UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934 (Amendment
No. )
Filed by the Registrant ☑
Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only(as Permitted by Rule 14a-6(e)(2)) |
| ☑ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to §240.14a-12 |
Equinix,
Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| ☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| 1. | Title of each class of securities to which transaction applies: |
| 2. | Aggregate number of securities to which transaction applies: |
| 3. | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was determined): |
| 4. | Proposed maximum aggregate value of transaction: |
| ☐ | Fee paid previously with preliminary materials: |
| ☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and
the date of its filing. |
| 1. | Amount Previously Paid: |
| 2. | Form, Schedule or Registration Statement No.: |
NOTICE
OF ANNUAL MEETING
OF STOCKHOLDERS
Dear Stockholder:
You are cordially invited to attend the
Annual Meeting of Stockholders (the "Annual Meeting") of Equinix, Inc., a Delaware corporation ("Equinix").
The meeting will be held at our headquarters, located at One Lagoon Drive, Redwood City, California, on Wednesday, May 27, 2015,
at 10:30 a.m. PDT, for the purpose of considering and voting on:
| 1. | Election of directors to the board of directors (the "Board") to serve until the next Annual Meeting or until
their successors have been duly elected and qualified; |
| 2. | Approval, by a non-binding advisory vote, of the compensation of our named executive officers; |
| 3. | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered
public accounting firm for the fiscal year ending Dec. 31, 2015; and |
| 4. | Such other business as may properly come before the meeting or any adjournments or postponements
thereof. |
The foregoing
items of business are more fully described in the attached proxy statement.
Only stockholders of record at the
close of business on April 20, 2015 are entitled to notice of, and to vote at, the Annual Meeting and at any adjournments or postponements
thereof. A list of such stockholders will be available for inspection at our headquarters located at One Lagoon Drive, Redwood
City, California, during ordinary business hours for the 10-day period prior to the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Peter Van Camp
Peter Van Camp
Executive
Chairman
Redwood City, California
April 30, 2015
TO BE HELD
Wednesday, May 27, 2015
LOCATION
Equinix Corporate Headquarters
One Lagoon Drive
Redwood City, CA 94065
+1.650.598.6000
ATTENDANCE
Whether or not you plan to attend
the Annual Meeting, please complete, sign, date and promptly return the accompanying proxy in the enclosed postage-paid
envelope, or follow the instructions in "Additional Information" (pg. 44) to submit your proxy by telephone or on the
Internet. You may revoke your proxy at any time prior to the Annual Meeting. If you decide to attend the Annual Meeting and
wish to change your proxy vote, you may do so automatically by voting in person at the meeting. Please note, however, that if
your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a
proxy issued in your name from that record holder.
Important notice regarding
the availability of proxy materials for the Annual Meeting to be held on May 27, 2015:
The proxy statement
and annual report to stockholders on Form 10-K are available at: investor.equinix.com/ PHOENIX.ZHTML?C=122662&P=PROXY
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Equinix 2015 Proxy Statement • NOTICE OF ANNUAL MEETING OF STOCKHOLDERS | 3 |
PROXY SUMMARY
This summary highlights
some of the topics discussed in this proxy statement. It does not cover all of the information you should consider before voting,
and you are encouraged to read the entire proxy statement before casting your vote.
General Information
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MEETING: Annual Meeting
of Stockholders
DATE: Wednesday, May
27, 2015
TIME: 10:30 a.m., PDT
LOCATION: Equinix Corporate
Headquarters,
One Lagoon Drive, Redwood City, CA 94065
RECORD DATE: April 20,
2015
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STOCK SYMBOL: EQIX
EXCHANGE: NASDAQ
COMMON STOCK OUTSTANDING: 56,923,183
shares as of April 20, 2015
REGISTRAR & TRANSFER AGENT: Computershare
STATE OF INCORPORATION: Delaware
YEAR OF INCORPORATION: 1998
PUBLIC COMPANY SINCE: 2000
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CORPORATE WEBSITE: Equinix.com
INVESTOR RELATIONS WEBSITE: investor.equinix.com
2015 ANNUAL MEETING MATERIALS: investor.equinix.com/PHOENIX.ZHTML?C=122662&P=PROXY
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Governance
DIRECTOR NOMINEES: 8
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Thomas Bartlett
(Independent
Director)
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Gary Hromadko
(Independent
Director)
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Scott Kriens
(Independent
Director)
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William Luby
(Independent
Director)
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Irving Lyons III
(Independent
Director)
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Christopher
Paisley
(Lead
Independent
Director)
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Stephen Smith
(Chief Executive
Officer and
President)
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Peter Van Camp
(Executive
Chairman)
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DIRECTOR TERM: One year
DIRECTOR ELECTION STANDARD: Majority
votes cast
BOARD MEETINGS IN 2014: 9
STANDING BOARD COMMITTEES (MEETINGS IN 2014):
Audit (10), Compensation (4), Governance
(4), Nominating (1), Real Estate (4)
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SUPERMAJORITY VOTING REQUIREMENTS: No
STOCKHOLDER RIGHTS PLAN: No
STOCKHOLDER RIGHT TO CALL SPECIAL MEETINGS: Yes
STOCKHOLDER RIGHT TO ACT BY WRITTEN CONSENT: Yes
CORPORATE GOVERNANCE MATERIALS: investor.equinix.com/
phoenix.zhtml?c=122662&p=irol-govHighlights
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Equinix 2015 Proxy Statement • PROXY SUMMARY | 4 |
Performance and Compensation Highlights
REVENUES ($M):
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ADJUSTED EBITDA ($M)(1): |
2014 STOCK PRICE PERFORMANCE ($): |
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CEO: Stephen
Smith (age 58; CEO since 2007)
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CEO 2014 COMPENSATION MIX(2): |
PERCENTAGE 2014 CEO INCENTIVE
COMPENSATION AT RISK: 100%
METRICS USED FOR INCENTIVE COMPENSATION:
Revenues, Adjusted EBITDA, Total Shareholder Return
TAX GROSS-UPS: No
STOCK OWNERSHIP GUIDELINES: Yes
ANTI-HEDGING POLICY: Yes
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Items to Be Voted On
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DIRECTORS:
Election of Directors
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COMPENSATION:
Advisory Vote to Approve Named
Executive Officer
Compensation
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AUDIT:
Ratification of Independent
Registered Public Accountants
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| 1. | For definitions of non-GAAP terms and a detailed reconciliation between non-GAAP financial results
and the corresponding GAAP measures, please refer to the Investor Relations section of
our website at Equinix.com. |
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| 2. | Reflects the market value of the performance-based RSU awards on the grant
date of March 6, 2014. Assumes the maximum size award is earned under the 2014 annual incentive plan and the maximum number of
shares is earned under the performance-based RSU awards. |
Equinix 2015 Proxy Statement • PROXY SUMMARY | 5 |
PROXY
STATEMENT
2015 Annual
Meeting
of Stockholders
E
Q U I N I X
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Equinix 2015 Proxy Statement • PROXY STATEMENT | 6 |
Table of Contents
NOTICE OF ANNUAL MEETING
OF
STOCKHOLDERS |
3 |
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PROXY
SUMMARY |
4 |
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PROXY
STATEMENT |
6 |
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GOVERNANCE |
8 |
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Election of Directors |
8 |
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Board Composition |
11 |
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Board Operations |
12 |
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Other Governance Policies And Practices |
15 |
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2014 Director Compensation |
16 |
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Equinix Stock Ownership |
17 |
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Related Party Transactions |
19 |
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COMPENSATION |
20 |
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Proposal 1 — Advisory Non-Binding Vote On Executive Compensation |
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Executive Officers |
21 |
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Executive Compensation and Related Information |
22 |
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Compensation Policies and Practices Risk Assessment |
38 |
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Compensation Committee Interlocks and Insider Participation |
39 |
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Equity Compensation Plan Information |
39 |
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Section 16(a) Beneficial Ownership Reporting Compliance |
40 |
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AUDIT |
41 |
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Proposal 2 — Ratification Of Independent Registered Public Accountants |
41 |
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ADDITIONAL INFORMATION |
44 |
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Voting Information and Attending the Meeting |
44 |
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Delivery Of Documents To Stockholders Sharing An Address |
47 |
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Stockholder Proposals For 2016 Annual Meeting |
47 |
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Other Matters |
48 |
Equinix 2015 Proxy Statement • PROXY STATEMENT | 7 |
GOVERNANCE
Election of Directors
All
directors will be elected at the Annual Meeting to serve for a term expiring at the next annual meeting of stockholders and until
his or her successor is elected, or until the director’s death, resignation or removal. If you sign your proxy card but do
not give instructions with respect to the voting of directors, your shares will be voted for the eight persons recommended by the
Board. If you wish to give specific instructions with respect to the voting of directors, you must
do so with respect to the individual nominee. If any nominee becomes unavailable for election as a result of an unexpected occurrence,
your shares will be voted for the election of a substitute nominee proposed by Equinix’s Board. Each person nominated for
election has agreed to serve if elected, and our Board has no reason to believe that any nominee will be unable to serve.
The eight directors who are
being nominated for election by the holders of common stock to the Board, their ages as of April 1,
2015, their positions and offices held with Equinix, and certain biographical information, including directorships held with other
public companies during the past five years, are set forth below. In addition, we have provided information concerning the particular
experience, qualifications, attributes and/or skills that led the Nominating Committee and the Board to determine that each nominee
should serve as a director of Equinix.
NOMINEES
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Thomas
Bartlett
Age
56
Director
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Thomas
Bartlett has served as a member of our Board since April 2013. Mr. Bartlett has served as executive vice president and
chief financial officer of American Tower, an owner and operator of wireless and broadcast communications sites that operates
as a Real Estate Investment Trust (REIT), since April 2009. Prior to joining American Tower, Mr. Bartlett spent 25 years
at Verizon Communications and its predecessor companies in numerous operations and business development roles, most recently
as senior vice president and corporate controller from November 2005. Mr. Bartlett began his career at Deloitte, Haskins
& Sells. We believe Mr. Bartlett's experience at American Tower with converting to, and operating as, a REIT will
be of value to the Board as Equinix operates as a REIT. His experience in the telecommunications and wireless infrastructure
fields, his extensive operating experience, and his accounting and finance expertise gained from executive roles at publicly
traded companies also qualify him to serve on our Board.
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Gary
Hromadko
Age
62
Director
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Gary Hromadko
has served as a member of our Board since June 2003. Mr. Hromadko has been a venture partner at Crosslink Capital, a venture
capital firm, since June 2002. In addition to his responsibilities with Crosslink Capital, Mr. Hromadko has been active as
a private investor since 1993. Mr. Hromadko serves on the board of directors of several privately held companies. He has also
served as a director of the public company Carbonite, Inc., during the past five years. We believe Mr. Hromadko's experience
as an investor in the communications services and infrastructure sectors, two customer segments where trends are important
to Equinix's future strategy and positioning, as well as his financial and capital markets experience, and his experience
with Equinix dating back to 2003, qualify him to serve on our Board. |
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Equinix 2015 Proxy Statement • GOVERNANCE | 8 |
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Scott Kriens
Age 57
Director
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Scott Kriens has served as a member of our Board since July 2000. Mr. Kriens has served
as chairman of the board of directors of Juniper Networks, Inc., a publicly traded Internet infrastructure solutions company,
since September 2008. From October 1996 to September 2008, Mr. Kriens served as Juniper's chief executive officer and chairman
of the board of directors. From April 1986 to January 1996, Mr. Kriens served as vice president of sales and vice president
of operations at StrataCom, Inc., a telecommunications equipment company, which he co-founded in 1986. He has also served
as a director of VeriSign, Inc., a public company, during the past five years. We believe Mr. Kriens' extensive experience
in the sectors of communications services and Internet infrastructure, two important sectors to Equinix as discussed above,
as well as his executive leadership and management experience leading a high growth company, qualify him to serve on our Board. |
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William Luby
Age 55
Director
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William Luby has served as a member of our Board since April 2010. Mr. Luby has served
as the managing partner of Seaport Capital, a private equity firm, and its predecessor companies since 1996. From 1991-1996
he was a managing director at Chase Capital, the private equity affiliate of the Chase Manhattan Corporation. Mr. Luby
also serves on the board of directors of several privately held companies, and served as chairman of the board of directors
of Switch & Data Facilities Company, Inc., a public company, prior to its acquisition by Equinix in 2010. Mr. Luby
has been an active investor in the telecommunications industry for 25 years. We believe that this experience, his experience
in the acquisition and integration of assets, including through his service as a director at Switch & Data, and his
familiarity with our industry qualify him to serve on our Board.
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Irving Lyons Ill
Age 65
Director
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Irving Lyons Ill has served as a member of our Board since February 2007. Mr. Lyons has been a principal
of Lyons Asset Management, a California-based private investment firm, since January 2005. From December 1993 to January
2005, Mr. Lyons was employed at ProLogis, a global provider of distribution facilities and services, where he served as
chief investment officer from March 1997 to December 2004 and as vice chairman of the board of directors from December
2001 to January 2005. Mr. Lyons serves on the boards of directors of the publicly traded REITs Essex Properties and ProLogis,
where he serves as lead independent director. We believe Mr. Lyons's qualifications to sit on our Board include his global
real estate experience, including his experience as a chief investment officer at a real estate concern, which provides
valuable insight to discussions of site selection and negotiations as Equinix conducts expansion planning and management
of its real estate portfolio. Mr Lyons' qualifications also include his experience with REITs, as well as his knowledge
of capital markets and executive leadership and management experience.
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Christopher
Paisley
Age 62
Lead Independent
Director
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Christopher Paisley has served as a member of our Board since July 2007 and as lead independent director
since February 2012. Mr. Paisley has been the Dean's Executive Professor of Accounting at the Leavey School of Business
at Santa Clara University since January 2001. From September 1985 until May 2000, Mr. Paisley was the senior vice president
of finance and chief financial officer of 3Com Corporation. Mr. Paisley currently serves as a director of Ambarella, Inc.,
Bridge Capital Holdings, Control4 Corporation and YuMe, Inc., and as lead independent director of Fortinet, Inc., all
public companies. He has served as a director of the public companies 3PAR, Inc., and Volterra Semiconductor Corporation
during the past five years. We believe Mr. Paisley's qualifications to sit on our Board include his accounting and finance
expertise, his experience as a chief financial officer at a technology company, and his extensive public company board
and audit committee experience. Mr. Paisley's experience has led our Board to determine he is an "audit committee
financial expert" as that term is defined in Item 407(d)(5) of Regulation S-K under Securities Exchange Act of 1934,
as amended (the "Exchange Act").
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Equinix 2015 Proxy Statement • GOVERNANCE | 9 |
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Stephen Smith
Age 58
Director, Chief Executive
Officer and President
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Stephen Smith has served as our chief executive officer and president and as a member of our Board
since April 2007. Prior to joining us, Mr. Smith served as senior vice president at HP Services, a business segment of
Hewlett-Packard Co., from January 2005 to October 2006. Prior to joining Hewlett-Packard Co., Mr. Smith served as vice
president of global professional and managed services at Lucent Technologies, Inc., a communications solutions provider,
from September 2003 to January 2005. From October 1987 to September 2003, he spent 17 years with Electronic Data Systems
Corporation ("EDS"), a business and technology solutions company, in a variety of positions, including chief
sales officer, president of eds asia-pacific, and president of EDS Western Region. Mr. Smith serves on the board of directors
of F5 Networks, a public company, and served as a director of Volterra Semiconductor and 3PAR, Inc., both public companies,
during the past five years. We believe Mr. Smith's understanding of Equinix's needs, challenges and opportunities that
he has acquired as our chief executive officer and president, an extensive career history at technology services and critical
infrastructure companies, and prior executive leadership and management experience, qualify him to serve on our Board.
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Peter Van Camp
Age 59
Executive
Chairman
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Peter Van Camp has served as our executive chairman since April 2007. Prior to becoming executive chairman, Mr. Van Camp
served as our chief executive officer and as a director from May 2000 and as president from March 2006. In addition, in December
2005, Mr. Van Camp was re-elected as chairman of the board, having previously served in that capacity from June 2001 to December
2002. From January 1997 to May 2000, Mr. Van Camp was employed at UUNET, the Internet division of MCI WorldCom (now Verizon),
where he served as president of Internet markets and as president of the Americas region. During the period from May 1995
to January 1997, Mr. Van Camp was president of Compuserve Network Services, an Internet access provider. Before holding this
position, Mr. Van Camp held various positions at Compuserve, Inc., during the period from October 1982 to May 1995. Mr. Van
Camp currently serves as a director of the public company Silver Spring Networks, Inc., and served as a director of Packeteer,
Inc., a public company, during the past five years. We believe Mr. Van Camp's long history with Equinix, in the roles of chief
executive officer, president and executive chairman, dating back to 2000, in addition to his communications services and Internet
infrastructure background and his extensive experience at technology services companies, qualify him to serve on our Board,
and that in the role of executive chairman he is able to effectively facilitate the dialogue between the Board and Equinix's
executive leadership. |
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The Board recommends a vote "FOR" each nominee |
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Equinix 2015 Proxy Statement • GOVERNANCE | 10 |
Board Composition
BOARD SIZE
Equinix’s Board currently consists of
eight directors. Equinix’s bylaws provide that the number of directors will be determined by the Board, and the number
of directors is currently set at nine. Thus, there is one vacant seat on Equinix’s Board that Equinix does not intend
to fill at this Annual Meeting.
