DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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

AKAMAI TECHNOLOGIES, 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 all boxes that apply):

  No fee required.
  Fee paid previously with preliminary materials:
  Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 


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Dear Fellow Stockholders:

Akamai delivered excellent results in 2021. We continued to dramatically grow our security business, diversify our customer base internationally and generate strong profitability and cash flows, all while delivering on our mission to power and protect life online.

Total revenue in 2021 was $3.5 billion, up 8% over 2020, led by the 26% year-over-year growth in our security business. We continued to improve our profitability as we grew our earnings per diluted share by 17% in 2021. Importantly, our strong profitability continued to translate into enviable cash generation. In 2021, our operating cash flow grew 16% year-over-year to $1.4 billion.

We thoughtfully deployed capital in an effort to increase shareholder value. In 2021, we completed the acquisitions of Inverse and Guardicore to add to our security capabilities. We also continued to return capital to shareholders, spending $522 million to buy back approximately 4.7 million shares during the year. Over the last 10 years, Akamai has reduced its shares outstanding by approximately 10%.

Our Security Technology Group continued to experience very strong growth in 2021, and revenue exceeded $1.3 billion. Akamai’s comprehensive security offerings are designed to provide the defenses needed to address our customers’ biggest threats. The breadth of our defenses is also important to our customers who want more effective security capabilities from fewer vendors. Our security solutions are highly differentiated and recognized as best-in-class by industry analysts and customers, who see us as a leading provider of services that protect their most critical assets, including enterprise websites, applications, data and access.

Our Edge Technology Group contributed more than $2 billion to Akamai’s revenue in 2021 as we continued to offer our customers fast reliable delivery and unmatched scale on a global basis. We surpassed peak traffic of 200 Tbps on several occasions during the year, and we continued to build out significant global capacity in anticipation of future traffic growth. Our global reach, reliability and performance remain critically important to our customers around the world.

Additionally, we continued to position our business for future growth in edge computing and Zero Trust security. In edge computing, we anticipate more enterprises will move compute workloads to the edge as 5G and the Internet of Things take hold. We continued to invest in our compute products, introducing important enhancements for EdgeWorkers, EdgeKV and our API acceleration products in 2021. In Zero Trust security, we acquired Guardicore to help stop the spread of ransomware. Enterprises today are confronting a rapidly-evolving threat landscape, with sophisticated attackers who are trying to steal their data, disrupt their operations and extort them for large sums of money. Guardicore’s microsegmentation solution helps limit the spread of malware and protects the flow of enterprise data across the network, and we believe it is the perfect addition to our Zero Trust portfolio.

We’re proud of the results we achieved in 2021 and are confident about our future. And, importantly, we again delivered our results the right way. Our environmental, social and governance efforts are appreciated and widely recognized for being best in class. Akamai was recognized in the Dow Jones Sustainability Index for the eighth consecutive year, in the FTSE4Good Index and in the JUST 100, where we were ranked 46 overall and second among internet companies. Our continued focus on inclusion and diversity as a strategic imperative increased the diversity of our workforce through hiring and retention in 2021.

I want to thank our nearly 9,000 employees for their very hard work on behalf of our many customers and the billions of internet users around the world. Despite the pandemic-related challenges, Akamai employees maintained their can-do attitude and customer-first mindset, enabling our platform to manage more traffic, more web transactions and more cyberattacks than ever before. Their creativity, teamwork and tenacity are key to what makes Akamai such a unique and strong company.

We hope you can attend Akamai’s 2022 Annual Meeting of Stockholders to be held on May 12, 2022, at 9:30 a.m. Eastern time. In light of continued public health and travel concerns, we will once again hold our stockholder meeting as a virtual-only event. The meeting will also be available through a link on our investor relations website (www.ir.akamai.com). Details regarding how to access the meeting and the business to be conducted are more fully described in our Notice of 2022 Annual Meeting of Stockholders and Proxy Statement.

Your vote is important. Whether or not you plan to attend the Annual Meeting of Stockholders, please vote as soon as possible. Voting by proxy will ensure your representation at the meeting even if you do not attend in person. Please review the instructions on the proxy card or your proxy materials regarding your voting options.

We wish continued success and well-being to all in 2022.

 

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Dr. Tom Leighton

Chief Executive Officer


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AKAMAI TECHNOLOGIES, INC.

145 BROADWAY

CAMBRIDGE, MASSACHUSETTS 02142

NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 12, 2022

The 2022 Annual Meeting of Stockholders (the “Annual Meeting”) of Akamai Technologies, Inc. (“Akamai” or the “Company”) will be held on Thursday, May 12, 2022, at 9:30 a.m., Eastern time, via the internet at a virtual web conference at www.meetnow.global/MYK5XPQ.

In light of continued public health and travel concerns, for the health and well-being of our stockholders, employees and directors, we have determined that the Annual Meeting will be held online in a virtual meeting format, via the internet, with no physical in-person meeting of the stockholders. Stockholders attending our virtual Annual Meeting will be able to attend, vote and submit questions during the Annual Meeting. Further information about how to attend the Annual Meeting online, vote your shares online during the Annual Meeting and submit questions is included in the accompanying proxy statement.

At the Annual Meeting, we expect stockholders will consider and vote upon the following matters:

 

  (1)

To elect ten nominees currently serving as members of our Board of Directors and named in the attached proxy statement to serve on our Board of Directors for a one-year term expiring at the 2023 Annual Meeting of Stockholders;

 

  (2)

To approve an amendment and restatement of our Amended and Restated 2013 Stock Incentive Plan (the “Plan”) to, among other things, (i) increase the number of shares of common stock authorized for issuance thereunder by 2,000,000 shares, (ii) address the treatment of time- and performance-based equity awards under the Plan upon a change in control event, (iii) remove certain provisions related to Section 162(m) of the Internal Revenue Code of 1986, as amended, that are no longer relevant as a result of the elimination of the exemption for qualified performance-based compensation under Section 162(m) and (iv) extend the expiration date of the Plan to May 12, 2032;

 

  (3)

To approve, on an advisory basis, our named executive officer compensation;

 

  (4)

To ratify the selection of PricewaterhouseCoopers LLP as our independent auditors for the fiscal year ending December 31, 2022; and

 

  (5)

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

Stockholders of record at the close of business on March 17, 2022, are entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof.

A complete list of stockholders of record will be available at least 10 days prior to the Annual Meeting at 145 Broadway, Cambridge, Massachusetts 02142. This list will also be available to stockholders of record during the Annual Meeting for examination at www.meetnow.global/MYK5XPQ.

All stockholders are cordially invited to attend the Annual Meeting online. If you hold your shares in an account with a broker, bank or other nominee and wish to attend the Annual Meeting, you must obtain a legal proxy from that entity and register in advance for the meeting by following the instructions in the accompanying proxy statement.

 

By order of the Board of Directors,

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AARON S. AHOLA

Executive Vice President, General Counsel and Corporate Secretary

Cambridge, Massachusetts

March 30, 2022


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WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING ONLINE, PLEASE SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AT YOUR EARLIEST CONVENIENCE. MOST STOCKHOLDERS HAVE A CHOICE OF VOTING OVER THE INTERNET, BY TELEPHONE OR BY MAIL AS INSTRUCTED IN THESE MATERIALS AS PROMPTLY AS POSSIBLE TO ENSURE YOUR REPRESENTATION AT THE MEETING. SENDING IN YOUR PROXY WILL NOT PREVENT YOU FROM VOTING YOUR SHARES ONLINE DURING THE ANNUAL MEETING IF YOU DESIRE TO DO SO, AND YOUR PROXY IS REVOCABLE AT YOUR OPTION BEFORE IT IS EXERCISED. 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 ANNUAL MEETING, YOU MUST OBTAIN A PROXY ISSUED IN YOUR NAME FROM THAT RECORD HOLDER. FURTHER INFORMATION ABOUT HOW TO ATTEND THE ANNUAL MEETING ONLINE, VOTE YOUR SHARES ONLINE DURING THE ANNUAL MEETING AND SUBMIT QUESTIONS DURING THE ANNUAL MEETING IS INCLUDED IN THE ACCOMPANYING PROXY STATEMENT.


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TABLE OF CONTENTS

 

         Page
Number
 
Executive Summary        2  
Part One   Corporate Governance Highlights — Our Commitment to Environmental, Social and Governance Matters      7  
Part Two   Executive Compensation Matters      42  
Part Three   Matters to be Voted Upon at the Annual Meeting      81  
 

Item One Election of Directors

     81  
 

Item Two Amendment and Restatement of Amended and Restated 2013 Stock Incentive Plan

     81  
 

Item Three Advisory Vote on Executive Compensation

     97  
 

Item Four Ratification of Selection of Independent Auditors

     97  
Part Four  

Information About These Proxy Materials and Voting

     100  

 


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AKAMAI TECHNOLOGIES, INC.

145 BROADWAY

CAMBRIDGE, MASSACHUSETTS 02142

PROXY STATEMENT

Cautionary Note Regarding Forward-Looking Statements

This Proxy Statement contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding Akamai Technologies, Inc., which we refer to as “we,” “us,” or the “Company.” All statements other than statements of historical facts are statements that could be deemed forward-looking statements. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of our management as of the date hereof based on information currently available to them. Use of words such as “believes,” “could,” “expects,” “anticipates,” “intends,” “plans,” “projects,” “estimates,” “should,” “forecasts,” “if,” “continues,” “goal,” “likely,” “may,” and variations of such words or similar expressions are intended to identify a forward-looking statement. Forward-looking statements are not guarantees of future performance or achievements and involve risks, uncertainties and assumptions. Actual events or results may differ materially from the forward-looking statements we make. Factors that could cause or contribute to such differences include, but are not limited to, inability to grow revenue, particularly from increased sales of security solutions, or inability to increase profitability as projected; lack of market acceptance of new solutions; cyberattacks that we are not able to successfully defend against; inability to successfully integrate our acquisitions and realize their expected benefits; inability to achieve environmental goals we set; changes in economic, business, competitive, technological and other regulatory factors or events such as acts of terrorism, outbreak of war or hostilities (including the ongoing conflict in Ukraine), civil unrest, adverse climate or weather related events, the COVID-19 pandemic or other public health emergencies; and other factors set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 and in other reports we file with the U.S. Securities and Exchange Commission. We disclaim any obligation to update any forward-looking statements as a result of new information, future events or otherwise.

This Proxy Statement and the 2021 Annual Report to Stockholders are available for viewing, printing and downloading at https://www.ir.akamai.com/financial-information/annual-reports.

Unless specifically stated herein, documents and information on any websites listed in this proxy statement are not incorporated by reference in this proxy statement.

You may obtain a copy of our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (the “Commission”), except for exhibits thereto, without charge upon written request to Akamai Technologies, Inc., 145 Broadway, Cambridge, Massachusetts 02142, Attn: Investor Relations. Exhibits will be provided upon written request and payment of an appropriate processing fee.

 

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EXECUTIVE SUMMARY

Below are highlights of important information you will find in this Proxy Statement. As it is only a summary, please review the complete Proxy Statement before you vote.

Our Mission and Purpose

Our Mission: We power and protect life online.

Our Purpose: We make life better for billions of people, billions of times a day.

Our Vision: A safer and more connected world.

Every day, billions of people around the world connect with their favorite brands to shop online, play the latest video games, log into mobile banking apps, learn remotely, share videos with friends and so much more. These digital experiences make up life’s experiences — and Akamai helps make them possible.

With our unique combination of security and edge delivery solutions, Akamai gives leading organizations around the world the power to innovate and deliver modern apps and superior user experiences — all while protecting their business by surrounding and working to secure their entire architecture, from the core to the cloud to the edge.

We’ve built an edge platform with more than 350,000 servers deployed in nearly 1,400 networks across more than 130 countries worldwide. The Akamai Intelligent Edge Platform is a place where proximity, scale, security and innovation work together to help our customers power and protect their businesses and the billions of people they serve.

We also strive to run our business the right way by how we:

 

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invest in the health, safety and development of our employees;

 

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deal fairly and ethically with our suppliers and partners;

 

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support the communities in which we live and work;

 

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operate in an environmentally sustainable way; and

 

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generate long-term value for our stockholders.

Our Strategy

We operate in a technology landscape that is rapidly evolving, driving enterprises to enhance their digital capabilities to improve productivity, support a shift to remote or hybrid workplaces, transform customer experiences, increase brand awareness and drive competitive advantage. Connected digital experiences are increasingly at the center of how people and businesses live and thrive. Applications and data are accessed and

 

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computing creates personalized experiences on devices in virtually every aspect of our lives. At the same time, security threats are growing more prevalent and advanced. Applications and compute infrastructure are moving from data centers behind the firewall to the cloud – making perimeter defense insufficient and making cybersecurity more challenging to achieve. These trends are not new; while they may have been accelerated by the global health crisis, it is our view that the internet will play an increasingly important role in our lives going forward. Our strategy is to meet the needs of this transformation by offering security, performance, edge computing and delivery solutions that aim to give our customers the competitive edge they need. The Akamai Intelligent Edge Platform is central to our approach, positioning us at the edge of the internet for more than 20 years. Through this pervasive presence at the edge, we bring applications, experiences and business decisions closer to users — and help keep attacks and threats farther away. We believe the strategic proximity enabled by this distributed approach makes us well situated to empower our customers to cost effectively deliver superior user experiences that are interactive, rich and secure.

In March 2021, we reorganized into two groups, both of which utilize the Akamai Intelligent Edge Platform and our global sales organization: the Security Technology Group and the Edge Technology Group. The Security Technology Group includes solutions that are designed to keep infrastructure, websites, applications and users safe, while the Edge Technology Group includes solutions that enable business online, including media delivery, web performance and edge computing solutions.

