-wide employee benefit plans. Our offer letter with Mr. Niles provides that if he is terminated by the Company for reasons other than cause, subject to his execution of a release of claims in favor of the Company, he will be eligible to receive cash severance equal to one year of annual base salary and target bonus, payable in monthly installments for twelve months following termination.
Change of Control. We have entered into Change of Control and Retention Agreements with each of our NEOs. Pursuant to these agreements, if the NEO is terminated without cause (as defined in the agreement) or the NEO resigns for good reason (as defined in the agreement) within three months prior to, or 18 months after, a change of control (as defined in the agreement) of the Company, the NEO will be entitled to receive the following payments and benefits:
• |
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A lump sum payment equal to 150% (or 200% for Mr. Benioff) of his annual base salary and target bonus; |
• |
|
Company-paid premiums for health care (medical, dental and vision) continuation coverage for the NEO and his or her eligible dependents for a period of up to 18 months (or 24 months for Mr. Benioff) following termination; and |
• |
|
Full vesting acceleration of the unvested portion of all outstanding equity incentive awards held by the NEO at the time of termination. |
Each Change of Control and Retention Agreement provides that termination payments and benefits will be either delivered in full or to such lesser extent as would result in no portion of such termination benefits being subject to the excise tax imposed by the “golden parachute” rules of Section 4999 of the Internal Revenue Code of 1986, as amended, whichever of the foregoing amounts, after taking into account all applicable taxes, results in the greatest amount of termination benefits to the executive on an after-tax basis.
Receipt of payments and benefits under each agreement is conditioned upon execution by the executive of a release of claims in favor of the Company and continued compliance by the executive with confidentiality obligations.
Performance-Based Restricted Stock Units. The PRSUs granted to our NEOs, including our CEO, provide that if a change of control of the Company occurs during the NEO’s employment and before the end of the applicable performance period, a number of PRSUs will become eligible to vest based on (1) our actual TSR performance ranking relative to the PRSU Index Group from the grant date through the date of the change of control and, (2) if applicable, our actual non-GAAP operating margin performance if the change of control occurs on or after the last day of an annual measurement period (or periods) or assumed target performance for any annual measurement periods in progress or that have not yet commenced as of the date of the change of control (the “eligible PRSUs”). As of the date of the change of control, a prorated portion of the eligible PRSUs (if any) will vest to reflect the portion of the performance period that has elapsed through such date, with the remaining eligible PRSUs vesting in equal calendar quarterly installments thereafter over the remainder of the original performance period, subject to the NEO’s continued employment through each vesting date. Any eligible PRSUs are also subject to accelerated vesting if the NEO incurs a qualifying termination of employment within three months before, or 18 months after, a change of control of the Company in accordance with the terms of the NEO’s existing Change of Control and Retention Agreement.
If a change of control of the Company occurs within the three-month period after an NEO ceases to be an employee, and such officer qualified for severance payments and benefits under his or her Change of Control and Retention Agreement, the rules described in the preceding paragraph apply as if such officer had remained an employee through the date of the change of control. Therefore, assuming the NEO qualifies for severance payments and benefits under his or her Change of Control and Retention Agreement, he or she will be entitled to full vesting of any and all shares eligible to vest based on the TSR and non-GAAP operating margin performance (determined as described above) as of the date performance is certified.
Millham Agreement. In February 2021, before he became an Executive Officer, the Company entered into a retention agreement with Mr. Millham (as described under “Compensation Discussion and Analysis—Pre-existing Retention Agreement with Mr. Millham” above). Pursuant to the terms of this agreement, if Mr. Millham’s employment is terminated by the Company without cause, his outstanding and unvested options and RSUs will continue to vest for a period of three years from the date of such termination. The agreement also provides that upon a termination by the Company without cause, Mr. Millham will be eligible for the Company’s U.S. Severance Plan benefits; however, he ceased to be eligible to participate in this plan upon becoming an Executive Officer. The Millham Agreement also provides that if Mr. Millham remains employed through February 1, 2025, and transitions to a non-employee advisor of the Company for a period of at least three years, any unvested options and RSUs will continue to vest during the advisory period, provided that he complies with the terms of an advisory agreement with standard covenants, including no conflicting obligations and confidentiality clauses. Mr. Millham would not be entitled to any other compensation for his services as an advisor during such period.
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SALESFORCE 2024 PROXY STATEMENT |
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EMPLOYMENT CONTRACTS AND CERTAIN TRANSACTIONS (CONT.) |
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Compensation Committee Interlocks and Insider Participation. John V. Roos, Neelie Kroes and Craig Conway served on the Compensation Committee during fiscal 2024, and Maynard Webb served on the Compensation Committee through February 2023. No member of the Compensation Committee was an employee, officer, or former officer of the Company or any of our subsidiaries. No member of the Compensation Committee had any relationship requiring disclosure under the “Related Party and Other Transactions” section below, except for Mr. Conway. For more information regarding transactions involving certain members of the Compensation Committee, please see transactions described under “Related Party and Other Transactions” below.
Policies and Procedures with Respect to Related Party Transactions. Our Board is committed to the highest legal and ethical standards of conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest. Our Audit Committee Charter requires that the Audit Committee approve any related party transactions, after reviewing each such transaction for potential conflicts of interest and other improprieties. Further, the Company has in place written Related Party Transaction Policies and Procedures, under which the Audit Committee reviews and approves or, where pre-approval is not reasonably practical, ratifies any related party transactions. In approving or rejecting a proposed transaction, our Audit Committee will consider the relevant facts and circumstances, including the costs and benefits to the Company, the nature of the related party’s interest in the transaction, the availability and terms of other sources for comparable services or products, and, if applicable, the impact on a director’s independence.
Related Party and Other Transactions. Except for the compensation of directors and executive officers described earlier and the transactions set forth below, there were no transactions since the beginning of fiscal 2024 in which the Company was a party, the amount involved in the transaction exceeds $120,000 and in which any director, director nominee, executive officer, holder of more than 5% of our capital stock, or immediate family member of any of the foregoing individuals had or will have a direct or indirect material interest.
Marc Benioff, our Chair and CEO, owns entities that publish TIME Magazine, with which the Company does business in the ordinary course. In fiscal 2024, entities affiliated with TIME Magazine paid approximately $880,000 for cloud service offerings from the Company on terms consistent with those available to unaffiliated third parties.
In fiscal 2021, Mr. Benioff entered into a Time Sharing Agreement with the Company providing for the reimbursement by the Company to Mr. Benioff for business use of his personal aircraft. For fiscal 2024, the value of this reimbursement (excluding a portion reported in “All Other Compensation” in the Summary Compensation Table) was approximately $599,125.
In fiscal 2024, the Company acquired Airkit, Inc. (“Airkit”), a digital automation company. Airkit’s co-founder and CEO, Stephen Ehikian, is the son-in-law of Craig Conway, one of the Company’s independent directors and a member of the Company’s Compensation Committee. Mr. Ehikian, who owned equity securities in Airkit, received approximately $11 million in total proceeds, subject to customary escrow-related withholdings, in connection with the acquisition. All holders of the same class of equity securities in Airkit received the same benefit on a pro rata basis. Additionally, Mr. Ehikian received and accepted a temporary offer of employment through February 2024 as a non-executive employee of Salesforce to promote transitional services and to help facilitate the success of the acquisition. In connection with his temporary offer of employment, he received base salary and cash retention compensation of approximately $129,833 and was eligible to participate in standard employee benefits. Mr. Conway was not involved in negotiations related to the acquisition or Mr. Ehikian’s compensation or service fee arrangement.
Mr. Munoz’s daughter, Kellie Munoz, is a non-executive employee of Salesforce. In fiscal 2024, she received base salary and cash incentive compensation of approximately $266,148, an equity award of restricted stock units with a grant date fair value of approximately $90,884, and standard employee benefits, consistent with the total compensation provided to other employees of the same level with similar responsibilities.
In January 1999, the Salesforce Foundation, also referred to as the Foundation, was chartered on an idea of leveraging the Company’s people, technology and resources to help improve communities around the world. The Company calls this integrated philanthropic approach the 1-1-1 model. In connection with its 2019 business combination with Salesforce.org, the Company agreed to use its best efforts to make charitable cash contributions of up to $5 million to the Foundation in each fiscal quarter beginning in the third quarter of fiscal 2020 for ten years. The Company’s Chair is also the chair of the Foundation. Since the Foundation’s inception, the Company provided at no charge certain resources to the Foundation, such as services provided by employees of the Company and other resources. The value of these resources and charitable cash contributions to the Foundation has not been and is not expected to be material. Although we do not consider this to be a related party transaction within the meaning of applicable SEC rules, we are providing this information in the interest of transparency.
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SALESFORCE 2024 PROXY STATEMENT |
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PROPOSAL 2 — APPROVAL OF AN AMENDMENT OF THE COMPANY’S CERTIFICATE OF INCORPORATION
The State of Delaware, where Salesforce is incorporated, recently enacted legislation that expands exculpation protection to officers, thereby enabling companies to eliminate the monetary liability of certain officers in certain circumstances, similar to but more limited than the protection already afforded to directors under our Restated Certificate of Incorporation (the “Certificate”). In line with the update to Delaware law, we are seeking stockholder approval to amend the Certificate to extend exculpation to certain officers to the fullest extent permitted by Delaware law (the “Proposed Certificate Amendment”). The Proposed Certificate Amendment also simplifies the existing exculpation provision related to directors of the Company set forth in Article EIGHTH by referring to the Delaware General Corporation Law (“DGCL”) instead of specifying each instance where exculpation for directors is currently not available under the DGCL. Accordingly, the current exculpation protections available to directors remain unchanged as a result of the Proposed Certificate Amendment.
Purpose and Effect of the Proposed Amendment
The Proposed Certificate Amendment is a result of the Board of Directors’ ongoing review of corporate governance best practices given recent changes in Delaware law. In developing the Proposed Certificate Amendment, the Board of Directors (including all members of the Nominating and Corporate Governance Committee) carefully considered the implications of amending our Certificate to provide exculpation from liability for certain of our officers.
The Board of Directors believes that it is important to extend exculpation protection to officers, to the fullest extent permitted by Delaware law, in order to better position Salesforce to attract and retain qualified and experienced officers. In the absence of such protection, such individuals might be deterred from serving as officers due to exposure to personal liability and the risk of incurring substantial expense in defending lawsuits, regardless of merit. The nature of their role often requires officers to make decisions on crucial matters and frequently in response to time-sensitive opportunities and challenges, which can create substantial risk of lawsuits seeking to impose liability with the benefit of hindsight and regardless of merit. Aligning the protections available to our officers with those available to our directors would empower officers to exercise their business judgment in furtherance of stockholder interests without the potential for distraction posed by the risk of personal liability.
The Board of Directors also believes that the Proposed Certificate Amendment would strike the appropriate balance between furthering our goals of attracting and retaining quality officers with promoting stockholder accountability because, consistent with the update to Delaware law, the Proposed Certificate Amendment would exculpate officers only in connection with direct claims brought by stockholders, including class actions, but would not eliminate or limit liability with respect to any of the following:
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breach of fiduciary duty claims brought by Salesforce itself; |
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derivative claims brought by stockholders in the name of Salesforce; |
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any claims involving breach of the duty of loyalty to Salesforce or our stockholders; |
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any claims involving acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; or |
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any claims involving transactions from which the officer derived an improper personal benefit. |
Additionally, in accordance with Delaware law, under the Proposed Certificate Amendment, the only officers who would be eligible for exculpation would be (i) anyone serving as our President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Legal Officer, Chief Accounting Officer, Controller and Treasurer, (ii) any other named executive officers, and (iii) any other officer who has consented to service of process in Delaware by written agreement.
Taking into account the narrow class and type of claims for which officers would be exculpated, and the benefits the Board of Directors believes would accrue to Salesforce and our stockholders — enhancing our ability to attract and retain talented officers and potentially reducing future litigation costs associated with frivolous lawsuits — the Board of Directors has declared the Proposed Certificate Amendment to be advisable and has determined it is in the best interests of Salesforce and our stockholders.
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SALESFORCE 2024 PROXY STATEMENT |
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PROPOSAL 3 — APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE COMPANY’S 2013 EQUITY INCENTIVE PLAN
We are seeking stockholder approval to amend and restate our 2013 Equity Incentive Plan, as amended (the “2013 Plan”) to increase the number of shares of Common Stock of the Company (the “Shares”) reserved for issuance under the 2013 Plan by an additional 36 million Shares and extend the termination date of the 2013 Plan from March 10, 2032 to March 21, 2034. Our continuing ability to offer equity incentive awards under the 2013 Plan is critical to our ability to attract, motivate and retain qualified personnel, particularly in light of the highly competitive market for employee talent in which we operate.
The Board has determined that it is in the best interests of the Company and its stockholders to approve this proposal. The Board has approved the amendment and restatement of the 2013 Plan to increase the available shares thereunder and extend the term of the 2013 Plan, subject to stockholder approval, and recommends that stockholders vote in favor of this proposal at the Annual Meeting. Stockholder approval of this proposal requires the affirmative vote of a majority of the outstanding Shares that are present in person or by proxy and entitled to vote on the proposal at the Annual Meeting.
If stockholders approve this proposal, the amendment and restatement of the 2013 Plan will become effective as of the date of stockholder approval. If stockholders do not approve this proposal, the amendment and restatement of the 2013 Plan described in this proposal will not take effect and our 2013 Plan will continue to be administered in its current form. Our executive officers and directors have an interest in this proposal by virtue of their being eligible to receive equity awards under the 2013 Plan. The remainder of this discussion, when referring to the 2013 Plan, refers to the amended and restated 2013 Plan as if this proposal is approved by our stockholders, unless otherwise specified or the context otherwise references the 2013 Plan prior to the amendment and restatement.
Increasing the Number of Shares Reserved for Issuance under the 2013 Plan
Background
The 2013 Plan was initially adopted by the Board in March 2013, and our stockholders approved it in June 2013. As described in more detail below, the initial share reserve under the 2013 Plan was 48 million Shares, plus an additional 21,920,540 Shares that were available for grant under our 2004 Equity Incentive Plan and 2004 Outside Directors Stock Plan (the “Prior Plans”) as of the date stockholders approved the 2013 Plan. In addition, any Shares subject to outstanding awards under the 2013 Plan or, after the date stockholders approved the 2013 Plan, under the Prior Plans, that expire or are otherwise forfeited to, or repurchased by, the Company also become available for future grant under the 2013 Plan, although the number of Shares that can become available under the 2013 Plan in this manner is limited to 54,332,000 Shares. Since adoption of the 2013 Plan, our stockholders have approved increases to our Share reserve at our 2015, 2017, 2018, 2019, 2020, 2021, 2022 and 2023 Annual Meetings totaling an additional 244.7 million Shares.
As discussed in our 2023 proxy statement, when we sought stockholder approval of the amendment of the 2013 Plan at the 2023 Annual Meeting, we believed that the Shares reserved for issuance under it following stockholder approval (along with Shares becoming available for future grant due to forfeitures and cancellations) would be sufficient to enable us to continue to grant equity awards under the 2013 Plan for approximately one year. This estimate was based on a forecast that took into account our anticipated rate of growth in hiring, an estimated range of our stock price over time, and our historical forfeiture rates, as well as the number of Shares we had available for grant under the 2014 Inducement Equity Incentive Plan (the “2014 Plan”).
Shares Available for Future Awards
As of March 31, 2024, approximately 34,337,880 Shares remained available for grant under the 2013 Plan, 849,274 Shares remained available for grant under the 2014 Plan and 10,062 Shares remained available for grant under the MetaMind Plan. The Board believes that additional Shares are necessary to meet the Company’s anticipated equity compensation needs. The proposed Share increase is expected to last approximately one to two years. This estimate is based on a forecast that takes into account our anticipated rate of growth in hiring, an estimated range of our stock price over time and our historical forfeiture rates, as well as the number of Shares we have available for grant under our acquired plans. We have also considered stockholder feedback in determining an appropriate number of Shares to seek to add to the 2013 Plan.
Reasons for Voting for the Proposal
Long-Term Equity Is a Key Component of Our Compensation Program
As discussed in the “Compensation Discussion and Analysis” above, our overall compensation objective is to compensate our personnel in a manner that attracts and retains the highly talented employees necessary to manage and staff a fast-paced and
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SALESFORCE 2024 PROXY STATEMENT |
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operationally complex business in an innovative and competitive industry. Our employees are our most valuable asset, and we strive to provide them with compensation packages that are competitive, that reward individual and Company performance and that help meet our retention needs. Equity awards, whose value depends on our stock performance and which require continued service over time before any value can be realized, help achieve these objectives and are a key element of our compensation program. Equity awards also incentivize our employees to manage our business as owners, aligning their interests with those of our stockholders. We believe we must continue to use equity compensation somewhat broadly to help attract, retain and motivate our employees to continue to grow our business, develop new products and ultimately increase stockholder value. As of March 31, 2024, approximately 45,309 of our current and former employees held outstanding equity awards.