MAJORITY VOTE STANDARD
Our bylaws provide that a director nominee
must receive a majority of the votes cast with respect to such nominee in uncontested director elections (i.e. the number of shares
voted “for” a director nominee must exceed the number of shares voted “against” such nominee). If an incumbent
director nominee fails to receive a majority of the votes cast in an uncontested election, the director shall immediately tender
his or her resignation to the Board. The Governance Committee of the Board, or such other committee designated by the Board, shall
make a recommendation to the Board as to whether to accept or reject the resignation of such incumbent director, or whether other
action should be taken. The Board shall act on the resignation, taking into account the committee’s recommendation, and publicly
disclose its decision regarding the resignation within 90 days following certification of the election results. If the Board accepts
a director’s resignation, or if a nominee for director is not elected and the nominee is not an incumbent director, the remaining
members of the Board may fill the resulting vacancy or may decrease the size of the Board.
DIRECTOR INDEPENDENCE
The Board is currently comprised of
eight directors, six of whom qualify as independent directors pursuant to the rules adopted by the Securities and Exchange
Commission applicable to the corporate governance standards for companies listed on the NASDAQ National Market System. The
Board has determined that all of Equinix’s director nominees are independent within the meaning of the applicable
NASDAQ listing standards, except for Mr. Smith, Equinix’s chief executive officer and president, and Mr. Van Camp,
Equinix’s executive chairman. The Audit, Compensation, Nominating and Real Estate committees of the Board consist
entirely of independent directors.
NOMINATION OF DIRECTORS
The Nominating Committee of the Board
operates pursuant to a written charter and has the exclusive right to recommend candidates for election as directors to the
Board. The Nominating Committee believes that candidates for director should have certain minimum qualifications, including
being able to read and understand basic financial statements, having high moral character, having business experience, and
being over 21 years of age. The Nominating Committee’s process for identifying and evaluating nominees is as follows:
In the case of incumbent directors whose annual terms of office are set to expire, the Nominating Committee reviews such
directors’ overall service to Equinix during their term, including the number of meetings attended, level of
participation, quality of performance, and any transactions of such directors with Equinix during their term. In the case of
new director candidates, the Nominating Committee first determines whether the nominee must be independent for NASDAQ
purposes, which determination is based upon the Equinix, Inc., Board of Directors Guidelines on Significant Corporate
Governance Issues (the “Guidelines”), the rules and regulations of the Securities and Exchange Commission, the
rules of the NASDAQ Stock Market, and the advice of counsel, if necessary. The Nominating Committee may then use its network
of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search
firm. The Nominating Committee will then meet to discuss and consider such candidates’ qualifications and choose
candidate(s) for recommendation to the Board.
There is no fixed set of qualifications that must
be satisfied before a candidate will be considered. Rather,
Equinix 2015 Proxy Statement • GOVERNANCE | 11 |
the Nominating Committee has the flexibility
to consider such factors as it deems appropriate. In evaluating potential nominees for Board membership, the Nominating
Committee considers qualification criteria, such as independence, character, ability to exercise sound judgment, demonstrated
leadership ability, skills, including financial literacy, educational background, diversity and experience, in the context of
the current and anticipated needs of the Board and of the company as a whole. In practice, the Nominating Committee has
sought members with experience relevant to our industry and current strategy. For example, in 2007 the addition of Mr. Lyons
to our Board was the result of a specific search designed to add experience in real estate to our Board as we embarked on a
period of major expansion, and in 2013 the addition of Mr. Bartlett was designed to add further REIT experience to our Board
in advance of our REIT conversion. The Nominating Committee understands the importance and value of diversity on the Board
and is therefore also committed to seeking out highly qualified women and individuals from minority groups to include in the
pool from which Board nominees are chosen.
The Nominating Committee will consider
candidates recommended by stockholders. Stockholders wishing to recommend candidates for consideration by the Nominating
Committee may do so by writing to the secretary of Equinix and providing the candidate’s name, biographical data and
qualifications. The Nominating Committee does not intend to alter the manner in which it evaluates candidates, including the
minimum criteria set forth above, based on whether the candidate was recommended by a stockholder.
A more detailed description on the functions
of the Nominating Committee can be found in the Nominating Committee Charter, published on the corporate governance section of
Equinix’s website at Equinix.com.
Board Operations
BOARD LEADERSHIP STRUCTURE
Prior to his current role, Mr. Van
Camp was serving as both our chief executive officer and as chairman of the board. In April 2007, Mr. Van Camp stepped down
as Equinix’s chief executive officer but retained the chairmanship of the Board as executive chairman, thus separating
the two roles. Today, our chief executive officer is responsible for the day-to-day leadership of Equinix and its
performance, and for setting the strategic direction of Equinix. Mr. Van Camp, with his depth of experience and history with
Equinix dating back to 2000, provides support and guidance to the chief executive officer and to management as executive
chairman. He also provides leadership to the Board and works with the Board to define its structure and activities in the
fulfillment of its responsibilities, facilitates communication among directors and between directors and senior management,
provides input to the agenda for Board meetings, works to provide an appropriate information flow to the Board, and presides
over meetings of the full Board. Thus, while our chief executive officer is positioned as the leader of Equinix and is free
to focus on day-to-day challenges, our Board also has a strong leader with deep knowledge of Equinix in Mr. Van Camp. We
believe this structure is best for both Equinix and our stockholders.
In February 2012, Mr. Paisley was designated
by the Board as its lead independent director. In this role, Mr. Paisley is responsible for presiding at all meetings of the Board
at which the executive chairman is not present, calling and chairing all sessions of the independent directors, preparing the agenda
and approving materials for meetings of the independent directors, briefing management directors about the results of deliberations
among independent directors, consulting with the executive chairman regarding agendas, pre-read materials and proposed meeting
calendars and schedules, collaborating with the executive chairman and acting as liaison between the executive chairman and the
independent directors, and serving as the Board’s liaison for consultation and communication with stockholders as appropriate,
including on request of major stockholders. In addition, the number of independent directors on our Board and our committee structure
provide additional independent oversight of Equinix. For example, the Audit, Compensation and Nominating committees of the Board,
and the Real Estate Committee of the Board, where decisions regarding our expansion and capital deployment are vetted, consist
entirely of independent directors. Our independent directors regularly hold private sessions and have direct access to management.
A self-assessment of the Board is also conducted annually, at which time each member is free to evaluate and comment as to whether
they feel this leadership structure continues to be appropriate.
Equinix 2015 Proxy Statement • GOVERNANCE | 12 |
DIRECTOR ATTENDANCE
During the fiscal year ended Dec. 31, 2014,
the Board held nine meetings. For the fiscal year, during his period of service, each of the incumbent directors attended or participated
in at least 90% of the aggregate of (i) the total number of meetings of the Board and (ii) the total number of meetings held by
all committees of the Board on which each such director served. In the event any director missed a meeting, he would separately
discuss material items with Mr. Smith or Mr. Van Camp.
BOARD COMMITTEES
The Board has six standing committees: the
Audit Committee, the Compensation Committee, the Governance Committee, the Nominating Committee, the Real Estate Committee and
the Stock Award Committee, in addition to special committees that may be formed from time to time. The following table provides
membership information for the incumbent directors for fiscal 2014 for such standing committees of the Board:
Name |
Audit |
Compensation |
Governance |
Nominating |
Real Estate |
Stock Award |
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Thomas Bartlett |
X |
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Gary Hromadko |
X |
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X |
X |
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Scott Kriens |
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X |
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X(1) |
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William Luby |
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X |
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X |
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Irving Lyons III |
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X(1) |
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X |
X |
Christopher Paisley |
X(1) |
|
X |
|
X |
|
Stephen Smith |
|
|
|
|
|
X |
Peter Van Camp |
|
|
X(1) |
|
|
|
1. Committee Chairman
A detailed description of the Audit
Committee can be found in the section entitled, “Report of the Audit Committee of the Board of Directors”,
elsewhere in this proxy statement. The members of the Audit Committee in 2014 were Mr. Bartlett, Mr. Hromadko and Mr.
Paisley. Mr. Paisley is chairman of the Audit Committee and considered its financial expert. During the fiscal year ended
Dec. 31, 2014, the Audit Committee held 10 meetings.
The Compensation Committee oversees, reviews
and administers all of Equinix’s compensation, equity and employee benefit plans and programs relating to executive officers,
including the named executive officers, approves the global guidelines for the compensation program for Equinix’s non-executive
employees and approves Equinix’s projected global equity usage. The Compensation Committee also acts periodically to evaluate
the effectiveness of the compensation programs at Equinix and considers recommendations from its consultant, Compensia, Inc.,
and from management regarding new compensation programs and changes to those already in existence. In addition, the Compensation
Committee is consulted to approve the compensation package of a newly hired executive or of an executive whose scope of responsibility
has changed significantly. A more detailed description of the functions of the Compensation Committee can be found in the Compensation
Committee Charter, published on the corporate governance section of Equinix’s website at Equinix.com and also in the “Compensation
Discussion and Analysis” section below. The members of the Compensation Committee are Mr. Kriens, Mr. Luby and Mr. Lyons.
Mr. Lyons is chairman of the Compensation Committee.During the fiscal year ended Dec. 31, 2014, the Compensation Committee held
four meetings.
The Governance Committee was established
to (i) oversee the evaluation of the Board, (ii) review and consider developments in corporate governance practices and to recommend
to the Board a set of effective corporate governance policies and procedures applicable to Equinix, and (iii) review and consider
developments related to
Equinix 2015 Proxy Statement • GOVERNANCE | 13 |
Equinix’s Governance Risk and
Compliance (“GRC”) Program and to report out to the Board on GRC Program activites and recommendations. A more
detailed description on the functions of the Governance Committee can be found in the Governance Committee Charter, published
in the corporate governance section of Equinix’s website at Equinix.com. The members of the Governance Committee are
Mr. Paisley and Mr. Van Camp. Mr. Van Camp is chairman of the Governance Committee. During the fiscal year ended Dec. 31,
2014, the Governance Committee held four meetings.
The Nominating Committee’s functions
are described above in the section entitled “Nomination of Directors”. The members of the Nominating Committee are
Mr. Hromadko, Mr. Kriens and Mr. Luby. Mr. Kriens is chairman of the Nominating Committee. During the fiscal year ended Dec. 31,
2014, the Nominating Committee held one meeting.
The Real Estate Committee approves capital
expenditures in connection with real estate development, expansion or acquisition within parameters set by the full Board.
All decisions are made considering a projected 10-year internal rate of return and within the context of a multi-year capital
expenditure development pipeline and cash flow analysis provided by management to the Real Estate Committee. In approving
real estate capital expenditures, the Real Estate Committee also considers an overview of the project and the market,
including the competition, strategy, current capacity and sales pipeline. In addition, the Real Estate Committee has the
authority to analyze, negotiate and approve the purchase, sale, lease or sublease of real property, approve guarantees
related to real property transactions and, subject to any limitations or terms, if any, imposed by the full Board, analyze,
negotiate and approve real estate-related financing transactions. The members of the Real Estate Committee are Mr. Hromadko,
Mr. Lyons and Mr. Paisley. During the fiscal year ended Dec. 31, 2014, the Real Estate Committee held four meetings.
The Stock Award Committee
has the authority to approve the grant of stock awards to non-Section 16 officer employees and other individuals. The members of
the Stock Award Committee are Mr. Lyons and Mr. Smith. The Stock Award Committee typically does not hold meetings but acts by written
consent.
BOARD RISK OVERSIGHT
Our Board’s oversight of risk
management is designed to support the achievement of organizational objectives, including strategic objectives, to improve
Equinix’s long−term organizational performance and enhance stockholder value. The involvement of the full Board
in setting Equinix’s business strategy is a key part of its assessment of what risks Equinix faces, what steps
management is taking to manage those risks, and what constitutes an appropriate level of risk for Equinix. Our senior
management attends the quarterly Board meetings, presents to the Board on strategic and other matters, and is available to
address any questions or concerns raised about risk-management-related issues, or any other matters. Board members also have
ongoing and direct access to senior management between regularly scheduled board meetings for any information requests or
issues they would like to discuss. In addition, in September 2014 the Board held a two-day strategy meeting with senior
management to discuss strategies, key challenges, and risks and opportunities for Equinix. The Board intends to hold a
meeting focused solely on strategy annually, to set the stage for the planning and development of Equinix’s operating
plan for the coming year.
While the Board has the ultimate oversight responsibility
for the risk management process, various committees of the Board also have responsibility for risk management. In particular, the
Audit Committee’s charter mandates that it discuss guidelines and policies governing the process by which management and
other persons responsible for risk management assess and manage Equinix’s exposure to risk, including Equinix’s major
financial risk exposures, and the steps management has taken to monitor and control such exposures, based on consultation with
management and the independent auditors. Equinix has completed a global risk assessment to identify key strategic, operational
and financial risks. These risks have been communicated to and assessed by Equinix’s executive management and the Audit Committee.
The Audit Committee also receives an annual assessment of the adequacy of the controls over financial reporting, including an assessment
of the risks associated with the controls over the financial reporting process.
The Governance Committee oversees Equinix’s
GRC Program, formally launched in 2013. In connection with
Equinix 2015 Proxy Statement • GOVERNANCE | 14 |
this oversight, the Governance
Committee receives periodic updates on key issues, such as enterprise risk management, business continuity and disaster
recovery planning, cybersecurity and regulatory compliance. The Governance Committee evaluates the effectiveness of risk
mitigation capabilities identified in these areas and monitors for emerging risks. Equinix’s Compliance Officer, as
leader of the GRC Program, reports on the program at each meeting of the Governance Committee.
In setting compensation, the Compensation Committee
strives to manage risks arising from our compensation policies and programs by setting compensation at levels that maximize stockholder
long-term value without encouraging excessive risk-taking. For more information, please read “Compensation Policies and Practices
Risk Assessment.” Finally, the Real Estate Committee manages risk by evaluating real estate expansion opportunities and the
deployment of capital within the context of Equinix’s overall business and financial strategy and financial picture.
The Board believes that the risk management processes
in place for Equinix are appropriate.
Other Governance Policies and Practices
CORPORATE GOVERNANCE GUIDELINES
The Board follows its Guidelines published
on the corporate governance section of Equinix’s website at Equinix. com. The Guidelines reflect the Board’s dedication
to monitoring the effectiveness of policy and decision-making at the Board level. In conjunction with the Governance Committee,
the Board will continue to monitor the effectiveness of these Guidelines.
CODE OF ETHICS AND BUSINESS CONDUCT
Equinix has always taken the issue of
corporate governance seriously. The Board has adopted (1) a Code of Business Conduct which applies to all directors, officers
and employees and (2) an additional Code of Ethics for Chief Executive Officer and Senior Financial Officers. These documents
can be found on the corporate governance section of Equinix’s website at Equinix.com. In addition, anonymous reporting
hotlines have been established to facilitate reporting of violations of financial and non-financial policies.
Should the Board ever choose to amend or
waive a provision of the Code of Ethics for Chief Executive Officer and Senior Financial Officers, we may disclose such amendment
or waiver on the corporate governance section of Equinix’s website at Equinix.com.
STOCK OWNERSHIP GUIDELINES
In its Guidelines, the Board has established
a stock ownership requirement for Equinix’s non-employee directors to encourage them to have a significant financial stake
in the company. The Guidelines state that each non-employee director should own not less than six times their cash annual retainer
for general service on the Board in shares of Equinix’s common stock, including exercised stock options, vested restricted
stock units (“RSUs”) and deferred RSUs. Non-employee directors serving on the Board as of Nov. 17, 2010 have until
Dec. 31, 2015 to comply with the requirement, and new non-employee directors will have five years from the date of their election
to the Board to comply. Compliance with this requirement will be measured annually at the end of each fiscal year.
Stock ownership guidelines for Mr. Smith
and his direct reports have also been established and require that these executives achieve target ownership levels, expressed
as a multiple of salary, within five years from the adoption date of Nov. 30, 2012. The target ownership level for Mr. Smith is
three times his annual salary; for all others the target ownership level is one time their annual salary. Compliance with this
requirement will be measured annually at the end of each fiscal year starting with 2017.
Equinix 2015 Proxy Statement • GOVERNANCE | 15 |
NO HEDGING POLICY
Equinix’s Insider Trading Policy prohibits
our Board members, officers, employees and consultants from engaging in hedging transactions related to Equinix’s common
stock.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Interested parties may contact the Board
by sending correspondence to the attention of Equinix’s secretary, c/o Equinix, Inc., One Lagoon Drive, Fourth Floor, Redwood
City, California, 94065. Any mail received by the secretary, except improper commercial solicitations, will be forwarded to the
members of Equinix’s Audit Committee for their further action, if necessary. Equinix does not have a policy requiring attendance
by members of the Board at Equinix’s annual stockholder meetings. At Equinix’s 2014 Annual Meeting, Messrs. Paisley,
Smith and Van Camp were in attendance and available for questions.