Akamai 2021 Performance Highlights

In 2021, Akamai realized achievements across our operations, including the following highlights.

 

 

Performance Highlights

 

 

🌑   Earned record annual revenue of $3.5 billion

 

🌑   Security revenue grew 26% in 2021 and now represents 39% of total revenue

 

🌑   Operating cash flow grew 16% year-over-year to $1.4 billion

 

🌑   New product innovation across business groups

 

🌑   Achieved industry recognition for our security solutions from Gartner, Forrester and others

 

🌑   Acquired Guardicore to enhance our security portfolio with Guardicore’s micro-segmentation technology; purchased Inverse to further expand our portfolio of enterprise security capabilities

 

🌑   Akamai made its network more power efficient, despite an increase in overall platform capacity

 

 

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From a financial perspective, we have increased our revenue in each of the past three fiscal years and have been profitable over that same period. The charts below show our revenue and diluted earnings per share, calculated in accordance with generally accepted accounting principles in the United States, or GAAP, for the past three fiscal years.

 

 

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In particular, our Security Technology Group has grown rapidly in recent years as shown below:

 

 

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Over the past five years, we have successfully generated cash from operations to use in strategic initiatives. We believe we have effectively deployed that cash in stock repurchases and acquisition activity as reflected in the chart below.

 

 

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Corporate Governance Snapshot

Akamai’s governance structure reflects our commitment to advancing the long-term interests of our stockholders, maintaining accountability, diversity, ethical conduct and alignment of interests between leadership and investors. Highlights of our governance profile include:

 

 

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Executive Compensation Overview

Akamai has developed an executive compensation program that is designed to closely align executive compensation with performance by allocating a majority of target compensation to performance-based equity awards that directly link the value of executive compensation to our stock price performance and tying annual bonuses to performance against specific financial measures. Key aspects of our 2021 executive compensation program are highlighted below.

 

 

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Our 2021 annual bonus plan, payable in shares of vested common stock for our executive officers, was based on the achievement of defined performance metrics and incorporated a payout modifier based on our achievement against pre-determined environmental, social and governance objectives established by the Talent, Leadership and Compensation Committee of the Board of Directors. These goals were centered on defined metrics related to employee diversity, inclusion and engagement as well as environmental sustainability and are intended to drive accountability within the management team for advancing Akamai’s environmental, social and corporate governance goals.

 

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Part One – Corporate Governance Highlights – Our Commitment to Environmental, Social and Governance Matters

Akamai is committed to maintaining and enhancing our record of excellence in environmental, social and governance (ESG) matters by:

 

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continually refining our corporate governance policies;

 

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working to improve our energy efficiency and reducing our and our partners’ environmental impact;

 

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fostering a diverse and inclusive workplace; and

 

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contributing to the communities in which we live and work.

We also place great value on input from our investors and other stakeholders and engage regularly with them to gain insights into the governance, environmental and social issues they care about most.

In 2021, Akamai created a new ESG Office comprised of members of our management team. This office is charged with enabling a global ESG strategy that integrates our business goals with all ESG efforts across the enterprise, including sustainability, inclusion, diversity and engagement and the Akamai Foundation.

 

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Good Governance

Overview of the Board of Directors

Our Board of Directors, which we will often reference as the Board below, currently consists of 11 individuals with a range of backgrounds, as reflected in the graphic below. Collectively, they bring industry expertise, leadership skills and financial sophistication to our corporate governance. Below is a skills matrix displaying key attributes of our Board members.

 

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Board Refreshment and Diversity

Akamai believes that having an independent, diverse, active and engaged Board has been key to our success. We also believe that new perspectives and ideas are critical to a forward-looking and strategic Board. Our goal is to seek a balance between new points of view and the valuable experience and familiarity that longer-serving directors bring to the boardroom. Since our 2017 annual meeting, we have seen six incumbent directors transition off the Board and have added five new directors. One of our current directors, Jill Greenthal who has been a director since 2007, will transition off the Board following our Annual Meeting. In considering nominations for re-election, we take into account whether a director has served for more than 10 years on the Board as one factor in our holistic approach. A summary of the tenure of our current directors is reflected in the graph below:

 

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In considering new Board members, our Corporate Governance Guidelines set forth a process requiring that the initial list of individuals under consideration by the Board’s Environmental, Social and Governance Committee, or the ESG Committee, include one or more qualified candidates who represent diverse backgrounds, including diversity of gender and race or ethnicity. If a search firm is used, the search firm is instructed to do the same.

 

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The table below provides certain highlights of the composition of our Board members and nominees as of March 1, 2022. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f).

 

Board Diversity Matrix (As of March 1, 2022)

 
Total Number of Directors   

11

 
     

Female

    

Male

     Non-Binary     

Did Not

Disclose

Gender

 

  Part I: Gender Identity

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  Directors

     4        7     

 

 

 

  

 

 

 

  Part II: Demographic Background

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  African American or Black

     1        1     

 

 

 

  

 

 

 

  Alaskan Native or Native American

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  Asian

     1     

 

 

 

  

 

 

 

  

 

 

 

  Hispanic or Latinx

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  Native Hawaiian or Pacific Islander

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  White

     2        6     

 

 

 

  

 

 

 

  Two or More Races or Ethnicities

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  LGBTQ+

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

  Did Not Disclose Demographic Background

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Board Evaluations

A key component of our approach is a robust annual Board evaluation process. Led by our Chair of the Board and the Chair of the ESG Committee, this review is intended to elicit the views of all directors about what makes the Board effective, what improvements can be made, how their peers are most effective, whether steps should be taken to improve contributions and their views on the performance of the Board and its committees over the past year. The evaluation has taken a variety of forms including written surveys, interviews conducted by an outside consultant and interviews conducted by our Chair of the Board. The ESG Committee also regularly oversees and plans for director succession and refreshment of the Board to ensure a mix of skills, global perspectives, experiences, tenure and diversity that promotes and supports the Company’s long-term strategy. In doing so, the ESG Committee takes into consideration the overall needs, composition and size of the Board, as well as the criteria adopted by the Board regarding director candidate qualifications.

 

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Ethics

We have adopted a written Code of Ethics that applies to all of our directors, executive officers and other employees (including our principal executive officer, our principal financial officer and our principal accounting officer). Our Code of Ethics is available on our website at www.ir.akamai.com/corporate-governance/highlights. We did not waive any provisions of the Code of Ethics for our directors or executive officers during the year ended December 31, 2021. If we amend, or grant a waiver under, our Code of Ethics that applies to our executive officers or directors, we intend to post information about such amendment or waiver on our website at www.akamai.com. We have also adopted Corporate Governance Guidelines, a copy of which is also available on our website at www.ir.akamai.com/corporate-governance/highlights.

Engagement with Stakeholders

Akamai and our employees are dedicated to delivering value to investors, providing excellent service to our customers, offering a great place to work and contributing to the communities in which we operate. Some of the key areas of focus as we work with our stakeholders on ESG matters are highlighted below.

 

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Commitment to Customers

At Akamai, we are focused on helping our customers navigate a rapidly-evolving technology landscape so that they can maintain the security of their operations that touch the internet, improve productivity, transform customer experiences, increase brand awareness and drive competitive advantage. With our Intelligent Edge Platform and creative and innovative employees, we believe we are uniquely situated to provide this assistance. We also believe that having an active ESG program is becoming increasingly important to our customers and prospective customers, and we believe our ESG program is a strategic differentiator.

Promoting Diversity and Inclusion in the Workplace

Akamai is committed to providing a work environment and culture where all employees feel that they can contribute and perform to the best of their abilities. As a global company, our diverse workforce combines employees from different backgrounds and experiences. We believe that bringing together a diverse workforce in an inclusive environment captures the experiences, cultures, talents and thought perspectives that will drive innovation and our business strategy in a collaborative manner. Our aim is to understand and build on our cross-cultural competence, and by doing so, improve the way we work in our global community.

Our Diversity & Inclusion Strategy has four focus areas:

 

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Accountability – our leaders are charged with driving accountability across their teams for making Akamai an inclusive, diverse and engaging workplace;

 

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Community – operating in ways that are globally consistent where appropriate, while also locally relevant to our global employee population;

 

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Transparency – reporting on our progress and evolution consistently and broadly, both internally and externally; and

 

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Simplicity – ensuring that as we grow and evolve, we prioritize doing things simply and with great impact.

We have implemented a number of initiatives to foster inclusivity, including: incorporating an ESG component in our executive bonus plan; incorporating diversity and inclusion goals in both our corporate level annual Mission Critical Goals and the individual performance goals of our senior personnel; supporting eleven Employee Resource Groups that are employee-led, voluntary internal global networks open for all to come together to help collaborate, share ideas and discuss issues among colleagues with similar characteristics or common interests; and introducing a company-wide education and behavior change program that is intended to enhance our corporate culture by promoting an inclusive approach to decision making and innovation.

We are an equal opportunity employer. To help us improve the diversity of our workforce, we participate in or sponsor professional development and recruiting forums. We also offer Akamai Technical Academy, a technical training program targeted primarily at

 

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underrepresented talent (gender, ethnicity, experiential, generational, veterans) who are interested in pursuing a technical career path, but may not be formally educated in science, mathematics or engineering. We are a member of the Massachusetts Technology Leadership Council Tech Compact for Social Justice, committing to make change towards racial equality in our company. We have also posted our EEO-1 report, which we file with the U.S. Equal Employment Opportunity Commission and is limited to the demographics of our U.S. employees based on federally mandated categories, on our website at https://www.akamai.com/site/en/documents/akamai/eeo1-report.pdf. These categories are not necessarily representative of how our industry or workforce is organized. We measure the progress of our inclusion, diversity and engagement objectives against the data points reflected in our Inclusion, Diversity and Engagement Report, also available on our website.

Our Supplier Diversity Program seeks to identify and engage suppliers for a wide range of products and services compatible with Akamai’s current needs — including office supplies, computer equipment and peripherals, office equipment maintenance and repair, food service and printing. We are committed to developing mutually beneficial and successful partnerships with small businesses including companies owned by women, minorities, veterans and people who are socially and economically disadvantaged or have disabilities.

Environmental Sustainability

As a vital part of the internet, Akamai takes responsibility for reducing our environmental impact on society. To fulfill that commitment, we are focused on achieving five goals to reduce and mitigate our environmental effects by 2030. They include:

 

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100% renewably sourced energy;

 

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50% more energy-efficient platform;

 

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100% platform emissions mitigation;

 

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responsible supply chain management; and

 

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global expansion of 100% e-waste recycling.

100% renewably sourced energy. Akamai has set the goal of using 100% renewable power by 2030. We plan to achieve this by procuring clean and renewable power sources working in concert with our suppliers, data center partners and those interested in coming together to aggregate utility-scale power. To support our goal under the renewable energy program, we help support the creation of net-new renewable energy that will reduce emissions-emitting sources from the global grid.

50% more energy-efficient platform. Making the Akamai Intelligent Edge Platform more efficient is critical in using our power more effectively across our operations. It is also the foundation of our goal to be 50% more efficient across the platform by 2030.

100% platform emissions mitigation. Akamai takes our emissions impact on the planet seriously. By 2030, we plan to mitigate 100% of our platform’s greenhouse gas (GHG)

 

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emissions. To establish a pathway to achieve our goals and measure our progress, Akamai has joined the Science-Based Targets Business Ambition for 1.5°C initiative, which is focused on settling net-zero aligned emissions targets.

Responsible supply chain management. Akamai launched our Responsible Supply Chain (“RSC”) program in 2021, with the goal of helping us build strong, transparent and trusted supplier partnerships. The fundamental goal of our RSC program is to engage and monitor our suppliers to align with our corporate goals and values in the areas of ESG, including to help select and prioritize suppliers that are taking an environmentally conscious approach while minimizing risk and reputational impact.

Global expansion of 100% e-waste recycling. Akamai has a goal to continue recycling 100% of our e-waste. Akamai looks to ensure the highest standards for the security of customer data while working with recyclers that institute effective downstream management of all toxic materials.

Employee Well-Being, Health & Safety; Human Rights

Our employees are our most valuable resource, as they are fundamental to our innovation, the operation and ongoing enhancement of the Akamai Intelligent Edge Platform, the fostering and maintenance of relationships with our customers and the management of our operations. In addition to offering competitive compensation and benefits, we focus on the development of our people through fostering inclusion and engagement, providing training and development opportunities and implementing health and safety procedures.

We have a demonstrated history of investing in our workforce by offering competitive salaries, wages, and benefits. Our benefits programs (which vary by country and region) include healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, adoption and fertility assistance, employee assistance programs, tuition assistance, fitness reimbursements and holistic wellness programs. Our wellness programs include educational offerings on healthy lifestyles, access to mental health experts and access to ergonomic advice and equipment.

Given our ability to deliver results while working virtually, we have designated over 90% of roles as flexible and able to be successfully performed remotely. We believe flexible workforce positions will make us a more attractive employer, increase productivity, enable us to recruit from a more diverse pool of applicants and present additional growth and development opportunities for our employees. To support this workforce of the future, we plan to roll out our FlexBase program in May 2022, which will allow the more than 90% of our workforce designated as flexible to choose whether they want to work from an Akamai office, their home office or a combination of both. In order to roll out the FlexBase program, we are designing and developing a number of tools and resources to support this program.

We have adopted a Human Rights Policy available on our website at https://www.akamai.com/company/corporate-responsibility/human-rights. Our Human Rights Policy is intended to promote respect for human rights, foster understanding and provide value to the communities in which we operate. We are committed to ensuring that our

 

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employees, the people who work for our contractors, customers, suppliers and individuals in the communities affected by our activities, are treated with dignity and respect.

Community Involvement

We recognize that the communities in which we live and operate are also stakeholders in our business. We address a wide range of issues to help our neighbors, including responding to COVID-19, humanitarian and disaster relief efforts, encouraging and supporting volunteerism by our employees and promoting diversity in the technology ecosystem.