The 2013 Plan Requires Additional Shares to Meet Our Forecasted Needs
We currently forecast granting equity awards representing approximately 13,411,757 Shares (or 31,656,483 fungible shares, i.e., taking into account that full value awards such as restricted stock units deplete the 2013 Plan share reserve at a rate of 2.15 Shares for every Share subject to the full value award) over a one-year period, or approximately 2.6% of our Common Stock outstanding as of March 31, 2024. We also anticipate Share forfeitures and cancellations of approximately 3,407,027 Shares (or 6,414,773 fungible shares) over this period, based on our historic rates.
If our expectation for forfeitures is accurate, our net grants (grants less forfeitures and cancellations) over the next year would be approximately 10,004,731 Shares (or 25,241,709 fungible shares), or approximately 2.6% of our Common Stock outstanding as of March 31, 2024.
As described above, the 2013 Plan had 34,337,880 Shares available for grant as of March 31, 2024. Our 2014 Plan allows us to grant awards to new employees as a material inducement to their joining the Company, such as in acquisitions, and The MetaMind, Inc. 2014 Stock Incentive Plan (the “MetaMind Plan”), which was assumed by us in 2016 in connection with our acquisition of MetaMind, allows us to grant awards to employees and consultants of MetaMind as of immediately prior to the acquisition date and employees and consultants of Salesforce hired on or following the acquisition date. We believe additional Shares should be reserved for issuance under our 2013 Plan to meet our estimated near-term equity compensation needs.
We operate in a highly competitive industry and geography for employee talent and do not expect required rates of compensation to decline. One alternative to using equity awards would be to significantly increase cash compensation. We do not believe this would be practical or advisable. We believe that a combination of equity and cash compensation is better for attracting, retaining and motivating employees, particularly in light of the highly innovative and competitive industry in which we operate. Any significant increase in cash compensation in lieu of equity awards would reduce the cash otherwise available for operations, investment in our business, or return to stockholders through our dividend program or share repurchase program. Furthermore, we do not believe a more cash-oriented program would have the same long-term retention value or serve to align employees’ interests to those of our stockholders as effectively as a program that includes equity.
We Manage Our Equity Incentive Program Thoughtfully
We manage our long-term stockholder dilution by limiting the number of equity awards granted annually and limiting what we grant to what we believe is an appropriate amount of equity necessary to attract, reward and retain high performing employees. Our three-year average burn rate, which we define as the number of Shares subject to equity awards granted in a fiscal year divided by the weighted average Shares outstanding for that fiscal year, was 2.1% for fiscal years 2022 through 2024 (see chart on page 94 for detailed calculations of our three-year burn rates). We are also mindful of the ratio of our stock-based compensation expense to our revenues over time.
Equity Awards Outstanding
As of March 31, 2024, equity awards outstanding under Salesforce equity plans were approximately: 10,858,104 stock options, no unvested restricted shares, 33,324,592 restricted stock units (“RSUs”) and 2,952,650 unearned performance-based restricted stock units (“PRSUs”) (at target). An additional 477,612 stock options, 347,108 RSUs and no unvested restricted shares were outstanding under equity awards that had been assumed in connection with mergers and other corporate transactions as of March 31, 2024.
As of March 31, 2024, we had 970,283,653 Shares outstanding. Accordingly, our approximately 47,960,066 outstanding awards (not including awards under our employee stock purchase plan) plus 35,197,216 Shares available for future grant under our equity plans (not including awards under our employee stock purchase plan) as of March 31, 2024 represented approximately 8.6% of our Common Stock outstanding (commonly referred to as the “overhang”). As of March 31, 2024, the average weighted per share exercise price of all outstanding stock options (whether granted under Salesforce-originated equity plans or assumed in connection with corporate transactions) was $190.71 and the weighted average remaining contractual term was approximately four years. The closing price of our Common Stock on the NYSE was $276.32 per share on April 17, 2024.
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SALESFORCE 2024 PROXY STATEMENT |
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credited to the 2013 Plan share reserve on a 2.15-for-one basis; provided, however, that no more than 54,332,000 Shares may be added to the 2013 Plan pursuant to this provision.
Since the adoption of the 2013 Plan, our stockholders have approved reserving an aggregate of 244.7 million additional Shares at our 2015, 2017, 2018, 2019, 2020, 2021, 2022 and 2023 Annual Meetings. Our stockholders are now being asked to approve an additional 36 million Shares to become available for issuance under the 2013 Plan. As of March 31, 2024, we had approximately 34,337,880 Shares available for issuance under the 2013 Plan.
Share Reserve Reduction and Share Recycling
Any Shares subject to options or stock appreciation rights are counted against the 2013 Plan share reserve as one Share for every one Share subject to the award. Any Shares subject to awards granted under the 2013 Plan other than options or stock appreciation rights (i.e., full value awards, including restricted stock, RSUs, performance units and performance shares) are counted against the 2013 Plan share reserve as 2.15 Shares for every one Share subject thereto.
If any award granted under the 2013 Plan expires or becomes unexercisable without having been exercised in full, is surrendered or is forfeited to or repurchased by the Company due to failure to vest, the unpurchased or forfeited or repurchased Shares subject to such award become available for future grant or sale under the 2013 Plan. When Shares underlying full value awards are so returned to the 2013 Plan share reserve, 2.15 Shares are returned to the 2013 Plan reserve for each Share underlying such award.
With respect to the exercise of stock appreciation rights, the gross number of Shares covered by the portion of the exercised award, whether or not actually issued pursuant to such exercise, cease to be available under the 2013 Plan. If Shares subject to restricted stock, RSUs, performance shares or performance units are repurchased by or forfeited to the Company due to failure to vest, such Shares become available for future grant under the 2013 Plan (and increase the 2013 Plan reserve on the 2.15-for-one basis described above).
Shares used to pay the purchase price or satisfy tax withholding obligations of awards other than stock options or stock appreciation rights become available for future issuance under the 2013 Plan. However, Shares used to pay the exercise price or purchase price of an option or stock appreciation right or to satisfy tax withholding obligations relating to such awards do not become available for future issuance under the 2013 Plan.
Adjustments to Shares Subject to the 2013 Plan
In the event of any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property, but excepting normal cash dividends), recapitalization, stock split, reverse stock split, reorganization, reincorporation, reclassification, merger, consolidation, split-up, split-off, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure affecting the Company’s Common Stock, the Administrator (as defined below), in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the 2013 Plan, will adjust the number and class of Shares that may be delivered under the 2013 Plan, the number, class and price of Shares subject to outstanding awards and the numerical award limitations. Any fractional Shares resulting from the adjustment will be rounded down to the nearest whole number, and in no event may the exercise or purchase price under any award be decreased to an amount less than the par value.
Administration
The 2013 Plan will be administered by the Board or a committee of individuals satisfying applicable laws appointed by the Board (the “Committee”). The Board has appointed its Compensation Committee as the Committee administering the 2013 Plan. Different Committees may administer the 2013 Plan with respect to different groups of service providers. If the Administrator desires to qualify grants to certain officers and key employees of the Company as exempt under Rule 16b-3 of the Exchange Act, the members of the Committee must qualify as “non-employee directors” under such rule. (For purposes of this summary of the 2013 Plan, the term “Administrator” will refer to either the Committee or the Board.) The Administrator may delegate day-to-day administration of the 2013 Plan, and any of the functions assigned to it, to one or more individuals.
Subject to the terms of the 2013 Plan, the Administrator has the sole discretion to select the employees, consultants, and directors who will receive awards, to determine the terms and conditions of awards (including the exercise price, the method of payment for Shares purchased under awards, the method of satisfaction of any tax withholding obligation arising in connection with an award, and the exercise terms for any award), to modify or amend each award subject to the restrictions of the 2013 Plan (including to accelerate vesting or waive forfeiture restrictions subject to any minimum vesting requirements set forth in the 2013 Plan), and to interpret the provisions of the 2013 Plan and outstanding awards. The Administrator may allow a participant to defer the receipt of payment of cash or delivery of Shares that otherwise would be due to such participant, provided that, unless expressly determined by the Administrator, such deferral election must comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the guidance promulgated thereunder (“Section 409A”). The Administrator may make rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws or qualifying for favorable tax treatment under applicable foreign laws. The Administrator may correct any defect, supply any omission or reconcile any inconsistency in the 2013 Plan of any award agreement and may make all other determinations deemed necessary or advisable for administering the 2013 Plan.
Notwithstanding the foregoing, the Administrator cannot institute, without prior stockholder approval, an exchange program whereby the exercise prices of outstanding awards may be reduced, outstanding awards may be surrendered or cancelled in exchange for awards with a higher or lower exercise price, or outstanding awards may be transferred to a third party.
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Eligibility
Awards may be granted to employees, directors and consultants of the Company and employees and consultants of any parent, subsidiary, or affiliate of the Company. Performance Bonus Awards may only be granted to employees of the Company or any parent, subsidiary, or affiliate of the Company. Incentive stock options may be granted only to employees who, as of the time of grant, are employees of the Company or any parent or subsidiary corporation of the Company. As of March 31, 2024, there were approximately 73,657 employees, including five Named Executive Officers and 11 non-employee directors, each of whom would be eligible to be granted awards under the 2013 Plan. In principle, any consultant to the Company is eligible to participate in the 2013 Plan, subject to certain SEC limitations. However, the Company’s current practice is generally not to grant equity awards to consultants except in certain limited cases. In fiscal 2024, seven consultants received equity awards under the 2013 Plan.
Minimum Vesting
Notwithstanding anything in the 2013 Plan to the contrary, equity-based awards granted under the 2013 Plan may not become exercisable, vest or be settled, in whole or in part, prior to the one-year anniversary of the date of grant, except that the Administrator may provide that awards become exercisable, vest or settle prior to such date in the event of the participant’s death or disability or in the event of a transaction described in the 2013 Plan. Notwithstanding the foregoing, up to 5% of the sum of (a) the number of Shares available for future grants on the date the Board approved the amended and restated version of the 2013 Plan (34,337,880 Shares as of March 31, 2024), plus (b) the proposed increase in the number of Shares available for issuance under the 2013 Plan (as described above), may be issued pursuant to awards subject to any, or no, vesting conditions, as the Administrator determines appropriate.
Stock Options
Options granted under the 2013 Plan are evidenced by a written agreement between the Company and the participant specifying the number of Shares subject to the option, the exercise price, the expiration date of the option, any conditions to exercise the options, and the other terms and conditions of the option, consistent with the requirements of the 2013 Plan.
The exercise price per Share of each option may not be less than the fair market value of a Share of the Company’s Common Stock on the date of grant. However, any incentive stock option granted to a person who at the time of grant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company (a “Ten Percent Stockholder”) must have an exercise price per share equal to at least 110% of the fair market value of a Share on the date of grant. In addition, stock options may be granted with an exercise price per share of less than the fair market value of a Share of the Company’s Common Stock in certain situations in which we are assuming or replacing options granted by another company that we are acquiring. The aggregate fair market value of the Shares (determined on the grant date) covered by incentive stock options which first become exercisable by any participant during any calendar year also may not exceed $100,000. Generally, the fair market value of the Common Stock is the closing sales price per share on the relevant date as quoted on the NYSE.
The 2013 Plan provides that the Administrator will determine acceptable forms of consideration for exercising an option. An option is deemed exercised when the Company receives the notice of exercise and full payment for the Shares to be exercised, together with applicable tax withholdings.
Options are exercisable at such times or under such conditions as determined by the Administrator and set forth in the award agreement. The maximum term of an option is as specified in the award agreement, provided that options may not have a term of more than seven years, and provided further that an incentive stock option granted to a Ten Percent Stockholder must have a term not exceeding five years.
The Administrator determines and specifies in each written award agreement, and solely in its discretion, the period of post-termination exercise applicable to each option. In the absence of such a determination by the Administrator, the participant generally is able to exercise the option to the extent vested for (i) 90 days following the participant’s termination as a service provider for reasons other than death, disability, or cause and (ii) 12 months following his or her termination due to death or disability. If the exercise of the option is prevented by applicable law within the time periods otherwise applicable, the option generally will remain exercisable for 90 days (or such longer period determined by the Administrator) following the date the participant received notice that the option is exercisable. If a sale within the applicable post-termination exercise period would subject the participant to suit under Section 16(b) of the Exchange Act, the option generally will remain exercisable until the 10th day following the date on which a sale of the Shares by the participant would no longer be subject to suit. Options terminate immediately upon the participant’s termination for cause. In no event can an option be exercised after the expiration of the term of the option.
Restricted Stock Awards
Awards of restricted stock are rights to acquire or purchase Shares, which vest in accordance with the terms and conditions established by the Administrator in its sole discretion. Restricted stock awards are evidenced by a written agreement between the Company and the participant specifying the number of Shares subject to the award and the other terms and conditions of the award, consistent with the requirements of the 2013 Plan.
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SALESFORCE 2024 PROXY STATEMENT |
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Restricted stock awards are subject to vesting conditions as the Administrator specifies, and the Shares acquired may not be transferred by the participant until the vesting conditions (if any) are satisfied. The Administrator may establish vesting criteria in its discretion, which may be based on continued employment or service, company-wide, departmental, divisional, business unit, or individual goals, applicable federal or state securities laws, or any other basis and which may include the performance goals listed below, and which, depending on the extent to which they are met, will determine the number of shares subject to the restricted stock award to become vested and no longer subject to forfeiture. Unless otherwise provided by the Administrator, a participant will forfeit any shares of restricted stock as to which the restrictions have not lapsed prior to the participant’s termination of service.
Participants holding restricted stock generally have the right to vote the Shares and to receive any dividends paid, provided that dividends or other distributions credited or payable in connection with shares of restricted stock that are not yet vested will be subject to the same restrictions and risk of forfeiture as the underlying award and will not be paid until the underlying award vests.
Restricted Stock Units
The Administrator may grant RSUs which represent a right to receive Shares at a future date as set forth in the participant’s award agreement. RSUs granted under the 2013 Plan are evidenced by a written agreement between the Company and the participant specifying the number of RSUs subject to the award, any vesting conditions, and other terms and conditions of the award, consistent with the requirements of the 2013 Plan.
RSUs vest if the performance goals or other vesting criteria the Administrator may establish are achieved. Earned RSUs may be settled, in the sole discretion of the Administrator, in cash, Shares, or a combination of both. The Administrator may establish vesting criteria in its discretion, which may be based on continued employment or service, company-wide, departmental, divisional, business unit, or individual goals, applicable federal or state securities laws, or any other basis and which may include the performance goals listed below, and which, depending on the extent to which they are met, will determine the number of Shares or amount of cash to be paid out to participants.
A participant will forfeit any unearned RSUs as of the date or under the conditions set forth in the award agreement.
Participants holding RSUs have no voting rights with respect to the Shares represented by the RSUs until the date the underlying Shares are issued, consistent with the terms of the 2013 Plan. The Administrator, in its sole discretion, may provide in the participant’s award agreement that the participant shall be entitled to receive dividend equivalents with respect to the payment of cash dividends on Shares having a record date prior to the date on which the RSUs are settled, consistent with the terms of the 2013 Plan. Settlement of dividend equivalents may be made in cash, Shares, or a combination thereof as determined by the Administrator. Except as otherwise provided in the participant’s award agreement, dividend equivalents, if any, shall accrue in additional RSUs based on the amount of dividend equivalents payable divided by the fair market value of a Share as of the date such dividend equivalents are credited. Any additional RSUs or other dividend equivalents resulting from any accrued dividend equivalents will be subject to the same terms and conditions, including vesting conditions, as the RSUs to which they relate and shall not vest or be paid prior to the time that the underlying award vests. In the event of a dividend or distribution paid in Shares or any other adjustment made upon a change in the capital structure of the Company, appropriate adjustments will be made to a participant’s RSU award so that it represents the right to receive upon settlement any new, substituted or additional securities or other property (other than normal cash dividends) to which the participant would be entitled by reason of the Shares issuable upon settlement of the award and any new, substituted, or additional securities or other property will be subject to the same vesting conditions as are applicable to the award.
Stock Appreciation Rights
A stock appreciation right gives a participant the right to receive the appreciation in the fair market value of a Share between the date of grant of the award and the date of its exercise. Each stock appreciation right granted under the 2013 Plan is to be evidenced by a written agreement between the Company and the participant specifying the exercise price and the other terms and conditions of the award, consistent with the requirements of the 2013 Plan.