2014 Director Compensation
Equinix uses a combination of cash and equity-based
incentive compensation to attract and retain qualified candidates to serve on the Board. In setting director compensation, Equinix
considers the competitive compensation market for directors in the high-technology market, the demands of the various roles that
directors hold, and the time required to fulfill their duties to Equinix.
Non-employee directors receive a retainer
in connection with their service on the Board. For fiscal 2014, the annual retainer was $60,000. In addition, in lieu of regular
meeting fees, committee chairs (if any) and members received the following annual retainers for fiscal 2014, payable quarterly
in arrears:
Committee |
Chairman |
Member |
|
|
|
Audit |
$30,000 |
$15,000 |
Compensation |
$25,000 |
$12,500 |
Real Estate |
$15,000 |
$5,000 |
Nominating |
$12,500 |
$5,000 |
Governance |
$12,500 |
$5,000 |
|
|
|
Currently, non-employee directors only receive
fees for attendance at committee meetings in excess of a specified number of meetings in a calendar year. The committee meeting
fees and the threshold number of meetings that must be attended before any meeting fees are paid are:
|
|
|
Threshold |
|
|
|
Number of |
Committee |
Chairman |
Member |
Meetings |
|
|
|
|
Audit |
$5,000 |
$3,000 |
12 |
Compensation |
$5,000 |
$3,000 |
8 |
Real Estate |
$5,000 |
$3,000 |
6 |
Nominating |
$5,000 |
$3,000 |
5 |
Governance |
$5,000 |
$3,000 |
5 |
Other |
$5,000 |
$3,000 |
6 |
|
|
|
|
The Board has also designated a lead independent
director with a $25,000 annual retainer.
Equinix 2015 Proxy Statement • GOVERNANCE | 16 |
Non-employee directors receive
automatic grants of RSUs. At our annual meeting of stockholders, each non-employee director who will continue to be a
director after that meeting is automatically granted an award of RSUs. For fiscal 2014, the grant date fair value of these
annual awards was $250,000. The automatic RSU awards become fully vested on the earlier of (i) the first anniversary of
Equinix’s immediately preceding annual meeting of stockholders or (ii) in the case of a non-employee director not
standing for reelection, the date of the first annual meeting of stockholders held subsequent to the date of grant. In
addition, each non-employee director receives a prorated award of RSUs upon joining the Board with a grant date fair value of
$250,000. The proration is based upon a fraction equal to (x) the number of days from the start date of the non-employee
director until the first anniversary of the date of Equinix’s immediately preceding annual meeting of stockholders
divided by (y) 365. The number of shares subject to each RSU award is determined by dividing the specified dollar value of
the award by the closing price of Equinix’s common stock on the date of grant. The RSUs granted to our directors will
become fully vested if Equinix is subject to a change-in-control. We allow our non-employee directors to elect to defer
settlement of their RSUs. Directors are also eligible to receive discretionary awards under Equinix’s 2000 Equity
Incentive Plan. Our stock ownership guidelines for non-employee directors are described under “Governance.”
The following table sets forth all of the
compensation awarded to, earned by, or paid to each non-employee director who served during fiscal year 2014.
|
Fees Earned or Paid |
|
|
Name |
in Cash(1) ($) |
Stock Awards(2)(3)(4) ($) |
Total ($) |
Thomas Bartlett |
$75,000 |
$249,975 |
$324,975 |
Gary Hromadko |
$85,000 |
$249,975 |
$334,975 |
Scott Kriens |
$85,000 |
$249,975 |
$334,975 |
William Luby |
$77,500 |
$249,975 |
$327,475 |
Irving Lyons III |
$90,000 |
$249,975 |
$339,975 |
Christopher Paisley |
$125,000 |
$249,975 |
$374,975 |
| 1. | Amounts listed in this column include the annual retainers for Board and committee service. Board
and committee retainers are prorated based on the number of days the director served during the year. No directors received any
additional fees for their attendance at any committee meetings in 2014. The amount in this column for Mr. Paisley also includes
a $25,000 retainer for service as a lead independent director. |
| 2. | Reflects RSUs covering 1,251 shares granted to each non-employee director on
the date of our annual stockholders’ meeting in June 2014. Each grant was adjusted by 42 shares as a part of the special
distribution paid to stockholders on Nov. 25, 2014. |
| 3. | Reflects the aggregate grant date fair value of the restricted stock unit awards granted to the
director in 2014 computed in accordance with FASB ASC Topic 718. See Note 12 of the notes to our consolidated financial statements
in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2015 for a discussion of all assumptions
made by Equinix in determining the grant date fair value of our equity awards. |
| 4. | As of Dec. 31, 2014, Mr. Kriens held outstanding options to purchase 10,200 shares of our common
stock; Mr. Lyons held outstanding options to purchase 20,400 shares of our common stock and Mr. Paisley held outstanding options
to purchase 10,200 shares of our common stock. As of Dec. 31, 2014, Mr. Bartlett, Mr. Kriens, Mr. Lyons, Mr. Paisley, Mr. Hromadko
and Mr. Luby each held 1,293 unvested stock units. |
Mr. Van Camp is our executive
chairman, but not a named executive officer, and does not receive any additional compensation for services provided as a
director. For the year ended Dec. 31, 2014, Mr. Van Camp earned $271,731 in salary and was granted a total of 9,000 RSUs (at
maximum award sizes), with the same service and performance-vesting requirements as those granted to our named executive
officers, for his service as Equinix’s executive chairman. Mr. Smith, our chief executive officer and president, does
not receive any additional compensation for services provided as a director.
Equinix Stock Ownership
The following table sets forth, as of
April 1, 2015, certain information with respect to shares beneficially owned by (i) each person who is known by Equinix to be
the beneficial owner of more than five percent of Equinix’s outstanding shares of common stock, (ii) each of
Equinix’s directors and nominees, (iii) each of the executive officers named in Executive Compensation and Related
Information, and (iv) all current directors and executive officers (as defined by applicable securities laws) as a group.
Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain
shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or
the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has
the right to acquire shares (for example, upon exercise of an option or warrant) within 60 days of the date
Equinix 2015 Proxy Statement • GOVERNANCE | 17 |
as of which the information is provided. In computing
the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such
person (and only such person) by reason of such acquisition rights. As a result, the percentage of outstanding shares of any person
as shown in the following table does not necessarily reflect the person’s actual voting power at any particular date. Unless
otherwise indicated, the address for each listed stockholder is c/o Equinix, Inc., One Lagoon Drive, Fourth Floor, Redwood City,
CA 94065.
|
Shares Beneficially Owned |
Name of Beneficial Owner |
Number of Shares |
Percentage of Total |
Sara Baack |
3,279 |
* |
Thomas Bartlett |
1,509 |
* |
Gary Hromadko |
158,834 |
* |
Scott Kriens(1) |
79,651 |
* |
William Luby(2) |
47,668 |
* |
Irving Lyons III(3) |
32,790 |
* |
Charles Meyers |
885 |
* |
Christopher Paisley(4) |
23,709 |
* |
Eric Schwartz |
3,756 |
* |
Stephen Smith |
24,929 |
* |
Keith Taylor |
56,596 |
* |
Peter Van Camp |
8,276 |
* |
SPO Advisory Corp.(5)
591 Redwood Hwy, Suite 3215, Mill Valley, CA 94941 |
5,638,653 |
9.91% |
Lone Pine Capital, L.L.C.(6)
Two Greenwich Plaza, Greenwich, CT 06830 |
3,890,489 |
6.83% |
BlackRock Fund Advisors(7)
Park Avenue Plaza, 55 East 52nd Street, New York,
NY 10055 |
3,688,846 |
6.48% |
Jackson Square Partners(8)
101 California Street, San Francisco, CA 94111 |
3,392,711 |
5.96% |
The Vanguard Group LLC(9)
100 Vanguard Blvd, Malvern, PA 19355 |
3,343,839 |
5.87% |
All current directors and executive officers as a group (14 persons)(10) |
445,045 |
* |
| 1. | Includes 10,200 shares subject to options exercisable within 60 days of April 1, 2015. Also includes
2,596 shares pursuant to vested RSUs as to which Mr. Kriens has deferred the settlement of until the earlier of 30 days from his
termination of service or Feb. 15, 2032. |
| 2. | Includes 4,707 shares pursuant to vested RSUs as to which Mr. Luby has deferred the settlement of
until the earlier of 30 days from his termination of service or Feb. 15, 2020. Mr. Luby disclaims beneficial ownership of 5,000
shares held in the Luby Family Trust except to the extent of his pecuniary interest therein. |
| 3. | Includes 20,400 shares subject to options exercisable within 60 days of April 1, 2015. Also includes
2,596 shares pursuant to vested RSUs as to which Mr. Lyons has deferred the settlement of until the earlier of 30 days from his
termination of service or Feb. 15, 2016 and 1,304 shares pursuant to vested RSUs for which settlement has been deferred until the
earlier of 30 days from his termination of service or Feb. 15, 2017. |
| 4. | Includes 9,200 shares subject to options exercisable within 60 days of March
31, 2015. Also includes an aggregate of 818 shares held in trusts for Mr. Paisley’s children and a brother. |
| 5. | Based on the Schedule 13D filed with the Securities and Exchange Commission on Feb. 17, 2015. Includes
5,248,147 shares that are owned directly by SPO Partners II, L.P. (“SPO II”), and may be deemed to be indirectly beneficially
owned by (i) SPO Advisory Partners L.P. (“SPO Advisory”), the sole general partner of SPO II, (ii) SPO Advisory Corp.
(“SPO Corp.”), the sole general partner of SPO Advisory, and (iii) John H. Scully (“JHS”), Edward H. McDermott
(“EHM”), and Eli J. Weinberg (“EJW”), the controlling persons of SPO Corp. Additionally, 338,302 shares
are owned directly by San Francisco Partners, L.P. (“SFP”), and may be deemed to be indirectly beneficially owned by
(i) SF Advisory Partners, L.P. (“SF Advisory”), the sole general partner of SFP, (ii) SPO Corp., the sole general partner
of SF Advisory, and (iii) JHS, EHM and EJW. Additionally, the Phoebe Snow Foundation, Inc. (of which JHS is the controlling person,
director and executive officer) owns 52,204 shares, which are included in the total. |
| 6. | Based on the Schedule 13D filed with the Securities and Exchange Commission on Feb. 17, 2015. Includes
3,890,489 shares that are owned directly by Lone Pine Capital LLC, which serves as investment manager to Lone Spruce, L.P., a Delaware
limited partnership (“Lone Spruce”), Lone Cascade, L.P. (“Lone Cascade”), Lone Sierra, L.P. (“Lone
Sierra”), Lone Tamarack, L.P. (“Lone Tamarack”), Lone Cypress, Ltd., (“Lone Cypress”), Lone Kauri,
Ltd. (“Lone Kauri”), Lone Monterey Master Fund, Ltd. (“Lone Monterey Master Fund”), and Lone Savin Master
Fund, Ltd., (“Lone Savin Master Fund”, and together with Lone Spruce, Lone Cascade, Lone Sierra, Lone Tamarack, Lone
Cypress, Lone Kauri, Lone Monterey Master Fund and Lone Savin Master Fund, the (“Lone Pine Funds”), with respect to
the Common Stock directly held by each of the Lone Pine Funds; and Stephen F. Mandel, Jr. (“Mr. Mandel”), the managing
member of Lone Pine Managing Member LLC, which is the Managing Member of Lone Pine Capital, with respect to the Common Stock directly
held by each of the Lone Pine Funds. |
| 7. | Based on the Schedule 13D filed with the Securities and Exchange Commission on Feb. 12, 2015. Includes
3,688,846 shares that are owned directly by Black Rock, Inc., a parent holding company. |
| 8. | Based on the Schedule 13D filed with the Securities and Exchange Commission on Feb. 12, 2015. Includes
3,392,711 shares that are owned directly by Jackson Square Partners, LLC an investment adviser. |
| 9. | Based on the Schedule 13D filed with the Securities and Exchange Commission on Feb. 9, 2015. Includes
3,297,000 shares that are owned directly, 51,913 with sole voting power and 46,839 shares with dispositive power by The Vanguard
Group Inc., an investment advisor. Within these amounts, 32,105 shares are held by Vanguard Fiduciary Trust Company (“VFTC”),
and 34,542 shares are held by Vanguard Investments Australia Ltd. (“VIA”). Both are wholly-owned subsidiaries of The
Vanguard Group, Inc. The total amount beneficially owned for The Vanguard Group as a whole is 3,343,839. |
| 10. | Includes an aggregate of 39,800 shares subject to options exercisable within
60 days of April 1, 2015. Also includes 9,899 shares pursuant to deferred RSUs. |
Equinix 2015 Proxy Statement • GOVERNANCE | 18 |
Related Party Transactions
APPROVAL OF RELATED PARTY TRANSACTIONS
Per its written charter, Equinix’s
Audit Committee is responsible for reviewing all related party transactions in accordance with the rules of the NASDAQ National
Market. Related parties include any of our directors or executive officers, our greater than 5% stockholders, and their immediate
family members.
We review related party transactions due to the potential
for a conflict of interest. A conflict of interest occurs when an individual’s private interest interferes, or appears to
interfere, with our interests. To identify related party transactions, each year we require our directors and executive officers
to complete a questionnaire identifying any transactions with us in which the executive officer or director or their family members
have an interest. We seek updates to this information from our directors and executive officers on a quarterly basis. We also ask
our directors to update their list of companies they are affiliated with on a quarterly basis to help us identify related party
transactions.
Finally, our Code of Business Conduct establishes
corporate standards of behavior for all our employees, officers and directors and sets our expectations of contractors and agents.
Our Code of Business Conduct seeks to deter wrongdoing and to promote honest and ethical conduct and encourages the reporting of
illegal or unethical behavior. Waivers of the Code of Business Conduct may be granted by Equinix’s chief executive officer,
chief legal officer or compliance officer, provided that waivers for executive officers or directors may only be granted by the
Board or by one of its committees.
The Audit Committee Charter and the Code
of Business Conduct are available on the corporate governance section of Equinix’s website at Equinix.com.
RELATED PARTY TRANSACTIONS FOR 2014
For the year ended December 31, 2014, revenues
from entities affiliated with Goldman Sachs totaled approximately $4,765,167. Goldman Sachs Asset Management LP was a holder of
greater than 5% of our outstanding common stock during part of the year ended Dec. 31, 2014.
Equinix 2015 Proxy Statement • GOVERNANCE | 19 |
COMPENSATION
PROPOSAL 1 — Advisory Non-Binding Vote
On Executive Compensation
The Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 contains a provision that is commonly known as “Say-on-Pay.” Say-on-Pay gives our
stockholders an opportunity to vote on an advisory, non-binding basis to approve the 2014 compensation of our named executive
officers as disclosed in this proxy statement. We are asking our stockholders to indicate their support for the compensation
of our named executive officers as described in this proxy statement. This vote is not intended to address any specific item
of compensation, but rather the overall compensation of our named executive officers and the executive compensation program
and practices described in this proxy statement. Our executive compensation program is tied directly to the performance of
the business to ensure strong growth and value creation for stockholders using metrics we believe best indicate the success
of our business. Please read “Compensation Discussion and Analysis” and the executive compensation tables and
narrative disclosure for a detailed explanation of our executive compensation program and practices.
Accordingly, we ask that you vote “FOR”
the following resolution:
“RESOLVED, that the
stockholders of Equinix, Inc., hereby approve, on an advisory basis, the compensation of the named executive officers as
disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission in Item 402 of Regulation
S-K, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this
proxy statement.”
This advisory vote on executive compensation
is not binding on us. However, the Board and the Compensation Committee highly value the opinions of our stockholders. To the
extent there is a significant vote against this proposal, we will seek to determine the reasons for our stockholders’
concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns when
making future executive compensation decisions.
|
The
Board recommends a vote "FOR" proposal 1 |
|
Equinix 2015 Proxy Statement • COMPENSATION | 20 |
Executive Officers
The following are the executive officers
(as defined by applicable securities laws) of Equinix (with the exception of Mr. Smith, Equinix’s chief executive officer
and president, whose information appears in the section “Election of Directors”), their ages as of April 1, 2015, their
positions and offices held with Equinix, and certain biographical information. All serve at the discretion of the Board.
|
|
|
|
Keith Taylor
Age 53
Chief Financial
Officer |
Keith
Taylor has served as our chief financial officer since September 2005. From February 2001 to September 2005, Mr. Taylor served
as our vice president, finance and chief accounting officer. In addition, from February 1999 to February 2001, Mr. Taylor
served as our director of finance and administration. Before joining us, Mr. Taylor was employed by International Wireless
Communications, Inc., an operator, owner and developer of wireless communication networks, as vice president finance and interim
chief financial officer. Prior to joining International Wireless Communications, Inc., Mr. Taylor was employed by Becton Dickinson
& Company, a medical and diagnostic device manufacturer, as a senior sector analyst for the diagnostic businesses in Asia,
Latin America and Europe. |
|
|
|
|
|
|
|
Charles Meyers
Age 49
Chief Operating
Officer |
Charles
Meyers has served as our chief operating officer since August 2013. Previously, he served as our president, Equinix Americas
from September 2010 to August 2013. Mr. Meyers was employed at VeriSign, an Internet security company now part of Symantec
Corp., from November 2006 to March 2010, most recently as group president of messaging and mobile media, and as a product
group executive for the security and communications portfolio. Prior to joining VeriSign, Mr. Meyers held various positions
at Level 3 Communications, a communications services company, including group vice president of global marketing, president
of IP and data services and senior vice president, Softswitch Services, from August 2001 to May 2006. |
|
|
|
|
|
|
|
Sara Baack
Age 43
Chief Marketing
Officer |
Sara
Baack has served as chief marketing officer since September 2012. Prior to joining us, Ms. Baack was employed at Level 3 Communications,
a communications services company, from August 2000 to August 2012, most recently as senior vice president of product management.