The Akamai Foundation plays a key role in Akamai’s community outreach. The Akamai Foundation focuses on increasing equitable access to STEM education and technology careers with a goal of creating a more diverse tech workforce. In 2021, the Akamai Foundation awarded over 90 grants targeting digital equity and inclusion in STEM education, disaster relief efforts and strengthening community networks around the globe.

The diverse passions of our employee volunteers and Akamai employee resource groups enrich our philanthropic and community partnerships. The centerpiece of our employee volunteer efforts is our Danny Lewin Community Care Days program. Each year we honor and celebrate our co-founder Danny Lewin’s spirit with a global initiative to encourage employees to give back to our local communities through events such as participating in blood drives, working at food banks, repairing homes, refreshing playgrounds and creating care packages for ill children. Group volunteer activities are organized for employees in many of our offices worldwide. All of our full-time employees are approved to take the equivalent of up to 16 hours of paid volunteer time per calendar year for approved volunteer activities that take place during their regularly scheduled workday.

 

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Stockholder Engagement

Our management and Board are committed to driving stockholder value and communicating with our investors and other stakeholders. Our stockholder engagement model is summarized below:

 

LOGO

During 2021, we conducted outreach to all of our 25 largest stockholders and other investors, who collectively held approximately 54% of our outstanding shares, to express an interest in meeting with them to discuss governance or executive compensation matters at Akamai. We engaged with approximately 60% of those investors and discussed a broad range of operational, strategic and governance topics with them. These engagement efforts and meaningful conversations provided the Board and management with a valuable understanding of investors’ perspectives and an opportunity to exchange views. When the Board conducted its regular reviews of governance and executive compensation, it discussed the input that we received, and the evaluation process was reflective of those views. We were encouraged by the feedback we received and look forward to continuing our dialogue with our stockholders in the coming year.

Commitment to Privacy Best Practices

Our customers trust us to help make the internet fast, intelligent and secure. We understand that how we process personal data is an important part of that trust. We also understand the importance of the data protection rights of internet users, customers and

 

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employees and compliance with the data protection laws of the countries in which we operate. Akamai’s Data Protection and Privacy Program is aimed at protecting the personal data that we process based on respect for the data subject’s privacy concerns by implementing appropriate security safeguards. Our program has four main components:

Awareness

 

  🌑   

Promoting a culture of respect for, and thoughtful consideration of, privacy and personal data protection throughout Akamai.

 

  🌑   

Communicating to our employees timely information about changes in privacy laws, regulations and standards that affect our business.

 

  🌑   

Instilling understanding of different cultures and practices around the world related to the use of individual personal information.

Policies and Procedures

 

  🌑   

Implementing privacy protection policies and related operational procedures (in harmony with our Information Security Compliance Program) that are designed to enable compliance with the law consistent with our business commitments and needs.

 

  🌑   

Utilizing privacy by design tools to timely raise, consider and address privacy concerns at the early stage of service and product development.

Training

 

  🌑   

Conducting trainings designed to promote awareness and provide employees with privacy-related information pertinent to their roles and responsibilities.

Accountability and Transparency

 

  🌑   

Maintaining accountability standards consistent with those articulated by the Organization for Economic Co-operation and Development in its Guidelines Governing the Protection of Privacy and Transborder Flows of Personal Data.

 

  🌑   

Communicating with our employees, customers and the public about our data protection and privacy practices.

Public Policy

Akamai believes that responsible corporate citizenship requires active engagement in legislative and regulatory processes. Our engagement with policymakers and advocacy on public policy issues are coordinated by our Global Public Policy group. Members of the Global Public Policy team work closely with our senior leadership to identify legislative and regulatory priorities, both regionally and globally, that will protect and advance our business interests, increase stockholder value and promote the free and responsible use of the internet. The group also works to educate and inform policymakers about Akamai’s technology and solutions and how the internet itself works.

 

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As part of Akamai’s engagement in the public policy process, we participate in a number of trade associations around the world that advocate for and shape public policy positions that are important to our industry. Trade associations also provide educational, training and professional networking opportunities for their members. We participate in these associations for such opportunities and to help build consensus on issues that we believe will serve our customers and investors. Our membership and participation in these organizations are not an endorsement of all of the activities and positions of these organizations. Accordingly, there may be instances where their positions diverge from ours.

We have not formed a political action committee nor have we donated to individual political candidates or parties.

The Board of Directors

The Board currently consists of eleven persons. Set forth below is information about the professional experiences of each of our ten nominees for election at the 2022 Annual Meeting, including his or her specific experience, qualifications and attributes that we believe qualify him or her to serve on the Board. Jill Greenthal, who joined our Board in 2007, will be stepping down after the Annual Meeting. We thank her for all of her contributions to Akamai.

Each of the nominees listed below is currently a director of the Company who was previously elected by the stockholders. We have included their age, committee memberships, board memberships and experience as of March 1, 2022.

Nominees for Director for Terms That Will Expire in 2023

 

 

LOGO

 

Sharon Bowen, age 65

Director since 2021

Audit Committee, ESG Committee

  

 

Commissioner of the United States Commodity Futures Trading Commission from June 2014 until retirement in September 2017

 

Senior Associate and Partner at the law firm Latham & Watkins between 1988 and May 2014

 

Other Current Boards

 

Chair of the New York Stock Exchange, a subsidiary of Intercontinental Exchange

 

Intercontinental Exchange, Inc., a provider of marketplace infrastructure, data services and technology solutions for a diverse set of asset classes

 

Bakkt Trust Company LLC, a private majority owned subsidiary of Intercontinental Exchange

 

Neuberger Berman Group, a private investment management firm

 

 

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Deep regulatory, securities, market risk and public policy expertise

 

Corporate finance, mergers and acquisitions, strategic transactions and corporate governance expertise from her role as a partner at a global law firm

 

Experience leading ESG initiatives and programs

 

 

 

LOGO

 

Marianne Brown, age 63

Director since 2020

Audit Committee, Finance Committee (Chair elect)

 

  

 

Retired former executive at Fidelity National Information Services, Inc., or FIS, a global financial services technology company, where she was Corporate Executive Vice President and Co-Chief Operating Office from January 2018 through December 2019

 

Chief Operating Officer, Institutional and Wholesale Business of FIS from December 2015 through December 2018, when FIS acquired SunGard Financial Systems LLC, a financial software and technology services company

 

Other Current Boards

 

The Charles Schwab Corporation, an investment services firm

 

Northrop Grumman Corp, an aerospace and defense technology company

 

VMWare, Inc. a provider of cloud computing and virtualization software and services

 

 

Extensive leadership experience in technology sales and product management to provide insight into the likely perspectives of Akamai’s current and potential customers

 

Executive oversight of go-to-market initiatives and organizational and investment strategy

 

Demonstrated ability to execute and integrate acquisitions

 

 

 

LOGO

 

Monte Ford, age 62

Director since 2013

TL&C Committee Chair, ESG Committee

 

  

 

Principal Partner of CIO Strategy Exchange, a membership organization for chief information officers, since 2016

 

Network Partner at Brightwood Capital Partners, a venture capital firm, since 2013

 

Other Current Boards

 

Iron Mountain Incorporated, a provider of storage and other information management services

 

JetBlue Airways Corporation, an airline

 

Prior Public Company Boards in Last 5 Years

 

The Michaels Companies, an arts and crafts retailer

 

 

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Experience as an information technology executive at Aptean Software and American Airlines, including serving as a chief executive officer and as a CIO overseeing all aspects of information systems and business analytics functions

 

Helps fellow Board members and management understand what Akamai’s current and potential customers likely expect and want from our solutions and to provide actionable insight into our innovation initiatives

 

Provides valuable advice and counsel regarding potential improvements to our internal IT systems

 

Contributes a personal perspective on diversity and inclusion issues impacting Akamai and our environment

 

 

 

LOGO

 

Dan Hesse, age 68

Director since 2016

Board Chair since 2021

TL&C Committee, ESG Committee

 

  

 

Former President and CEO, Sprint Corporation, a telecommunications provider, from December 2007 to August 2014

 

Other Current Boards

 

PNC Corporation, a financial institution

 

Tech and Energy Transition Corporation, a non-operating special purpose acquisition company formed for the purpose of effecting the acquisition of one or more businesses that is focused on targets that use or facilitate disruptive, differentiated technology to build, enable, service or manage businesses or infrastructure undergoing transformation

 

Insight into mobile and telecommunications industry affords important insight into strategy deliberations

 

Experience as a chief executive officer enables him to advise on leadership, management and operational issues

 

Leverages experience overseeing a large, complex technology company to provide valuable guidance and perspective

 

Understanding of corporate governance issues, particularly social responsibility matters

 

 

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LOGO

 

Tom Killalea, age 54

Director since 2018

Audit Committee, Finance Committee

 

  

 

Founder and President, Aionle LLC, a consulting firm, from November 2014 to December 2021

 

VP Technology for the Kindle Content Ecosystem, Amazon.com, a multi-national technology company from 2008 to 2014

 

Other Current Boards

 

Capital One Financial Corp., a financial services company

 

MongoDB, a database technology company

 

Prior Public Company Boards in Last 5 Years

 

Carbon Black, Inc., a cybersecurity company

 

 

Professional focus on internet security issues, a key area of emphasis in Akamai’s strategic plan

 

Experience with digital innovation and focus on customer experience

 

Understanding of the content delivery network business through his work at Amazon

 

Extensive corporate governance experience serving on several public company boards

 

 

 

LOGO

 

Tom Leighton, age 65

Director since 1998

 

  

 

Chief Executive Officer, Akamai, since January 2013

 

Chief Scientist, Akamai from 1998 to 2012

 

Professor of Applied Mathematics at the Massachusetts Institute of Technology since 1982 (on leave)

 

 

Co-founder and key developer of the software underlying our platform

 

Unparalleled understanding of our technology and how the internet works

 

Crucial source of industry information, technical and market trends and how Akamai can address those needs

 

Provides the Board with vital information about the strategic and operational challenges and opportunities facing us

 

 

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LOGO

 

Jonathan Miller, age 65

Director since 2015

TL&C Committee, ESG Committee

 

  

 

CEO of Integrated Media Co., an investment company, since February 2018

 

Advisor at Advancit Capital, a venture capital firm focusing on early-stage companies, since January 2018, having previously served as a partner since 2013

 

Other Current Boards

 

Interpublic Group of Companies, a marketing solutions provider

 

Nielsen Holdings plc, a global measurement and data analytics company

 

Ziff Davis, Inc. (formerly J2 Global), a vertically focused digital media and internet company

 

Advancit Acquisition I, a non-operating special purpose acquisition company formed for the purpose of effecting the acquisition of one or more businesses; focusing on media and technology targets in North America and Europe

 

Prior Public Company Boards in Last 5 Years

 

AMC Networks, an American entertainment company

 

 

Insight into the challenges, goals and priorities of media companies such as those that are key current and prospective customers

 

Key participant in the rapid development of the internet as a global platform for video and audio entertainment

 

Deep understanding of the ongoing evolution of digital media

 

Involvement with early-stage media and technology companies gives our management and the Board a window into developments that could shape our industry in the future

 

 

 

 

LOGO

 

Madhu Ranganathan, age 57

Director since 2019

Audit Committee Chair, Finance Committee

 

  

 

Chief Financial Officer of Open Text Corporation, a provider of enterprise information management solutions since April 2018

 

Executive Vice President and Chief Financial Officer for 24/7 Customer, Inc., a provider of customer engagement technology solutions, from June 2008 to March 2018

 

Other Current Boards

 

Bank of Montreal, a financial services company

 

Prior Public Company Boards in Last 5 Years

 

Service Source International, Inc., provider of outsourced inside sales, customer success, renewals management and channel management solutions

 

 

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Extensive public-company financial expertise that enables her to qualify as an “audit committee financial expert” (as defined by Commission rules) and advise management and other directors on complex accounting and internal control matters

 

Experience in developing global software and SaaS companies to provide insight from both a customer and an operational perspective

 

Oversight of acquisition programs position her well to participate in the Finance Committee’s oversight of Akamai’s M&A program

 

Understanding of complex global tax matters

 

 

 

LOGO

 

Ben Verwaayen, age 69

Director since 2013

TL&C Committee, ESG Committee Chair

 

  

 

General Partner of Keen Venture Partners, a venture capital firm, since 2017

 

Former Chief Executive Officer of Alcatel-Lucent, a provider of communications equipment and solutions from 2008 to 2013

 

Other Current Boards

 

Renewi plc, a waste-to-product company that collects and processes waste and then sells the recyclates and energy it produces

 

Ofcom, the regulatory and competition authority for the broadcasting, telecommunications and postal industries of the United Kingdom

 

 

Brings an international perspective to Board deliberations, helping us better understand non-U.S. markets, public policy issues and how to operate with a global employee base

 

CEO experience enables him to provide significant guidance to our CEO on management, leadership and operational issues

 

Ability to leverage knowledge of telecommunications industry to advise us on carrier strategy and network relationships

 

Deep understanding of motivational aspects of executive compensation approaches and applicable international issues

 

 

 

LOGO

 

Bill Wagner, age 55

Director since 2018

TL&C Committee, Finance Committee

 

  

 

Former President and CEO of LogMeIn, Inc., a software-as-a-service company, from December 2015 to January 2022, having previously served from May 2013 through November 2015 as its President and Chief Operating Officer. In 2020, LogMeIn, Inc. transitioned from being a publicly-traded company to being privately held.

 

Prior Public Company Boards in Last 5 Years

 

LogMeIn, Inc.