The exercise price per share of each stock appreciation right may not be less than the fair market value of a Share on the date of grant, except in certain situations in which we are assuming or replacing stock appreciation rights granted by another company that we are acquiring. Upon exercise of a stock appreciation right, the holder of the award will be entitled to receive an amount determined by multiplying (i) the difference between the fair market value of a Share on the date of exercise over the exercise price by (ii) the number of exercised Shares. The Company may pay the appreciation in cash, in Shares, or in some combination thereof. The term of a stock appreciation right must be no more than seven years from the date of grant. The terms and conditions relating to the period of post-termination exercise with respect to options described above also apply to stock appreciation rights.
Performance Units and Performance Shares
Performance units and performance shares may also be granted under the 2013 Plan. Each award of performance units or performance shares granted under the 2013 Plan is to be evidenced by a written agreement between the Company and the participant specifying any vesting conditions, the number of performance units or performance shares (as applicable), and other terms and conditions of the
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award, consistent with the requirements of the 2013 Plan. Performance units and performance shares will result in a payment to a participant only if the performance goals or other vesting criteria (if any) the Administrator may establish are achieved or the awards otherwise vest (if applicable). Earned performance units and performance shares will be paid, in the sole discretion of the Administrator, in the form of cash, Shares, or in a combination thereof. The Administrator may set vesting criteria based upon continued employment or service, the achievement of specific performance objectives (Company-wide, departmental, divisional, business unit or individual goals, applicable federal or state securities laws, or any other basis), and which, depending on the extent to which they are met, will determine the number or value of performance units and performance shares to be paid out to participants.
Performance units will have an initial value established by the Administrator on or before the date of grant. Each performance share will have an initial value equal to the fair market value of a Share on the grant date. A participant will forfeit any performance shares or performance units that are unearned or unvested as of the date set forth in the award agreement.
Participants holding performance units or performance shares have no voting rights with respect to the Shares represented by the performance units or performance shares until the date the underlying Shares are issued, consistent with the terms of the 2013 Plan. No dividend equivalents may be granted with respect to performance units. However, the Administrator, in its sole discretion, may provide in the participant’s performance share award agreement that the participant will be entitled to receive dividend equivalents with respect to the payment of cash dividends on Shares having a record date prior to the date on which the performance shares are settled, consistent with the terms of the 2013 Plan. Settlement of dividend equivalents may be made in cash, Shares, or a combination thereof as determined by the Administrator. Except as otherwise provided in the participant’s award agreement, dividend equivalents, if any, shall accrue in additional performance shares based on the amount of dividend equivalents payable divided by the fair market value of a Share as of the date such dividend equivalents are credited. Any additional performance shares or other dividend equivalents resulting from any accrued dividend equivalents will be subject to the same terms and conditions, including vesting conditions, as the performance shares to which they relate and shall not vest or be paid prior to the time that the underlying award vests. In the event of a dividend or distribution paid in Shares or any other adjustment made upon a change in the capital structure of the Company, appropriate adjustments will be made to a participant’s award of performance shares so that it represents the right to receive upon settlement any new, substituted or additional securities or other property (other than normal cash dividends) to which the participant would be entitled by reason of the Shares issuable upon settlement of the award and any new, substituted, or additional securities or other property will be subject to the same vesting conditions as are applicable to the award.
Performance Bonus Awards
Performance bonus awards may also be granted under the 2013 Plan to employees in the form of a cash bonus payable upon the attainment of performance goals or objectives determined by the Administrator. The Administrator has complete discretion to determine the amount of the cash bonus that can be earned under a performance bonus award, provided that no one participant may be granted performance bonus awards under the 2013 Plan that could result in the participant receiving more than $10,000,000 in any one fiscal year of the Company.
Performance Goals
The Administrator (in its discretion) may make performance goals applicable to an award recipient with respect to any award granted in its discretion, including but not limited to one or more of the performance goals listed below. Awards granted under the 2013 Plan and subject to achievement of performance goals may be subject to achievement of one or more of the following measures: revenue, gross margin, operating margin, operating income, operating profit or net operating profit, pre-tax profit, earnings (which may include earnings before interest, taxes and depreciation, earnings before taxes and net earnings), net income, cash flow (including operating cash flow or free cash flow), expenses, the market price of the Company’s Common Stock, earnings per share, return on stockholder equity, return on capital, return on assets or net assets, return on equity, return on investment, economic value added, number of customers, stock price, growth in stockholder value relative to the moving average on the S&P 500 Index or another index, market share, contract awards or backlog, overhead or other expense reduction, credit rating, objective customer indicators, new product invention or innovation, attainment of research and development milestones, or improvement in productivity, as well as any additional measures or metrics deemed appropriate by the Administrator.
The performance goals applicable to awards may differ from participant to participant and from award to award. The Administrator in its discretion determines whether and the extent to which any performance goals are or are not satisfied and to which awards subject to performance goals are earned or settled, including whether any significant elements or items shall be included in or excluded from the calculation of any performance goal with respect to any awards or participants.
Grants to Non-Employee Directors
Our non-employee directors are eligible to receive all awards under the 2013 Plan, except incentive stock options and performance bonus awards, and subject to the limits described below.
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SALESFORCE 2024 PROXY STATEMENT |
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Individual Award Limitations
The 2013 Plan contains annual grant limits. Specifically, subject to the adjustment provisions of the 2013 Plan, the maximum number of Shares or dollars that can be subject to awards granted to any one employee in any fiscal year is:
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Award Type |
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Annual Number of Shares or Dollar Value |
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Additional Shares or Dollar Value in Connection with New Hire* |
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Maximum Number of Shares and/or Dollars |
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Stock Options, Stock Appreciation Rights or Combination Thereof |
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20,000,000 shares |
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8,000,000 shares |
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28,000,000 shares |
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Restricted Stock, RSUs, Performance Shares or Combination Thereof |
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10,000,000 shares |
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4,000,000 shares |
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14,000,000 shares |
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Performance Units |
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$15,000,000 |
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$5,000,000 |
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$20,000,000 |
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* |
May be granted in the Company’s fiscal year in which the employee’s employment with the Company (or a parent or subsidiary corporation of the Company or an affiliate of the Company) first commences. |
In addition, the 2013 Plan limits the granting of cash performance bonus awards, such that no one employee may be granted performance bonus awards that could result in the employee receiving more than $10,000,000 in any one fiscal year of the Company.
If an award is cancelled in the same fiscal year of the Company in which it was granted (other than in connection with a merger of the Company with or into another corporation or entity or a change in control of the Company), the cancelled award will be counted against the limitations described above.
The 2013 Plan also provides that no non-employee director may be granted awards that cover more than 60,000 Shares in any one fiscal year of the Company, subject to the adjustment provisions of the 2013 Plan, provided that any awards granted to an individual while he or she was an employee or consultant but not a non-employee director shall not count for purposes of this limitation. This limit was determined after consultation with the Compensation Committee’s independent compensation consultant, Compensia, Inc.
The limit is consistent with the Company’s non-employee director compensation program, described in more detail starting on page 31.
The Administrator will adjust the Share limitations in this section in the event of any adjustment to the Company’s Shares discussed above (under “Adjustments to Shares Subject to the 2013 Plan”).
Transferability of Awards
Awards granted under the 2013 Plan generally are not transferable, and all rights with respect to an award granted to a participant generally will be available during a participant’s lifetime only to the participant (or the participant’s guardian or legal representative).
Dissolution or Liquidation
In the event of the Company’s proposed dissolution or liquidation, the Administrator will notify each participant in writing as soon as practicable prior to the effective date of such proposed transaction. An award will terminate immediately prior to consummation of such proposed action to the extent the award has not been previously exercised.
Change in Control
The 2013 Plan provides that, in the event of a merger or our “change in control” (as defined in the 2013 Plan), the Administrator will have authority to determine the treatment of outstanding awards, including, without limitation, that awards be assumed or an equivalent option or right substituted by the successor corporation or a parent or subsidiary of the successor corporation. The Administrator will not be required to treat all outstanding awards similarly.
If the successor corporation does not assume or substitute outstanding awards, the options and stock appreciation rights will become fully vested and exercisable, all restrictions on restricted stock and RSUs will lapse, and, with respect to awards with performance-based vesting, unless determined otherwise by the Administrator, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met. In addition, if an option or stock appreciation right is not assumed or substituted in the event of a change in control, the Administrator will notify the participant in writing that the option or stock appreciation right will be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion, and the option or stock appreciation right will terminate upon the expiration of such period.
If the successor corporation assumes or substitutes outstanding awards held by a non-employee director and the non-employee director’s status as a director of the Company or a director of the successor or acquiring company terminates other than upon voluntary resignation by the non-employee director (unless such resignation is at the request of the acquirer), then any options and stock appreciation rights held by the non-employee director will fully vest and become immediately exercisable. In addition, in such circumstances, all restrictions on restricted stock and RSUs held by such non-employee director will lapse, and, unless otherwise determined by the Administrator, all performance goals or other vesting requirements will be deemed achieved at 100% and all other terms and conditions met.
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SALESFORCE 2024 PROXY STATEMENT |
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Termination or Amendment
The 2013 Plan, as amended and restated and described in this proposal, will automatically terminate on March 21, 2034. The Administrator may terminate or amend the 2013 Plan at any time; however, no amendment may be made without stockholder approval except as described under “Administration” above on page 87. No termination or amendment may materially impair the rights of any participant unless required by applicable law or mutually agreed between the participant and the Administrator.
Summary of U.S. Federal Income Tax Consequences
The following summary is intended only as a general guide to the material U.S. federal income tax consequences of participation in the 2013 Plan. The summary is based on existing U.S. laws and regulations, and there can be no assurance that those laws and regulations will not change in the future. The summary does not purport to be complete and does not discuss the tax consequences upon a participant’s death, or the provisions of the income tax laws of any municipality, state or foreign country in which a participant may reside. As a result, tax consequences for any particular participant may vary from this summary based on individual circumstances.
Incentive Stock Options
An optionee recognizes no taxable income for regular income tax purposes as a result of the grant or exercise of an incentive stock option qualifying under Section 422 of the Code. Optionees who neither dispose of their Shares within two years following the date the option was granted nor within one year following the exercise of the option normally will recognize a capital gain or loss equal to the difference, if any, between the sale price and the purchase price of the Shares. If an optionee satisfies such holding periods upon a sale of the Shares, the Company will not be entitled to any deduction for federal income tax purposes. If an optionee disposes of Shares within two years after the date of grant or within one year after the date of exercise (a “disqualifying disposition”), the difference between the fair market value of the Shares on the exercise date and the option exercise price (not to exceed the gain realized on the sale if the disposition is a transaction with respect to which a loss, if sustained, would be recognized) will be taxed as ordinary income at the time of disposition. Any gain in excess of that amount will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. Any ordinary income recognized by the optionee upon the disqualifying disposition of the Shares generally should be deductible by the Company for federal income tax purposes, except to the extent such deduction is limited by applicable provisions of the Code.
The difference between the option exercise price and the fair market value of the Shares on the exercise date is treated as an adjustment in computing the optionee’s alternative minimum taxable income and may be subject to an alternative minimum tax, which is paid if such tax exceeds the regular tax for the year.
Special rules may apply with respect to certain subsequent sales of the Shares in a disqualifying disposition, certain basis adjustments for purposes of computing the alternative minimum taxable income on a subsequent sale of the Shares and certain tax credits which may arise with respect to optionees subject to the alternative minimum tax.
Nonstatutory Stock Options
Options not designated or qualifying as incentive stock options will be nonstatutory stock options having no special tax status. An optionee generally recognizes no taxable income as the result of the grant of such an option. Upon exercise of a nonstatutory stock option, the optionee normally recognizes ordinary income equal to the amount that the fair market value of the Shares on such date exceeds the exercise price. If the optionee is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by the exercise of a nonstatutory stock option, any gain or loss, based on the difference between the sale price and the fair market value on the exercise date, will be taxed as capital gain or loss. No tax deduction is available to the Company with respect to the grant of a nonstatutory stock option or the sale of the stock acquired pursuant to such grant.
Stock Appreciation Rights
In general, no taxable income is reportable when a stock appreciation right is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the fair market value of any Shares received. Any additional gain or loss recognized upon any later disposition of the Shares would be capital gain or loss.
Restricted Stock Awards
A participant acquiring restricted stock generally will recognize ordinary income equal to the fair market value of the Shares on the vesting date. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The participant may elect, pursuant to Section 83(b) of the Code, to accelerate the ordinary income tax event to the date of acquisition by filing an election with the Internal Revenue Service no later than 30 days after the date the Shares are acquired. Upon the sale of Shares acquired pursuant to a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss.
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SALESFORCE 2024 PROXY STATEMENT |
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Restricted Stock Unit Awards
There are no immediate tax consequences of receiving an award of RSUs. A participant who is awarded RSUs will be required to recognize ordinary income in an amount equal to the fair market value of Shares issued to such participant at the end of the applicable vesting period or, if later, the settlement date elected by the Administrator or a participant. Any additional gain or loss recognized upon any later disposition of any Shares received would be capital gain or loss.
Performance Shares, Performance Units, and Performance Bonus Awards
A participant generally will recognize no income upon the grant of a performance share, a performance unit, or performance bonus award. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of receipt in an amount equal to the cash received and the fair market value of any cash or nonrestricted Shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of any Shares received, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss.
Dividend Equivalents
A participant generally will not recognize taxable income upon the crediting of a dividend equivalent. However, upon the settlement of a dividend equivalent, whether in cash, Shares or a combination thereof, the participant normally will recognize ordinary income in the year of receipt in an amount equal to the amount of cash and/or fair market value of any Shares received.
Section 409A
Section 409A provides certain requirements for non-qualified deferred compensation arrangements with respect to an individual’s deferral and distribution elections and permissible distribution events. Awards granted under the 2013 Plan with a deferral feature will be subject to the requirements of Section 409A. If an award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation.
Tax Effect for the Company
The Company generally will be entitled to a tax deduction in connection with an award under the 2013 Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option). Section 162(m) limits a publicly traded company’s federal income tax deduction for compensation in excess of $1 million paid to certain “covered employees.” Covered employees generally include any executive officer whose compensation was required to be disclosed in the Company’s annual proxy statement. Therefore, we expect that we will be unable to deduct all compensation in excess of $1 million paid to our covered employees.
The foregoing is only a summary of the effects of the U.S. federal income taxation upon participants and the Company with respect to awards under the 2013 Plan. It does not purport to be complete, and does not discuss the impact of employment or other tax requirements, the tax consequences of a participant’s death or the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside.
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SALESFORCE 2024 PROXY STATEMENT |
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PROPOSAL 5 — ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
We are asking our stockholders to cast an advisory vote to approve the compensation of the Named Executive Officers during fiscal 2024 as disclosed in this Proxy Statement in accordance with the requirements of Section 14A of the Exchange Act. This Proposal gives our stockholders the opportunity to express their views on the design and effectiveness of our executive compensation program.
As described in detail under the heading “Compensation Discussion and Analysis,” our executive compensation program is designed to attract, motivate and retain the Named Executive Officers, who are critical to our success, and to align their interests with the long-term interests of our stockholders. Under this program, the Named Executive Officers are rewarded for the achievement of both corporate and individual performance goals, which are intended to result in increased stockholder value. Please read the “Compensation Discussion and Analysis” and the compensation tables and narrative disclosure that follow for additional details about our executive compensation program, including information about the fiscal 2024 compensation of the Named Executive Officers.
Advisory Vote and Board of Directors’ Recommendation
We request stockholder approval of the fiscal 2024 compensation of the Named Executive Officers as disclosed in this Proxy Statement pursuant to the SEC’s compensation disclosure rules (which disclosure includes the “Compensation Discussion and Analysis,” the compensation tables and the narrative disclosure that accompany the compensation tables in this Proxy Statement). This vote is not intended to address any specific element of compensation, but rather the overall compensation of the Named Executive Officers and the compensation philosophy, policies and practices described in this Proxy Statement.
Accordingly, we ask that you vote “FOR” the following resolution:
“RESOLVED, that the stockholders of Salesforce, Inc. approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 2024 Annual Meeting of Stockholders of the Company, pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table for Fiscal 2024 and the other compensation tables and narrative disclosure within such Proxy Statement.”
Approval of this proposal requires the affirmative vote of a majority of the votes cast on this proposal.
As an advisory vote, the outcome of the vote on this Proposal is not binding. However, our Compensation Committee, which is responsible for designing and administering our executive compensation program, values the opinions expressed by our stockholders and will consider the outcome of this vote when making future executive compensation decisions.
Under our current policy of providing for annual votes, we expect that our next advisory vote to approve named executive officer compensation will occur at our 2025 Annual Meeting.
The Board of Directors recommends a vote FOR approval, on an advisory basis,
of the compensation of the Named Executive Officers.