Prior to joining Level 3, Ms. Baack worked at PaineWebber Incorporated as vice president of principal transactions where she
invested proprietary private equity capital in the communications sector. |
|
|
|
|
|
|
|
Samuel Lee
Age 47
President, Equinix
Asia-Pacific |
Samuel
Lee has served as President, Equinix Asia-Pacific since December 2005. Previously, he served as our managing director of Equinix
Hong Kong from July 2000 to Deember 2005. Prior to joining us, Mr. Lee was managing director of Pacific Gateway Exchange,
a provider of wholesale and retail long distance, Internet, and bandwidth services. He also founded Telekom Consulting Ltd.,
a consulting firm offering strategic assistance to network providers in the deregulated telecommunications market in Hong
Kong and Asia and held management positions at Teleglobe International, Intel and Sprint. |
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Equinix 2015 Proxy Statement • COMPENSATION | 21 |
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Eric Schwartz
Age 48
President, Equinix
EMEA |
Eric Schwartz has served as president,
Equinix EMEA since June 2008. Previously, he served as our chief development officer from January 2008 to June 2008 and as
vice president, strategy and services from May 2006 to January 2008. Prior to joining us, Mr. Schwartz was vice president
of IP communications at BellSouth, a telecommunications company, where he was employed from November 1997 to February 2006. |
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Karl Strohmeyer
Age 43
President, Equinix
Americas |
Karl Strohmeyer has served as president, Equinix
Americas since December 2013. Prior to joining us, Mr. Strohmeyer was most recently group vice president for the North American
Enterprise Group at Level 3 Communications, a communications services company, where he was employed from 2001 to November
2013 in various roles. Prior to joining Level 3, Mr. Strohmeyer held various executive positions at NetRail, a telecommunications
services company. |
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Executive Compensation and Related
Information
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
This Compensation Discussion and
Analysis (“CD&A”) describes Equinix’s executive compensation policies and decisions for the individuals
who served as our chief executive officer and chief financial officer during 2014, as well as the other individuals included
in the 2014 Summary Compensation Table in this proxy statement, who are collectively referred to as the named executive
officers. Those individuals are:
| • | Stephen Smith — Chief Executive Officer and President |
| • | Keith Taylor — Chief Financial Officer |
| • | Charles Meyers — Chief Operating Officer |
| • | Eric Schwartz — President, Equinix EMEA |
| • | Sara Baack — Chief Marketing Officer |
Executive Summary
Overview
Our executive compensation program is tied
directly to the performance of the business to ensure strong growth and value creation for stockholders using metrics we believe
best indicate the success of our business. For 2014, 100% of our short- and long-term incentives for our named executive officers
were performance-based and at risk, dependent on annual revenue and adjusted EBITDA growth, along with total shareholder return
(“TSR”) achievement against the IWB Russell 1000 Index Fund (“IWB”) over a two-year period.
In 2014, our compensation program for the
named executive officers consisted primarily of base salary, annual incentive compensation, and long-term incentive compensation
in the form of performance-based
Equinix 2015 Proxy Statement • COMPENSATION | 22 |
RSUs, for total potential compensation as follows(1):
CEO
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Other
Named Executive Officers |
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2014 Results
For 2014, we delivered revenue growth of 14% and
adjusted EBITDA growth of 11%, on an as-reported basis, over strong 2013 results. However, despite strong one-, three- and five-year
stock price performance against the IWB, our TSR underperformed the Russell 1000 by -23.96% over 2013-2014. These results are reflected
in the 2014 compensation of our named executive officers.
Revenues ($M)
|
|
Adjusted EBITDA ($M)(2)
|
|
1/3/5-year stock price performance against the Russell 1000
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Governance
Our executive compensation philosophy
is complemented by the following governance best practices:
| • | Mr. Smith and his direct reports are subject to stock ownership guidelines,
at a level of three times and one time base salary, respectively. |
| • | We have a policy prohibiting all employees, including the named executive officers and members
of the Board, from engaging in transactions involving options on Equinix’s securities, such as puts, calls and other derivative
securities, whether on an exchange or in any other market, or in hedging transactions, such as collars and forward sale contracts. |
| • | Our executives and members of the Board are prohibited from holding Equinix securities in a margin
account or pledging Equinix securities as collateral for a loan, absent an exception granted by the Compensation Committee on a
case-by-case basis. |
| 1. | Reflects the market value of the performance-based RSU awards on the grant
date of March 6, 2014. Assumes the maximum size award is earned under the 2014 annual incentive plan and the maximum number of
shares is earned under the performance-based RSU awards. |
| 2. | For definitions of non-GAAP terms and a detailed reconciliation between
non-GAAP financial results and the corresponding GAAP measures, please refer to the Investor Relations section of our website at
Equinix.com. |
Equinix 2015 Proxy Statement • COMPENSATION | 23 |
| • | Named executive officers at Equinix are not offered any significant perquisites or tax gross-ups,
other than in connection with a relocation or international assignment. |
| • | Our Compensation Committee is comprised solely of independent members. |
| • | An independent Compensation Committee compensation consultant, Compensia, Inc., is retained directly
by the Compensation Committee and performs no other work for Equinix. |
| • | The Compensation Committee reviews tally sheets when making executive compensation decisions. |
| • | In March 2015, we conducted a risk assessment of our compensation programs and presented the results to the Compensation Committee.
The Compensation Committee considered the findings of the assessment and agreed with our conclusion that our compensation programs
do not create excessive or inappropriate risks for Equinix. |
Program Changes for 2015
In 2014 we held our annual stockholder advisory
vote on executive compensation. The proposal received significant stockholder support, with over 94% of shares represented in person
or by proxy at the meeting and entitled to vote on the matter voting in favor of our program. The voting results did not result
in any changes to our executive compensation program design for 2015.
However, for 2015 we have introduced time-based
awards as a long-term incentive for the executive officers and the performance metric adjusted funds from operations (“AFFO”)
as a replacement for adjusted EBITDA in our 2015 annual incentive plan and long-term incentive performance awards. We also extended
the measurement period of the 2015 TSR award from two years to three years. These changes in our 2015 compensation program were
made for consistency with our defined peer group and in connection with our conversion to a REIT, effective Jan. 1, 2015. We will
continue to evaluate further changes to our compensation policies and practices as appropriate.
2014 Executive Compensation Program
2014 Program Philosophy and Objectives
Our executive compensation philosophy for
2014 was to provide competitive total rewards programs globally to attract and retain top talent, utilizing a pay-for-performance
strategy at both the company and the individual level. Consistent with our compensation philosophy, a significant percentage of
each executive officer’s total compensation is tied to performance, as illustrated by the potential pay mixes described above.
2014 Pay Positioning
In making compensation decisions for 2014,
the Compensation Committee assessed compensation levels against data provided by its consultant, Compensia, and approved compensation
plans and arrangements, taking into account our competitive market for talent, including a peer group of companies against which
we compare our performance and executive compensation programs.
For 2014 executive compensation, our goal
was to provide base salary targeted at the 50th percentile and total cash compensation targeted between the 50th and 75th percentiles
of market competitive pay practices, if targeted levels of performance were achieved under the annual cash incentive plan. We generally
targeted equity compensation at the 75th percentile of market competitive pay practices, with upside potential at the 90th percentile,
to aggressively align executive performance and rewards to company results and stockholder interests. We believe our company’s
strong performance in recent years, and the fact that a significant percentage of each executive officer’s total compensation
is tied to performance and thus “at risk,” supports our target pay positioning.
We use peer group survey data, proxy statement
data and technology industry survey data to define our competitive market. With the assistance of Compensia, a preliminary list
of peer group companies was selected to establish the competitive market for the compensation of our executive officers in May
of 2013. Factors considered in developing the peer group included revenue of approximately 0.5-2.0x Equinix’s then-current
revenue, and market capitalization of approximately 0.33-3.0x Equinix’s then-current market capitalization. The
Equinix 2015 Proxy Statement • COMPENSATION | 24 |
peer group was reviewed and approved by our chief
executive officer and the Compensation Committee. At the time of approval, compared to the peer companies Equinix was positioned
at the 53rd and 80th percentiles with respect to revenue and market capitalization, respectively. Our peer group is reviewed annually
to ensure it reflects changes in our market and competitors for business and talent. For 2014 compensation decisions, our peer
group consisted of the following companies:
• Akamai Technologies |
• Digital Realty Trust |
• Rackspace Hosting |
• Autodesk |
• F5 Networks |
• Red Hat |
• BMC Software |
• FLIR Systems |
• Salesforce.com |
• Cerner |
• JDS Uniphase |
• Synopys |
• Citrix Systems |
• Netflix |
• Trimble Navigation |
The Compensation Committee
reviews the executive compensation levels of our executive officers at least annually to determine positioning to the competitive
market. If an element of compensation is found to be below the desired target level, a recommendation may be made by the chief
executive officer, or by the executive chairman in the case of the chief executive officer, to adjust that element of compensation
in light of our compensation philosophy and individual performance. Likewise, if the review shows an element of our compensation
to be above the desired target level, that data is also taken into consideration in determining compensation position and movement
for that individual. Our philosophy is not to reduce compensation, but instead to work with
the various elements comprising total compensation to slow or freeze an element’s growth to achieve the desired level of
targeted total compensation. In 2013, we participated in the AON/Radford High Technology compensation survey and used peer market
data from a subset of the survey to benchmark our executive positions for 2014 compensation decisions.
2014 Compensation-Setting Process
The 2014 compensation for the
named executive officers was first considered by the Compensation Committee in September 2013 and approved in February and March
2014. In addition to reviewing executive officers’ compensation against the competitive market, the Compensation Committee
also considers recommendations from the chief executive officer regarding each compensation element for the executive officers
who report directly to him based on the competitive market data and his assessment of their individual performance. The
chief executive officer, as the manager of the executive team, assesses the named executive officers’ contributions to Equinix’s
performance and makes a recommendation to the Compensation Committee with respect to any merit increase in base salary, target
annual incentive compensation opportunity and equity awards for each named executive officer, other than himself. Each element
of compensation is recommended to the Compensation Committee based upon the individual’s performance, as well as internal
equity within the framework established through the competitive market data. The Compensation Committee meets to evaluate, discuss
and modify or approve these recommendations based on their own judgment. For 2014, the Compensation Committee, assisted by the
executive chairman, conducted a similar evaluation of the chief executive officer’s performance and approved his compensation
elements.
Members of management support the Compensation
Committee in its work by preparing periodic analysis and modeling related to the compensation programs and providing frequent updates
on programs that fall under the Compensation Committee’s responsibility. In addition, the Compensation Committee has the
exclusive authority under its charter to engage the services of independent outside counsel, consultants, accountants and other
advisers to assist it in carrying out its duties. Since 2006, the Compensation Committee has engaged the services of Compensia
as its independent consultant to advise it on matters related to compensation for executive officers and other key employees, and
on best practices to follow as they review and make decisions on Equinix’s compensation programs. Our chief executive officer
attends most Compensation Committee meetings and reviews and provides input on agendas and compensation proposals and recommendations
brought before the Compensation Committee for review and approval.
In connection with the 2014
compensation decisions, in September 2013 Compensia prepared and presented to the Compensation Committee a detailed executive compensation
analysis, assessing Equinix’s current and proposed executive pay and financial performance, as compared to our peer group.
For our executive officers, including the named executive officers, Compensia identified any
gaps between the current and target
Equinix 2015 Proxy Statement • COMPENSATION | 25 |
pay positioning and presented market competitive
data for each position for base salary, target annual incentive compensation opportunity, long-term incentive compensation and
target total direct compensation to provide a framework and guide for making individual compensation decisions.
In addition, in November 2013 Compensia provided
the Compensation Committee with “tally sheets” outlining the total dollar compensation paid to each named executive
officer in 2010, 2011, 2012 and 2013, including base salary, annual incentive compensation, long-term equity compensation, and
other compensation. The tally sheets also included an equity award grant history, a summary of stock option exercises and restricted
stock vesting, an analysis of outstanding equity held and its unrealized potential gain over a three-year period, and a summary
of total potential stock ownership. The tally sheets also outlined and quantified the potential payments upon termination of employment
or change-in-control that would be paid to each named executive officer. Finally, the tally sheets included the unvested equity
value as a multiple of base salary and an illustration of how the target value of Equinix’s 2013 compensation elements compared
to the 2013 peer group for similar positions. The Compensation Committee used the tally sheet information as a basis for understanding
the potential impact of recommended changes to the elements of our executive compensation program and to evaluate the degree to
which unvested shares held by a named executive officer encouraged retention.
Compensia continues to advise
the Compensation Committee on an on-going basis and a representative from the firm attends all Compensation Committee meetings.
In 2014, Compensia performed its annual market review of executive pay practices, perquisites and benefits, as discussed above,
and director compensation. Compensia also provides routine updates to the Compensation Committee
regarding legal and regulatory trends. In 2014, Compensia also provided the Compensation Committee with modeling and recommendations
for Equinix’s equity structures for non-executives. The Compensation Committee has assessed the independence of Compensia
pursuant to Securities and Exchange Commission rules and concluded that Compensia’s work for the Compensation
Committee does not raise any conflict of interest.
Principal Elements of Executive Compensation
Base Salary
Base salary for the executive officers is established
based on the underlying scope of their respective responsibilities, taking into account competitive market compensation data and
individual performance. In February 2014, based on the executive compensation assessment from the fall and the recommendations
of the chief executive officer (except with respect to his own salary which was recommended by Equinix’s executive chairman
in consultation with the Compensation Committee), base salaries for our named executive officers were approved by the Compensation
Committee, effective Feb. 24, 2014, as follows:
Name |
2013 Salary |
2014 Salary |
Increase |
|
|
|
|
Stephen Smith |
$780,000 |
$810,000 |
3.8% |
Keith Taylor |
$475,000 |
$490,000 |
3.2% |
Charles Meyers |
$475,000 |
$485,000 |
2.1% |
Eric Schwartz |
$362,000 |
$375,000 |
3.6% |
Sara Baack |
$376,000 |
$384,000 |
2.1% |
For 2014, named executive officer salaries
were positioned based on our philosophy of the 50th market percentile. The base salary increases
were based primarily on the aggressive continued upward movement of base salaries in the competitive market along with our desire
to keep total cash compensation aligned to our philosophy and individual performance considerations.
Annual Incentive Compensation
Annual incentive compensation for the named executive
officers is linked to the attainment of Equinix’s corporate
Equinix 2015 Proxy Statement • COMPENSATION | 26 |
growth goals and is not tied
to individual performance. This focus on team performance at the executive level is designed to align senior leaders towards common
goals. Accordingly, in February 2014 the Compensation Committee adopted the 2014 incentive
plan, pursuant to which the named executive officers were eligible to earn an annual cash bonus. Under the 2014 incentive plan,
the Compensation Committee assigned each named executive officer an annual target bonus opportunity tied to the achievement of
specific goals related to revenue and adjusted EBITDA as set forth in the 2014 operating plan
approved by the Board. These goals reflected bookings growth we had experienced in the past, while taking into account the available
inventory in each of our markets and the unfolding global economic conditions. The goals also contemplated strong growth
in the U.S., Europe and Asia, investment in headcount and key areas to scale Equinix to the appropriate operating level and support
the REIT conversion, and continued expansion in key markets where inventory was limited or would become limited during the year
and where we saw customer demand. Because there would be no pool if revenue and adjusted EBITDA were each 95% or less than the
operating plan target, annual incentive compensation was 100% at risk. For 2014, Equinix funded 100% of the 2014 incentive plan.
Metric |
Weighting |
Target |
Results* |
Achievement |
|
|
|
|
|
Revenue |
50% |
$2,375 million |
$2,466 million |
100% |
Adjusted EBITDA |
50% |
$1,109 million |
$1,136 million |
100% |
*Adjusted for one-time events and excluding
the impact of fluctuations in foreign currencies against the foreign currency rates applied in the 2014 operating plan.
The target bonus opportunity
set for each named executive officer was based on the target bonuses for comparable positions in our competitive market, targeting
the 50th – 75th percentiles for total cash compensation, and was stated in terms of a
percentage of the named executive officer’s base salary. For 2014, the Compensation Committee approved increases in the target
bonus opportunities for Messrs. Smith, Taylor and Meyers to keep their target total cash compensation, including salary and variable
pay mix, on pace with the competitive market. There were no changes to the target bonus opportunities, as a percentage of base
salary, for the other named executive officers. Under the 2014 annual incentive plan, target bonus opportunities, as a percentage
of base salary, and bonus awards (calculated based on salary in effect at year-end) were as follows:
|
2013 Bonus pportunity |
2014 Bonus pportunity |
2014 Bonus Award Paid |
Name |
(% Base Salary) |
(% Base Salary) |
(100% of Target) |
|
|
|
|
Stephen Smith |
115% |
125% |
$1,012,500 |
Keith Taylor |
80% |
85% |
$416,500 |
Charles Meyers |
80% |
85% |
$412,250 |
Eric Schwartz |
65% |
65% |
$259,346* |
Sara Baack |
65% |
65% |
$249,600 |
*Certain benefits paid in local currencies
have been converted from euro to US dollars using the exchange rate of 1.3806.