 

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Extensive sales and marketing experience in the software industry brings a valuable perspective on the company’s go-to-market operations

 

Recent experience as a chief executive officer of a large software company and formerly as a CEO of a publicly-traded software company enables him to provide valuable counsel to the CEO and Board on matters related to strategy, leadership and operations

 

Brings a customer perspective on how companies purchase, deploy and rely on Akamai solutions to enable and secure their businesses

 

Experience fundraising and successfully executing mergers, acquisitions and divestitures position him well to participate in the Finance Committee’s oversight of Akamai’s M&A program

 

Our Executive Officers

Our executive officers as of March 1, 2022 were:

 

LOGO   Tom Leighton, age 65, was elected our Chief Executive Officer in January 2013, having previously served as our Chief Scientist since he co-founded the company in 1998. As discussed above, Dr. Leighton also serves on the Board.
LOGO   Aaron Ahola, age 52, was named our Executive Vice President, General Counsel and Corporate Secretary in May 2019. From October 2017 through April 2019, he was Senior Vice President, General Counsel and Corporate Secretary. Mr. Ahola joined Akamai in April 2000. During his tenure, he has served in a variety of positions, including as Vice President and Deputy General Counsel from 2011 to 2017 and our Chief Privacy Officer from 2008 until 2017.
LOGO   Robert Blumofe, age 57, became our Executive Vice President and Chief Technology Officer in March 2021. From April 2016 through February 2021, he was our Executive Vice President, Platform and General Manager of the Enterprise Division, having previously served as our Executive Vice President – Platform since January 2013. Before taking on that role, Mr. Blumofe served in a variety of positions at Akamai since joining us in 1999.

 

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LOGO   Paul Joseph, age 48, became our Executive Vice President, Global Sales in March 2021 and gained the added responsibility for the oversight of our Global Services organization in December 2021. Mr. Joseph joined Akamai in January 2000 and has served in a variety of roles during his tenure with us. From September 2018 through February 2021, he was Senior Vice President, Global Sales for our Media and Carrier Division. Between October 2017 and August 2018, he served as Vice President Field Business Development in our Media Division. From March 2016 through September 2017, he was Vice President of our America Channel Sales group.

 

LOGO   Adam Karon, age 50, became our Chief Operating Officer and General Manager, Edge Technology Group in March 2021. He joined Akamai in February 2005 and has served in numerous leadership positions during his tenure with us. From March 2017 through February 2021, he was Executive Vice President and General Manager of the Media and Carrier Division. He served as Senior Vice President, Global Services and Support from January 2014 through February 2017.
LOGO   Edward McGowan, age 51, became our Executive Vice President and Chief Financial Officer in March 2019 and gained the added responsibility for the oversight of our global IT organization in December 2021. Mr. McGowan began his career at Akamai in 2000 and has served in numerous roles across the organization since that time, including as Senior Vice President, Finance, between September 2018 and February 2019; Senior Vice President, Global Sales Media & Carrier Division from January 2017 through August 2018; and Vice President, Global Carrier Strategy & Sales from April 2013 through December 2016.
LOGO   Kim Salem-Jackson, age 45, became our Executive Vice President and Chief Marketing Officer in March 2021. Ms. Salem-Jackson joined us as Vice President of Global Marketing in August 2017 before being promoted to Senior Vice President Marketing and Corporate Communications in November 2019. Prior to joining Akamai, Ms. Salem-Jackson had been Senior Vice President of Worldwide Marketing and Business Development at Informatica, a provider of enterprise cloud management solutions, from August 2015 to August 2017, after holding a number of management roles at the company since joining it in 2008.

 

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LOGO   Mani Sundaram, age 46, became our Executive Vice President and General Manager, Security Technology Group in December 2021. Mr. Sundaram began his career at Akamai in February 2007 and has held a variety of positions during his tenure with us. Most recently, he was Executive Vice President Global Services & Support and CIO from November 2019 to December 2021. He also served as Senior Vice President Global Services and Support from March 2017 until November 2019, after serving as Vice President Global Services from January 2015 through February 2017.

 

LOGO   Anthony Williams, age 48, became our Executive Vice President and Chief Human Resources Officer in January 2020. He joined Akamai in April 2015 as Vice President, Talent Acquisition and Diversity and served in that role until January 2018 when his title became Vice President, International HR, Talent Acquisition & Diversity. Prior to Akamai, Mr. Williams held a wide range of global human resource positions at First Data Corporation (acquired by Fiserv in 2019), Newell Rubbermaid and Time Warner – Turner Broadcasting System.

Security Ownership of Certain Beneficial Owners and Management

The following table includes information as to the number of shares of our common stock beneficially owned as of March 3, 2022, by the following:

 

  🌑   

each person known to us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

 

  🌑   

each of our directors;

 

  🌑   

each of our Named Executive Officers; and

 

  🌑   

all of our executive officers and directors as of March 3, 2022 as a group.

Beneficial ownership is determined in accordance with the rules of the Commission and includes voting and/or investment power with respect to shares. Unless otherwise indicated below, to our knowledge, all persons named in the table have sole voting and investment power with respect to the shares of common stock identified below, except to the extent authority is shared by spouses under applicable law. Beneficial ownership includes any shares that the person has the right to acquire within 60 days after March 3, 2022, through the exercise of any stock option or other equity right. Unless otherwise indicated, the address of each person identified in the table below is c/o Akamai

 

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Technologies, Inc., 145 Broadway, Cambridge, Massachusetts 02142. On March 3, 2022, there were 160,898,567 shares of our common stock outstanding.

 

Name of Beneficial Owner                        Number of Shares of Common
Stock Beneficially Owned
   

Percentage of Common

Stock Outstanding (%)

 

  5% Stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Vanguard Group (1)

 

 

 

 

 

 

 

 

 

 

 

 

    17,625,754       10.9%  

BlackRock, Inc. (2)

 

 

 

 

 

 

 

 

 

 

 

 

    14,373,706       8.9%  

  Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sharon Bowen

 

 

 

 

 

 

 

 

 

 

 

 

    0        

Marianne Brown

 

 

 

 

 

 

 

 

 

 

 

 

    3,589       *  

Monte Ford

 

 

 

 

 

 

 

 

 

 

 

 

    12,637       *  

Jill Greenthal (3)

 

 

 

 

 

 

 

 

 

 

 

 

    34,217       *  

Dan Hesse

 

 

 

 

 

 

 

 

 

 

 

 

    7,689       *  

Tom Killalea

 

 

 

 

 

 

 

 

 

 

 

 

    10,796       *  

Tom Leighton (4)

 

 

 

 

 

 

 

 

 

 

 

 

    2,340,270       1.5%  

Jonathan Miller

 

 

 

 

 

 

 

 

 

 

 

 

    22,804       *  

Madhu Ranganathan

 

 

 

 

 

 

 

 

 

 

 

 

    4,210       *  

Ben Verwaayen

 

 

 

 

 

 

 

 

 

 

 

 

    16,592       *  

Bill Wagner

 

 

 

 

 

 

 

 

 

 

 

 

    10,732       *  

  Other Named Executive Officers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aaron Ahola

 

 

 

 

 

 

 

 

 

 

 

 

    23,846       *  

Robert Blumofe

 

 

 

 

 

 

 

 

 

 

 

 

    33,734       *  

Adam Karon

 

 

 

 

 

 

 

 

 

 

 

 

    39,193       *  

Edward McGowan

 

 

 

 

 

 

 

 

 

 

 

 

    32,469       *  

Rick McConnell (5)

 

 

 

 

 

 

 

 

 

 

 

 

    22,580       *  

All executive officers and directors as of March 3, 2022 as a group (21 persons) (6)

 

 

 

 

 

 

 

 

 

 

 

 

    2,721,010       1.7%  

 

*

Percentage is less than 1% of the total number of outstanding shares of our common stock.

(1)

The information reported is based on a Schedule 13G/A filed with the Commission on February 9, 2022 by The Vanguard Group, Inc., or Vanguard, which reports its address as 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. Vanguard reports that it holds shared voting power with respect to 255,191 shares, sole dispositive power with respect to 16,971,063 shares and shared dispositive power with respect to 654,691 shares.

 

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(2)

The information reported is based on a Schedule 13G/A filed with the Commission on February 3, 2022 by BlackRock, Inc., or BlackRock, which reports its address as 55 East 52nd Street, New York, New York 10055. BlackRock reports that it holds sole dispositive power with respect to 14,373,706 shares and sole voting power with respect to 12,641,176 shares held by it.

(3)

Includes 6,394 shares issuable in respect of deferred stock units, or DSUs, that have vested and will be distributed within 60 days of March 3, 2022.

(4)

Includes (i) 108,358 shares held by the TBL Foundation of which Mr. Leighton serves as a trustee, (ii) 1,929,392 shares held by the F. Thomson Leighton and Bonnie B. Leighton Revocable Trust dtd 11/3/99 over which Mr. Leighton disclaims beneficial ownership and (iii) 20,963 shares held by the David T. Leighton Trust of which F. Thomson Leighton is a trustee over which Mr. Leighton disclaims beneficial ownership.

(5)

Mr. McConnell ceased being an employee of the Company on December 13, 2021.

(6)

Includes 1,811 shares issuable upon vesting of RSUs within 60 days after March 3, 2022.

Board Leadership and Role in Risk Oversight

Chair of the Board

In June 2021, Daniel Hesse was elected as our independent Chair of the Board. In this role, he works with his fellow directors and management to prepare Board meeting agendas, chairs meetings of the Board (including its independent director sessions) and our annual stockholder meetings and informs other directors about the overall progress of Akamai. Mr. Hesse also provides leadership and advice to management on key strategic initiatives and seeks to ensure effective communication among the committees of the Board. He leads discussions on the performance of the Chief Executive Officer and succession planning for executive officers and other key management positions. Mr. Hesse also led our 2021 board evaluation process.

Roles of Chair of the Board and CEO

Currently, the roles of Chair of the Board and Chief Executive Officer are held by two different individuals. We believe this structure represents an appropriate allocation of roles and responsibilities at this time. Mr. Hesse, as a strong independent director, has been able to play a key role in ensuring Board effectiveness, management oversight and adherence to good governance principles. Dr. Leighton is then better able to focus on our day-to-day business and strategy, meet with investors and convey the management perspective to other directors.

 

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Risk Oversight

The Board has an active role in supervising management’s oversight of Akamai’s risks as described in the graphic below:

 

 

LOGO

The Board and our management team have increased their focus on cybersecurity risk oversight and management in recent years. Our information security leadership meets with the Audit Committee on a quarterly basis to discuss management’s process for identifying, tracking and mitigating cybersecurity risks, progress on mitigation initiatives and industry-wide developments related to security matters. All of our employees are required to take annual security compliance training.

 

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Board Oversight of ESG

Investing in our ESG initiatives is a core part of our purpose to make life better for billions of people, billions of times a day. Board oversight of ESG matters primarily occurs through the Committees of the Board, including our ESG Committee, which provides oversight of management’s environmental initiatives, including our sustainability goals, corporate governance matters and social matters (including receiving periodic management reports on social matters and the charitable activities of the Akamai Foundation); the Audit Committee, which provides regular oversight of our ethics and compliance, data privacy and security matters; and the Talent, Leadership and Compensation (“TL&C”) Committee, which reviews social matters on an ongoing basis, including our inclusion, diversity and engagement initiatives, and recommends to the Board certain ESG compensation metrics. Our Board also exercises direct oversight of our ESG initiatives. For example, the Board conducts annual reviews of our social (employee related) matters with management. The Board or its Committees offers management feedback on ESG best practices that help guide development of our various ESG initiatives.

Board Committees

The standing committees of the Board consist of the Audit Committee, the ESG Committee (formerly known as the Nominating and Corporate Governance Committee), the Finance Committee and the TL&C Committee (formerly known as the Compensation Committee). Each committee operates under a charter that has been approved by the Board. Copies of the charters are posted in the Investor Relations section of our website at www.ir.akamai.com. The Board has determined that all of the members of each of the four standing committees of the Board are independent as defined under The Nasdaq Stock Market, Inc. Listing Rules, or the Nasdaq Rules, including, in the case of all members of the Audit Committee, the independence requirements of Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and, in the case of all members of the TL&C Committee, the independence requirements under Rule 10C-1 under the Exchange Act. Membership on each standing committee as of March 1, 2022 is reflected in the chart below.

 

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Membership in Standing Committees as of March 1, 2022

 

      Audit    ESG    Finance    TL&C

  Sharon Bowen

   X    X          

  Marianne Brown

   X         X     

  Monte Ford

        X         X*

  Jill Greenthal

   X         X*     

  Dan Hesse

        X         X

  Tom Killalea

   X         X     

  Jonathan Miller

        X         X

  Madhu Ranganathan

   X*         X     

  Ben Verwaayen

        X*         X

  Bill Wagner

             X    X
  *

Committee Chair

The Audit Committee assists the Board in overseeing the financial and accounting reporting processes and audits of our financial statements, which includes reviewing the professional services provided by our independent auditors, the independence of such auditors from our management, our annual financial statements and our system of internal financial and IT controls, including cybersecurity, privacy and network resiliency matters. Our General Counsel also reviews with the Audit Committee on a periodic basis any material ethics or compliance issues or investigations and at least annually the Company’s framework for compliance with applicable laws and regulations. The Audit Committee also reviews such other matters with respect to our accounting, auditing and financial reporting practices and procedures as it may find appropriate or may be brought to its attention. Our Audit Committee meets with the Board on a quarterly basis to discuss management’s process for identifying, tracking and mitigating cybersecurity risks, progress on mitigation initiatives and industry-wide developments related to security matters. The Board has determined that Madhu Ranganathan is an “audit committee financial expert” within the meaning of Item 407(d)(5)(ii) under Regulation S-K promulgated by the Commission under the Exchange Act. The Audit Committee held nine meetings in 2021.