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SALESFORCE 2024 PROXY STATEMENT |
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The Company’s Statement of Opposition
The Board of Directors recommends a vote AGAINST Proposal 6:
The Board believes it is important to retain flexibility to determine the most appropriate leadership structure for the Board, in light of the Company’s circumstances and Board composition at any given time. Eliminating this flexibility in favor of the rigid and prescriptive approach of this proposal is not in the best interests of the Company or our stockholders.
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This proposal is out of line with industry and market practice. It unduly restricts the Board’s ability to determine the appropriate leadership structure for the Board at any given time, including by expressly prohibiting the Board from selecting a former CEO to serve as Chair of the Board. |
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The Board believes that its current leadership structure benefits our stockholders. As Chair and CEO, Marc Benioff provides a clear strategic vision and leadership that draws on years of experience and in-depth knowledge of our business and industry. Our corporate governance practices promote effective independent oversight, including from an active and empowered Lead Independent Director as well as fully engaged and independent key committees. |
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The Board recently took steps to enhance its independent oversight practices. In the last two years, the Company effected a Lead Independent Director transition, expanded the Lead Independent Director role, and made committee structure and membership changes. |
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We reached out to the proponent to discuss this proposal and exchange perspectives on this topic, but the proponent declined to speak with us. |
The Board has acted in the best interests of our stockholders and the Company to identify the most appropriate leadership structure based on the needs of the Company at a given time, with no fixed rule on whether the offices of Chair and CEO are vested in the same person or two different people. The Board is committed to sound corporate governance that facilitates strong independent leadership and effective and informed decision-making. The Board regularly reviews its leadership structure to assess whether it continues to best serve the evolving needs of the Board and the Company. In doing so, the Board considers the business environment, the Company’s strategy, investor views, the individuals available to serve in different leadership roles, academic perspectives, and market practices. At this time, the Board believes that having one individual, Mr. Benioff, serve as both Chair and CEO, paired with a strong Lead Independent Director who is selected by the independent directors, and fully independent members and chairs of the Audit and Finance, Compensation, and Nominating and Corporate Governance committees, confers distinct advantages such as:
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having a Chair who can draw on detailed institutional knowledge of the Company and industry experience from serving as co-founder and CEO, which enables him to provide the Board with focused leadership, particularly in discussions about the Company’s strategy, business plans and related risks; |
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helping to ensure that the Company presents its message and strategy to stockholders, employees, customers and other stakeholders through one unified voice; and |
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enabling efficient and effective decision-making and focused accountability. |
Given the strong mission, vision and leadership that has produced our history of sustained, strong operational and financial performance through past business cycles and our successful transformation over the past year, the Board believes that our stockholders continue to be best served by this leadership structure. Under the current structure, we have executed on key aspects of our strategy and delivered strong results for our stockholders across key metrics, such as cash flow and non-GAAP operating margin, despite a cautious macroeconomic environment. We also recently introduced a quarterly dividend program and increased our share repurchase authorization. Under Mr. Benioff’s leadership, we have continued to lay the foundation for future success by delivering innovation for our customers, particularly in the areas of artificial intelligence and our Data Cloud offering.
In 2022, as we set the Company’s business transformation in motion, we further strengthened the Board’s independent oversight of management and the Company, including through the appointment of a new Lead Independent Director, Robin Washington, and expansion of the scope of authority and responsibilities for the role. Since assuming the Lead Independent Director role in 2022, Ms. Washington, a seasoned former officer and director of large public technology and other companies, has provided independent Board leadership and robust oversight of management. Based on stockholder feedback and evolving best practices, the Board also updated our Corporate Governance Guidelines at that time to expressly state specific, expanded responsibilities and authority of the Lead Independent Director, which include:
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Presiding at executive sessions and meetings of the Board where the Chair is not present. |
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Reviewing and approving, or providing input and consultation on, materials sent to the Board in connection with its regular or special meetings or other decision-making or deliberations. |
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SALESFORCE 2024 PROXY STATEMENT |
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PROPOSAL 7 — STOCKHOLDER PROPOSAL REQUESTING STOCKHOLDER APPROVAL OF CERTAIN EXECUTIVE SEVERANCE ARRANGEMENTS
The Company has been advised that John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, beneficial owner of more than $2,000 worth of the Company’s common stock, intends to submit the proposal set forth below at the Annual Meeting:
Proposal 7 — Shareholder Opportunity to Vote on Excessive Golden Parachutes
Shareholders request that the Board adopt a policy to seek shareholder approval of senior managers’ new or renewed pay package that provides for golden parachute payments with an estimated value exceeding 2.99 times the sum of the executive’s base salary plus target short-term bonus. This proposal only applies to Named Executive Officers.
Supporting Statement by Stockholder Proponent
Golden parachute payments include cash, equity or other compensation that is paid out or vests due to a senior executive’s termination for any reason. Payments include those provided under employment agreements, severance plans, and change-in-control clauses in long-term equity plans, but not life insurance, pension benefits, or deferred compensation earned and vested prior to termination.
“Estimated total value” includes: lump-sum payments; payments offsetting tax liabilities; perquisites or benefits not vested under a plan generally available to management employees; post-employment consulting fees or office expense; and equity awards if vesting is accelerated, or a performance condition waived, due to termination.
The Board shall retain the option to seek shareholder approval at an annual meeting after material terms are agreed upon.
Generous performance-based pay can sometimes be justified but shareholder ratification of golden parachutes better aligns management pay with shareholder interests.
This proposal is relevant even if there are current golden parachute limits. A limit on golden parachutes is like a speed limit. A speed limit by itself does not guarantee that the speed limit will never be exceeded. Like this proposal the rules associated with a speed limit provide consequences if the limit is exceeded. With this proposal the consequences are a non-binding shareholder vote is required for unreasonably high golden parachutes.
This proposal places no limit on long-term equity pay or any other type pay. This proposal thus has no impact on the ability to attract executive talent or discourage the use of long-term equity pay because it places no limit on golden parachutes. It simply requires that extra large golden parachutes be subject to a non-binding shareholder vote at a shareholder meeting already scheduled for other matters.
This proposal is relevant because the annual say on executive pay vote does not have a separate section for approving or rejecting golden parachutes.
The topic of this proposal received and between 51% and 65% support at:
FedEx
Spirit AeroSystems
Alaska Air
Fisery
Please vote yes:
Shareholder Opportunity to Vote on Excessive Golden Parachutes — Proposal 7
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SALESFORCE 2024 PROXY STATEMENT |
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PROPOSAL 8 — STOCKHOLDER PROPOSAL REQUESTING A REPORT ON VIEWPOINT RESTRICTION RISKS
The Company has been advised that the National Center for Public Policy Research, 2005 Massachusetts Avenue Northwest, Washington, D.C. 20036, beneficial owner of more than $2,000 worth of the Company’s common stock, intends to submit the proposal set forth below at the Annual Meeting:
RESOLVED: Shareholders request that the Board of Directors conduct an evaluation and issue a report within the next year, at reasonable cost and excluding proprietary information and disclosure of anything that would constitute an admission of pending litigation, evaluating how the Company oversees risks related to denying or restricting service to users or customers – due to their viewpoints being classified as “hate speech,” “misinformation” or other related terms, or due to related content management policies – and how such risks impact both the Company’s business and the constitutionally protected civil rights of users or customers.
Supporting Statement by Stockholder Proponent
Digital service providers (DSPs) such as Salesforce control access to critical computer and web-related services and infrastructure that facilitate the open exchange of information. As such, these companies have unprecedented power to censor speech, and have been under increasing pressure to remove religious and conservative views from the marketplace.
Respecting freedom of speech and religious liberty is fundamental to the open and fair discourse necessary for self-governance. Salesforce can and should promote these fundamental freedoms to best serve its diverse users and participate in the market to the best of its ability, an effort it legally owes its shareholders.
Recent events and DSPs’ own policies suggest that users’ and customers’ freedom of speech and religion are at risk. In addition to concerning revelations of collusion with government at companies like Meta and Twitter to censor constitutionally protected speech,1 the 2023 edition of the Viewpoint Diversity Business Index2 found that 74% of the largest DSPs have policies that permit them to deny or restrict service based on subjective and vague terms like “misinformation,” “hate speech,” “intolerance” or “reputational risk.”3 In an Orwellian fashion, these arbitrary standards are exploited by tech companies – often under pressure from activists, the US government and foreign governments – to censor conservative and religious users.
Salesforce CEO Marc Benioff threatened to withdraw the Company from conservative states – which is most states – for “the equality and dignity of every human being.”4 The Company also refused to assure shareholders that employees would not be discriminated against for viewpoint or ideology, when asked about it explicitly at a shareholder meeting.5
And while Salesforce has fully engaged in viewpoint discrimination, it also maintains that it promotes an “inclusive workplace” and is “committed to driving equality for employees, customers, partners, and society at large.”6 Shareholders must ensure that Salesforce is adhering to its own standards and the standards of the US constitution by serving diverse customers without regard to their political views or religious beliefs.
When Salesforce engages in viewpoint discrimination, it exposes itself to heightened legal liability for both hindering access of certain Americans to the marketplace – which undermines constitutionally protected freedoms – and for prioritizing ideology over sound business practices, thereby failing to abide by its fiduciary duty to shareholders.
1 |
https://www.usatoday.com/story/money/2023/09/08/biden-administration-coerced-facebook-court-rules/70800723007/ |
2 |
https://viewpointdiversityscore.org/business-index |
4 |
https://www.dailywire.com/news/billionaire-salesforce-ceo-threatens-to-yank-company-from-conservative-states |
5 |
https://nationalcenter.org/ncppr/2020/06/12/salesforce-reserves-the-right-to-fire-employees-for-political-beliefs-but-cant-explain-why/ |
6 |
https://www.salesforce.com/company/equality/ |
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SALESFORCE 2024 PROXY STATEMENT |
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The Company’s Statement of Opposition
The Board of Directors recommends a vote AGAINST Proposal 8:
The Board believes the report sought by this proposal is unnecessary and not in the best interests of the Company or our stockholders. In summary, we believe it is important for our stockholders to know:
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Our existing policies and practices are designed to uphold internationally recognized human rights. |
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Our commitment to anti-discrimination and equality is embedded across our business and reflected in the decisions and actions we take as a company. |
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We already publicly report on the status and outcomes of our equality initiatives. |
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We engaged with the proponent to discuss this proposal and exchange perspectives on this topic. |
Our existing policies and practices, including through the work of our Office of Ethical and Humane Use, are designed to uphold internationally recognized human rights, including freedom of opinion and expression, freedom of religion and belief, and freedom from discrimination.
As innovators and leaders in the technology industry, we recognize that technology can transform how we live and work by fostering deep connections and fueling customer and user success. We have also seen, however, the potential for technology to exacerbate prejudice, mistrust, and even violence. As technology becomes more integrated with the human experience, we have the opportunity and responsibility to protect against the misuse of our service offerings, including, among other things, the use of our services to transmit hate-related material, malicious material or material intended to mislead people.
We are focused on understanding how our products are used and we are committed to creating a safe and inclusive platform. In carrying out our work, Salesforce has long honored the principles of internationally recognized human rights. We work with our stakeholders—our customers, governments, industry, civil society, stockholders, suppliers, and employees—to help guide our ethical use policies, protect inalienable rights and avoid human rights abuses.
Salesforce’s Office of Ethical and Humane Use leads with rights-aware decision-making based on rigorous research. We embed our commitments to human rights across product development and in our Acceptable Use and External-Facing Services Policy,1 which applies to all of our customers. Our Ethics by Design and Product Accessibility and Inclusive Design teams embed ethics and endeavor to protect human rights in our design process.
Our commitment to anti-discrimination and equality is embedded across our business and reflected in the decisions and actions we take as a company.
Equality is a part of who we are at Salesforce. We aspire to be the most inclusive company in the world, and believe everyone should be seen, heard, valued, and empowered to succeed. We believe that hearing diverse perspectives fuels innovation, deepens connections between people, and makes us a better company. As a matter of practice, we seek out diverse perspectives from a range of stakeholder groups and viewpoints, to inform the decisions we take as a company.
Our Ethical Use Policy team has developed guardrails designed to protect against our products being used for malicious purposes. When considering these types of issues in relation to our products, it is imperative that we understand the direct product use case, how closely the use may be connected to any harm, where the use stands in relation to our guiding principles, the effectiveness of any proposed actions, and the current geopolitical landscape, among other things. We are committed to conducting this work in a manner that respects upholds human rights, including freedom of expression, access to information, privacy and security.
In carrying out these responsibilities, we strive to actively listen to our customers, employees, partners, members of impacted communities, and experts in the field to create policies informed by multiple perspectives, humane principles, and Salesforce’s core values. We leverage external expertise through our Ethical Use Advisory Council, which consists of a diverse group of front-line and executive employees, academics, and industry experts who have varying experiences and ideologies. This council meets regularly to discuss key ethical use issues through a wide variety of perspectives, and to help identify shortcomings, avoid unintended consequences of technological and policy decisions, maintain consistent enforcement of policies to avoid unintentional bias, mitigate human rights risks, and make informed decisions collaboratively. We also conduct human rights assessments and regularly collaborate with a human rights consultant for independent due diligence.
We already publicly report on the status and outcomes of our equality initiatives.
This proposal requests an evaluation and a report on the oversight of risks related to discrimination against individuals based on a narrow set of criteria. Salesforce’s workforce and our customers represent a wide range of backgrounds, viewpoints and experiences. We are committed to our equality goals and working across our ecosystem with employees, partners, and customers to drive progress and increase business value.
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Available at https://www.salesforce.com/content/dam/web/en_us/www/documents/legal/Agreements/policies/ExternalFacing_Services _Policy.pdf. |
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SALESFORCE 2024 PROXY STATEMENT |
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PROCEDURAL MATTERS
General
The Board is soliciting your vote with this Proxy Statement and proxy card for the Annual Meeting, to be held on Thursday, June 27, 2024 at 11:00 a.m. Pacific Time and for any adjournment or postponement of the Annual Meeting. The Annual Meeting will be a virtual meeting held exclusively via live audio webcast at www.virtualshareholdermeeting.com/CRM2024. Our Annual Report for fiscal 2024, including our financial statements for fiscal 2024, is also enclosed or available online at the same website as this Proxy Statement. These proxy materials are first being made available to stockholders on May 16, 2024.
Stockholders Entitled to Vote; Record Date
As of the close of business on May 1, 2024, the record date for determination of stockholders entitled to vote at the Annual Meeting, there were 971,250,639 outstanding shares of common stock of the Company, all of which are entitled to vote with respect to all matters to be acted upon at the Annual Meeting. Each stockholder is entitled to one vote for each share of our common stock held by such stockholder as of the record date. All valid proxies received before the Annual Meeting will be voted according to the instructions thereon.
Stockholders of record may vote in advance of the Annual Meeting:
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over the Internet at www.proxyvote.com; |
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by telephone at 1-800-690-6903 (if you requested copies of the proxy materials to be mailed or emailed to you); or |
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by mail (if you requested printed copies of the proxy materials to be mailed to you) by completing, signing and dating the enclosed proxy card and returning it in the enclosed postage-prepaid envelope. |
Stockholders of record may also vote during the virtual Annual Meeting by logging into the meeting website and following the instructions provided on the website. Stockholders who hold shares in street name should refer to the voting instructions from their brokerage firm, bank, trust or other organization provided with these proxy materials.
Quorum; Abstentions; Broker Non-Votes
The Company’s Bylaws provide that the holders of a majority of the issued and outstanding shares of the capital stock of the Company entitled to vote at the Annual Meeting, present in person or represented by proxy, constitute a quorum for the transaction of business. Shares that are authorized to be voted on or to abstain on any matter presented at the Annual Meeting, or that are held by stockholders who are present at the Annual Meeting, are counted as present and entitled to vote and are therefore included for purposes of determining whether a quorum is present at the Annual Meeting.
If you hold your Salesforce common stock through a broker, the broker may be prevented from voting, or may otherwise choose not to vote, shares held in your brokerage account if you have not given the broker voting instructions with respect to your shares (resulting in what is referred to as a “broker non-vote”). Thus, it is important that you vote your shares to ensure that they are represented on all matters presented at the Annual Meeting.