Long-Term Equity Compensation
The Compensation Committee believes
that stock awards with performance-based vesting encourage executive performance by focusing on long-term growth and profitability,
which it believes are the primary drivers of stockholder value creation. Generally, a market competitive equity award is made in
the year that an executive officer commences employment with Equinix. Thereafter, additional “refresh” awards are generally
made during the first quarter of each year. While the “refresh” awards were 100% performance based in 2014, for 2015
we have introduced a time-based component for 25% of the awards to more closely align with relevant market practice and to help
manage future dilution. The size of each award is based upon consideration of a number of factors,
including consideration of the individual’s position with Equinix, their potential for future responsibility and promotion,
their individual performance in the recent period, Equinix’s performance in the recent period, the competitive marketplace
trends, internal equity and the retention value of unvested options or shares held by the individual at the time of the new grant.
In general, given the heavy at-risk performance orientation, the desired
Equinix 2015 Proxy Statement • COMPENSATION | 27 |
pay position for long-term equity compensation
for executives is between the 75th and 90th percentiles of the competitive market data.
In February 2014, the Compensation Committee
discussed long-term incentive compensation awards for the executive officers, including the named executive officers, and determined
that for 2014, TSR would be kept as a performance metric for 1/3 of long-term incentive compensation for executive officers (the
“TSR Award”) as a means of further aligning management incentives and stockholder interests. The remaining 2/3 of long-term
incentive compensation would continue to be based on revenue and adjusted EBITDA performance, as in prior years (the “Revenue-EBITDA
Award”).
In February 2014, the Compensation Committee
considered proposals for performance-based RSU awards, including proposed award sizes, and granted both a Revenue-EBITDA Award
and a TSR Award to each of the executive officers in March 2014.
2014 Awards
The Revenue-EBITDA
Awards were 100% at risk and could be earned only if Equinix achieved revenues greater than $2.256 billion and adjusted EBITDA
greater than $1.054 billion in 2014. The number of RSUs earned would then be determined linearly based on the degree of achievement
of revenue and adjusted EBITDA targets, from 0% of the target award at or below the foregoing thresholds, to 100% of the target
award (upon achievement of both revenue and adjusted EBITDA goals of $2.4 billion and $1.12
billion, respectively). 50% of any earned RSUs would vest upon certification that Equinix had
achieved at least the minimum revenue and adjusted EBITDA goals for 2014; 25% of the earned RSUs on Feb. 15, 2016; and the remaining
25% of the earned RSUs on Feb. 15, 2017.
The revenue and adjusted
EBITDA goals excluded the impact of fluctuations in foreign currencies against the foreign currency rates used in the 2014 operating
plan and were subject to adjustment for losses from discontinued operations, the cumulative effect of accounting changes, acquisitions
or divestitures, sales of assets, and/or IBX expansions not contemplated by Equinix at the time of grant.
The number of shares earned
under the TSR Awards is determined based on the TSR of Equinix’s common stock (“EQIX”) against the IWB over a
two-year period, calculated using the 30-day trading averages for both EQIX and the IWB prior to the start (Jan. 1, 2014) and end
(Dec. 31, 2015) of the performance period. The number of RSUs vesting under the TSR Awards scale up or down such that the target
shares increase or decrease by 2% for every 1% that Equinix’s TSR exceeds or falls below the IWB. Vesting will occur in early
2016 upon certification of TSR over the performance period.
While the Compensation Committee approved
award amounts at or near the top end of the market, achieving maximum payout under both the Revenue-EBITDA Award and the TSR Award
would require significant over-performance by Equinix. The following table presents the maximum number of RSUs that could be earned
under each RSU award, as follows:
|
Revenue-EBITDA |
|
Name |
Award (#) |
TSR Award (#) |
|
|
|
Stephen Smith |
33,350 |
16,650 |
Keith Taylor |
12,670 |
6,330 |
Charles Meyers |
10,000 |
5,000 |
Eric Schwartz |
7,336 |
3,664 |
Sara Baack |
5,336 |
2,664 |
As described above,
when adjusted for currency fluctuations and one-time events, we achieved revenues of approximately $2.466 billion and adjusted
EBITDA of approximately $1.136 billion for 2014. The certification of
Equinix 2015 Proxy Statement • COMPENSATION | 28 |
this performance triggered
the Revenue-EBITDA Awards at 100% of the maximum award, with 50% vesting immediately and the remainder vesting into 2017 as described
above. The actual Revenue-EBITDA Awards earned by our named executive officers for 2014 performance were as follows:
|
Max Revenue- |
Earned Revenue- |
Name |
EBITDA Award |
EBITDA Award |
|
|
|
Stephen Smith |
33,350 |
33,350 |
Keith Taylor |
12,670 |
12,670 |
Charles Meyers |
10,000 |
10,000 |
Eric Schwartz |
7,336 |
7,336 |
Sara Baack |
5,336 |
5,336 |
2014 TSR Payout
In January 2015, the Compensation Committee
also certified percentage achievement for the TSR Awards that were granted in February 2013, based on the performance of EQIX against
the IWB over 2013 and 2014. The number of shares earned under the TSR Awards was calculated using the 30-day trading averages for
both EQIX and the IWB prior to the start (Jan. 1, 2013) and end (Dec. 31, 2014) of the performance period, excluding the reinvestment
of regular dividends, with scaling up or down such that the target shares would increase or decrease by 2% for every 1% that Equinix’s
TSR exceeded or fell below the IWB. The reinvestment of regular dividends was not included in calculating TSR achievement, based
on the initial award design. However, regular dividends shall be included in the calculation of performance of subsequent TSR Awards,
beginning with those granted in February 2014, to the extent both Equinix and the IWB are paying regular dividends, to account
for the fact that Equinix has become a regular dividend paying company upon conversion to a REIT. Based on a TSR for EQIX of -23.96%
over the performance period, each executive received 52.08% of their target award size, as follows:
Name |
Max TSR Award |
Target TSR Award |
Earned TSR Award |
|
|
|
|
Stephen Smith |
14,015 |
7,008 |
3,649 |
Keith Taylor |
5,017 |
2,509 |
1,305 |
Charles Meyers |
4,155 |
2,078 |
1,081 |
Eric Schwartz |
2,942 |
1,471 |
766 |
Sara Baack |
1,308 |
654 |
340 |
Severance, Change-in-Control and other Post-Employment
Programs
As described in detail under “Potential
Payments Upon Termination or Change-in-Control” in this proxy statement, we have entered into a severance agreement as
a part of each named executive officer’s offer of employment which provides for a cash severance payment and benefits
in the event his or her employment is terminated for any reason other than cause or he or she voluntarily resigns under
certain circumstances, as described in the agreement. In the case of Mr. Meyers, Mr. Schwartz and Ms. Baack, these agreements
provide for severance payments and benefits only if the termination or voluntary resignation occurs in connection with a
change-in-control of Equinix. In the case of Mr. Smith and Mr. Taylor, the severance benefits are not contingent upon a
change-in-control. The severance agreements of Ms. Baack, Mr. Meyers and Mr. Schwartz also specify that they cannot
voluntarily resign for four months following a change-in-control of Equinix and still trigger the benefits under the
severance agreement. This “stay-put” clause was requested by the Compensation Committee to require that these
named executive officers stay to assist with any transition after a change-in-control. Mr. Smith’s severance agreement
provides that any restricted stock outstanding on the date of termination
Equinix 2015 Proxy Statement • COMPENSATION | 29 |
of employment will vest pro rata as to any
partially completed installment. All of the severance agreements have a three-year term and none provide for tax gross-ups. The
severance program is a competitive element of executive recruitment and compensation and allows for a temporary source of income
in the event of an executive officer’s involuntary termination of employment. In addition, in the case of executive officers
with agreements contingent on a change-in-control, the program is also designed to keep these executive officers focused on a transaction
designed to benefit stockholders, even if a job loss may result. Mr. Schwartz also has an employment agreement with our Netherlands
subsidiary in connection with his international assignment.
RSU awards granted to our named executive
officers vest as to 50% of the outstanding unvested portion of such awards, in connection with an involuntarily termination or
voluntary resignation for good reason under certain circumstances, within 12 months following a change-in-control, in the case
of an involuntary termination, and between the date that is four months following a change-in-control and the date that is 12 months
following a change-in-control, in the case of a voluntary resignation for good reason. We believe some provision for acceleration
of equity awards in connection with changes-in-control protects the stockholders’ interests by encouraging our executive
officers to continue to devote their attention to their duties and to facilitate an acquisition with minimized distraction, and
by neutralizing bias the executive officers might have in evaluating acquisition proposals that could result in a loss of equity
compensation. In addition, we believe that the events triggering payment, both a change-in-control and termination of employment,
and then only when there is no misconduct by the executive officer, are reasonable hurdles for the ensuing rewards.
RSU awards granted
to our employees, including our named executive officers, shall vest as to the next unvested tranche of the award in the event
of the death of the individual as a benefit to his or her estate, provided however, in the case of performance RSUs, that the RSUs
have been earned based on actual performance results as certified by the Board or a committee thereof.
Benefits and Perquisites
Retirement, life, health and
other welfare benefits at Equinix are the same for all eligible employees, including the named executive officers, and are designed
to be aligned to our competitive market. Equinix shares the cost of health and welfare benefits with all of our eligible employees
and offers an employer matching contribution to participant contributions to our Section 401(k)
plan, for which all employees, including the named executive officers, are eligible. In 2014, the maximum match was $7,800. In
general, Equinix does not offer perquisites to its named executive officers, except as described below.
In November 2008, the Compensation Committee
approved an Executive Physical Program. This program is designed to proactively manage health risks for our executive officers.
In May 2013, the Compensation
Committee approved a new expatriate agreement for Mr. Schwartz in connection with his leadership role of our European business
and his new assignment to our EMEA headquarters in Amsterdam, the Netherlands. The term of
the expatriate agreement extends through June 2016. For a complete discussion of the benefits
and perquisites incurred under the expatriate agreement in 2014, see the 2014 Summary Compensation Table in this proxy statement.
None of our named executive officers received
tax gross-ups or other amounts during 2014 for the payment of taxes in connection with other compensation payments, with the exception
of Mr. Schwartz in connection with his overseas assignment. For further information, see the 2014 Summary Compensation Table in
this proxy statement.
Accounting and Tax Considerations
Accounting Considerations
Base salary and annual incentive compensation
are recorded as an expense for financial reporting purposes by Equinix over the period the services are rendered by the individual
employees. In terms of long-term equity compensation, the fair value of RSU awards, determined as of their grant date, is amortized
as an expense for financial reporting purposes over the awards’ vesting period.
Equinix 2015 Proxy Statement • COMPENSATION | 30 |
For 2014, the total compensation expense
of Equinix’s equity compensation programs under Financial Accounting Standards Board
Accounting Standards Codification Topic 718, requiring that all equity-based awards to employees be recognized in the income statement
based upon their fair value over the requisite service period, was approximately $118 million. The total compensation expense is
considered by management in setting equity compensation levels at Equinix.
Tax Considerations
Section 162(m) of the Internal Revenue Code
places a limit of $1 million on the amount of compensation that we may deduct for federal income tax purposes in any one year with
respect to our chief executive officer or any of our three other most highly compensated executive officers, excluding our chief
financial officer (each referred to as a “covered employee”). There is an exemption to the $1 million limitation for
performance-based compensation meeting certain requirements.
With the intention of qualifying for the
exemption from the $1 million deduction limitation, our stockholders approved a limitation under our 2000 Equity Incentive Plan
on the maximum number of shares of common stock for which any one participant may be granted awards per fiscal year. In 2007 and
again in 2012, our stockholders approved performance criteria and other terms intended to permit us to grant long-term incentive
awards (including performance-based RSUs) for covered employees under our 2000 Equity Incentive Plan that would be performance-based
for purposes of the exemption from the limitations of Section 162(m). Cash awards under the annual incentive program are subject
to the $1 million deduction limitation when aggregated with other non-exempt compensation.
To maintain flexibility in compensating
our named executive officers, the Compensation Committee has not adopted a policy requiring all compensation to be deductible.
Although a portion of the amount we recorded as compensation to certain named executive officers in 2014 was non-deductible as
a result of the limitation of Section 162(m), the limitation does not cause substantial impact
to our income tax position. The Compensation Committee may approve compensation or changes to plans, programs or awards that may
cause the compensation or awards not to comply with Section 162(m), if it determines that such action is appropriate and in our
best interests.
COMPENSATION COMMITTEE REPORT
Equinix’s Compensation
Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management and, based on such review
and discussions, the Compensation Committee recommended to the Board that the Compensation
Discussion and Analysis be included in this proxy statement.
The Compensation Committee:
Irving Lyons III, Chairman
Scott Kriens
William Luby
Equinix 2015 Proxy Statement • COMPENSATION | 31 |
SUMMARY COMPENSATION TABLE
The following table sets forth the
compensation awarded to, earned by, or paid to each individual who served as Equinix’s “principal executive
officer” or Equinix’s “principal financial officer” during the fiscal year, and Equinix’s three
other most highly compensated executive officers for the fiscal year (collectively, our “named executive
officers”).
|
|
|
|
|
Non-Equity |
All Other |
|
Name and Principal |
|
|
|
Stock Awards(1) |
Incentive Plan |
Compensation |
|
Position |
Year |
Salary ($) |
Bonus ($) |
($) |
Compensation(2)($) |
($) |
Total ($) |
Stephen Smith |
2014 |
804,231 |
— |
9,688,500 |
1,012,500 |
7,800(3) |
11,513,031 |
Chief Executive Officer & |
2013 |
764,615 |
— |
8,701,235 |
717,600 |
7,650 |
10,191,100 |
President |
2012 |
672,115 |
— |
6,334,178 |
805,000 |
7,500 |
7,818,793 |
Keith Taylor |
2014 |
487,115 |
— |
3,681,630 |
416,500 |
7,800(3) |
4,593,045 |
Chief Financial Officer |
2013 |
470,577 |
19,000 |
3,115,491 |
304,000 |
7,650 |
3,916,718 |
|
2012 |
437,654 |
— |
2,287,342 |
361,600 |
7,500 |
3,094,096 |
Charles Meyers |
2014 |
483,077 |
— |
2,906,550 |
412,250 |
7,800(3) |
3,809,677 |
Chief Operating Officer |
2013 |
440,400 |
— |
2,580,613 |
255,080 |
7,650 |
3,283,743 |
|
2012 |
384,712 |
— |
1,829,874 |
260,000 |
18,329 |
2,492,915 |
Eric Schwartz |
2014 |
362,489 |
— |
2,131,470 |
259,346 |
846,607(3) |
3,599,912(4) |
President, Equinix EMEA |
2013 |
358,174 |
— |
1,826,261 |
188,240 |
1,570,581 |
3,943,256 |
|
2012 |
334,519 |
— |
1,431,074 |
224,250 |
1,117,928 |
3,107,771 |
Sara Baack |
2014 |
382,462 |
— |
1,550,160 |
249,600 |
7,800(3) |
2,190,022 |
Chief Marketing Officer |
2013 |
366,193 |
— |
863,376 |
195,520 |
6,590 |
1,431,679 |
|
2012 |
86,250 |
— |
1,890,800 |
64,812 |
— |
2,041,862 |
| 1. | Reflects the aggregate grant date fair value of stock awards granted to the named executive officer
in applicable fiscal year computed in accordance with FASB ASC Topic 718. For 2014, except as noted below, includes the following
performance-based stock awards granted to our named executive officers in 2014: (a) stock awards tied to revenue and adjusted EBITDA
performance for fiscal 2014, for which the amounts in this column were determined assuming earning of 100% of the maximum grant
date fair value, which was determined to be the probable outcome at the time of grant, and for which the maximum grant date fair
value for such awards would have been $6,462,230 (Smith), $2,455,066 (Taylor), $ 1,937,700 (Meyers), $1,421,497 (Schwartz) and
$1,033,957 (Baack); and (b) stock awards tied to relative Total Shareholder Return (TSR), for which the amounts in this column
represent the grant date fair value estimated using Monte Carlo simulations of the variables over the two-year performance period
for such awards. See Note 12 of the notes to our consolidated financial statements in our Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 2, 2015 for a discussion of the assumptions made by Equinix in determining the
values of our equity awards. |
| 2. | The amounts in this column reflect the cash bonus awards to the named executive officers under
our annual incentive plan for the applicable fiscal year. The performance criteria and other terms of the 2014 annual incentive
plan are discussed in greater detail in “Compensation Discussion and Analysis” in this proxy statement. |
| 3. | Amounts include matching contributions made by Equinix to the named executive officers’ respective
401(k) plan accounts. All Equinix U.S. employees are eligible for our 401(k) plan matching program. For Mr. Schwartz, includes
the following expatriate benefits in connection with Mr. Schwartz’s assignments to the United Kingdom and the Netherlands:
$199,759 in company-paid housing-related expenses, $67,718 in educational benefits, $520,482 in taxes paid on Mr. Schwartz’s
behalf, net of additional amounts withheld from his other compensation, a $31,779 cost of living adjustment, a $16,299 automobile
allowance, $5,829 in storage costs and $4,741 for miscellaneous expenses related to his assignments (such as mail forwarding, wire
fees, tax preparation fees and relocation service fees). For other individuals, excludes personal benefits totaling less than $10,000. |
| 4. | Certain benefits paid in local currencies have been converted from euro to US dollars using the
exchange rate of 1.3806. |
Equinix has entered into
expatriate agreements with Mr. Schwartz, pursuant to which we agreed to provide benefits including an annual cost of living adjustment
(with the amount subject to review periodically), company-provided housing, an automobile allowance, an educational allowance,
a utilities allowance and a tax equalization provision to the extent his taxes in the United
Kingdom and the Netherlands exceed the taxes he would have paid in the United States. Equinix has not entered into employment agreements
with any of the other named executive officers, other than at-will offer letters. Equinix has entered into severance agreements
pursuant to which each named executive officer is entitled to cash severance upon certain terminations of employment, and our named
executive officers are also entitled to certain vesting acceleration benefits in connection with
a change-in-control of Equinix. See the section entitled “Potential Payments upon Termination or Change-in-Control”
elsewhere in this proxy statement for detailed information.