The ESG Committee is responsible for, among other things, identifying individuals qualified to become members of the Board; recommending to the full Board the persons to be nominated for election as directors and to each of its committees; overseeing self-evaluation of the Board, including the performance of individual directors; and reviewing and making recommendations to the Board with respect to corporate governance practices. The ESG Committee also reviews management’s initiatives with respect to environmental, social and governance matters (including charitable activities of the Akamai Foundation). The ESG Committee held five meetings in 2021.

 

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The Finance Committee is responsible for, among other things, reviewing matters pertaining to the capital structure and corporate finance strategy, oversight of the Treasury function, review of proposed acquisitions and similar strategic transactions, ongoing evaluation and assessment of completed acquisitions, oversight of our defined contribution and other retirement plans, review of Akamai’s insurance program and assisting and advising management on its operating plans, including any specific plans in place from time to time related to margin improvement or other financial goals. Due to our acquisitions, our Finance Committee met regularly in 2021 to review the deal pipeline, diligence related matters and deal terms. The Finance Committee held nine meetings in 2021.

The TL&C Committee assists the Board in discharging its oversight responsibilities relating to talent development and succession planning, compensation of our executive officers, directors and other employees and employee health and safety and engagement. The TL&C Committee assists in determining the compensation of our Chief Executive Officer and other executive officers, administering our bonus, incentive compensation and stock plans, approving equity grants and approving the salaries and other benefits of our executive officers. In addition, the TL&C Committee consults with our management regarding human capital management, including our benefit plans and compensation policies and practices as well as our leadership development initiatives. It also provides counsel and oversight to our management team on key human resource management strategies and programs, including those related to diversity, equity and inclusion, pay equity and other ESG initiatives, initiatives involving corporate culture, enterprise-wide talent development and succession planning. The TL&C Committee also supports the Board and ESG Committee’s oversight of our programs related to employee engagement, health, safety and well-being. The TL&C Committee is directly responsible for the appointment and oversight of our independent compensation consultants and other advisors it retains. The TL&C Committee held seven meetings in 2021.

Meeting Attendance

The Board held eleven meetings during 2021. Each incumbent director attended more than 75% of the total number of meetings of the Board and each committee on which he or she served during the fiscal year ended December 31, 2021. All directors are expected to attend regular Board meetings, Board committee meetings for committees on which he or she serves and our annual meeting of stockholders. All of our directors then in office attended the 2021 Annual Meeting of Stockholders.

Determination of Independence

Under the Nasdaq Rules, a director of Akamai will only qualify as an “independent director” if, in the opinion of the Board, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Board has determined that each member of the Board, other than Dr. Leighton, is an “independent director” as defined under Nasdaq Rule 5605(a)(2).

 

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In making its independence determination with respect to Mr. Wagner, the Board considered that, in 2021, Akamai sold approximately $1.5 million of products and services to LogMeIn, Inc., where Mr. Wagner was an executive officer until January 2022. The amount of sales and the amount of purchases in 2021 were less than 1% of LogMeIn’s annual revenues and less than 1% of Akamai’s annual revenues and the transactions were conducted in the ordinary course of business, on commercial terms and on an arms’-length basis. We expect similar commercial arrangements to recur in 2022.

In making its independence determination with respect to Ms. Ranganathan, the Board considered that, in 2021, Akamai sold approximately $0.7 million of products and services to Open Text Corporation, where Ms. Ranganathan is an executive officer. The amount of sales and the amount of purchases in 2021 were less than 1% of Open Text’s annual revenues and less than 1% of Akamai’s annual revenues and the transactions were conducted in the ordinary course of business, on commercial terms and on an arms’-length basis. We expect similar commercial arrangements to recur in 2022.

Our independent directors meet separately as part of each Board meeting and at other times as appropriate. In the independent director sessions, Mr. Hesse and the other independent directors review management performance, assess the focus and content of meetings of the Board and establish the strategic issues that the Board believes should be the focus of management’s attention to drive short-term and longer-term business success. Mr. Hesse then provides feedback to the Chief Executive Officer and other members of management on their performance and important issues on which the independent members of the Board believe management should focus.

Director Compensation

The TL&C Committee, with our independent compensation consultant, periodically reviews the compensation structure and levels paid to non-employee directors and makes recommendations for adjustments, as appropriate, to the Board. Our objective is to pay non-employee directors at or near the median of our executive compensation benchmarking peer group, to award the majority of compensation in equity and to make meaningful adjustments every few years.

 

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The following table sets forth compensation paid in 2021 to individuals who served on the Board for any portion of that year for their service as directors, other than Dr. Leighton, whose compensation is reflected in “Executive Compensation Matters” below. Ms. Bowen joined the Board in April 2021.

 

  Name                 

Fees Earned

or Paid in Cash ($) (1)

    

Stock Awards

($) (2)

     Total ($)  

  Sharon Bowen (3)

 

 

 

 

 

 

 

 

     56,250        624,925        681,175  

  Marianne Brown (4)

 

 

 

 

 

 

 

 

     75,000        224,996        299,996  

  Monte Ford (5)

 

 

 

 

 

 

 

 

     77,917        244,929        322,846  

  Jill Greenthal (6)

 

 

 

 

 

 

 

 

     80,000        244,929        324,929  

  Dan Hesse (7)

 

 

 

 

 

 

 

 

     91,667        299,918        391,585  

  Tom Killalea (8)

 

 

 

 

 

 

 

 

     75,000        224,996        299,996  

  Jonathan Miller (9)

 

 

 

 

 

 

 

 

     75,000        224,996        299,996  

  Madhu Ranganathan (10)

 

 

 

 

 

 

 

 

     80,000        254,896        334,896  

  Fred Salerno (11)

 

 

 

 

 

 

 

 

     41,667               41,667  

  Ben Verwaayen (12)

 

 

 

 

 

 

 

 

     80,000        234,963        314,963  

  Bill Wagner (13)

 

 

 

 

 

 

 

 

     75,000        224,996        299,996  

 

(1)

Cash retainer amounts are paid in arrears for the annual service period ending on the date of the annual stockholder meeting. Throughout the year, all directors earn a pro rata portion of the cash retainer payable to them in the amounts described in the description of the director compensation plan below.

(2)

For individuals other than Ms. Bowen, consists of DSUs granted to directors on June 3, 2021. Ms. Bowen was issued RSUs on June 3, 2021 following her appointment to the Board as well as DSUs. Amounts reflect the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718 for equity awards granted to the directors. The assumptions we use in calculating these amounts are discussed in Note 18 of the notes to our consolidated financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K, which accompanies this Proxy Statement.

(3)

Ms. Bowen joined the Board on April 2, 2021. At December 31, 2021, Ms. Bowen held 3,491 unvested RSUs and 1,964 unvested DSUs.

(4)

At December 31, 2021, Ms. Brown held 2,651 unvested RSUs and 1,964 unvested DSUs.

(5)

At December 31, 2021, Mr. Ford held 2,138 unvested DSUs.

(6)

At December 31, 2021, Ms. Greenthal held 2,138 unvested DSUs.

(7)

At December 31, 2021, Mr. Hesse held 2,618 unvested DSUs.

(8)

At December 31, 2021, Mr. Killalea held 1,964 unvested DSUs.

(9)

At December 31, 2021, Mr. Miller held 1,964 unvested DSUs.

(10)

At December 31, 2021, Ms. Ranganathan held 1,676 unvested RSUs and 2,225 unvested DSUs.

(11)

Mr. Salerno did not stand for reelection at the 2021 Annual Meeting of Stockholders and ceased being a director after June 3, 2021.

(12)

At December 31, 2021, Mr. Verwaayen held 2,051 unvested DSUs.

(13)

At December 31, 2021, Mr. Wagner held 1,964 unvested DSUs.

 

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In 2021, our independent compensation consultant conducted a benchmarking review of our outside director compensation, covering both compensation levels and program design as compared to our peer group and shared its findings with TL&C Committee members. The results of the review indicated that our overall non-employee director program is generally aligned with our peers, both in terms of practices and structure as well as pay levels. As a result, our director compensation plan structure and levels remained unchanged for 2021.

Under our non-employee director compensation plan, non-employee directors are entitled to receive annual compensation of $300,000, of which $75,000 is paid in cash and $225,000 is paid in DSUs representing the right to receive shares of Akamai common stock. This compensation is generally paid or, in the case of DSUs, granted, on the date of our annual meeting of stockholders, and the number of DSUs issued is based on the fair market value of our common stock on that date. For so long as the person remains a director, DSUs will vest in full on the first anniversary of the grant date, but a director may defer distribution of his or her shares for up to ten years. If a director has completed one year of service on the Board, vesting of 100% of the DSUs held by such director will accelerate at the time of his or her departure from the Board.

In addition, our Chair of the Board receives $100,000 of additional annual compensation, of which $25,000 is paid in cash and $75,000 is paid in DSUs. Chairs of the Audit Committee, the TL&C Committee and the Finance Committee receive $35,000 of additional compensation, of which $5,000 is paid in cash and $30,000 is paid in DSUs. The Chair of the ESG Committee receives $15,000 of additional compensation, of which $5,000 is paid in cash and $10,000 is paid in DSUs. Each non-employee director is eligible to receive RSUs with a fair value at the time of grant of $400,000 when he or she first joins the Board. Such RSUs vest over a three-year period, with one-third vesting on each of the first, second and third anniversaries of the date of grant. We also reimburse directors for reasonable out-of-pocket expenses incurred in attending meetings of the Board.

Stock Ownership Guidelines

We have minimum stock ownership requirements for our senior management team and Board. Pursuant to the guidelines, each member of Akamai’s senior management team is required to own a number of shares of our common stock having at least the value calculated by applying the following multiples: for the Chief Executive Officer, six times his base salary; for our other Named Executive Officers, two times his or her base salary; and for other executives, one time his or her base salary. In addition, each non-employee director is required to own a number of shares of our common stock having a value equal to five times his or her then-current base cash retainer. Non-employee directors shall have three years from the date of election or appointment to attain required ownership levels. The Chief Executive Officer and each other senior executive shall have five years from the date of their respective appointments to attain required ownership levels. Unvested options, RSUs and DSUs do not count toward satisfying the requirements; vested but undistributed DSUs held by directors do count toward satisfying the requirements.

 

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If a director’s base cash retainer or an executive’s base salary is increased, the minimum ownership requirement is re-calculated at the end of the year in which the increase occurred, taking into account our stock price at that time. If a non-employee director or executive does not meet the ownership guidelines as of a test date that occurs after the period of time for attainment of the ownership level, he or she will not be permitted to sell any shares of our common stock until such time as he or she has exceeded the required ownership level. A more detailed description of these guidelines, including the timeline for compliance, is set forth in our Corporate Governance Guidelines, which are posted on our website at www.ir.akamai.com/corporate-governance/highlights.

All directors are currently in compliance with the ownership guidelines. See “Stock Ownership Requirements” in Part Two of this Proxy Statement for additional information regarding our executive officers’ compliance with the ownership guidelines.

ESG Committee’s Process for Reviewing and Considering Director Candidates

The ESG Committee assists the Board in identifying and attracting individuals qualified to become members of the Board. In executing its mission to solicit qualified candidates to become directors of Akamai, the ESG Committee seeks to attract qualified potential candidates from varied backgrounds who have a strong desire to understand and provide insight about Akamai’s business and corporate goals; to understand and contribute to the role of the Board in representing the interests of stockholders; and to promote good corporate governance and ethical behavior by the members of the Board and our employees.

Criteria Used to Consider Nominees to the Board of Directors

In assessing whether an individual has these characteristics and whether to recommend any particular candidate for inclusion in the Board’s slate of recommended director nominees, the ESG Committee will apply the criteria attached to its charter. These criteria include, but are not limited to:

 

  🌑   

integrity, honesty and adherence to high ethical standards;

 

  🌑   

business and financial acumen, experience and ability to exercise sound judgments in matters that relate to the current and long-term objectives of the Company;

 

  🌑   

commitment to understand Akamai’s business and industry and regularly attend and participate in meetings;

 

  🌑   

diversity in terms of gender, race, ethnicity and professional background;

 

  🌑   

avoidance of potential conflicts of interest with various constituencies of Akamai; and

 

  🌑   

ability to understand the conflicting interests of the various constituencies of the Company.

 

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The Board particularly values demonstrated leadership experience and skills and reputation for high standards of honesty, ethics and integrity. Although the ESG Committee does not assign specific weights to particular criteria, we believe that it is essential that all potential Board members have integrity and honesty, adhere to high ethical standards and possess a commitment to dedicate the necessary time and attention to Akamai and an ability to act in the interests of all stockholders without any potential personal conflict of interest. The ESG Committee and the Board believe that the backgrounds and qualifications of its directors, considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities.

With respect to considering whether to re-nominate our incumbent directors, the ESG Committee and the full Board apply the criteria discussed above, in addition to considering the evolving needs of Akamai. In addition, the ESG Committee and the full Board take into account whether a director has served for more than 10 years on the Board and may consider information available to it about directors’ professional status and performance on other boards of directors. If there is a change in a director’s professional status, under our Corporate Governance Guidelines, that director must offer to resign from the Board and in considering whether to accept the resignation, the Board considers whether the director’s new status continues to complement the Board’s skills and qualities.

Importance of Diversity

The Board believes that diversity in its membership is important to serving the long-term interests of stockholders. Since adoption in 2003, the Criteria for Nomination as a director appended to Akamai’s ESG Committee charter has always emphasized the importance of diversity in determining the appropriate composition of the Board. The Criteria specifically state, “The [ESG] Committee shall actively consider nominees who can contribute to the diversity of the Board in terms of gender, race, ethnicity and professional background. Nominees shall not be discriminated against on the basis of race, religion, national origin, sex, sexual orientation, disability or any other basis proscribed by law.”