For each of the proposals, the applicable voting standard, Board recommendation, and treatment of abstentions and broker non-votes, if any, are as follows:
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Voting Item |
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Board Recommendation |
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Voting Standard |
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Treatment of Abstentions |
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Treatment of Broker Non-Votes, If Any |
1. Election of Directors |
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For |
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Majority of votes cast |
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No effect |
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No effect |
2. Amendment to the Company’s Certificate of Incorporation |
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For |
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Majority of the outstanding shares |
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Same effect as votes against the proposal |
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Same effect as votes against the proposal |
3. Amendment to the Company’s 2013 Equity Incentive Plan |
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For |
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Majority of votes cast |
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No effect |
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No effect |
4. Ratification of Appointment of Ernst & Young LLP |
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For |
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Majority of votes cast |
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No effect |
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No effect |
5. Advisory Vote to Approve Named Executive Officer Compensation |
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For |
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Majority of votes cast |
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No effect |
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No effect |
6-8. Stockholder Proposals, If Properly Presented at the Meeting |
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Against |
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Majority of votes cast |
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No effect |
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No effect |
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SALESFORCE 2024 PROXY STATEMENT |
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PROCEDURAL MATTERS (CONTINUED) |
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Voting; Revocability of Proxies
Voting of proxies; Discretionary voting. Stockholders may vote over the Internet, by telephone, by mail, or online when attending the virtual meeting, as described in “About the Annual Meeting” beginning on page 1. All shares entitled to vote and represented by properly executed proxy cards received prior to the Annual Meeting, and not revoked, will be voted at the Annual Meeting in accordance with the instructions indicated on those proxy cards. The telephone and Internet voting procedures are designed to authenticate the stockholder’s identity, to allow stockholders to vote their shares, and to confirm that their voting instructions have been properly recorded. If you vote by telephone or over the Internet, you do not need to complete and mail your proxy card. If you do not provide specific voting instructions on a properly executed proxy card or when voting over the phone or Internet, your shares will be voted as recommended by the Board.
We are not aware of any matters to be presented at the Annual Meeting other than those described in this Proxy Statement. If any other matters are properly presented for consideration at the Annual Meeting, the persons named in the proxy card and acting thereunder will have discretion to vote on those matters in accordance with their best judgment.
Effect of not casting your vote. If you hold your shares in street name, it is critical that you cast your vote if you want it to count in the voting for each of the proposals as your bank or broker may not have discretion or may otherwise choose not to vote any uninstructed shares.
If you are a stockholder of record, it is also critical that you cast your vote. If you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the Annual Meeting.
Revocability of proxy. You may revoke or change your proxy by:
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entering a new vote by telephone or over the Internet; |
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filing with the Secretary of the Company, at or before the taking of the vote at the Annual Meeting, a written notice of revocation or a duly executed proxy card, in either case dated later than the prior proxy card relating to the same shares; or |
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attending and voting online at the virtual Annual Meeting (although attendance at the virtual Annual Meeting will not in and of itself revoke a proxy). |
Any written notice of revocation or subsequent proxy card must be received by the Secretary of the Company prior to the taking of the vote at the Annual Meeting. Such written notice of revocation or subsequent proxy card should be sent to the Company’s principal executive offices at Salesforce, Inc., 415 Mission Street, 3rd Floor, San Francisco, California 94105, Attention: Corporate Secretary.
If a broker, bank or other nominee holds your shares, you must contact them in order to find out how to revoke or change your vote.
Expenses of Solicitation
The Company will bear the entire cost of solicitation. In addition, the Company may arrange with brokerage houses and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of the stock held of record by such persons, and the Company will reimburse them for their reasonable out-of-pocket expenses. The Company may use the services of the Company’s directors, officers, employees and others to solicit proxies, personally or by telephone, without additional compensation. The Company has retained D.F. King & Co., Inc., a proxy solicitation firm, for assistance in connection with the Annual Meeting at a cost of approximately $20,000, plus reasonable out-of-pocket expenses.
Procedure for Introducing Business or Director Nominations at Our 2025 Annual Meeting of Stockholders
Stockholder proposals and director nominees to be presented at the meeting. Stockholders of record may introduce business or nominate directors for election at an annual meeting of stockholders, provided that the stockholder satisfies the advance notice requirements set forth in the Company’s Bylaws (which includes the timing and information required under Rule 14a-19 of the Exchange Act). Among other things, the advance notice provisions require stockholders to give timely notice of business they propose to introduce and of any director nomination they propose to make in proper written form to the Secretary of the Company at Salesforce, Inc., 415 Mission Street, 3rd Floor, San Francisco, California 94105, Attention: Corporate Secretary.
To be timely for our 2025 Annual Meeting of Stockholders, such notice must be received no earlier than March 2, 2025 and no later than the close of business (6:00 p.m. PT) on April 1, 2025. However, if the date of the 2025 Annual Meeting of Stockholders is advanced by more than 30 days prior to, or delayed by more than 60 days after, the one-year anniversary of the date of the 2024 Annual Meeting, then notice must be received no earlier than the close of business on the 120th day prior to the 2025 Annual Meeting of Stockholders and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is first made. If a stockholder does not also comply with the requirements of Rule 14a-4(c)(2) under the Exchange Act, we may exercise discretionary voting authority under proxies that we solicit to vote in accordance with our best judgment on any business presented by a stockholder at our 2025 Annual Meeting of Stockholders.
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SALESFORCE 2024 PROXY STATEMENT |
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PROCEDURAL MATTERS (CONTINUED) |
Director nominees to be included in the proxy statement (proxy access). In addition, our Bylaws contain “proxy access” provisions that permit a stockholder or group of stockholders to include director candidates that they intend to nominate in our annual meeting proxy statement and on our proxy card, provided that the stockholder ownership, notice and other requirements set forth in our Bylaws are satisfied. To be timely for our 2025 Annual Meeting of Stockholders, the required notice under the proxy access provisions of our Bylaws must be received by the Corporate Secretary at the address set forth above not earlier than December 17, 2024 and not later than the close of business (6:00 p.m. PT) on January 16, 2025. However, if the date of the 2025 Annual Meeting of Stockholders is advanced by more than 30 days prior to, or delayed by more than 60 days after, the one-year anniversary of the date of the 2024 Annual Meeting, then notice under the proxy access provisions must be received no earlier than the close of business on the 120th day prior to the 2025 Annual Meeting of Stockholders and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is first made.
Stockholder proposals to be included in the proxy statement (Rule 14a-8 proposals). Any stockholder proposal submitted for inclusion in the Company’s proxy statement for the 2025 Annual Meeting of Stockholders pursuant to Rule 14a-8 of the Exchange Act should be addressed to the Secretary of the Company at the address set forth above and must be received at our principal executive offices not later than the close of business (6:00 p.m. PT) on January 16, 2025. In the event the date of the annual meeting is moved by more than 30 days from the one-year anniversary of the date of the 2024 Annual Meeting, then notice must be received within a reasonable time before the Company begins to make its proxy materials available. Upon such an occurrence, the Company will publicly announce the deadline for submitting a proposal by means of disclosure in a press release or in a document filed with the SEC.
The requirements for providing advance notice of business or nominations as summarized above are qualified in their entirety by our Bylaws, Rule 14a-19 (as applicable) and, in the case of stockholder proposals submitted for inclusion in our proxy statement, Rule 14a-8, which we recommend that you read in order to comply with the applicable requirements. Failure to timely deliver the requisite notice or satisfy the requirements in our Bylaws, Rule 14a-19 or Rule 14a-8, as applicable, may result in a proposal or nomination not being presented at our annual meeting of stockholders. You may contact the Company’s Secretary at our principal executive offices for a copy of our current Bylaws, including the relevant provisions regarding the requirements for making stockholder proposals and nominating director candidates, or you may refer to the copy of our Bylaws most recently filed with the SEC and available at www.sec.gov.
Delivery of Proxy Materials
To receive current and future proxy materials in either paper or electronic form, please contact Investor Relations at investor@salesforce.com. In addition, we will provide, free of charge, a copy of our fiscal 2024 Annual Report on Form 10-K upon the written request of any stockholder to Investor Relations at the address set forth below.
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders, unless the Company has received contrary instructions from one or more of the stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for companies. The Company and some brokers household proxy materials, delivering a single set of materials per household, even if more than one stockholder resides in that household. If your proxy statement is being householded and you would like to receive separate copies, or if you are receiving multiple copies and would like to receive a single copy, please contact Investor Relations at investor@salesforce.com, or write to Salesforce, Inc., 415 Mission Street, 3rd Floor, San Francisco, California 94105, Attention: Investor Relations.
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SALESFORCE 2024 PROXY STATEMENT |
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SALESFORCE, INC.
AMENDED AND RESTATED 2013 EQUITY INCENTIVE PLAN
1. PURPOSES OF THE PLAN. The purposes of this Plan are:
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to attract and retain the best available personnel for positions of substantial responsibility, |
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to provide incentive to Employees, Directors and Consultants, and |
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to promote the success of the Company’s business. |
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Bonus Awards, Performance Units and Performance Shares.
2. DEFINITIONS. As used herein, the following definitions will apply:
(a) “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.
(b) “Affiliate” means any corporation or any other entity (including, but not limited to, partnerships and joint ventures) controlling, controlled by, or under common control with the Company.
(c) “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.
(d) “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Bonus Awards, Performance Units or Performance Shares.
(e) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.
(f) “Award Transfer Program” means any program instituted by the Administrator that would permit Participants the opportunity to transfer for value any outstanding Awards to a financial institution or other person or entity approved by the Administrator. A transfer for “value” shall not be deemed to occur under this Plan where an Award is transferred by a Participant for bona fide estate planning purposes to a trust or other testamentary vehicle approved by the Administrator.
(g) “Board” means the Board of Directors of the Company.
(h) “Cause” means, unless otherwise defined by the Participant’s Award Agreement or contract of employment or service, any of the following: (i) the Participant’s theft, dishonesty, or falsification of any Participating Company documents or records; (ii) the Participant’s improper use or disclosure of a Participating Company’s confidential or proprietary information; (iii) any action by the Participant which has a detrimental effect on a Participating Company’s reputation or business; (iv) the Participant’s failure or inability to perform any reasonable assigned duties after written notice from a Participating Company of, and a reasonable opportunity to cure, such failure or inability; (v) any material breach by the Participant of any employment or service agreement between the Participant and a Participating Company, which breach is not cured pursuant to the terms of such agreement; or (vi) the Participant’s conviction (including any plea of guilty or nolo contendere) of any criminal act which impairs the Participant’s ability to perform his or her duties with a Participating Company.
(i) “Change in Control” means the occurrence of any of the following events:
(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent (50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this clause (i), (1) the acquisition of beneficial ownership of additional stock by any one Person who is considered to beneficially own more than fifty percent (50%) of the total voting power of the stock of the Company will not be considered a Change in Control; and (2) if the stockholders of the Company immediately before such change in ownership continue to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately prior to the change in ownership, direct or indirect beneficial ownership of fifty percent (50%) or more of the total voting power of the
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SALESFORCE 2024 PROXY STATEMENT |
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stock of the Company, such event shall not be considered a Change in Control under this clause (i). For this purpose, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business entities;
(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this subsection (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or
(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
For purposes of this definition, Persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A.
Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the jurisdiction of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
(j) “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
(k) “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or a duly authorized committee of the Board, in accordance with Section 4 hereof.
(l) “Common Stock” means the common stock of the Company.
(m) “Company” means Salesforce, Inc., a Delaware corporation, or any successor thereto.
(n) “Consultant” means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary or other Affiliate to render services to such entity.
(o) “Director” means a member of the Board.
(p) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.
(q) “Dividend Equivalent” means a credit, made at the discretion of the Administrator or as otherwise provided by the Plan, to the account of a Participant in an amount equal to the cash dividends paid on one Share for each Share represented by an Award held by such Participant.
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SALESFORCE 2024 PROXY STATEMENT |
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(r) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary or other Affiliate of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company or an Affiliate. The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be. For purposes of an individual’s rights, if any, under the Plan as of the time of the Company’s determination, all such determinations by the Company shall be final, binding and conclusive, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination.
(s) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(t) “Exchange Program” means a program under which (i) outstanding awards are surrendered or cancelled in exchange for awards of the same type (which may have higher or lower exercise prices and different terms), awards of a different type, and/or cash, (ii) Participants would have the opportunity to participate in an Award Transfer Program, and/or (iii) the exercise price of an outstanding Award is reduced. The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion.
(u) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the New York Stock Exchange, Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or the mean of the closing bid and asked prices for the Common Stock, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in the Wall Street Journal or such other source as the Administrator deems reliable. If the relevant date does not fall on a day on which the Common Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Common Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Administrator, in its discretion;
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last trading date such bids and asks were reported), as reported in the Wall Street Journal or such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator.
(v) “Fiscal Year” means the fiscal year of the Company.
(w) “Fiscal Quarter” means a fiscal quarter within a Fiscal Year of the Company.
(x) “Incentive Stock Option” means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
(y) “Inside Director” means a Director who is an Employee.
(z) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
(aa) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(bb) “Option” means a stock option granted pursuant to the Plan.
(cc) “Outside Director” means a Director who is not an Employee.
(dd) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
(ee) “Participant” means the holder of an outstanding Award.
(ff) “Participating Company” means the Company or any Affiliate.
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SALESFORCE 2024 PROXY STATEMENT |
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(xxvi) |
objective customer indicators; |
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new product invention or innovation; |
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attainment of research and development milestones; |
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improvements in productivity; and |
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any other measure or metric the Administrator deems appropriate. |
The Performance Goals may differ from Participant to Participant and from Award to Award. Any criteria used may be measured, as applicable, (i) in absolute terms, (ii) in combination with another Performance Goal or Goals (for example, but not by way of limitation, as a ratio or matrix), (iii) in relative terms (including, but not limited to, results for other periods, passage of time and/or against another company or companies or an index or indices), (iv) on a per-share or per-capita basis, (v) against the performance of the Company as a whole or a segment of the Company (including, but not limited to, any combination of the Company and any subsidiary, division, joint venture, Affiliate and/or other segment) and/or (vi) on a pre-tax or after-tax basis. The Administrator shall determine whether any significant element(s) or item(s) shall be included in or excluded from the calculation of any Performance Goal with respect to any Participants (for example, but not by way of limitation, the effect of mergers and acquisitions). As determined in the discretion of the Administrator, achievement of Performance Goals for a particular Award may be calculated in accordance with the Company’s financial statements, prepared in accordance with generally accepted accounting principles (“GAAP”), or on a basis other than GAAP, including as adjusted for certain costs, expenses, gains and losses to provide non-GAAP measures of operating results.
(ii) “Performance Period” means the time period determined by the Administrator in its sole discretion during which the performance objectives must be met.
(jj) “Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine pursuant to Section 11.
(kk) “Performance Unit” means an Award denominated in cash which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 11.
(ll) “Plan” means this Amended and Restated 2013 Equity Incentive Plan.
(mm) “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 8 of the Plan, or issued pursuant to the early exercise of an Option.
(nn) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 9. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.
(oo) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.
(pp) “Section 16(b)” means Section 16(b) of the Exchange Act.
(qq) “Section 409A” means Section 409A of the Code, and any proposed, temporary or final Treasury Regulations and Internal Revenue Service guidance thereunder, as each may be amended from time to time.
(rr) “Securities Act” means the Securities Act of 1933, as amended.
(ss) “Service Provider” means an Employee, Director or Consultant. The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be a Service Provider and the effective date of such individual’s status as, or cessation of status as, a Service Provider. For purposes of an individual’s rights, if any, under the Plan as of the time of the Company’s determination, all such determinations by the Company shall be final, binding and conclusive, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination.
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“Share” means a share of the Common Stock, as adjusted in accordance with Section 15 of the Plan. |
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(uu) “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with an Option, that pursuant to Section 10 is designated as a Stock Appreciation Right.
(vv) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
(ww) “Tax Obligations” means tax and social insurance liability obligations and requirements in connection with the Awards, including, without limitation, (a) all federal, state, and local taxes (including the Participant’s Federal Insurance Contributions Act (FICA) obligation) that are required to be withheld by the Company or the employing Affiliate, (b) the Participant’s and, to the extent required by the Company (or Affiliate), the Company’s (or Affiliate’s) fringe benefit tax liability, if any, associated with the grant, vesting, or exercise of an Award or sale of Shares, and (c) any other Company (or Affiliate) taxes the responsibility for which the Participant has, or has agreed to bear, with respect to such Award (or exercise thereof or issuance of Shares thereunder).