Equinix does not have defined benefit
pension plans or non-qualified deferred compensation plans for the named executive officers.
Equinix 2015 Proxy Statement • COMPENSATION | 32 |
2014 GRANTS OF PLAN-BASED AWARDS
The table below sets forth each non-equity
incentive plan award and equity award granted to Equinix’s named executive officers during fiscal year 2014.
Our 2014 annual incentive plan provided for target
bonuses if Equinix achieved the revenue and adjusted EBITDA goals in its 2014 operating plan. Under the 2014 annual incentive
plan, the revenue goal was weighted at 50% and the adjusted EBITDA goal was weighted at 50%. For every 1% below operating plan
for revenue, the revenue portion of the incentive plan pool was subject to reduction by 20% and for every 1% below operating plan
for adjusted EBITDA, the adjusted EBITDA portion of the incentive plan pool was subject to reduction by 20%, such that no bonuses
were payable if revenue and adjusted EBITDA were each 95% or less than the operating plan target. Actual amounts earned and paid
for fiscal 2014 performance are set forth in the Summary Compensation Table above.
The amounts in the “Equity Incentive
Plan Award” column reflect two different types of RSU awards granted during fiscal 2014 with both service and
performance vesting requirements. With respect to the first grant, none of these RSUs would be earned unless Equinix achieved
95% of both revenue and adjusted EBITDA goals for 2014, with the actual number of RSUs (ranging from the
“threshold” to the “maximum” amounts in the table) based on the extent to which Equinix achieved the
goals. The earned RSUs would then vest subject to continued service as follows: 50% in February 2015 and an additional 25% in
each of February 2016 and February 2017. As further described in “Compensation Discussion and Analysis” above, in
February 2015, our Compensation Committee determined that the number of RSUs earned was at 100% of the maximum level, based
on our achievement of our 2014 revenue and adjusted EBITDA goals. The second grant reflects RSUs that may be earned based on
achievement of relative TSR for the two-year period from 2014 through 2015, as further described above in “Compensation
Discussion and Analysis.” The extent to which these RSUs are earned will be determined in early 2016, at which time
they will vest to the extent earned.
|
|
Estimated Possible
Payouts Under
Non-Equity Incentive
|
Estimated Future Payouts Under Equity |
All
Other Stock
Awards:
Number of |
Grant Date Fair |
|
|
Plan
Awards |
Incentive Plan Awards |
Shares of |
Value of Stock |
|
|
Target/Maximum(1) |
Threshold |
|
|
Stock or Units |
and Option |
Name |
Grant Date |
($) |
(#) |
Target (#) |
Maximum (#) |
(#) |
Awards(2) ($) |
Stephen Smith |
N/A |
1,012,500 |
|
|
|
|
|
|
3/06/2014(3) |
|
15,008 |
28,348 |
33,350 |
|
6,462,230 |
|
3/06/2014(4) |
|
3,330 |
8,325 |
16,650 |
|
3,226,271 |
Keith Taylor |
N/A |
416,500 |
|
|
|
|
|
|
3/06/2014(3) |
|
5,702 |
10,770 |
12,670 |
|
2,455,066 |
|
3/06/2014(4) |
|
1,266 |
3,165 |
6,330 |
|
1,226,564 |
Charles Meyers |
N/A |
412,250 |
|
|
|
|
|
|
3/06/2014(3) |
|
4,500 |
8,500 |
10,000 |
|
1,937,700 |
|
3/06/2014(4) |
|
1,000 |
2,500 |
5,000 |
|
968,850 |
Eric Schwartz |
N/A |
259,346 |
|
|
|
|
|
|
3/06/2014(3) |
|
3,301 |
6,236 |
7,336 |
|
1,421,497 |
|
3/06/2014(4) |
|
733 |
1,832 |
3,664 |
|
709,973 |
Sara Baack |
N/A |
249,600 |
|
|
|
|
|
|
3/06/2014(3) |
|
2,401 |
4,536 |
5,336 |
|
1,033,957 |
|
3/06/2014(4) |
|
533 |
1,332 |
2,664 |
|
516,203 |
| 1. | Because each individual’s target bonus is a specified percentage of
base salary, the target bonus amount in this table is based on the annual base salary in effect at the end of the year when bonuses
are calculated. |
| 2. | The amounts in this column represent the aggregate grant date fair value of the equity award calculated
in accordance with FASB ASC Topic 718. See Note 1 under the Summary Compensation Table. Also see Note 12 of the notes to our consolidated
financial statements in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2015 for a
discussion of the assumptions made by Equinix in determining the grant date fair values of our equity awards |
| 3. | These are performance-based RSUs eligible to be earned based on revenue and adjusted EBITDA goals
for fiscal 2014 as further described above. |
| 4. | These are performance-based RSUs that will be earned based on TSR as further described above. |
Equinix 2015 Proxy Statement • COMPENSATION | 33 |
OUTSTANDING EQUITY AWARDS AT 2014 FISCAL YEAR-END
The following table sets forth information
regarding all unvested stock awards held by each of our named executive officers as of Dec. 31, 2014. None of our named executive
officers held outstanding stock options at Dec. 31, 2014.
|
Option Awards |
Stock Awards |
|
|
|
|
|
|
|
|
|
Equity Incentive |
|
|
|
|
|
|
|
|
Equity Incentive |
Plan Awards: |
|
|
|
|
|
|
|
|
Plan Awards: |
Market or |
|
|
Number of |
Number of |
|
|
|
|
Number of |
Payout Value |
|
|
Securities |
Securities |
|
|
Number of |
Market Value of |
Unearned |
of Unearned |
|
|
Underlying |
Underlying |
|
|
Shares or Units |
Shares or Units |
Shares, Units |
Shares, Units |
|
|
Unexercised |
Unexercised |
Option |
Option |
of Stock That |
of Stock That |
or Other Rights |
or Other Rights |
|
Name |
Option (#) |
Options (#) |
Exercise Price |
Expiration |
Have Not |
Have Not |
That Have Not |
That Have Not |
|
Exercisable |
Unexercisable |
($) |
Date |
Vested(2)
(#) |
Vested(1)
($) |
Vested(2) (#) |
Vested(1)
($) |
|
|
|
|
|
|
|
|
|
|
|
Stephen |
— |
— |
— |
— |
8,982(3) |
2,036,489 |
|
|
|
Smith |
— |
— |
— |
— |
5,422(4) |
1,229,330 |
|
|
|
|
|
|
|
|
3,530(6) |
800,357 |
|
|
|
|
— |
— |
— |
— |
34,475(5) |
7,816,517 |
17,211(7) |
3,902,250 |
|
Keith Taylor |
— |
— |
— |
— |
3,243(3) |
735,285 |
|
|
|
|
— |
— |
— |
— |
1,941(4) |
440,083 |
|
|
|
|
|
|
|
|
1,263(6) |
286,360 |
|
|
|
|
— |
— |
— |
— |
13,097(5) |
2,969,483 |
6,543(7) |
1,483,494 |
|
Charles |
— |
— |
— |
— |
2,595(3) |
588,364 |
|
|
|
Meyers |
— |
— |
— |
— |
1,608(4) |
364,582 |
|
|
|
|
|
|
|
|
10,337(5) |
2,343,708 |
|
|
|
|
— |
— |
— |
— |
804(6) |
182,290 |
5,168(7) |
1,171,741 |
|
|
|
|
|
|
6,202(8) |
1,406,179 |
|
|
|
Eric |
— |
— |
— |
— |
2,029(3) |
460,035 |
|
|
|
Schwartz |
— |
— |
— |
— |
1,138(4) |
258,019 |
|
|
|
|
|
|
|
|
569(6) |
129,009 |
|
|
|
|
— |
— |
— |
— |
7,583(5) |
1,719,294 |
3,787(7) |
858,627 |
|
Sara Baack |
— |
— |
— |
— |
502(4) |
113,818 |
|
|
|
|
— |
— |
— |
— |
329(6) |
74,594 |
|
|
|
|
— |
— |
— |
— |
5,516(5) |
1,250,643 |
2,753(7) |
624,188 |
|
|
|
|
|
|
2,584(9) |
585,870 |
|
|
|
| 1. | Computed in accordance with Securities and Exchange Commission rules as the number of unvested
shares or units multiplied by the closing price of Equinix’s common stock at the end of the 2014 fiscal year, which was $226.73
on Dec. 31, 2014. The actual value realized by the officer will depend on whether the award vests and the future performance of
Equinix’s common stock. |
| 2. | Reflects an anti-dilutive adjustment of approximately 3.4% pursuant to a special distribution paid
on Nov. 25, 2014. |
| 3. | These units were granted in fiscal 2012 and were eligible to be earned depending
on whether and to what extent Equinix achieved both its 2012 revenue and adjusted EBITDA goals. These share numbers reflect the
amount actually earned for performance during fiscal 2012, as determined in February 2013. The remaining unvested amount vested
in February 2015. |
| 4. | These units were granted in fiscal 2013 and were eligible to be earned depending
on whether and to what extent Equinix achieved both its 2013 revenue and adjusted EBITDA goals. These share numbers reflect the
amount actually earned for performance during fiscal 2013, as determined in February 2014. Of this unvested amount, 50% of the
RSUs will vest in each of February 2015 and February 2016. |
| 5. | These units were granted in fiscal 2014 and were eligible to be earned depending on whether and
to what extent Equinix achieved both its 2014 revenue and adjusted EBITDA goals. These share numbers reflect the amount actually
earned for performance during fiscal 2014, as determined in February 2015. Of this amount, 50% vested in February 2015, and an
additional 25% of the RSUs will vest in each of February 2016 and February 2017. |
| 6. | Represents performance-based award subject to meeting a relative TSR goal
for the two-year period ending Dec. 31, 2014. The share numbers in this table represent the actual payout which vested in January
2015. |
| 7. | Represents performance-based award subject to meeting a relative TSR goal
for the two-year period ending Dec. 31, 2015. The share numbers in this table represent the maximum payout of 200% of target level,
which assumes the maximum performance level is achieved, although the actual amount that may be earned is between 0% and 200% of
target level. |
| 8. | Subject to continuous service throughout the vesting period, the first 25%
of the restricted stock units shall vest on Sept. 1, 2014, and an additional 25% shall vest on each Sept. 1 thereafter until fully
vested. |
| 9. | Subject to continuous service throughout the vesting period, the first 25%
of the restricted stock units shall vest on March 1, 2013, and an additional 25% shall vest on each Sept. 1 thereafter until fully
vested. |
Equinix 2015 Proxy Statement • COMPENSATION | 34 |
2014 OPTION EXERCISES AND STOCK VESTED
The following table shows the number of shares
acquired upon exercise of options by each named executive officer during fiscal year 2014 and the number of shares of restricted
shares or restricted stock units that vested during fiscal year 2014.
|
Option Awards |
Stock Awards |
|
Number of Shares |
|
Number of Shares |
|
|
Acquired on Exercise |
Value Realized on |
Acquired on Vesting |
Value Realized on |
Name |
(#) |
Exercise(1) ($) |
(#) |
Vesting(2) ($) |
Stephen Smith |
— |
— |
41,689 |
7,888,502 |
Keith Taylor |
— |
— |
15,371 |
2,910,134 |
Charles Meyers |
— |
— |
12,252 |
2,370,050 |
Eric Schwartz |
— |
— |
8,942 |
1,690,111 |
Sara Baack |
— |
— |
3,002 |
643,985 |
| 1. | Value realized is based on the fair market value of our common stock on date
of exercise minus the exercise price and does not necessarily reflect proceeds actually received by the named executive officer. |
| 2. | Value realized is based on the fair market value of our common stock on the
vesting date, multiplied by the number of shares or units vested, and does not necessarily reflect proceeds actually received by
the named executive officer. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
Severance Agreements
We have entered into severance agreements with each
of our named executive officers. Under their severance agreements, Mr. Smith and Mr. Taylor are entitled to benefits if they voluntarily
resign for good reason or if Equinix terminates their employment for any reason other than cause. Following a change-in-control,
the officers may not resign for good reason for a four-month period. Mr. Meyers, Mr. Schwartz and Ms. Baack are only entitled to
severance benefits if Equinix terminates their employment for any reason other than cause within 12 months after a change-in-control
or if they resign for good reason during the period beginning four months after a change-in-control and ending 12 months after
a change-in-control.
In the event of a qualifying termination,
these severance agreements provide for the following benefits if the officer signs a general release of claims:
| • | A lump sum severance payment equal to 100% of the officer’s annual base
salary and target bonus (at the annual rate in effect immediately prior to the actions that resulted in the qualifying termination). |
| • | If the officer elects to continue health insurance coverage under COBRA then Equinix will pay the
officer’s monthly premium under COBRA for up to the 12-month period following cessation of the officer’s employment. |
| • | Under Mr. Smith’s agreement only, his restricted stock awards will vest pro rata with respect
to the installment that would otherwise vest on the vesting date following his termination date, subject to any performance criteria
applicable to a performance-vesting award having been met as of his termination date. |
In addition, for terminations following a
change-in-control, the officers may be eligible for accelerated vesting of equity as described below under “Equity Vesting
Acceleration”.
The severance agreements also contain non-solicitation,
non-competition (during employment with Equinix), cooperation and non-disparagement covenants.
Equinix 2015 Proxy Statement • COMPENSATION | 35 |
The following definitions are used in the severance
agreements with our named executive officers:
| • | In the case of Mr. Smith and Mr. Taylor, “good reason” means: |
| • | a material diminution in the officer’s authority, duties or responsibilities; |
| • | a material reduction in the officer’s level of compensation (including base salary and target
bonus) other than pursuant to a company-wide reduction of compensation where the reduction applicable to the officer is substantially
equal, on a percentage basis, to the reduction of the other executive officers; |
| • | a relocation of the officer’s place of employment by more than 30 miles without the officer’s
consent; or |
| • | in the case of Mr. Smith only, a breach of his offer letter or severance agreement
by Equinix or the failure of any successor to assume those agreements. |
| • | In the case of Mr. Meyers, Mr. Schwartz and Ms. Baack, “good reason” means: |
| • | a material diminution in the officer’s authority, duties or responsibilities, provided, however, if by virtue of Equinix
being acquired and made a division or business unit of a larger entity following a change-in-control, the officer retains substantially
similar authority, duties or responsibilities for such division or business unit of the acquiring corporation, but not for the
entire acquiring corporation, such reduction in authority, duties or responsibilities shall not constitute good reason; |
| • | a 10% or greater reduction in the officer’s average level of compensation over the prior three
calendar years, determined based on salary, target bonus and the FASB ASC Topic 718 grant value of any equity awards; or |
| • | a relocation of the officer’s place of employment by more than 30 miles without the officer’s
consent. |
| • | “Cause” includes the officer’s unauthorized use or disclosure
of trade secrets which causes material harm to Equinix, the officer’s conviction of, or a plea of “guilty” or
“no contest” to, a felony, or the officer’s gross misconduct. |
| • | The definition of “change-in-control” in the severance agreements
with our named executive officers is the same definition as in our 2000 Equity Incentive Plan, described below. |
In April 2008, we entered into an expatriate
agreement with Mr. Schwartz pursuant to which he agreed to relocate to the United Kingdom for approximately two years to serve
as our president, Equinix EMEA. His expatriate agreement was extended through June 2013. In May 2013, we entered into a revised
expatriate agreement with Mr. Schwartz pursuant to which he agreed to relocate to the Netherlands for approximately three years
to serve as our president, Equinix EMEA. Mr. Schwartz also has an employment agreement with our Netherlands subsidiary in connection
with his international assignment to the Netherlands. Pursuant to this employment agreement, if Mr. Schwartz is terminated by
Equinix from the role of president, EMEA, he is guaranteed a fixed term of employment until July 31, 2018 as a consultant on european
affairs. The role shall be at a work location in the Netherlands with an annual salary of EUR 60,000. Such role shall not entitle
Mr. Schwartz to any annual or long-term incentive compensation. Further, in the event of a change-in-control of Equinix, if Mr.