Process for Identifying Candidates to Serve as Directors

To identify and evaluate attractive candidates, the members of the ESG Committee actively and regularly solicit recommendations for highly-qualified director candidates, including from other members of Akamai’s Board and other professional contacts. From time to time, we have also retained professional search firms to help identify individuals that would meet our selection criteria. As potential candidates emerge, the ESG Committee meets from time to time to evaluate biographical information and background material relating to potential candidates; discusses those individuals with other members of the Board; and reviews the results of personal interviews and meetings conducted by members of the Board, senior management and our outside advisors. In considering new Board members, our Corporate Governance Guidelines set forth a process requiring that the initial list of individuals under consideration by the ESG Committee include one or more qualified candidates who represent diverse backgrounds, including diversity of gender and race or

 

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ethnicity. If a search firm is used, it is instructed to do the same. Regular review of the director selection process, including the criteria for nomination as a director appended to the ESG Committee Charter, is done by the ESG Committee to work to achieve diversity in the candidate pool.

Stockholders may recommend individuals to the ESG Committee for consideration as potential director candidates by submitting their names, together with appropriate biographical information and background materials and a statement as to whether the stockholder or group of stockholders making the recommendation has beneficially owned more than 5% of our common stock for at least a year as of the date such recommendation is made, to the Environmental, Social and Governance Committee, c/o Corporate Secretary, Akamai Technologies, Inc., 145 Broadway, Cambridge, Massachusetts 02142. Assuming that appropriate biographical and background material has been provided on a timely basis, the ESG Committee will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others.

Stockholders also have the right under Akamai’s bylaws to directly nominate director candidates, without any action or recommendation on the part of the ESG Committee or the Board, by following the procedures set forth in our bylaws and described under “Deadlines for Submission of Stockholder Proposals and Director Nominations for the 2023 Annual Meeting” below.

Stockholder Communications

The Board will give appropriate attention to written communications that are submitted by stockholders and will respond if and as appropriate. The Chair of the Board, with the assistance of our General Counsel, is primarily responsible for monitoring communications from stockholders and for providing copies or summaries to the other directors as he or she considers appropriate. Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that the Chair of the Board considers to be important for the Board to know.

Stockholders who wish to send communications on any topic to the Board should address such communications to Board of Directors, c/o Corporate Secretary, Akamai Technologies, Inc., 145 Broadway, Cambridge, Massachusetts 02142.

Compensation Committee Interlocks and Insider Participation

Messrs. Ford, Hesse, Killalea, Miller, Verwaayen and Wagner were members of the TL&C Committee during all or part of 2021. No member of the TL&C Committee was at any time during 2021, or formerly, an officer or employee of Akamai or of any of our subsidiaries, and no member of the TL&C Committee had any relationship with us requiring disclosure under Item 404 of Regulation S-K under the Exchange Act. No member of the TL&C Committee receives compensation, directly or indirectly, from Akamai in any capacity other than as a director.

 

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None of our executive officers served as a director or member of the compensation committee (or other committee serving an equivalent function) of any other entity where an executive officer of that entity also served as a director or member of our TL&C Committee at any time during 2021.

Report of the Audit Committee

The Audit Committee of the Board has furnished the following report on the Audit Committee’s review of our audited financial statements:

The Audit Committee is responsible for, among other things:

 

  🌑   

monitoring the integrity of Akamai’s consolidated financial statements;

 

  🌑   

oversight of Akamai’s compliance with legal and regulatory requirements;

 

  🌑   

oversight of Akamai’s system of internal controls (including oversight of our internal audit function, which reports directly to the Audit Committee);

 

  🌑   

oversight of Akamai’s management of cybersecurity risks;

 

  🌑   

appointment, oversight and evaluation of the qualifications, independence and performance of our internal and independent auditors with the authority to replace Akamai’s independent auditors;

 

  🌑   

review and oversight of the handling of ethical and compliance issues brought to the attention of management and the Board; and

 

  🌑   

review of management’s enterprise risk assessments.

The Audit Committee acts under a written charter that is available on our website at www.ir.akamai.com/corporate-governance/highlights. The members of the Audit Committee are independent directors as defined by the Audit Committee charter and the Nasdaq Rules.

Akamai’s management is responsible for the financial reporting process, including Akamai’s system of internal controls, and for the preparation of consolidated financial statements in accordance with GAAP. PricewaterhouseCoopers LLP, or PwC, Akamai’s independent auditor, is responsible for auditing those financial statements and expressing an opinion as to their conformity with GAAP. The Audit Committee’s responsibility is to oversee and review these processes. The members of the Audit Committee are not, however, professionally engaged in the practice of accounting or auditing and do not provide any expert or other special assurance as to the financial statements concerning compliance with laws, regulations or GAAP or as to auditor independence.

Our Vice President of Internal Audit reports directly to the Audit Committee. The Internal Audit function annually conducts a series of audits to test Akamai’s internal financial and IT

 

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controls. This annual internal audit plan is reviewed and approved by the Audit Committee. Individual audit reports are reviewed at each Audit Committee meeting and any deficiencies are reviewed with management.

We reviewed Akamai’s audited consolidated financial statements that were included in Akamai’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the Commission, which we refer to herein as the Financial Statements. We reviewed and discussed the Financial Statements with Akamai’s management and PwC. PwC has represented to the Audit Committee that, in its opinion, Akamai’s Financial Statements were prepared in accordance with GAAP. We discussed with PwC the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the Commission.

We also discussed with PwC its independence from Akamai and considered whether PwC’s rendering of certain services to Akamai, other than services rendered in connection with the audit or review of the Financial Statements, is compatible with maintaining PwC’s independence. See “Ratification of Selection of Independent Auditors” included elsewhere in this Proxy Statement. In connection with these matters, Akamai received the written disclosures and letter from PwC required by the applicable requirements of the Public Company Accounting Oversight Board.

Based on our review of the Financial Statements and reports to us and our participation in the meetings and discussions described above, and subject to the limitations on our role and responsibilities referred to above and in the Audit Committee charter, we recommended to the Board that the Financial Statements be included in Akamai’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 as filed with the Commission.

We, the undersigned members of the Audit Committee, have also appointed PwC to act as Akamai’s independent auditors for 2022.

 

Audit Committee      
Madhu Ranganathan—Chair    Marianne Brown    Jill Greenthal
Sharon Bowen    Tom Killalea   

 

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Certain Relationships and Related Party Transactions; Code of Ethics; Interest in Annual Meeting Matters

Akamai did not enter into any transactions of the type required to be disclosed under Item 404 of Regulation S-K under the Exchange Act. Under our written Code of Ethics, each of our employees and members of the Board is prohibited from entering into any business, financial, or other relationship with our existing or potential customers, competitors, or suppliers that might impair, or appear to impair, the exercise of his or her judgment for Akamai. Our Code of Ethics also prohibits situations involving Akamai entering into a business transaction with an executive officer or director, a family member of an executive officer or director, or a business in which such a person has any significant role or interest if such a transaction could give rise to a conflict of interest. Our executive officers and directors are obligated under the Code of Ethics to disclose to our Legal Department any existing or proposed transaction or relationship that reasonably could be expected to give rise to a conflict of interest. Under the procedures reflected in our Code of Ethics and Audit Committee Charter, proposed related party transactions are subject to review to determine if they are in the best interests of us and our stockholders and, if such transaction is entered into, the conditions under which it may proceed. Proposed transactions involving executive officers, other than the General Counsel, are reviewed and subject to approval by the General Counsel after notifying the Audit Committee and the Chair of the Board. Proposed transactions involving the General Counsel or a director are reviewed and subject to approval by disinterested members of the Audit Committee after notifying the Chair of the Board.

No person who served as a director or executive officer of Akamai during the year ended December 31, 2021 has a substantial interest, direct or indirect, in any matter to be acted upon at the Annual Meeting. Each executive officer serves at the discretion of the Board and holds office until his or her successor is elected and qualified or until his or her earlier resignation or removal. There are no family relationships among any of our directors or executive officers.

 

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Part Two – Executive Compensation Matters

Compensation Discussion and Analysis (CD&A)

The following discussion and analysis of Akamai’s executive compensation objectives, policies and practices is designed to provide an overview of the material elements of our compensation structure.

2021 Developments

In March 2021, we put in place an organizational realignment to position Akamai to become more agile in delivering our solutions. At the centerpiece was the creation of two new business groups, the Security Technology Group and the Edge Technology Group, both of which are supported by a single sales organization.

The Security Technology Group includes solutions that are designed to keep infrastructure, websites, applications and users safe. Until December 13, 2021, Mr. McConnell served as the President and General Manager of the Security Technology Group. Mr. Sundaram replaced Mr. McConnell as Executive Vice President and General Manager of the Security Technology Group following Mr. McConnell’s departure from Akamai.

The Edge Technology Group includes solutions that enable business online, including media delivery, web performance and edge computing solutions. Mr. Karon was appointed to Chief Operating Officer and General Manager of the Edge Technology Group.

The Global Sales Organization provides streamlined access to Akamai’s customers and prospects. Mr. Joseph was appointed Executive Vice President, Global Sales, to lead the sales team in March 2021 and was given additional responsibility for oversight of our Global Services organization in December 2021.

In connection with the reorganization, Dr. Blumofe was appointed Chief Technology Officer to develop a cohesive innovation strategy to position Akamai to capitalize on growth opportunities in emerging technologies.

In setting compensation for 2021, our TL&C Committee took into account new roles and responsibilities for our executive officers resulting from this reorganization.

Our NEOs

This discussion is focused on the following persons who served as Akamai executive officers in 2021. We refer to them as our Named Executive Officers, or our NEOs.

 

 

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 Name   Title (1)   Date Appointed
to Current or
Former Role
  Year of Hire

 Tom Leighton

  Chief Executive Officer   January 2013   1998

 Edward McGowan

  EVP, Chief Financial Officer and Treasurer   March 2019   2000

 Aaron Ahola

  EVP, General Counsel and Corporate Secretary   May 2019   2000

 Robert Blumofe

  EVP, Chief Technology Officer   March 2021   1999

 Adam Karon

  COO and GM, Edge Technology Group   March 2021   2005

 Rick McConnell (2)

  Former President and GM Security Technology Group   March 2021   2011

 

(1)

Prior to March 1, 2021, Mr. Karon was Executive Vice President and General Manager of the Media & Carrier Division; Mr. McConnell was President and General Manager of the Web Division; and Mr. Blumofe was Executive Vice President – Platform and General Manager of the Enterprise Division.

(2)

Mr. McConnell departed the Company on December 13, 2021.

Executive Summary

In this Executive Summary, we describe our guiding principles on executive compensation, how those principles have aligned with our executive pay outcomes, and how we establish our compensation levels and performance targets. We also discuss key compensation policies and practices.

 

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Our Compensation Philosophy

 

 

 

LOGO

Aligning Executive Compensation with our Performance

Akamai seeks to align executive compensation with performance by:

 

  🌑   

tying annual bonuses to performance against specific financial measures that require achievement of rigorous financial targets for payment, with a modifier based on ESG goals;

 

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utilizing performance-based vesting restricted stock units, or PRSUs, that require achievement of rigorous financial targets in order to vest; and

 

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granting restricted stock units that require us to meet relative total shareholder return, or TSR, targets in order to vest.

 

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We believe that a significant portion of executive pay should be variable and at risk. Specifically, the amount earned by an executive officer should primarily be tied to our financial performance and the performance of our stock price. The charts below show the percentage of “at risk” 2021 compensation for our CEO and other NEOs at target. We consider compensation to be “at risk” if vesting is subject to achievement of performance targets and/or the value received is dependent on our stock price.

LOGO

 

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Overview of Compensation Components

We structure the compensation opportunities for our NEOs using three principal components: base salary, annual bonuses and long-term equity incentives. Within our long-term equity incentive program, we grant three types of awards: time-vesting RSUs, PRSUs and relative TSR-Based RSUs. In making decisions about how to balance different compensation components, we first adhere to our overarching compensation principles outlined above. In addition, we consider the practices of our peer group, our business model and individual factors, such as the ability of a given executive to contribute to our results.

In the graphic below, we provide an overview of each material component of our 2021 executive compensation program and describe how each component is tied to our compensation objectives.

 

LOGO

 

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Compensation Policies and Practices Highlights

Every year, the TL&C Committee assesses the effectiveness of the performance of our compensation plans and practices. We evaluate the financial and ESG metrics we use and how our programs compare with those used by our peer group companies. We also evaluate whether our compensation continues to align with performance and if our programs appear to have led to any unintended consequences. In recent years, we have continuously taken steps to strengthen and improve our executive compensation policies and practices. Highlights of our current policies and practices include:

 

Highlights

We align executive compensation with the interests of our stockholders by designing our executive compensation program to avoid excessive risk and foster sustainable growth       Focus on performance-based pay
      Include a relative market-based performance metric (TSR) in executive compensation
      Pay NEOs annual bonuses in Akamai common stock
      Utilize double-trigger change in control provisions for all equity awards
      Utilize objective performance metrics
      Review tally sheets when making executive compensation decisions
      Provide few, if any, perquisites
      Enforce stock ownership guidelines for officers and directors
      Cap bonus and performance-based equity awards through maximum payouts
      Mitigate undue risk in compensation programs
     
We adhere to executive compensation best practices       Prohibit hedging transactions and short sales
      Prohibit pledging of Company stock
      Maintain a Clawback Policy
      Mitigate potential dilutive effect of equity awards through robust share repurchase program
      Utilize an independent compensation consulting firm that provides no other services to Akamai
      Provide reasonable post-employment/change in control provisions
      No employment contracts (unless required by law)
      No repricing underwater stock options
      No excise tax gross-ups upon change in control

CEO Compensation

Dr. Leighton became our CEO in January 2013, having previously served as our Chief Scientist since co-founding Akamai. In establishing his salary as CEO, the TL&C Committee considered Dr. Leighton’s past compensation history, his significant equity holdings, peer

 

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group practices and the desire to include performance-based compensation as the majority of his pay package. This approach conforms to our philosophy of aligning his compensation with the interests of our long-term investors. In 2013, when Dr. Leighton became CEO, his salary was established at $1. In 2018, in order to align Dr. Leighton with his leadership team, the TL&C Committee established an annual target bonus opportunity for him of $1 million, with the remainder of his annual compensation to be market competitive and consisting of equity-based components. The TL&C Committee increased the target bonus in 2019 to $1.25 million based on his job performance and the company’s performance and to better align Dr. Leighton’s compensation mix to be more consistent with market practices. Dr. Leighton had the same target bonus in 2021. As in the prior year, the TL&C Committee and Dr. Leighton agreed that his earned 2021 annual bonus would be paid to him in shares of our common stock in lieu of cash to reinforce and further the alignment of his compensation with stockholder interests. Ultimately, nearly 100% of Dr. Leighton’s compensation is at risk.