3. STOCK SUBJECT TO THE PLAN.
(a) Stock Subject to the Plan. Subject to the provisions of Section 15 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is 328,700,000 plus (i) any Shares that, as of the date stockholders initially approve the Plan, have been reserved but not issued pursuant to any awards granted under the 2004 Equity Incentive Plan (the “2004 Plan”) and/or the 2004 Outside Directors Stock Plan (the “Director Plan” and, together with the 2004 Plan, the “Prior Plans” and each, a “Prior Plan”) and are not subject to any awards granted thereunder, with the Shares subject to the awards referenced in this clause (i) credited to the aggregate number of Shares that may be awarded under the Plan as one (1) Share for every one (1) Share subject thereto, and (ii) any Shares subject to stock options or other awards granted under the Prior Plans that, after the date stockholders initially approve the Plan, expire or otherwise terminate without having been vested or exercised in full, Shares issued pursuant to awards granted under the Prior Plans that, after the date stockholders initially approve the Plan, are forfeited to or repurchased by the Company due to failure to vest, and Shares subject to awards granted under a Prior Plan that, after the date stockholders initially approve the Plan, would have, but for the termination of the applicable Prior Plan, again become available for future use under the terms of such Prior Plan (as applicable), with the Shares subject to those of the awards referenced in this clause (ii) that are stock options and/or stock appreciation rights credited to the aggregate number of Shares that may be awarded under the Plan as one (1) Share for every one (1) Share subject thereto, and the Shares subject to those of the awards referenced in this clause (ii) that are awards other than stock options or stock appreciation rights credited to the aggregate number of Shares that may be awarded under the Plan as two and fifteen- one hundredths (2.15) Shares for every one (1) Share subject thereto. Notwithstanding the foregoing, the maximum number of Shares to be added to the Plan pursuant to clause (i) of the prior sentence shall be equal to 23,800,000 Shares and the maximum number of Shares to be added to the Plan pursuant to clause (ii) of the prior sentence shall be equal to 54,332,000 Shares. The Shares may be authorized, but unissued, or reacquired Common Stock. Any Shares subject to Awards of Options or Stock Appreciation Rights shall be counted against the numerical limits of this Section 3 as one (1) Share for every one (1) Share subject thereto. Any Shares subject to Awards granted under the Plan other than Options or Stock Appreciation Rights shall be counted against the numerical limits of this Section 3 as two and fifteen-one hundredths (2.15) Shares for every one (1) Share subject thereto and shall be counted as two and fifteen-one hundredths (2.15) Shares for every one (1) Share returned to or deemed not issued from the Plan pursuant to this Section 3. The Shares may be authorized, but unissued, or reacquired Common Stock.
(b) Lapsed Awards. If an Award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an Exchange Program, or, with respect to Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares, is forfeited to or repurchased by the Company due to failure to vest, the unpurchased Shares (or for Awards other than Options or Stock Appreciation Rights the forfeited or repurchased Shares), which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). Upon exercise of a Stock Appreciation Right settled in Shares, the gross number of Shares covered by the portion of the Award so exercised, whether or not actually issued pursuant to such exercise will cease to be available under the Plan. Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to the Company due to failure to vest, such Shares will become available for future grant under the Plan. Notwithstanding the foregoing, Shares used to pay the exercise price or purchase price of an Award other than an Option or SAR or to satisfy the tax withholding obligations related to an Award other than an Option or SAR will become available for future grant and/or sale under the Plan; Shares used to pay the exercise price or purchase of an Option or SAR or to satisfy the tax withholding obligations related to an Option or SAR will not become available for future grant or sale under the Plan. To the extent an Award (including a Dividend Equivalent) under the Plan is paid out in cash rather than Shares, whether pursuant to a Performance Bonus Award or other Award, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Notwithstanding anything in the Plan or any Award Agreement to the contrary, Shares actually issued pursuant to Awards transferred under any Award Transfer Program will not be again available for grant under the Plan. Notwithstanding the foregoing and, subject to adjustment as provided in Section 15, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to this Section 3(b).
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SALESFORCE 2024 PROXY STATEMENT |
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(c) Share Reserve. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) Procedure.
(i) Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.
(ii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.
(iii) Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws. The Administrator may, in its discretion and to the extent permitted by Applicable Laws, delegate to a Committee, including but not limited to, comprised of one or more Officers, the authority to grant one or more Awards, without further approval of the Administrator, on such terms and conditions as the Administrator, in its discretion, deems appropriate. To the extent of any delegation by the Administrator, references to the Administrator in the Plan and any Award Agreement shall be deemed also to include reference to the applicable delegate(s).
(iv) Delegation of Authority for Day-to-Day Administration; Authority of Officers. Except to the extent prohibited by Applicable Law, the Administrator may delegate to one or more individuals the day-to-day administration of the Plan and any of the functions assigned to it in this Plan. Such delegation may be revoked at any time. Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, determination or election.
(b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Awards may be granted hereunder;
(iii) to determine the number of Shares to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the method of payment for Shares purchased under any Award, the method for satisfaction of any tax withholding obligation arising in connection with an Award, the time or times when Awards may be exercised (which may be based on performance criteria), subject to any minimum vesting requirements set forth in the Plan, any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine;
(vi) to determine the terms and conditions of any Exchange Program and/or Award Transfer Program and with the consent of the Company’s stockholders, to institute an Exchange Program and/or Award Transfer Program (provided that the Administrator may not institute an Exchange Program and/or Award Transfer Program without first receiving the consent of the Company’s stockholders);
(vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;
(viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws and/or for qualifying for favorable tax treatment under applicable foreign laws;
(ix) to modify or amend each Award (subject to Section 21 of the Plan), including but not limited to the discretionary authority to extend the post-termination exercisability period of Awards and to extend the maximum term of an Option (subject to Section 7(b) of the Plan regarding Incentive Stock Options);
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(x) to allow Participants to satisfy withholding tax obligations in such manner as prescribed in Section 17 of the Plan;
(xi) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator pursuant to such procedures as the Administrator may determine;
(xii) to allow a Participant, in compliance with all Applicable Laws including, but not limited to, Section 409A, to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award;
(xiii) to determine whether Awards will be settled in Shares, cash or in any combination thereof;
(xiv) to impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by the Participant of any Shares issued as a result of or under an Award, including without limitation, (A) restrictions under an insider trading policy, and (B) restrictions as to the use of a specified brokerage firm for such resales or other transfers;
(xv) to require that the Participant’s rights, payments and benefits with respect to an Award (including amounts received upon the settlement or exercise of an Award) shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award, as may be specified in an Award Agreement at the time of the Award, or later if (A) Applicable Laws require the Company to adopt a policy requiring such reduction, cancellation, forfeiture or recoupment, or (B) pursuant to an amendment of an outstanding Award; and
(xvi) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement and to make all other determinations and take such other actions with respect to the Plan or any Award deemed necessary or advisable for administering the Plan.
(c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards and shall be given the maximum deference permitted by law.
5. ELIGIBILITY. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units may be granted to Service Providers. Performance Bonus Awards may be granted only to Employees. Incentive Stock Options may be granted only to Employees of the Company or Parent or Subsidiary of the Company.
6. LIMITATIONS.
(a) Incentive Stock Options. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as Nonstatutory Stock Options. If the Code is amended to provide for a different limitation from that set forth in this Section, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code. Further, if for any reason an Option (or portion thereof) designated as an Incentive Stock Option shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a Nonstatutory Stock Option granted under the Plan. For purposes of this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.
(b) Employee Award Limitations. The following limitations shall apply to Awards under the Plan: subject to adjustment as provided in Section 15, during any Fiscal Year, no Employee will be granted:
(i) Options and/or SARs covering more than a total of 20,000,000 Shares; provided, however, that in connection with his or her initial employment, an Employee may be granted Options and/or SARs covering up to a total of 8,000,000 additional Shares in the Fiscal Year in which his or her service as an Employee first commences;
(ii) Restricted Stock and/or Restricted Stock Units and/or Performance Shares covering more than 10,000,000 Shares; provided, however, that in connection with his or her initial employment, an Employee may be granted Restricted Stock, Restricted Stock Units and/or Performance Shares covering up to a total of 4,000,000 additional Shares in the Fiscal Year in which his or her service as an Employee first commences;
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SALESFORCE 2024 PROXY STATEMENT |
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(iii) Performance Units having an initial value greater than $15,000,000; provided, however, that in connection with his or her initial employment, an Employee may be granted additional Performance Units in the Fiscal Year in which his or her service as an Employee first commences having an initial value no greater than $5,000,000; and
(iv) Performance Bonus Awards that could result in such Employee receiving more than $10,000,000 in any one Fiscal Year.
If an Award is cancelled in the same Fiscal Year in which it was granted (other than in connection with a transaction described in Section 15(c)), the cancelled Award will be counted against the limits set forth in this subsection (b).
(c) Outside Director Award Limitations. Subject to adjustment as provided in Section 15, no Outside Director may be granted, in any Fiscal Year, Awards covering more than 60,000 Shares. Any Awards granted to an individual while he or she was an Employee, or while he or she was a Consultant but not an Outside Director, shall not count for purposes of this limitation.
(d) Minimum Vesting. Notwithstanding anything in the Plan to the contrary, equity-based Awards granted under the Plan may not become exercisable, vest or be settled, in whole or in part, prior to the one-year anniversary of the date of grant, except that the Administrator may provide that Awards become exercisable, vest or settle prior to such date in the event of the Participant’s death or Disability or in the event of a transaction described in Section 15(c). Notwithstanding the foregoing, up to 5% of the sum of (a) the number of Shares available for future grants on the date the Board approved this amended and restated version of the Plan, plus (b) the increase in the number of Shares available for grant under the Plan (as described in Section 3(a)) approved by the Company’s stockholders at the 2024 annual meeting, may be issued pursuant to Awards subject to any, or no, vesting conditions, as the Administrator determines appropriate.
7. STOCK OPTIONS.
(a) Grant of Option. Subject to the terms and conditions of the Plan, Option may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion. Subject to Section 6 and the other terms and conditions of the Plan, the Administrator will have complete discretion to determine the number of Shares granted to any Service Provider. Each Option shall be evidenced by an Award Agreement (which may be in electronic form) that shall specify the exercise price, the expiration date of the Option, the number of Shares covered by the Option, any conditions to exercise the Option, and such other terms and conditions as the Administrator, in its discretion, shall determine.
(b) Term of Option. The term of each Option will be stated in the Award Agreement; provided, however, that the term will be no more than seven (7) years from the date of grant hereof. In the case of an Incentive Stock Option, the term will be seven (7) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.
(c) Option Exercise Price and Consideration.
(i) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following:
(1) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(3) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.
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SALESFORCE 2024 PROXY STATEMENT |
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(ii) Waiting Period and Exercise Dates. Subject to Section 6 and the other terms and conditions of the Plan, at the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.
(iii) Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of, without limitation: (1) cash; (2) check; (3) promissory note, to the extent permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion; (5) consideration received by the Company under a cashless exercise program (whether through a broker, net exercise program or otherwise) implemented by the Company in connection with the Plan; (6) by reduction in the amount of any Company liability to the Participant, (7) by net exercise; (8) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (9) any combination of the foregoing methods of payment.
(d) Exercise of Option.
(i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.
An Option will be deemed exercised when the Company receives: (i) a notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends, Dividend Equivalents or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend, Dividend Equivalent or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 15 of the Plan.
Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
(ii) Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s termination as the result of the Participant’s death or Disability or as a result of a termination for Cause, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for ninety (90) days following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
(iii) Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
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SALESFORCE 2024 PROXY STATEMENT |
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(iv) Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. The Participant’s status as a Service Provider shall be deemed to have terminated on account of death if the Participant dies within ninety (90) days (or such longer period of time as determined by the Administrator, in its discretion) after the Participant’s termination as a Service Provider.
(v) Termination for Cause. Notwithstanding any other provision of the Plan to the contrary, if the Participant’s status as a Service Provider is terminated for Cause, the Option shall terminate and cease to be exercisable immediately upon such termination as a Service Provider.
(e) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, other than termination of Service for Cause, if the exercise of an Option within the applicable time periods set forth in Section 7(d) is prevented by the provisions of Section 26 below, the Option shall remain exercisable until ninety (90) days (or such longer period of time as determined by the Administrator, in its discretion) after the date the Participant is notified by the Company that the Option is exercisable, but in no event later than the expiration of the term of such Option as set forth in the Award Agreement.
(f) Extension if Participant Subject to Section 16(b). Notwithstanding the foregoing, other than termination of Service for Cause, if a sale within the applicable time periods set forth in Section 7(d) of shares acquired upon the exercise of the Option would subject the Participant to suit under Section 16(b) of the Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Participant would no longer be subject to such suit, and (ii) the expiration of the term of such Option as set forth in the Award Agreement.
8. RESTRICTED STOCK.
(a) Grant of Restricted Stock. Subject to Section 6 and the other terms and conditions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.
(b) Restricted Stock Agreement. Subject to Section 6 and the other terms and conditions of the Plan, each Award of Restricted Stock will be evidenced by an Award Agreement (which may be in electronic form) that will specify any vesting conditions, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares, if any, have lapsed.
(c) Transferability. Except as provided in this Section 8, Section 14 or the Award Agreement, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable vesting period (if any).
(d) Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.
(i) General Restrictions. Subject to Section 6 and the other terms and conditions of the Plan, the Administrator may set restrictions based upon continued employment or service, the achievement of Performance Goals or other specific performance objectives (Company-wide, departmental, divisional, business unit, or individual goals), applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion.
(e) Removal of Restrictions. Except as otherwise provided in this Section 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the vesting period or at such other time as the Administrator may determine. The Administrator, in its discretion, may establish procedures regarding the release of Shares from escrow and/or removal of legends, as necessary or appropriate to minimize administrative burdens on the Company.
(f) Legend on Certificates. The Administrator, in its discretion, may require that one or more legends be placed on the certificates representing Restricted Stock to give appropriate notice of the applicable restrictions.
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(g) Voting Rights. During the vesting period, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise.
(h) Dividends and Other Distributions. During the vesting period, Participants holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Administrator provides otherwise. Notwithstanding anything herein to the contrary, dividends or other distributions credited/payable in connection with Shares of Restricted Stock that are not yet vested will be subject to the same restrictions and risk of forfeiture as the underlying Award and will not be paid until the underlying Award vests.
(i) Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and, subject to Section 3, again will become available for grant under the Plan.
9. RESTRICTED STOCK UNITS.
(a) Grant. Subject to Section 6 and the other terms and conditions of the Plan, the Administrator, at any time and from time to time, may grant Restricted Stock Units to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.
(b) Award Agreement. Subject to Section 6 and the other terms and conditions of the Plan, each Award of Restricted Stock Units will be evidenced by an Award Agreement (which may be in electronic form) that will specify any vesting conditions, the number of Restricted Stock Units granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine.
(c) Vesting Criteria and Other Terms. Subject to Section 6 and the other terms and conditions of the Plan, the Administrator will set vesting criteria (if any) in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant.
(i) General Restrictions. Subject to Section 6 and the other terms and conditions of the Plan, the Administrator may set vesting criteria based upon continued employment or service, the achievement of Performance Goals or other specific performance objectives (Company-wide, departmental, divisional, business unit, or individual goals), applicable federal or state securities laws or any other basis determined by the Administrator in its discretion.
(d) Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Administrator.
(e) Form and Timing of Payment. Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s) determined by the Administrator and set forth in the Award Agreement; provided, however, that the timing of payment shall in all cases comply with Section 409A to the extent applicable to the Award. The Administrator, in its sole discretion, may settle earned Restricted Stock Units in cash, Shares, or a combination of both.
(f) Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company and, subject to Section 3, again will become available for grant under the Plan.
(g) Voting Rights, Dividend Equivalents and Distributions. Participants shall have no voting rights with respect to Shares represented by Restricted Stock Units until the date of the issuance of such Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, the Administrator, in its discretion, may provide in the Award Agreement evidencing any Restricted Stock Unit Award that the Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cash dividends on Shares having a record date prior to the date on which the Restricted Stock Units held by such Participant are settled. Settlement of Dividend Equivalents may be made in cash, Shares, or a combination thereof as determined by the Administrator. Except as otherwise provided in an Award Agreement, Dividend Equivalents, if any, shall be accrued by crediting the Participant with additional whole Restricted Stock Units as of the date of payment of such cash dividends on Shares (or as of the record date if the Restricted Stock Units are settled on or after the record date and before the date of payment of the cash dividend) and the number of additional Restricted Stock Units (rounded to the nearest whole number) to be so credited shall be determined by dividing (a) the amount of cash dividends paid (or to be paid) on such date with respect to the number of Shares represented by the Restricted Stock Units previously credited to the Participant by (b) the Fair Market Value per Share as of the date such Dividend Equivalents are credited. Any such additional Restricted Stock Units shall be subject to the same terms and conditions, including but not limited to vesting conditions, and shall be settled in the same manner and at the same time (or as soon thereafter as practicable) as the Restricted Stock Units originally subject to the Restricted Stock Unit Award. For the avoidance of doubt, such additional Restricted Stock Units or other Dividend Equivalents will not vest or be paid prior to the time that the original Award vests. In the event of a dividend or distribution
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SALESFORCE 2024 PROXY STATEMENT |
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paid in Shares or any other adjustment made upon a change in the capital structure of the Company as described in Section 15 appropriate adjustments shall be made in the Participant’s Restricted Stock Unit Award so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than normal cash dividends) to which the Participant would be entitled by reason of the Shares issuable upon settlement of the Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same vesting conditions as are applicable to the Award.