Schwartz is entitled to benefits under both his severance agreement and his agreement with our Netherlands subsidiary, he will
not be eligible to receive both, but payments under one will offset payments made under the other. In addition, if we terminate
Mr. Schwartz’s employment during the assignment for any reason other than cause or if Mr. Schwartz resigns and promptly
returns to the United States, we will pay the transportation costs to bring Mr. Schwartz, his family and his household goods back
to the United States. Mr. Schwartz may also be entitled to statutory severance under Netherlands law.
The following table estimates the amount
of compensation and benefits payable to each of our named executive officers under the severance agreements described above as
if their employment terminated upon a qualifying termination on Dec. 31, 2014, the last business day of the last fiscal year.
Equinix 2015 Proxy Statement • COMPENSATION | 36 |
|
Base Salary |
Bonus |
COBRA |
Acceleration of |
Total |
Name |
Severance(1) ($) |
Severance(1) ($) |
Premiums(2) ($) |
Vesting ($) |
($) |
Stephen Smith(4) |
810,000 |
1,012,500 |
27,494 |
9,899,444(3) |
11,749,438 |
Keith Taylor(4) |
490,000 |
416,500 |
27,494 |
— |
933,994 |
Charles Meyers(5) |
485,000 |
412,250 |
27,494 |
— |
924,744 |
Eric Schwartz(5) |
375,000 |
259,346 |
29,280 |
— |
663,626 |
Sara Baack(5) |
384,000 |
249,600 |
7,650 |
— |
641,250 |
| | |
| 1. | The amounts in these columns are based on the officer’s 2014 base salary at the rate in effect
on Dec. 31, 2014. |
| 2. | The amounts in this column represent the cost of the executive’s monthly health care premium
under COBRA for a 12-month period. |
| 3. | Represents the value of pro rata vesting of Mr. Smith’s equity awards under his severance
agreement, using the closing price of our common stock of $226.73 on Dec. 31, 2014. Excludes accelerated vesting for termination
following a change-in-control under our equity award documents as described below. |
| 4. | Assumes a voluntary resignation for good reason or involuntary termination of employment for any
reason other than cause. |
| 5. | Assumes a change-in-control followed by a voluntary resignation for good reason
or involuntary termination of employment for any reason other than cause (or, in the case of Mr. Schwartz, if severance is triggered
under his expatriate agreement). |
Equity Vesting Acceleration
Pursuant to our 2000 Equity Incentive Plan,
upon a change-in-control of Equinix, if the surviving corporation refuses to assume outstanding equity awards or replace them with
comparable awards, each equity award will become fully vested. If equity awards are assumed, our named executive officers’
awards have the following provisions:
| • | RSU awards will vest as to 50% of the outstanding unvested portion of such awards, if the named executive officer is terminated
without cause within 12 months after a change-in-control or in the event of a certain voluntary resignations for good reason during
the period beginning four months after a change-in-control and ending 12 months after a change-in-control. |
| • | In the event of a change-in-control before the end of the performance
period of the awards based on revenue and adjusted EBITDA performance, each such award shall no longer be dependent on
achievement of the revenue and adjusted EBITDA goals, but shall instead convert to a time-based award with 50% of the target
number of RSUs under the award vesting on Feb. 15 of the following year and 25% vesting on each Feb. 15 thereafter. |
| • | Our performance-based RSUs dependent on TSR performance will be deemed to be earned at the change-in-control
based on performance for a shortened period ending before the change-in-control, but subject to time-based vesting through the
end of the original performance period. |
| • | RSU awards granted to our employees, including our named executive officers,
shall vest as to the next unvested tranche of the award in the event of the death of the individual as a benefit to his or her
estate; provided however, in the case of performance RSUs, that the RSUs have been earned based on actual performance results as
certified by the Board or a committee thereof. |
The following definitions apply to our named executive
officers’ equity awards:
A “change-in-control” includes:
| • | a merger of Equinix after which our stockholders own less than 50% of the
surviving corporation or its parent company; |
| • | a sale of all or substantially all of our assets; |
| • | a proxy contest that results in the replacement of more than half of our directors over a 24-month
period; or |
| • | an acquisition of 50% or more of our outstanding stock by any person or group,
other than a person related to Equinix, such as a holding company owned by our stockholders. |
The definitions of “cause” and “good
reason” are the same as in the severance agreements described above.
Equinix 2015 Proxy Statement • COMPENSATION | 37 |
The following table estimates
the value of the potential vesting acceleration for each named executive officer in connection with a change-in-control or termination
of employment following a change-in-control. We have assumed for this purpose that both the change-in-control and termination of
employment occurred on Dec. 31, 2014, the last business day of our last fiscal year.
|
Vesting Upon Involuntary Termination |
Vesting if Equity Awards Not Assumed or |
Name |
Following a CIC(1) ($) |
Substituted Following a CIC(1) ($) |
Stephen Smith |
9,427,207 |
15,921,888 |
Keith Taylor |
3,509,327 |
5,963,226 |
Charles Meyers |
3,502,185 |
6,151,185 |
Eric Schwartz |
2,071,859 |
3,494,363 |
Sara Baack |
1,367,409 |
2,657,729 |
| 1. | The value was calculated by multiplying the number of unvested awards by $226.73, which was the
closing price of Equinix’s common stock on Dec. 31, 2014. For awards subject to meeting revenue and EBITDA performance criteria
for the year ended Dec. 31, 2014, the calculation of the unvested portion reflects the actual performance for such year at 100%
of the target/maximum level. For awards subject to meeting relative TSR goals for the two-year period ending Dec. 31, 2014, the
calculation of the unvested portion reflects the actual performance for such period and 52.08% of the target award size. However,
for awards subject to meeting relative TSR goals for the two-year period ending Dec., 31, 2015, assumes the maximum amount of 200%
of target would have been earned based on a shortened performance period ending Dec. 31, 2014, if a change-in-control had occurred
at such time. |
Compensation Policies and Practices Risk
Assessment
We conducted a risk assessment of our
compensation programs and presented the results to our Compensation Committee. The Compensation Committee considered the
findings of the assessment and agreed with management’s conclusion that our compensation programs do not create
excessive or inappropriate risks for Equinix. Our assessment involved a review of our material compensation arrangements,
policies and practices for the purpose of identifying inherent risks and program features that mitigate or eliminate those
risks. Factors that support this conclusion include the following:
| • | Overall mix of short- and long-term incentives as well as mix of fixed and variable compensation. |
| • | Base pay is fixed and targeted at the 50th percentile of market for all employees. Our competitive
base pay supports our goal of attracting and retaining employees while still representing an efficient use of our resources. There
is an annual market analysis and alignment with this objective, and Equinix’s annual salary increase budget is approved by
the Compensation Committee. Individual performance is also considered in setting base pay. |
| • | Short-term incentive compensation is earned under our annual incentive plan, which in 2015 will
be funded based upon our performance against equally weighted revenue and AFFO targets. We mitigate the risk of manipulation of
financial results through a combination of strict internal controls and plan design, including a cap on bonus payouts and the fact
that actual payouts are based on individual performance. In addition, for our executives, short-term incentive compensation represents
a modest portion of total compensation. |
| • | Long-term incentive compensation consists of RSUs. For non-executives, RSUs are granted with time-based vesting. For
executives, RSUs are granted with both performance and time-based vesting elements. These awards compose the greatest portion
of total compensation for our executives. Individual performance is considered in sizing the awards and award sizes are
capped. For 2015, the performance elements for half of an executive’s annual RSU grant consist of both revenue and AFFO
achievement targets. Use of these two metrics ensures that executives are motivated to meet revenue targets while keeping
costs contained. The risk of manipulation of financial results is also mitigated by strict internal controls. If the targets
are met, the awards continue to vest over the next two years, offsetting the risk of short-term decision-making. The
performance element for a fourth of the RSUs consists of TSR achievement over a three-year period. If the three-year target
is met, the awards vest fully, offsetting the risk of short-term decision-making and aligning the interests of executives
with stockholders. The remaining fourth of the RSUs vest based on time only to align Equinix’s executive compensation
program more closely to market practice. |
| • | In 2012, the Governance Committee approved stock ownership guidelines for Mr. Smith and his direct |
Equinix 2015 Proxy Statement • COMPENSATION | 38 |
reports. The guidelines
require that these executives achieve target ownership levels, expressed as a multiple of salary, within five years from the adoption
date of Nov. 30, 2012. The target ownership level for Mr. Smith is three times his annual salary; for all others the target ownership
level is one time their annual salary.
| • | The Compensation Committee, comprised of independent members of the Board,
approves all compensation for executives in its discretion. The Compensation Committee is advised by an independent consultant. |
Compensation Committee Interlocks and Insider
Participation
None of the members of the Compensation Committee
was at any time during the 2014 fiscal year or at any other time an officer or employee of Equinix. No executive officer of Equinix
serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving
as a member of the Board or Compensation Committee of Equinix.
Equity Compensation Plan Information
The following table provides information
as of Dec. 31, 2014 with respect to shares of our common stock issuable under our existing equity compensation plans:
|
A |
B |
C |
|
|
|
Number of securities |
|
|
|
remaining available for |
|
Number of securities to |
Weighted-average exercise |
future issuance under |
|
be issued upon exercise |
price of outstanding |
equity compensation |
|
of outstanding options, |
options, warrants and |
plans, excluding securities |
Plan category |
warrants and rights |
rights |
reflected in Column A |
|
|
|
|
Equity compensation |
|
|
|
plans approved by security |
1,467,375(2)(3) |
$3.50(4) |
8,722,888(5) |
holders(1) |
|
|
|
Equity compensation plans |
|
|
|
not approved by security |
14,533 |
$43.0312 |
260,248 |
holders |
|
|
|
|
|
|
|
Total |
1,481,908 |
N/A |
8,983,136 |
|
|
|
|
| 1. | On each Jan. 1, commencing on Jan. 1, 2001 and continuing through Jan. 1, 2010, the number of shares
reserved for issuance under the following equity compensation plans were automatically increased as follows: The 2000 Equity Incentive
Plan was automatically increased by the lesser of 6% of the then-outstanding shares of common stock or 6.0 million shares and the
2000 Director Option Plan was automatically increased by 50,000 shares of common stock. On each Jan. 1, continuing through Jan.
1, 2014, the 2004 Employee Stock Purchase Plan was automatically increased by the lesser of 2% of the then-outstanding shares of
common stock or 500,000 shares. |
| 2. | Includes 1,403,974 unissued shares subject to outstanding RSUs. |
| 3. | Includes 2,988 stock options assumed pursuant to our acquisition of Switch & Data Facilities
Company, Inc., effective April 30, 2010. No additional stock options, RSUs, or any other equity awards are issuable pursuant to
the Switch and Data 2007 Stock Incentive Plan, including upon the cancellation of the stock options and RSUs which were assumed. |
| 4. | The weighted-average exercise price takes into account 1,403,974 shares under
approved plans issuable upon vesting of outstanding RSUs, which have no exercise price. The weighted-average exercise price for
options only with respect to the approved plans is $80.9041. |
| 5. | Includes 3,751,066 shares available for future issuance under the 2004 ESPP. |
The following equity compensation plan that was in
effect as of Dec. 31, 2014 was adopted without the approval of our security holders:
The Equinix, Inc., 2001 Supplemental Stock
Plan (the “2001 Plan”) was adopted by the Board on Sept. 26, 2001. We have reserved 1,494,275 shares of common stock
for issuance under the 2001 Plan, under which non-statutory stock options and restricted shares may be granted to non-executive
officer employees and consultants
Equinix 2015 Proxy Statement • COMPENSATION | 39 |
of ours or any parent or subsidiary
corporation. Options granted under the 2001 Plan must have an exercise price equal to no less than 85% of the fair market value
on the date of grant; however, as of Dec. 31, 2014, all options granted under the 2001 Plan have an exercise price equal to 100%
of the fair market value on the date of grant. As of Dec. 31, 2014, options to purchase 14,533 shares of common stock were outstanding
under the 2001 Plan, 260,248 shares remained available for future grants, and options covering 1,219,494 shares had been exercised.
Pursuant the 2001 Plan, upon a change-in-control of Equinix, each outstanding option and all
shares of restricted stock will generally become fully vested unless the surviving corporation assumes the option or award or replaces
it with a comparable award. Any options or shares of restricted stock, granted prior to February 2008, which are assumed or replaced
in the transaction and do not otherwise accelerate at that time will become fully vested if the holder is subject to an involuntary
termination within 18 months following the change-in-control. The Board may amend or terminate the 2001 Plan at any time, and the
2001 Plan will continue in effect indefinitely unless the Board decides to terminate the plan earlier.
Section 16(a) Beneficial Ownership Reporting
Compliance
The members of the Board, the
executive officers of Equinix, and persons who hold more than 10% of Equinix’s outstanding common stock (“Section 16
Insiders”) are subject to the reporting requirements of Section 16(a) of the Exchange
Act, which require them to file reports with respect to their ownership of Equinix’s common stock and their transactions
in such common stock. Based on (i) the copies of Section 16(a) reports filed for the members of the Board and the executive officers
for their 2014 fiscal year transactions in common stock and their common stock holdings and (ii) the written representations received
by such persons, Equinix believes that all reporting requirements under Section 16(a) for such fiscal year were met in a timely
manner by Section 16 Insiders.
Equinix 2015 Proxy Statement • COMPENSATION | 40 |
AUDIT
Proposal 2 — Ratification of Independent
Registered Public Accountants
Equinix is asking the stockholders to ratify
the appointment of PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as Equinix’s independent
registered public accounting firm for the fiscal year ending Dec. 31, 2015. The affirmative vote of the holders of a majority
of the shares present in person or represented by proxy and entitled to vote on the proposal at the Annual Meeting will be
required to ratify the selection of PricewaterhouseCoopers.
If the stockholders fail to ratify the selection,
the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Board in its discretion may
direct the appointment of different independent auditors at any time during the year if they determine that such a change would
be in the best interests of Equinix and its stockholders.
PricewaterhouseCoopers has audited Equinix’s
financial statements since 2000. Its representatives are expected to be present at the Annual Meeting, will have the opportunity
to make a statement if they desire to do so, and will be available to respond to appropriate questions.
|
The
Board recommends a vote "FOR" proposal 2 |
|
Equinix 2015 Proxy Statement • AUDIT | 41 |
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee serves as the representative
of the Board for general oversight of Equinix’s financial accounting and reporting process, system of internal control, audit
process, process for monitoring compliance with laws and regulations, and Equinix’s Code of Ethics for Chief Executive Officer
and Senior Financial Officers. The Audit Committee annually appoints an independent registered public accounting firm to express
an opinion on the financial statements and on Equinix’s internal control over financial reporting based on an integrated
audit. A more detailed description of the functions of the Audit Committee can be found in Equinix’s Audit Committee Charter,
published on the corporate governance section of Equinix’s website at Equinix.com.
During fiscal year 2014,
the Audit Committee consisted of Messrs. Bartlett, Hromadko and Paisley. Mr. Paisley is the Audit Committee’s chairman and
financial expert. The Audit Committee held 10 meetings during the last fiscal year.
Equinix’s management has
primary responsibility for preparing Equinix’s financial statements and maintaining Equinix’s financial reporting
process. Equinix’s independent registered public accounting firm, PricewaterhouseCoopers, is responsible for expressing
an opinion on the conformity of Equinix’s financial statements to generally accepted accounting principles and on
Equinix’s internal control over financial reporting based on an integrated audit. The Audit Committee serves a
board-level oversight role in which it provides advice, counsel and direction to management and the independent registered
public accounting firm on the basis of the information it receives, discussions with management and the independent
registered public accounting firm and the experience of the Audit Committee’s members in business, financial and
accounting matters.
In this context, the Audit Committee hereby reports
as follows:
| • | The Audit Committee has reviewed and discussed the audited financial statements
with Equinix’s management and the independent registered public accounting firm. |
| • | The Audit Committee has discussed with the independent registered
public accounting firm the matters required to be discussed by Codification of Statements on Auditing Standard No. 16, as
adopted by the Public Company Accounting
Oversight Board. |
| • | The Audit Committee has received the written disclosures and the letter
from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting
Oversight Board. The letter
concerns the independent auditors’ communications with the Audit Committee about the registered accounting firm’s independence,
which the committee has discussed with the firm. |
Aggregate fees for professional services
rendered for Equinix by PricewaterhouseCoopers as of or for the years ended December 31, 2014 and 2013 were:
|
December 31, |
|
2014 |
2013 |
|
|
|
Audit |
$6,516,209 |
$4,966,985 |
Audit-related |
$575,000 |
$174,000 |
All Other |
$6,300 |
$10,000 |
Total |
$7,097,509 |
$5,150,985 |
The Audit fees for the years ended Dec. 31,
2014 and 2013, respectively, were for professional services rendered for the audits of the consolidated financial statements of
Equinix and the financial statements of certain of its subsidiaries, including professional services related to Equinix’s
REIT conversion.