2021 Executive Compensation Program and Results

In this section, we describe in detail our 2021 NEO compensation program including the impact of our 2021 financial performance on overall achievement. The TL&C Committee set 2021 total direct compensation for Messrs. Leighton, Ahola, Blumofe, Karon, McGowan and McConnell at approximately the 50th percentile of the benchmarking peer group (as described more fully below). See “Setting Compensation Levels for our NEOs” for a discussion of factors we use to establish the overall compensation levels for these executives.

Base Salary

Base salary is used to provide NEOs with a fixed amount of annual cash compensation. The TL&C Committee views base salary as a way to attract and retain talent by providing a reliable source of income while also motivating strong business performance without encouraging excessive risk-taking. In order to ensure that our programs provide significant alignment with our stockholders’ interests, base salaries represent a relatively small percentage of our overall compensation. The table below reflects 2021 salary levels for our NEOs:

 

Year-End 2021 Base Salaries for NEOs

 

Name                            2021 Salary Level    Percentage Increase from 2020

Dr. Leighton

  

 

  

 

  

 

  

 

   $1    0%

Mr. McGowan

  

 

  

 

  

 

  

 

   $515,000    8%

Mr. Ahola

  

 

  

 

  

 

  

 

   $450,000    2%

Dr. Blumofe

  

 

  

 

  

 

  

 

   $505,000    0%

Mr. Karon

  

 

  

 

  

 

  

 

   $550,000    16%

Mr. McConnell*

  

 

  

 

  

 

  

 

   $600,000    3%

 

*

Mr. McConnell departed the Company on December 13, 2021.

 

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In 2021, the TL&C Committee evaluated the salaries of our executives in light of labor market conditions and the reorganization in March 2021 of our business into two business groups. Mr. Karon’s and Mr. McConnell’s salaries were increased in light of their increased responsibilities in connection with the reorganization. Mr. Karon served as Executive Vice President and General Manager, Media and Carrier Division prior to the reorganization and was appointed as the Chief Operating Officer and General Manager of the Edge Technology Group following the reorganization. Mr. McConnell, prior to the reorganization, served as President and General Manager, Web Division and following the reorganization was made President and General Manager of the Security Technology Group.

Annual Bonuses

Annual bonuses are performance-based awards that are intended to drive the achievement of key business results while rewarding NEOs based upon their contributions to Akamai’s success. Each year, the TL&C Committee sets a Target Annual Bonus Opportunity for each NEO, expressed as a percentage of base salary, based upon each NEO’s role and responsibilities, internal equity considerations and peer group data. In addition, the TL&C Committee believes that the Target Annual Bonus Opportunity should comprise a more significant portion of an NEO’s target total compensation as the individual’s level of responsibility increases.

Under the 2021 compensation plan, each NEO had the opportunity to earn between 0% and 200% of his Target Annual Bonus Opportunity based on performance against financial targets. The TL&C Committee believes that these goals and objectives encourage a balanced focus on revenue growth and profitability.

In 2021, the TL&C Committee introduced a change to our annual bonus plan for NEOs and other Akamai executives. While maintaining the core revenue and profitability financial metrics, the 2021 bonus plan incorporates a payout modifier based on our achievement against designated ESG goals established by the TL&C Committee. The ESG goals are centered on employee diversity, inclusion and engagement as well as environmental sustainability metrics. If management exceeds these goals, the bonus earned based on the financial metrics will be increased by up to 10% (for a maximum aggregate bonus payout opportunity of 220% of target); if management fails to meet the ESG goals, the bonus earned on the financial metrics will be decreased by up to 10%. The TL&C Committee adopted this change to help drive accountability within the management team for advancing Akamai’s ESG goals.

As with Dr. Leighton, the TL&C Committee and each of our other NEOs agreed that earned 2021 annual bonuses would be paid in shares of our common stock in lieu of cash to further align compensation with stockholder interests.

 

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The table below reflects the structure, goals and outcomes of the 2021 annual incentive program. For performance at intermediate achievement levels not specified in the chart, the amount paid is calculated based on where actual performance falls proportionately between the two identified tiers. The overall payout percentage against the Target Annual Bonus Opportunity, excluding the effect of the ESG modifier, was 160.4% due to above-target performance on revenue and profitability.

 

Metric

 

 

%
Weighting

 

 

Why We Use This Metric

 

 

2021

Threshold

(0%
payout)

 

 

2021

Target
(100%
payout)

 

 

2021

Maximum
(200%
payout)

 

 

2021

Actual

 

 

 

Payout %

Against
Target

 

 

 

Revenue (adjusted for

foreign currency)*

 

 

50%

 

 

Revenue is a fundamental
measure of our success
at selling our solutions,
innovating and
competing in the
marketplace.

 

 

 

$3,027.2
million

 

 

$3,363.5
million

 

 

$3,699.9
million

 

 

$3,445.7

million

 

 

 

 

124.4%

 

 

 

Non-GAAP Operating Income*

 

 

50%

 

 

Non-GAAP operating
income is an indicator of
profitability that
eliminates the effects of
events that either are not
part of our core
operations or are
non-cash; we use it as a
component of the bonus
targets to align our
NEOs’ interests with
those of our investors.

 

 

 

$893.8
million

 

 

$993.1
million

 

 

$1,092.4

million

 

 

$1,088.8
million

 

 

 

 

196.3%

 

 

 

Overall Payout as a % Against Target

 

 

 

 

 

 

160.4%

 

 

 

 

 

*

Refer to “Financial Metrics Definitions” below for an explanation of the calculation of this measure.

Following year end, management provided the TL&C Committee with a performance assessment relative to key ESG-related benchmarks. Following review of the performance assessment, the TL&C Committee determined an achievement of +5 percentage points, resulting in a final bonus funding of 168.4%.

 

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The table below shows each NEO’s target bonus percentage of base salary, target bonus payout for 2021 and actual bonus earned for 2021. In 2021, Mr. Karon saw an increase in his target bonus percentage compared to 2020 due to his increased responsibilities in connection with the reorganization. The target bonus payout is calculated by multiplying the NEO’s base salary earnings by his or her target bonus percentage. The actual bonus earned is calculated by multiplying the NEO’s target bonus payout by our overall payout percentage, which was 168.4% for 2021 as described above.

 

Name                   2021 Target
Bonus Percentage
  2021 Target Payout    2021 Actual
Bonus Earned

Dr. Leighton

   

 

 

 

   

 

 

 

   

 

 

 

       *Not applicable     $ 1,250,000      $ 2,104,594

Mr. McGowan

   

 

 

 

   

 

 

 

   

 

 

 

       85%     $ 420,358      $ 707,746

Mr. Ahola

   

 

 

 

   

 

 

 

   

 

 

 

       80%     $ 355,908      $ 599,233

Dr. Blumofe

   

 

 

 

   

 

 

 

   

 

 

 

       80%     $ 404,000      $ 680,205

Mr. Karon**

   

 

 

 

   

 

 

 

   

 

 

 

       97%     $ 520,909      $ 877,041

Mr. McConnell***

                   100%     $ 566,923      $ 566,910

 

*

In accordance with the terms of his annual incentive plan, Dr. Leighton’s 2021 annual bonus is not based on a percentage of his base salary of $1.

**

Mr. Karon’s target bonus increased from 80% to 100% effective March 1, 2021, and the resulting full year target bonus percentage reflects his bonus percentage weighted for the different bonus percentages.

***

Mr. McConnell departed the Company on December 13, 2021. On December 6, 2021, the TL&C Committee approved a prorated fiscal 2021 bonus payable in 5,105 RSUs which vested on December 10, 2021. The value reported for the 2021 Actual Bonus Earned is the value of the number of RSUs multiplied by the closing stock price on December 6, 2021.

 

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Long-Term Equity Incentives

We believe that long-term equity-based compensation grants motivate and reward strong corporate performance and drive long-term value creation for stockholders. In addition, these awards assist in attracting and retaining our NEOs. The chart below explains why we granted each award type to our NEOs in 2021.

 

Type of RSU    Why We use This Type of RSU    Vesting
Schedule
   Weighting

 

Time-Vesting RSUs

  

 

Vesting based on continued employment; help retain our NEOs and incentivize them to enhance stockholder value.

  

 

1/3
annually over 3
years

  

 

40%

 

PRSUs

  

 

Vesting based on performance against specific financial metrics; align our NEOs’ compensation with our corporate performance.

  

 

3-year
cliff*

  

 

40%

 

Relative TSR-Based RSUs

  

 

Vesting based on our stock price performance; align our NEOs’ compensation with how our stock price has performed relative to the S&P 500 Technology Index Group, which we refer to as the Index Group, enhancing the alignment of management and investor interests.

  

 

3-year
cliff*

  

 

20%

 

*

PRSUs and Relative TSR-Based RSUs are eligible to vest following completion of a 3-year performance period and the TL&C Committee’s certification of Akamai’s financial results after the end of such 3-year performance period.

The TL&C Committee sets each NEO’s target equity award value based on market data, future expected contributions and performance, job responsibilities and duties. The 2021 grant-date target long-term equity incentive values for our NEOs were:

 

Name                      Grant Date Value of
Time-Vesting RSUs
   Grant Date
Value of PRSUs
   Grant Date
Value of Relative
TSR-Based RSUs
   Total

Dr. Leighton

    

 

 

 

    

 

 

 

    

 

 

 

     $ 3,900,000      $ 3,900,000      $ 1,950,000      $ 9,750,000

Mr. McGowan

    

 

 

 

    

 

 

 

    

 

 

 

     $ 1,200,000      $ 1,200,000      $ 600,000      $ 3,000,000

Mr. Ahola

    

 

 

 

    

 

 

 

    

 

 

 

     $ 780,000      $ 780,000      $ 390,000      $ 1,950,000

Dr. Blumofe

    

 

 

 

    

 

 

 

    

 

 

 

     $ 920,000      $ 920,000      $ 460,000      $ 2,300,000

Mr. Karon

    

 

 

 

    

 

 

 

    

 

 

 

     $ 1,502,000      $ 1,502,000      $ 751,000      $ 3,755,000

Mr. McConnell*

                    $ 1,680,000      $ 1,680,000      $ 840,000      $ 4,200,000

 

*

Mr. McConnell departed the Company on December 13, 2021.

 

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PRSUs. Each NEO has the opportunity to earn between 0% and 200% of his target PRSUs based on achievement against annual revenue and non-GAAP earnings per share performance targets for each of 2021, 2022 and 2023. Achievement below the threshold level would mean that no PRSUs vest with respect to that performance period; achievement at or above the maximum level would mean that 200% of the target number of PRSUs eligible for vesting would vest. One-third of an NEO’s 2021 PRSUs may be earned over each one-year period. At the beginning of each year, the TL&C Committee sets the performance targets for the year. After the conclusion of the year, the TL&C Committee certifies achieved performance for that year. Vesting of PRSUs does not, however, occur until the date of the TL&C Committee’s certification of results for 2023.

In structuring our PRSUs, the TL&C Committee considered the difficulties in establishing long-term performance goals in our industry, where traffic and other trends are outside of our control and highly unpredictable. The TL&C Committee also carefully considered the implications of using one-year performance periods, as opposed to a single three-year period, and determined that the current approach was appropriate and supported by our peer group practice. See “Setting Financial Performance Targets” below for further discussion of how we set these targets.

We use revenue as a performance metric for our PRSUs, as well as our annual bonus plan, because it is a fundamental metric used by investors to assess our performance. Revenue growth is also key to both our short- and long-term strategic plans.

Because the PRSUs are dependent upon annual financial goals, the values reported in the Summary Compensation Table below are different than the target values set forth in the tables above. Financial Accounting Standards Board ASC Topic 718 requires that the value of the PRSUs reported in the Summary Compensation Table include only that portion of the value of the PRSUs for which annual financial performance metrics were established during fiscal 2021 based on probable achievement of such metrics. As a result, for the 2021 PRSUs, the Summary Compensation Table does not include the value of the PRSUs based on the annual financial metrics for fiscal 2022 or fiscal 2023. Such amounts will be included as equity compensation in the Summary Compensation Table for fiscal 2022 and fiscal 2023, respectively, when the applicable annual financial metrics are established.

 

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The chart below shows the applicable 2021 performance metrics and our achievement against them. For performance at intermediate achievement levels not specified in the chart, the amount paid is calculated based on where actual performance falls proportionately between the two identified tiers.

2021 PRSU Targets and Results

 

                 
Metric   %
Weighting
  Why We Use This Metric  

2021

Threshold
(0%
payout)

 

2021

Target
(100%
payout)

 

2021

Maximum
(200%
payout)

 

2021

Actual

 

Achievement
% Against

Target

 

% of
PRSUs
Earned

Against
Target

 

Revenue (adjusted for foreign currency)*

 

 

50%

 

 

Revenue is a fundamental measure of our performance against our long-term growth strategy.