10. STOCK APPRECIATION RIGHTS.
(a) Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.
(b) Number of Shares. Subject to Section 6 and the other terms and conditions of the Plan, the Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to any Service Provider.
(c) Exercise Price and Other Terms. The per share exercise price for the Shares to be issued pursuant to exercise of a Stock Appreciation Right will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. Notwithstanding the foregoing, Stock Appreciation Rights may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. Otherwise, the Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan. Until Shares are issued in respect of a Stock Appreciation Right (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends, Dividend Equivalents or any other rights as a stockholder will exist with respect to the Shares subject to a Stock Appreciation Right.
(d) Stock Appreciation Right Agreement. Subject to Section 6 and the other terms and conditions of the Plan, each Stock Appreciation Right grant will be evidenced by an Award Agreement (which may be in electronic form) that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.
(e) Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 7(b) relating to the maximum term and Sections 7(d), 7(e) and 7(f) relating to exercise also will apply to Stock Appreciation Rights.
(f) Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:
(i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times
(ii) The number of Shares with respect to which the Stock Appreciation Right is exercised.
At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof.
11. PERFORMANCE UNITS AND PERFORMANCE SHARES.
(a) Grant of Performance Units/Shares. Subject to the terms and conditions of the Plan, Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. Subject to Section 6 and the other terms and conditions of the Plan, the Administrator will have complete discretion in determining the number of Performance Units and/or Performance Shares granted to each Participant.
(b) Award Agreement. Subject to Section 6 and the other terms and conditions of the Plan, each Award of Performance Shares and Performance Units will be evidenced by an Award Agreement (which may be in electronic form) that will specify any vesting conditions, the number of Performance Shares or Performance Units, as applicable, granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine.
(c) Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.
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SALESFORCE 2024 PROXY STATEMENT |
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(d) Performance Objectives and Other Terms. Subject to Section 6 and the other terms and conditions of the Plan, the Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as a Service Provider) (if any) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units or Performance Shares, as applicable, that will be paid out to the Service Providers. The time period during which the performance objectives or other vesting provisions must be met will be called the “Performance Period.” Each Award of Performance Units and Performance Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine.
(i) General Restrictions. Subject to Section 6 and the other terms and conditions of the Plan, the Administrator may set vesting criteria based upon continued employment or service, the achievement of specific Performance Goals or other performance objectives (Company-wide, departmental, divisional, business unit, or individual goals), applicable federal or state securities laws or any other basis determined by the Administrator in its discretion.
(e) Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units or Performance Shares, as applicable, will be entitled to receive a payout of the number of Performance Units or Performance Shares, as applicable, earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved.
(f) Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units and Performance Shares will be made as soon as practicable after the expiration of the applicable Performance Period or as otherwise determined by the Administrator; provided, however, that the timing of payment shall in all cases comply with Section 409A to the extent applicable to the Award. The Administrator, in its sole discretion, may pay earned Performance Units and Performance Shares in the form of cash, in Shares or in a combination thereof.
(g) Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units or Performance Shares, as applicable, will be forfeited to the Company, and, subject to Section 3, again will be available for grant under the Plan.
(h) Voting Rights, Dividend Equivalents and Distributions. Participants shall have no voting rights with respect to Shares represented by Performance Units and/or Performance Shares until the date of the issuance of such Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). However, the Administrator, in its discretion, may provide in the Award Agreement evidencing any Award of Performance Shares that the Participant shall be entitled to receive Dividend Equivalents with respect to the payment of cash dividends on Shares having a record date prior to the date on which the Performance Shares are settled. Settlement of Dividend Equivalents may be made in cash, Shares, or a combination thereof as determined by the Administrator, and may be paid on the same basis as settlement of the related Performance Share. Except as otherwise provided in an Award Agreement, Dividend Equivalents, if any, shall be accrued by crediting the Participant with additional whole Performance Shares as of the date of payment of such cash dividends on Shares (or as of the record date if the Performance Shares are settled on or after the record date and before the date of payment of the cash dividend) and the number of additional Performance Shares (rounded to the nearest whole number) to be so credited shall be determined by dividing (a) the amount of cash dividends paid (or to be paid) on such date with respect to the number of Shares represented by the Performance Shares previously credited to the Participant by (b) the Fair Market Value per Share as of the date such Dividend Equivalents are credited. Any such additional Performance Shares shall be subject to the same terms and conditions, including but not limited to vesting conditions, and shall be settled in the same manner and at the same time (or as soon thereafter as practicable) as the Performance Shares originally subject to the Award of Performance Shares. For the avoidance of doubt, such additional Performance Shares or other Dividend Equivalents will not vest or be paid prior to the time that the original Award vests. Dividend Equivalents shall not be paid with respect to Performance Units. In the event of a dividend or distribution paid in Shares or any other adjustment made upon a change in the capital structure of the Company as described in Section 15 appropriate adjustments shall be made in the Participant’s Award of Performance Shares so that it represents the right to receive upon settlement any and all new, substituted or additional securities or other property (other than normal cash dividends) to which the Participant would be entitled by reason of the Shares issuable upon settlement of the Award, and all such new, substituted or additional securities or other property shall be immediately subject to the same vesting conditions as are applicable to the Award.
12. PERFORMANCE BONUS AWARDS.
(a) Grant of Performance Bonus Awards. Subject to the terms and conditions of the Plan, Performance Bonus Awards may be granted to Employees at any time and from time to time, as will be determined by the Administrator, in its sole discretion, in the form of a cash bonus payable upon the attainment of Performance Goals and/or other performance objectives that are established by the Administrator, in each case on a specified date or dates or over any period or periods determined by the Administrator.
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SALESFORCE 2024 PROXY STATEMENT |
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(b) Subject to Section 6 and the other terms and conditions of the Plan, the Administrator will have complete discretion to determine the amount of the cash bonus that could be earned under a Performance Bonus Award.
13. LEAVES OF ABSENCE/TRANSFER BETWEEN LOCATIONS. Unless the Administrator provides otherwise or as otherwise required by Applicable Law, vesting of Awards granted hereunder will be suspended during any unpaid personal leave of absence other than a Company-approved sabbatical, such that vesting shall cease on the first day of any such unpaid personal leave of absence and shall only recommence upon return to active service. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary or Affiliate. For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months following the first (1st) day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.
14. TRANSFERABILITY OF AWARDS.
(a) Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant (or the Participant’s guardian or legal representative). If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate. Notwithstanding anything to the contrary in the Plan, in no event will the Administrator have the right to determine and implement the terms and conditions of any Award Transfer Program without stockholder approval.
15. ADJUSTMENTS; DISSOLUTION OR LIQUIDATION; MERGER OR CHANGE IN CONTROL.
(a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property, but excepting normal cash dividends), recapitalization, stock split, reverse stock split, reorganization, reincorporation, reclassification, merger, consolidation, split-up, split-off, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of shares of stock that may be delivered under the Plan and/or the number, class, and price of shares of stock covered by each outstanding Award, the numerical Share limits in Section 3 of the Plan and the per person numerical Share limits in Section 6. Notwithstanding the preceding, the number of Shares subject to any Award always shall be a whole number. Any fractional share resulting from an adjustment pursuant to this Section 15(a) shall be rounded down to the nearest whole number, and in no event may the exercise or purchase price under any Award be decreased to an amount less than the par value, if any, of the stock subject to such Award.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised (with respect to an Option or SAR) or vested (with respect to an Award other than an Option or SAR), an Award will terminate immediately prior to the consummation of such proposed action.
(c) Change in Control. In the event of a merger of the Company with or into another corporation or other entity or a Change in Control, each outstanding Award will be treated as the Administrator determines (subject to the provisions of the following paragraph), including, without limitation, that each Award be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. The Administrator will not be required to treat all Awards similarly in the transaction.
In the event that the successor corporation does not assume or substitute for the Award, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, unless determined otherwise by the Administrator, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.
For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for
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SALESFORCE 2024 PROXY STATEMENT |
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each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, Performance Unit or Performance Share, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.
Notwithstanding anything in this Section 15(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.
(d) Outside Director Awards. With respect to Awards granted to an Outside Director that are assumed or substituted for, if on the date of or following such assumption or substitution the Participant’s status as a Director or a director of the successor or acquiring corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant (unless such resignation is at the request of the acquirer), then the Participant will fully vest in and have the right to exercise Options and/or Stock Appreciation Rights as to all of the Shares underlying such Award, including those Shares which would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, unless determined otherwise by the Administrator, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met.
16. DEFERRALS. The Administrator, in its sole discretion, may permit a Participant to defer receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award. Any such deferral elections shall be subject to such rules and procedures as shall be determined by the Administrator in its sole discretion and, unless otherwise expressly determined by the Administrator, shall comply with the requirements of Section 409A.
17. TAX.
(a) Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or such earlier time as any Tax Obligations are due, the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy all Tax Obligations.
(b) Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may designate the method or methods by which a Participant may satisfy such Tax Obligations. As determined by the Administrator in its discretion from time to time, these methods may include one or more of the following (a) paying cash, (b) having the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld or remitted, (c) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld or remitted, (d) selling a sufficient number of Shares otherwise deliverable to the Participant through such means as the Administrator may determine in its sole discretion (whether through a broker or otherwise) equal to the Tax Obligations required to be withheld or remitted, (e) retaining from salary or other amounts payable to the Participant cash having a sufficient value to satisfy the Tax Obligations, or (f) any other means which the Administrator, in its sole discretion, determines to both comply with Applicable Laws, and to be consistent with the purposes of the Plan. The amount of Tax Obligations will be deemed to include any amount that the Administrator agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum federal, state or local marginal income tax rates applicable to the Participant or the Company, as applicable, with respect to the Award on the date that the amount of tax or social insurance liability to be withheld or remitted is to be determined. The Fair Market Value of the Shares to be withheld or delivered shall be determined as of the date that the Tax Obligations are required to be withheld.
(c) Compliance With Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A, except as otherwise determined in the sole discretion of the Administrator. Each payment or benefit under this Plan and under each Award Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations. The Plan, each Award and each Award Agreement under the Plan is intended to be exempt from or otherwise meet the requirements of Section 409A and will be construed and interpreted, including but not limited with respect to ambiguities and/or ambiguous terms, in accordance with such intent, except as otherwise specifically determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Section 409A, the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A.
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SALESFORCE 2024 PROXY STATEMENT |
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18. NO EFFECT ON EMPLOYMENT OR SERVICE. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.
19. DATE OF GRANT. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.
20. TERM OF PLAN. Subject to Section 29 of the Plan, the Plan will become effective upon its approval by the Company’s stockholders. It will continue in effect for a term of ten (10) years from March 21, 2024 unless terminated earlier under Section 21 of the Plan. For the avoidance of doubt, neither the amendment and restatement of the Plan in 2018, nor any subsequent amendment and/or restatement is intended to, and shall not be interpreted to, modify any Awards granted prior to approval of the amendment and restatement of this Plan by the Company’s stockholders at its 2018 annual meeting to the extent such modification would result in a loss of deductibility under Code Section 162(m).
21. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Amendment and Termination. The Administrator may at any time amend, alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will materially impair the rights of any Participant, unless required by Applicable Law or mutually agreed between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.
22. CONSTRUCTION. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.
23. SEVERABILITY. If any one or more of the provisions (or any part thereof) of this Plan shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired thereby.
24. FRACTIONAL SHARES. The Company shall not be required to issue fractional shares upon the exercise or settlement of any Award.
25. UNFUNDED OBLIGATION. Participants shall have the status of general unsecured creditors of the Company. Any amounts payable to Participants pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974. No Participating Company shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any Participant account shall not create or constitute a trust or fiduciary relationship between the Administrator or any Participating Company and a Participant, or otherwise create any vested or beneficial interest in any Participant or the Participant’s creditors in any assets of any Participating Company. The Participants shall have no claim against any Participating Company for any changes in the value of any assets which may be invested or reinvested by the Company with respect to the Plan.
26. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Legal Compliance. The granting of Awards and the issuance and delivery of Shares under the Plan shall be subject to all Applicable Laws, rule and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. Shares will not be issued pursuant to the exercise or vesting of an Award unless the exercise or vesting of such Award and the issuance and delivery of such Shares will comply with Applicable Laws, rules and regulations and will be further subject to the approval of counsel for the Company with respect to such compliance.
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SALESFORCE 2024 PROXY STATEMENT |
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Pay vs Performance Disclosure
|
12 Months Ended |
Jan. 31, 2024
USD ($)
|
Jan. 31, 2023
USD ($)
|
Jan. 31, 2022
USD ($)
|
Jan. 31, 2021
USD ($)
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Pay vs Performance Disclosure |
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Pay vs Performance Disclosure, Table |
The information below is provided in accordance with the SEC pay versus performance disclosure rules set forth in Item 402(v) of Regulation S-K under the Exchange Act (“Pay Versus Performance Rules”). These rules require companies to disclose certain information about the relationship between the compensation of our principal executive officer (“PEO”) and non-PEO NEOs (as a group) and certain financial performance measures. For further information concerning the Company’s pay for performance philosophy and how the Company aligns executive compensation with Company performance, please refer to the “Compensation Discussion and Analysis” above.