The Audit-related fees for the years
ended Dec. 31 2014 and 2013, respectively, were for assurance and
Equinix 2015 Proxy Statement • AUDIT | 42 |
related accounting and advisory services
related to debt offerings, review of documents filed with the Securities and Exchange Commission and business process documentation
reviews.
The All Other fees for year ended
Dec. 31, 2014 and 2013, respectively, were for licensed software tools used for financial reporting.
Equinix’s Audit Committee
adopted pre-approval policies and procedures for audit and non-audit services during the fiscal year 2003. All audit, audit-related
and tax services are approved in advance by Equinix’s Audit Committee to assure they
do not impair the independence of Equinix’s independent registered public accounting firm. At the beginning of each fiscal
year, management prepares an estimate of all such fees for the duration of the fiscal year and submits the estimate to the Audit
Committee for review and pre-approval. Any modifications to the estimates are submitted to
the Audit Committee for pre-approval at the next regularly scheduled Audit Committee meeting, or if action is required sooner,
to the chairman of the Audit Committee. All fees paid to Equinix’s independent registered public accounting firm during the
fiscal years 2014 and 2013 were in accordance with this pre-approval policy.
Based on the Audit Committee’s discussion with
management and the independent registered public accounting firm and the Audit Committee’s review of the representations
of management and the report of the independent registered public accounting firm to the Audit Committee, the Audit Committee approved
the audited financial statements and recommended that the audited financial statements be included in Equinix’s Annual Report
on Form 10-K, for the fiscal year ended Dec. 31, 2014, for filing with the Securities and Exchange Commission. The Audit Committee
and the Board have also approved, subject to stockholder ratification, the selection of PricewaterhouseCoopers as Equinix’s
independent registered public accounting firm.
Each of the members of the Audit Committee
is independent as such term is defined under the rules of the Securities and Exchange Commission
and the listing standards of the NASDAQ Stock Market.
The Audit Committee:
Christopher Paisley, Chairman
Thomas Bartlett
Gary Hromadko
Equinix 2015 Proxy Statement • AUDIT | 43 |
ADDITIONAL INFORMATION
Voting Information and Attending the Meeting
ATTENDING THE ANNUAL MEETING
Only persons with evidence of stock
ownership or who are guests of Equinix may attend and be admitted to the Annual Meeting. Photo
identification will be required (a valid driver’s license or passport is preferred). If your shares are held in an account
at a brokerage firm, bank, dealer, or other similar organization, you will need to bring a proxy or a letter from that broker,
trust, bank or other nominee, or your most recent brokerage account statement, that confirms that you are the beneficial owner
of those shares. For assistance with directions to our headquarters where the Annual Meeting will be held, please call 650-598-6000.
VOTING COMMON STOCK
On each matter to be voted upon, you have one vote
for each share of common stock you own as of April 20, 2015.
QUALIFYING TO VOTE
Only stockholders of record at the close
of business on April 20, 2015 will be entitled to vote at the Annual Meeting. On this record date, there were 56,923,183 shares
of common stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your
Name
If, on April 20, 2015, your shares were registered
directly in your name with Equinix’s transfer agent, Computershare, then you are a stockholder of record. As a stockholder
of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to
fill out and return the enclosed proxy card or vote by proxy over the telephone or on the Internet as instructed below to ensure
your vote is counted.
Beneficial Owner: Shares Registered in the Name
of a Broker or Bank
If, on April 20, 2015, your
shares were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner
of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization
holding your account is considered the stockholder of record for purposes of voting at the
Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your
account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote
your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.
WAYS TO VOTE
On the matters to be voted on, including
the nominees to the Board, you may vote “For” or “Against” or abstain from voting. The procedures for voting
are fairly simple:
Stockholder of Record: Shares Registered in Your
Name
If you are a stockholder of record, you may vote
in person at the Annual Meeting, vote by proxy using the
Equinix 2015 Proxy Statement • ADDITIONAL INFORMATION | 44 |
enclosed proxy card, vote by proxy over the
telephone, or vote by proxy on the Internet. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure
your vote is counted. You may still attend the meeting and vote in person if you have already voted by proxy.
| 1. | To vote in person, come to the Annual Meeting and we will give you a ballot when you arrive. |
| 2. | To vote using the proxy card, simply complete, sign and date the enclosed proxy card and return
it promptly in the envelope provided. If you return your signed proxy card to us before the Annual Meeting, we will vote your shares
as you direct. |
| 3. | To vote over the telephone, dial toll-free (from the U.S., Canada and U.S. Territories) 1-800-652-VOTE
(8683) using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control
number from the enclosed proxy card. Your vote must be received by 1 a.m. Central Time, on May 27, 2015 to be counted. |
| 4. | To vote on the Internet, go to www.investorvote.com/EQIX to complete an electronic proxy card. You
will be asked to provide the company number and control number from the enclosed proxy card. Your vote must be received by 1 a.m.
Central Time, on May 27, 2015 to be counted. |
Beneficial Owner: Shares Registered in the Name
of Broker or Bank
If you are a beneficial owner of shares
registered in the name of your broker, bank, or other agent, you should have received a proxy card and voting instructions with
these proxy materials from that organization rather than from Equinix. Simply complete and mail the proxy card to ensure that
your vote is counted. Alternatively, you may vote by telephone or on the Internet as instructed by your broker or bank. To vote
in person at the Annual Meeting, you must obtain a valid proxy from your broker, bank, or other agent. Follow the instructions
from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy card.
We provide Internet
proxy voting to allow you to vote your shares online with procedures designed to ensure the authenticity and correctness
of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet access,
such as usage charges from Internet access providers and telephone companies. |
HOW VOTES ARE COUNTED
Votes will be counted
by the inspector of election appointed for the meeting, who will separately count “For” votes, “Against”
votes, abstentions and broker non-votes (when shares are held by brokers that do not have discretionary authority to vote on a
matter and have not received voting instructions from their clients).
If your shares are held by your broker as your nominee
(that is, in “street name”), you will need to obtain a proxy form from the institution that holds your shares and follow
the instructions included on that form regarding how to instruct your broker to vote your shares. If you do not give instructions
to your broker with respect to a “non-discretionary” matter, your shares will not be voted on such matter and will
not be counted as shares entitled to vote on such matter. For example, if you do not provide voting instructions to your broker,
the broker could vote your shares for Proposal No. 2 (the ratification of the appointment of PricewaterhouseCoopers LLP as Equinix’s
independent registered public accounting firm for the fiscal year ending Dec. 31, 2015) but not for the other proposals, including
the election of directors.
Shares not present at the meeting and shares
voting “abstain” have no effect on the election of directors. For the other proposals, abstentions have the same effect
as “Against” votes. Broker non-votes have no effect and will not be counted towards the vote total for the election
of directors or for Proposals No. 1 or 2. Broker non-votes will be counted in determining whether there is a quorum.
Equinix 2015 Proxy Statement • ADDITIONAL INFORMATION | 45 |
VOTES NEEDED TO APPROVE EACH MATTER
| 1. | To be elected, directors must receive a majority of the votes cast (that is,
the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that
nominee). |
| 2. | To be approved on an advisory non-binding basis, Proposal No. 1, the compensation of our named executive
officers must receive a “For” vote from the majority of shares present and entitled to vote on the proposal either
in person or by proxy. |
| 3. | To be approved, Proposal No. 2, the ratification of PricewaterhouseCoopers as Equinix’s independent
registered public accounting firm for the fiscal year ending Dec. 31, 2015, must receive a “For” vote from the majority
of shares present and entitled to vote on the proposal either in person or by proxy. |
RECEIPT OF MORE THAN ONE PROXY CARD
If you receive more than one proxy card,
your shares are registered in more than one name or are registered in different accounts, please complete, sign and return each
proxy card to ensure that all of your shares are voted.
RETURNING A BLANK PROXY
If you return a signed and dated proxy
card without marking any voting selections, your shares will be voted “For” the
election of all nominees for director, “For” the compensation of our named executive officers, and “For”
the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending
Dec. 31, 2015.
If any other matter is properly presented
at the meeting, your proxy (one of the individuals named on your proxy card) will vote your shares using his best judgment.
REVOKING A PROXY
You can revoke your proxy at any time before
the final vote at the meeting. You may revoke your proxy in any one of three ways:
| 1. | You may submit another properly completed proxy card with a later date. |
| 2. | You may send a written notice that you are revoking your proxy to Equinix’s Secretary at
One Lagoon Drive, Fourth Floor, Redwood City, CA 94065. |
| 3. | You may attend the Annual Meeting and vote in person. Simply attending the
meeting will not, by itself, revoke your proxy. |
PROXY SOLICITATION
Equinix will pay for the entire cost of soliciting
proxies. In addition to these mailed proxy materials, our directors and employees may also solicit proxies in person, by telephone,
or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies.
We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
QUORUM REQUIREMENT
A quorum of stockholders is necessary to
hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares is represented by stockholders
present at the meeting or by proxy. On the record date, there were 56,923,183 shares outstanding and entitled to vote. Thus 28,461,592
shares must be represented by stockholders present at the meeting or by proxy to have a quorum.
Your shares will be counted towards the quorum only
if you submit a valid proxy card or vote at the meeting.
Equinix 2015 Proxy Statement • ADDITIONAL INFORMATION | 46 |
Abstentions and broker non-votes will be
counted towards the quorum requirement. If there is no quorum, a majority of the votes present at the meeting may adjourn the meeting
to another date.
ANNUAL MEETING VOTING RESULTS
Preliminary voting results will be announced
at the Annual Meeting. Final voting results will be published on a Current Report on Form 8-K
filed within four business days after the Annual Meeting.
ELECTRONIC ACCESS TO PROXY STATEMENT AND ANNUAL REPORT
This proxy statement and Equinix’s
annual report on Form 10-K are available on-line at http://investor.equinix. com/phoenix.zhtml?c=122662&p=proxy.
Delivery of Documents to Stockholders Sharing
an Address
A number of brokers with account holders
who are stockholders of Equinix will be “householding” Equinix’s proxy materials. A single set of proxy materials
will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected
stockholders. Once you have received notice from your broker that they will be “householding” communications to your
address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any
time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement and
annual report, please notify your broker, direct your written request to Equinix, Inc., One Lagoon Drive, Fourth Floor, Redwood
City, California 94065, Attn: Stock Services, or contact Equinix Stock Services by telephone at (650) 598-6000 and a separate proxy
statement and annual report will be delivered to you promptly. Stockholders who currently receive multiple copies of the proxy
statement at their address and would like to request “householding” of their communications should contact their broker.
Stockholder Proposals for 2016 Annual Meeting
Stockholders who intend to have a
proposal considered for inclusion in Equinix’s proxy materials for presentation at the 2016 Annual Meeting of
Stockholders (the “2016 Annual Meeting”) pursuant to Rule 14a-8 of the Exchange Act must submit the proposal to
Equinix no later than Jan. 1, 2016. Pursuant to Rule 14a-4(c) of the Exchange Act and Equinix’s Amended and Restated
Bylaws, stockholders who intend to present a proposal at the 2016 Annual Meeting without inclusion of such proposal in the
proxy materials are required to notify Equinix of such proposal not earlier than Feb. 4, 2016 and not later than 5 p.m.,
Pacific Standard Time on March 6, 2016, so long as the 2016 Annual Meeting is not advanced by
more than 30 days or delayed by more than 70 days from May 27, 2016 (the anniversary date of the prior year’s annual
meeting). If Equinix does not receive notification of the proposal within that time frame it will be considered untimely and
we will not be required to present it at the 2016 Annual Meeting.
All stockholder proposals and notice of
stockholder proposals should be sent to Equinix, Inc., at One Lagoon Drive, Fourth Floor, Redwood City, California 94065, Attn:
Secretary. Equinix reserves the right to reject, rule out of order, or take other appropriate action with respect to any stockholder
proposal that does not satisfy the conditions and rules established by the Securities and Exchange Commission.
Equinix 2015 Proxy Statement • ADDITIONAL INFORMATION | 47 |
Other Matters
The Board knows of no other
matters to be presented for stockholder action at the Annual Meeting. However, if other matters do properly come before the Annual
Meeting or any adjournments or postponements thereof, the Board intends that the persons named in the proxies will vote upon such
matters in accordance with their best judgment.
Equinix will mail without charge, upon written
request, a copy of Equinix’s annual report on Form 10-K for the fiscal year ended Dec. 31, 2014. Requests should be sent
to Equinix, Inc., at One Lagoon Drive, Fourth Floor, Redwood City, CA 94065, Attn: Investor Relations.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Peter Van Camp
Peter Van Camp
Executive Chairman
Whether or not you plan to attend
the Annual Meeting, please complete, sign, date and promptly return the accompanying proxy in the enclosed postage-paid
envelope, or follow the instructions below to submit your proxy by telephone or on the Internet. You may revoke your proxy at any
time prior to the Annual Meeting. If you decide to attend the Annual Meeting and wish to change your proxy vote, you may do so
automatically by voting in person at the meeting. Please note, however, that if your shares are held of record by a broker, bank
or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder.
Thank you for your attention to this
matter. Your prompt response will greatly facilitate arrangements for the Annual Meeting.
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Equinix 2015 Proxy Statement • ADDITIONAL INFORMATION | 48 |
Worldwide |
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Corporate HQ |
EMEA |
Asia-Pacific |
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Equinix, Inc. |
Equinix (EMEA) BV |
Equinix Hong Kong Limited |
One Lagoon Drive |
Luttenbergweg 4 |
Suite 6504-07, |
4th Floor |
1101 EC Amsterdam Zuidoost |
65/F Central Plaza |
Redwood City, CA 94065 |
Netherlands |
18 Harbour Road |
USA |
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Wanchai, Hong Kong |
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Main: +1.650.598.6000 |
Main: +31.20.753.7950 |
Main: +852.2970.7788 |
Fax: +1.650.598.6900 |
Fax: +31.20.753.7951 |
Fax: +852.2511.3309 |
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Email: info@equinix.com |
Email: info@eu.equinix.com |
Email: info@ap.equinix.com |
About Equinix
Equinix, Inc. (Nasdaq: EQIX) connects the world’s
leading businesses to their customers, employees and partners inside the most interconnected data centers. In 33 markets across
five continents, Equinix is where companies come together to realize new opportunities and accelerate their business, IT and cloud
strategies. |
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In a digital economy where enterprise business models
are increasingly interdependent, interconnection is essential to success. Equinix operates the only global interconnection platform,
sparking new opportunities that are only possible when companies come together.
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© 2015 Equinix, Inc. |
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Equinix.com |
IMPORTANT ANNUAL MEETING INFORMATION
Electronic Voting Instructions Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by
1:00 a.m., Central Time, on May 27, 2015. Vote by Internet
•
Go to www.investorvote.com/EQIX
•
Or scan the QR code with your smartphone
•
Follow the steps outlined on the secure website
Vote by telephone
•
Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone
•
Follow the instructions provided by the recorded message
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.
X
Annual Meeting Proxy Card
• IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. •
Proposals — The Board recommends a vote FOR all nominees and FOR Proposals 2 and 3.
1. Election of Directors: For Withhold For Withhold For Withhold
0 1 - Thomas Bartlett 02 - Gary Hromadko 03 - Scott Kriens +
0 4 - William Luby 05 - Irving Lyons, III 06 - Christopher Paisley
0 7 - Stephen Smith 08 - Peter Van Camp
c2. T ompensation of the Company’s named executive officers. o approve by a non-binding advisory vote the For Against Abstain 3. To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015. For Against Abstain
Cha nge of Address — Please print your new address below. Comments — Please print your comments below. Meeting Attendance Non-Voting Items Mark the box to the right if you plan to attend the Annual Meeting.
Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.
1UPX +
021QCB
.
• IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. •
Proxy — Equinix, Inc.
One Lagoon Drive, Fourth Floor, Redwood City, California 94065
This Proxy is Solicited on Behalf of the Board of Directors of Equinix, Inc. for the Annual Meeting of Stockholders to be held May 27, 2015
The undersigned holder of Common Stock, par value $0.001, of Equinix, Inc. (the “Company”) hereby appoints Stephen M. Smith and Keith D. Taylor, or either of them, each with full power of substitution, to represent and to vote as specified in this Proxy all Common Stock of the Company that the undersigned stockholder would be entitled to vote if personally present at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 27, 2015 at
10:30 a.m. local time, at the Company’s headquarters located at One Lagoon Drive, Redwood City, California, 94065, and at any adjournments or postponements of the Annual Meeting. The undersigned stockholder hereby revokes any proxy or proxies heretofore executed for such matters.
This proxy, when properly executed, will be voted in the manner as described herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS, FOR PROPOSALS 2 AND 3, AND IN THE DISCRETION OF THE PROXIES AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. The undersigned stockholder may revoke this proxy at any time before it is voted by delivering to the Secretary of the Company either a written revocation of the proxy or a duly executed proxy bearing a later date, or by appearing at the Annual Meeting and voting in person.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE DIRECTORS AND “FOR” PROPOSALS 2 AND 3.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED RETURN ENVELOPE. If you receive more than one proxy card, please sign and return ALL cards in the enclosed envelope.
(continued and to be signed on reverse side.)
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