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Summary Compensation Table Total for PEO (Benioff)(1) |
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Summary Compensation Table Total for PEO (Taylor)(3) |
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Compensation Actually Paid to PEO (Taylor)(4) |
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Summary Compensation Table |
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Compensation Actually Paid to PEO (Block)(4) |
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Average Summary Compensation Table Total for Non-PEO NEOs(5) |
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Average Compensation Actually Paid to Non-PEO NEOs(6) |
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Value of Initial Fixed $100 Investment Based On: |
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Company Total Shareholder Return(7) |
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2024 |
|
$ |
39,642,173 |
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|
$ |
100,570,098 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
13,762,498 |
|
|
$ |
34,326,577 |
|
|
$ |
154.18 |
|
|
$ |
220.03 |
|
|
$ |
4,136 |
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|
|
93rd |
|
2023 |
|
$ |
29,868,893 |
|
|
($ |
15,648,986) |
|
|
$ |
26,792,798 |
|
|
($ |
72,220,776) |
|
|
|
— |
|
|
|
— |
|
|
$ |
15,923,619 |
|
|
($ |
7,680,438) |
|
|
$ |
92.13 |
|
|
$ |
142.05 |
|
|
$ |
208 |
|
|
|
17th |
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2022 |
|
$ |
28,602,112 |
|
|
$ |
25,056,235 |
|
|
$ |
22,794,415 |
|
|
$ |
31,528,547 |
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|
|
— |
|
|
|
— |
|
|
$ |
14,044,452 |
|
|
$ |
16,514,995 |
|
|
$ |
127.60 |
|
|
$ |
183.20 |
|
|
$ |
1,444 |
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|
|
41st |
|
2021 |
|
$ |
25,740,775 |
|
|
$ |
59,862,429 |
|
|
|
— |
|
|
|
— |
|
|
$ |
1,232,157 |
|
|
$ |
12,279,756 |
|
|
$ |
13,763,689 |
|
|
$ |
36,808,761 |
|
|
$ |
123.72 |
|
|
$ |
146.11 |
|
|
$ |
4,072 |
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|
65th |
|
(1) |
The dollar amounts reported are the “Total Compensation” amounts reported for our PEO, Marc Benioff, in our Summary Compensation Table above. |
(2) |
The dollar amounts reported represent the amount of Compensation Actually Paid to our PEO, Marc Benioff, as computed in accordance with SEC rules, and do not reflect the actual amount of compensation earned or received during the applicable fiscal year. In accordance with SEC rules, these amounts differ from “Total Compensation” as set forth in the Summary Compensation Table for fiscal 2024 as shown below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |
|
|
|
|
|
|
|
Compensation Actually Paid to PEO (Mr. Benioff) |
|
|
|
Summary Compensation Table Total |
|
$ |
39,642,173 |
|
for value of “Stock Awards” and “Option Awards” reported in the Summary Compensation Table |
|
($ |
30,338,323) |
|
Add Year-end fair value of outstanding and unvested equity awards granted in the fiscal year |
|
$ |
42,794,577 |
|
Add Year over year change in fair value of outstanding and unvested equity awards granted in prior fiscal years |
|
$ |
43,793,324 |
|
Add Fair value as of the vesting date of vested awards granted in current fiscal year |
|
$ |
0 |
|
Add Change in fair value from prior fiscal year end to the vesting date of equity awards granted in prior fiscal years that vested in the fiscal year |
|
$ |
4,678,347 |
|
Subtract: Prior fiscal year end value of any equity awards granted in prior fiscal years that failed to meet vesting conditions during the covered fiscal year |
|
$ |
0 |
|
Add: Value of dividends or other earnings paid on unvested equity awards during the covered fiscal year not otherwise included in the total compensation for the fiscal year |
|
$ |
0 |
|
Compensation Actually Paid to Mr. Benioff |
|
|
|
|
(3) |
The dollar amounts reported are the “Total Compensation” amounts reported for Bret Taylor, who served as Co-PEO from November 30, 2021 through January 31, 2023, as reported in the Summary Compensation Table included in our proxy statement for our 2023 and 2022 Annual Meetings of Stockholders, and for Keith Block, who served as Co-PEO through February 24, 2020, as reported in the Summary Compensation Table included in our proxy statement for our 2021 Annual Meeting of Stockholders. |
(4) |
The dollar amounts reported represent the amount of Compensation Actually Paid to our former Co-PEOs, as reported in the “Pay Versus Performance” section of our proxy statement for our 2023 Annual Meeting of Stockholders and computed in accordance with Pay Versus Performance Rules. These amounts differ from “Total Compensation” as reported in the applicable Summary Compensation Table included in our proxy statements for our 2023, 2022, and 2021 Annual Meetings of Stockholders, as shown in the “Pay Versus Performance” section for our proxy statement for our 2023 Annual Meeting of Stockholders. |
(5) |
The dollar amounts reported are the average of the “Total Compensation” amounts reported for the Company’s NEOs as a group excluding our CEO and former Co-PEOs for the year(s) in which they served as Co-PEO (the “Non-PEO NEOs”) in the Summary Compensation Table in each applicable fiscal year. The Non-PEO NEOs (excluding our PEO and former Co-PEOs, as applicable for the fiscal year(s) in which they served as Co-PEO) for each applicable year are as follows: (i) for fiscal 2024, Ms. Weaver and Messrs. Millham, Niles and Tallapragada; (ii) for fiscal 2023, Ms. Weaver and Messrs. Harris, Millham and Tallapragada; (iii) for fiscal 2022, Ms. Weaver and Messrs. Harris, Patterson and Tallapragada; and (iv) for fiscal 2021, Messrs. Hawkins, Patterson, Tallapragada and Taylor. |
(6) |
The dollar amounts reported represent the average amount of Compensation Actually Paid to the Non-PEO NEOs as computed in accordance with SEC rules, and do not reflect actual amounts of compensation earned or received during the applicable fiscal year. In accordance with SEC rules, these amounts differ from the average of the amounts of “Total Compensation” as set forth in the Summary Compensation Table for fiscal 2024 as shown below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of the grant. |
|
|
|
|
|
|
|
Average Compensation Actually Paid to Non-PEO NEOs |
|
|
|
Average Summary Compensation Table Total |
|
$ |
13,762,498 |
|
for the average value of “Stock Awards” and “Option Awards” reported in the Summary Compensation Table |
|
($ |
10,674,880) |
|
Add: Average year-end fair value of outstanding and unvested equity awards granted in the fiscal year |
|
$ |
17,623,840 |
|
Add: Average year over year change in fair value of outstanding and unvested equity awards granted in prior fiscal years |
|
$ |
10,874,062 |
|
Add: Average fair value as of the vesting date of vested awards granted in current fiscal year |
|
$ |
0 |
|
Add: Average change in fair value from prior fiscal year end to the vesting date of equity awards granted in prior fiscal years that vested in the fiscal year |
|
$ |
2,741,057 |
|
Subtract: Average prior fiscal year end value of any equity awards granted in prior fiscal years that failed to meet vesting conditions during the covered fiscal year |
|
$ |
0 |
|
Add: Average value of dividends or other earnings paid on unvested equity awards during the covered fiscal year not otherwise included in the total compensation for the fiscal year |
|
$ |
0 |
|
Average Compensation Actually Paid to Non-PEO NEOs |
|
|
|
|
(7) |
Cumulative TSR is calculated by dividing (a) the sum of (i) the cumulative amount of any dividends for the measurement period, assuming dividend reinvestment, and (ii) the difference between the Company’s stock price at the end and the beginning of the measurement period by (b) the Company’s stock price at the beginning of the measurement period. The beginning of the measurement period for each year in the table is January 31, 2020. Historical stock performance is not necessarily indicative of future stock performance. |
(8) |
Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: Nasdaq Computer & Data Processing Index, which is used in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the applicable fiscal year. Historical stock performance is not necessarily indicative of future stock performance. |
(9) |
The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable fiscal year. |
(10) |
The “Company-Selected Measure” (as defined in Item 402(v) of Regulation S-K of the Exchange Act) is our one-year TSR relative to the TSR of each member of the Nasdaq-100 Index as of the beginning of each fiscal year (“Relative TSR”). TSR for this purpose is calculated by comparing the Company’s average closing share price over the 90 calendar days ending on the last day of the fiscal year and the Company’s average closing share price over the 90 calendar days ending on the last day of the end of the prior fiscal year. We use three-year relative TSR as a performance measure for our PRSUs, including for the PRSUs granted in fiscal 2024. As described in the “Compensation Discussion and Analysis” above, we also use non-GAAP operating margin as a performance measure for the PRSUs granted in fiscal 2024. |
|
|
|
|
Company Selected Measure Name |
Relative TSR
|
|
|
|
Named Executive Officers, Footnote |
The Non-PEO NEOs (excluding our PEO and former Co-PEOs, as applicable for the fiscal year(s) in which they served as Co-PEO) for each applicable year are as follows: (i) for fiscal 2024, Ms. Weaver and Messrs. Millham, Niles and Tallapragada; (ii) for fiscal 2023, Ms. Weaver and Messrs. Harris, Millham and Tallapragada; (iii) for fiscal 2022, Ms. Weaver and Messrs. Harris, Patterson and Tallapragada; and (iv) for fiscal 2021, Messrs. Hawkins, Patterson, Tallapragada and Taylor.
|
|
|
|
Peer Group Issuers, Footnote |
Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: Nasdaq Computer & Data Processing Index, which is used in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the applicable fiscal year. Historical stock performance is not necessarily indicative of future stock performance.
|
|
|
|
PEO Total Compensation Amount |
$ 39,642,173
|
|
|
|
PEO Actually Paid Compensation Amount |
$ 100,570,098
|
|
|
|
Adjustment To PEO Compensation, Footnote |
(2) |
The dollar amounts reported represent the amount of Compensation Actually Paid to our PEO, Marc Benioff, as computed in accordance with SEC rules, and do not reflect the actual amount of compensation earned or received during the applicable fiscal year. In accordance with SEC rules, these amounts differ from “Total Compensation” as set forth in the Summary Compensation Table for fiscal 2024 as shown below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |
|
|
|
|
|
|
|
Compensation Actually Paid to PEO (Mr. Benioff) |
|
|
|
Summary Compensation Table Total |
|
$ |
39,642,173 |
|
for value of “Stock Awards” and “Option Awards” reported in the Summary Compensation Table |
|
($ |
30,338,323) |
|
Add Year-end fair value of outstanding and unvested equity awards granted in the fiscal year |
|
$ |
42,794,577 |
|
Add Year over year change in fair value of outstanding and unvested equity awards granted in prior fiscal years |
|
$ |
43,793,324 |
|
Add Fair value as of the vesting date of vested awards granted in current fiscal year |
|
$ |
0 |
|
Add Change in fair value from prior fiscal year end to the vesting date of equity awards granted in prior fiscal years that vested in the fiscal year |
|
$ |
4,678,347 |
|
Subtract: Prior fiscal year end value of any equity awards granted in prior fiscal years that failed to meet vesting conditions during the covered fiscal year |
|
$ |
0 |
|
Add: Value of dividends or other earnings paid on unvested equity awards during the covered fiscal year not otherwise included in the total compensation for the fiscal year |
|
$ |
0 |
|
Compensation Actually Paid to Mr. Benioff |
|
|
|
|
|
|
|
|
Non-PEO NEO Average Total Compensation Amount |
$ 13,762,498
|
$ 15,923,619
|
$ 14,044,452
|
$ 13,763,689
|
Non-PEO NEO Average Compensation Actually Paid Amount |
$ 34,326,577
|
(7,680,438)
|
16,514,995
|
36,808,761
|
Adjustment to Non-PEO NEO Compensation Footnote |
(6) |
The dollar amounts reported represent the average amount of Compensation Actually Paid to the Non-PEO NEOs as computed in accordance with SEC rules, and do not reflect actual amounts of compensation earned or received during the applicable fiscal year. In accordance with SEC rules, these amounts differ from the average of the amounts of “Total Compensation” as set forth in the Summary Compensation Table for fiscal 2024 as shown below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of the grant. |
|
|
|
|
|
|
|
Average Compensation Actually Paid to Non-PEO NEOs |
|
|
|
Average Summary Compensation Table Total |
|
$ |
13,762,498 |
|
for the average value of “Stock Awards” and “Option Awards” reported in the Summary Compensation Table |
|
($ |
10,674,880) |
|
Add: Average year-end fair value of outstanding and unvested equity awards granted in the fiscal year |
|
$ |
17,623,840 |
|
Add: Average year over year change in fair value of outstanding and unvested equity awards granted in prior fiscal years |
|
$ |
10,874,062 |
|
Add: Average fair value as of the vesting date of vested awards granted in current fiscal year |
|
$ |
0 |
|
Add: Average change in fair value from prior fiscal year end to the vesting date of equity awards granted in prior fiscal years that vested in the fiscal year |
|
$ |
2,741,057 |
|
Subtract: Average prior fiscal year end value of any equity awards granted in prior fiscal years that failed to meet vesting conditions during the covered fiscal year |
|
$ |
0 |
|
Add: Average value of dividends or other earnings paid on unvested equity awards during the covered fiscal year not otherwise included in the total compensation for the fiscal year |
|
$ |
0 |
|
Average Compensation Actually Paid to Non-PEO NEOs |
|
|
|
|
|
|
|
|
Compensation Actually Paid vs. Total Shareholder Return |
Relationship Between Compensation Actually Paid and Cumulative Company and Peer Group TSR. The graph below (i) sets forth the relationship between the amount of Compensation Actually Paid to our PEO and our former Co-PEOs, the average amount of Compensation Actually Paid to our Non-PEO NEOs, and the Company’s cumulative TSR over the four most recently completed fiscal years; and (ii) compares our cumulative TSR over the four most recently completed fiscal years to that of the Nasdaq Computer & Data Processing Index over the same period.
|
|
|
|
Compensation Actually Paid vs. Net Income |
Relationship Between Compensation Actually Paid and Net Income. The graph below sets forth the amount of Compensation Actually Paid to our PEO and our former Co-PEOs, the average amount of Compensation Actually Paid to our Non-PEO NEOs, and our net income during the four most recently completed fiscal years.
|
|
|
|
Compensation Actually Paid vs. Company Selected Measure |
Relationship Between Compensation Actually Paid and Relative TSR. The graph below sets forth the amount of Compensation Actually Paid to our PEO and our former Co-PEOs, the average amount of Compensation Actually Paid to our Non-PEO NEOs, and our Relative TSR during the four most recently completed fiscal years. Although we use three-year relative TSR as a PRSU performance measure, SEC guidance limits the Company-Selected Measure to one-year periods, so we have compared Compensation Actually Paid to annual Relative TSR in the graph below.
|
|
|
|
Total Shareholder Return Vs Peer Group |
Relationship Between Compensation Actually Paid and Cumulative Company and Peer Group TSR. The graph below (i) sets forth the relationship between the amount of Compensation Actually Paid to our PEO and our former Co-PEOs, the average amount of Compensation Actually Paid to our Non-PEO NEOs, and the Company’s cumulative TSR over the four most recently completed fiscal years; and (ii) compares our cumulative TSR over the four most recently completed fiscal years to that of the Nasdaq Computer & Data Processing Index over the same period.
|
|
|
|
Tabular List, Table |
Financial Performance Measures. As described in greater detail in the “Compensation Discussion and Analysis” above, the Company’s executive compensation program reflects a philosophy. The metrics that we use for both our long-term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our stockholders. Below is an unranked list of the most important financial performance measures that we use to link Compensation Actually Paid to the Company’s NEOs for the most recently completed fiscal year to the Company’s performance:
|
|
|
|
|
Non-GAAP Operating Margin (1) |
|
|
|
|
|
Non-GAAP Income from Operations (2) |
|
|
|
|
Total Shareholder Return Amount |
$ 154.18
|
92.13
|
127.6
|
123.72
|
Peer Group Total Shareholder Return Amount |
220.03
|
142.05
|
183.2
|
146.11
|
Net Income (Loss) |
$ 4,136,000,000
|
$ 208,000,000
|
$ 1,444,000,000
|
$ 4,072,000,000
|
Company Selected Measure Amount |
0.93
|
0.17
|
0.41
|
0.65
|
Measure:: 1 |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Name |
Relative TSR
|
|
|
|
Measure:: 2 |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Name |
Non-GAAP Operating Margin
|
|
|
|
Measure:: 3 |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Name |
Revenue
|
|
|
|
Measure:: 4 |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Name |
Operating Cash Flow
|
|
|
|
Measure:: 5 |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Name |
Non-GAAP Income from Operations
|
|
|
|
Marc Benioff [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
PEO Total Compensation Amount |
$ 39,642,173
|
$ 29,868,893
|
$ 28,602,112
|
$ 25,740,775
|
PEO Actually Paid Compensation Amount |
$ 100,570,098
|
(15,648,986)
|
25,056,235
|
59,862,429
|
PEO Name |
Marc Benioff
|
|
|
|
Mr. Taylor [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
PEO Total Compensation Amount |
$ 0
|
26,792,798
|
22,794,415
|
0
|
PEO Actually Paid Compensation Amount |
$ 0
|
(72,220,776)
|
31,528,547
|
0
|
PEO Name |
Bret Taylor
|
|
|
|
Mr. Block [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
PEO Total Compensation Amount |
$ 0
|
0
|
0
|
1,232,157
|
PEO Actually Paid Compensation Amount |
$ 0
|
$ 0
|
$ 0
|
$ 12,279,756
|
PEO Name |
Keith Block
|
|
|
|
PEO | Marc Benioff [Member] | Stock Awards And Option Awards [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
$ (30,338,323)
|
|
|
|
PEO | Marc Benioff [Member] | YearEnd Fair Value Of Outstanding And Unvested Equity Awards Granted In The Fiscal Year [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
42,794,577
|
|
|
|
PEO | Marc Benioff [Member] | Change In Fair Value Of Outstanding And Unvested Equity Awards Granted In Prior Fiscal Years [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
43,793,324
|
|
|
|
PEO | Marc Benioff [Member] | Change In Fair Value Of Equity Awards Granted In Prior Fiscal Years That Vested In The Fiscal Year [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
0
|
|
|
|
PEO | Marc Benioff [Member] | Prior Fiscal YearEnd Fair Value For Any Equity Awards Forfeited In The Fiscal Year [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
4,678,347
|
|
|
|
PEO | Marc Benioff [Member] | Prior Fiscal Year End Value Of Any Equity Awards Granted In Prior Fiscal Years That Failed To Meet Vesting Conditions During The Covered Fiscal Year [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
0
|
|
|
|
PEO | Marc Benioff [Member] | Value Of Dividends Or Other Earnings Paid On Unvested Equity Awards During The Covered Fiscal Year Not Otherwise Included In The Total Compensation For The Fiscal Year [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
0
|
|
|
|
Non-PEO NEO | Stock Awards And Option Awards [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
(10,674,880)
|
|
|
|
Non-PEO NEO | YearEnd Fair Value Of Outstanding And Unvested Equity Awards Granted In The Fiscal Year [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
17,623,840
|
|
|
|
Non-PEO NEO | Change In Fair Value Of Outstanding And Unvested Equity Awards Granted In Prior Fiscal Years [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
10,874,062
|
|
|
|
Non-PEO NEO | Change In Fair Value Of Equity Awards Granted In Prior Fiscal Years That Vested In The Fiscal Year [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
0
|
|
|
|
Non-PEO NEO | Prior Fiscal YearEnd Fair Value For Any Equity Awards Forfeited In The Fiscal Year [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
2,741,057
|
|
|
|
Non-PEO NEO | Prior Fiscal Year End Value Of Any Equity Awards Granted In Prior Fiscal Years That Failed To Meet Vesting Conditions During The Covered Fiscal Year [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
0
|
|
|
|
Non-PEO NEO | Value Of Dividends Or Other Earnings Paid On Unvested Equity Awards During The Covered Fiscal Year Not Otherwise Included In The Total Compensation For The Fiscal Year [Member] |
|
|
|
|
Pay vs Performance Disclosure |
|
|
|
|
Adjustment to Compensation, Amount |
$ 0
|
|
|
|