 

 

$3,027.2
million

 

 

$3,363.5
million

 

 

$3,699.9
million

 

 

$3,445.7

million

 

 

102.4%

 

 

124.4%

 

Non-GAAP Earnings per Share*

 

 

50%

 

 

Non-GAAP earnings per share is an indicator of profitability that eliminates the effects of events that either are not part of our core operations or are non-cash as well as the impact of income taxes; we use it as a performance target to align our NEOs’ interests with those of our investors.

 

 

$4.66/per
share

 

 

$5.18/per
share

 

 

$5.70/per
share

 

 

$5.71/per
share

 

 

110.3%

 

 

200.0%

 

Overall Payout as a % Against Target

 

     

 

162.2%

 

 

*

Refer to “Financial Metrics Definitions” below for an explanation of the calculation of this measure.

The metrics described above also apply to the 2021 performance period used to calculate the number of PRSUs earned under grants made to NEOs in 2019 and 2020.

Relative TSR-Based RSUs. Each NEO has the opportunity to earn between 0% and 200% of his target relative TSR-Based RSU award based on the three-year performance of our stock price relative to that of companies in the Index Group. The number of relative TSR-Based RSUs earned and vested is based upon the percentile ranking of our TSR within the Index Group at the conclusion of the three-year performance period ending on December 31, 2023. TSR is calculated on a per share basis as the quotient of (i) (Ending Price plus Dividends per Share Paid minus Beginning Price), divided by (ii) the Beginning Price, where Ending Price means the average closing stock price of one share of common stock over the 90 trading days immediately preceding January 1, 2024; Dividends per Share Paid means cumulative dividends per share of common stock paid between January 1, 2021 through December 31, 2023; and Beginning Price means the average closing stock price of one share of common stock over the 90 trading days immediately preceding January 1, 2021. TSR-Based RSUs, to the extent earned, will vest following the TL&C Committee’s certification of our financial results for 2023.

 

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For every percentile by which our ranking within the Index Group exceeds the 50th percentile, the number of relative TSR-Based RSUs eligible to vest will increase by 3.33% of the target, up to a maximum of 200% of the target if our TSR ranking is above the 80th percentile. For every percentile by which our ranking within the Index Group is below the 50th percentile, the number of relative TSR-Based RSUs eligible to vest will decrease by 3%, with no payout if our TSR ranking is below the 25th percentile. This is illustrated below.

 

Akamai’s TSR Performance Stated as a
Comparative Percentile Ranking Within
the Index Group
  

Percentage Payout Against Target

Number of Shares

Lower than 25th

   0%

25th

   25%

50th

   100%

80th

   200%

Higher than 80th

   200%

The chart below shows target performance, achieved performance and percent of target earned with respect to relative TSR-Based RSU award granted in 2019 and earned over the three-year period ending December 31, 2021.

 

Metric   Why We Use
This Metric
  Target  

  2019-21  

TSR

  2019-21
  Percentile  
Ranking
 

% of

Target
RSUs

  Earned  

           
2019-2021
TSR   Performance
  Alignment of share performance with executive compensation.   50th percentile as
compared to return
for the Index Group
  60.1%   39.7th Percentile   69.0%

Setting Compensation Levels for our NEOs

Each year we establish the base salary, target bonus and equity levels for each NEO based on a review and assessment of the following factors:

 

  🌑   

each individual’s overall performance;

 

  🌑   

company performance;

 

  🌑   

success in executing against corporate and functional goals;

 

  🌑   

importance and scope of role;

 

  🌑   

future potential contributions

 

  🌑   

prior background, training and experience;

 

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  🌑   

internal pay equity considerations;

 

  🌑   

retention concerns; and

 

  🌑   

practices of companies in our compensation benchmarking and design peer groups.

Our philosophy is generally to set each NEO’s target total compensation (i.e., the sum of base salary, target annual incentive bonus and target value of long-term incentives) at the 50th percentile of our benchmarking peer group; however, the TL&C Committee may ultimately set an NEO’s total direct compensation at a level above or below the 50th percentile based on non-market data factors such as those described above.

The TL&C Committee does not assign relative weights or rankings to such factors. Rather, the TL&C Committee relies upon the CEO’s recommendations (for NEOs other than the CEO) and the directors’ knowledge and judgment in assessing the various qualitative and quantitative inputs it receives as to each individual and makes compensation decisions accordingly.

If our results do not meet our expectations, our NEOs will receive compensation that is below target opportunity levels and may be below market in comparison. Similarly, when superior results are achieved, our NEOs may receive compensation that is above their respective target opportunity level.

Setting Financial Performance Targets

Revenue and profitability performance targets are used both in our annual bonus plan and our equity incentive plan. We engage in a rigorous and deliberate process in setting those targets, which are set early in the year and are directly linked to our annual operating plan. The performance targets for 2021 were also consistent with the financial guidance we gave to investors on our public earnings call in February 2021. As a result, we believe that the performance targets reflect our goals and expectations for the business, are common performance indicators in our industry and are meaningful to our stockholders. The performance goals are rigorous but achievable without encouraging inappropriate risk-taking.

Key factors underlying revenue goals include:

 

  🌑   

trends in sales of our solutions in prior quarters;

 

  🌑   

our understanding of how markets for our offerings may be evolving;

 

  🌑   

information we learn about customer plans;

 

  🌑   

expectations associated with new product introductions;

 

  🌑   

assessments about how macro-economic conditions could change; and

 

  🌑   

changes we have witnessed in the competitive landscape.

 

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Profitability goals are set based primarily on:

 

  🌑   

our revenue expectations;

 

  🌑   

plans for capital expenditures and hiring; and

 

  🌑   

expected growth in operating expenses as well as efforts to curtail spending growth.

Our performance targets are also adjusted during the year to give effect to acquisitions that occur and to eliminate the impact of foreign currency exchange rate fluctuations.

We carefully set our minimum and maximum target opportunities. Because we primarily derive income from sales of services to customers executing contracts with terms of one year or longer, we have a relatively consistent base level of revenue growth from year to year. The TL&C Committee takes this into account in setting annual performance targets and associated payout levels. A 5%-10% or greater improvement over target revenue or operating income targets represents excellent performance and is reflected in bonus payments; a 5%-10% or greater shortfall against such targets leads to much lower payouts. For example, bonuses are not payable under our annual incentive plan unless revenue achievement is at least 90% of target.

The TL&C Committee has considered using different metrics for the annual incentive and equity incentive programs but has concluded that using both revenue and profitability targets is appropriate because they are fundamental metrics used by investors to assess our performance. In particular, these performance targets represent key metrics by which we are evaluated by investors. We believe they also provide an appropriate and effective balance of performance incentives to focus and motivate executive officers to maximize value for our stockholders without excessive risk-taking. For example, we have continued to focus on revenue growth without sacrificing profit margins.

Once the TL&C Committee has approved performance targets, we set a range of payouts that can be earned by the NEOs based on achieved results against those targets. For annual bonus awards, the payout ranges from 0%-220% based on performance against pre-established financial targets and the ESG payment modifier. For PRSUs and relative TSR-Based RSU awards, the payout ranges from 0%-200% based on performance against pre-established financial targets.

The TL&C Committee approves the performance targets and applicable ranges only after the full Board has met to review, discuss and approve the short- and long-term financial plans for the company.

We did not adjust any financial metric targets in 2021 to account for the COVID-19 pandemic.

 

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How We Select and Use Peer Groups

The TL&C Committee works closely with Meridian Compensation Partners, LLC, or Meridian, our independent compensation consultant, to establish the peer groups we use in reviewing and setting executive compensation. We adhere to the following key principles to establish our peer groups:

 

  🌑   

Consistency. Peer group composition should remain relatively stable year over year.

 

  🌑   

Competitors. Peer group companies should reflect Akamai’s competitors for executive talent, business and capital.

 

  🌑   

Similarity in Size. Peer group companies that are used for benchmarking compensation levels should be similar to Akamai in size; we generally consider revenue and market capitalization.

 

  🌑   

Statistical Validity. Peer group should include enough data points to develop statistically valid data. We expect to include approximately 15-20 companies in our peer group.

There are also a number of companies with which we compete for executive talent that are significantly larger than Akamai and inappropriate for benchmarking NEO compensation levels but are still informative from a design perspective. To address this, the TL&C Committee approved and adopted a second peer group of these larger companies for compensation design considerations.

Benchmarking Peer Group

The 2021 benchmarking peer group is comprised of companies that are similar in size to Akamai and operate in related industries. The TL&C Committee reviewed compensation data for executive officers with comparable positions at these companies to gauge the reasonableness and competitiveness of each of our NEO’s total compensation as well as to inform the design of our programs. Our benchmarking peer group for setting 2021 executive compensation consisted of the following companies:

 

Adobe Systems

  Arista Networks    Autodesk

Ciena

  Citrix Systems    Equinix

F5 Networks

  Fortinet    IAC/Interactive Group

Juniper Networks

  Nuance Communications    Palo Alto Networks

PTC

  Sabre    Splunk

Twitter

  VeriSign    VMWare

We removed Red Hat due to its acquisition by IBM and added Splunk as a security company similar in size to Akamai that considers Akamai a peer. Akamai’s revenue for 2021 was $3.5 billion, and our market capitalization at the end of that year was approximately $19.0 billion. The median 2021 revenue for our benchmarking peer group was approximately $3.5 billion, and the median market capitalization for the group at the end of that year was $23.0 billion.

 

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Design Reference Peer Group

In addition to the benchmarking peer group, the TL&C Committee approved a design reference peer group to provide further information on overall competitive market design practices. The companies in the design reference peer group consistently provide the greatest challenges for Akamai in competing for talent; however, given that they are considerably larger than us, we do not include them in our benchmarking peer group. The TL&C Committee used data derived from the design reference peer group to inform our incentive plan design, pay mix, long-term incentive vehicles and other practices. The TL&C Committee believes that this information helps us to successfully attract and retain experienced and talented individuals who are critical to our long-term success. We also structure and balance the different elements of compensation to reflect trends across our design reference peer group.

Our 2021 design reference peer group consisted of the following companies:

 

Alphabet

  Amazon.com   Apple    Cisco Systems

eBay

  Meta Platforms   Microsoft    Netflix

Oracle

  Salesforce.com     

 

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Our Executive Compensation Process

The TL&C Committee designs our executive compensation program with input from Meridian and our Chief Executive Officer. We establish the annual compensation packages for our executive officers at the beginning of each year after an extensive analysis of competitive trends, assessment of prior compensation programs, consideration of the peer group practices, performance evaluations and investor input. The following is an overview of the planning and assessment process for our 2021 executive compensation:

 

 

LOGO

Role of the TL&C Committee

The TL&C Committee sets the compensation for each of our NEOs and other senior executive officers. It establishes the financial and ESG metrics for performance-based awards based on Akamai’s operating plans and long-term strategy approved by the Board and then assesses performance against those targets during, and following, the relevant performance period. For NEOs other than our CEO, the TL&C Committee reviews Dr. Leighton’s evaluation of his direct reports’ performance and establishes compensation levels and opportunities. The full Board makes the determination of our CEO’s performance and the TL&C Committee takes this into account when setting his compensation levels and opportunities.

 

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The TL&C Committee makes judgments about the role of each executive officer in the pursuit and achievement of our corporate and strategic objectives. Typically, these judgments involve qualitative, rather than quantitative, evaluations of each individual’s past performance and expectations about future contributions. We believe that it is important to reward excellence, leadership and outstanding long-term company performance through compensation arrangements designed to retain and motivate executive officers while aligning their incentives with continued high levels of performance.

The TL&C Committee approves and grants all equity incentive awards to our NEOs. In general, annual executive compensation determinations are made at the scheduled TL&C Committee meeting in January or February of each year. For 2021, we made such grants at the same time as annual equity grants were made to our non-executive employees in early March. Equity incentive awards to newly-hired executive officers are generally approved at the first regularly-scheduled TL&C Committee meeting following the individual’s date of hire. For retention purposes or to reflect changes in responsibilities or similar events or circumstances, the TL&C Committee may approve equity awards to our executive officers at other times during the year. The TL&C Committee sets a dollar value for each executive RSU award that is granted as part of our compensation program; the number of RSUs granted is determined based on the closing sale price of our stock on the grant date.

The TL&C Committee retains, but we do not currently expect that it will exercise in the future, discretion to waive the achievement of stated corporate performance targets as a condition to payment of annual bonuses.

Role of our Chief Executive Officer

Annually, the Chief Executive Officer evaluates the performance of the other NEOs and sets expectations for their roles in the upcoming year. He makes a recommendation to the TL&C Committee as to salary, bonus and equity incentive compensation for the coming year for these NEOs. With respect to his own compensation, the CEO conducts a self-assessment of prior year performance. The Board (without the participation of the CEO) then discusses and evaluates the Chief Executive Officer’s performance. The TL&C Committee is the ultimate decision-maker with respect to the compensation of our Chief Executive Officer and other NEOs.

Role of Independent Compensation Consultants

Our TL&C Committee considered advice provided by Meridian in establishing our 2021 executive compensation program. Meridian is retained by and reports directly to the Chair of the TL&C Committee. Meridian provides the following services to the TL&C Committee: (i) recommending a peer group of companies, (ii) assisting the TL&C Committee in understanding compensation levels of executive officers in the benchmarking peer group, (iii) assisting the TL&C Committee in understanding compensation design practices of companies in the design reference group, (iv) reviewing the value of equity compensation previously granted to executive officers and (v) developing a long-term executive compensation

 

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strategy and related services. Meridian has not provided us with any services beyond providing advice on the amount or form of executive and non-employee director compensation. The TL&C Committee determined that Meridian was independent of management.

How We Considered the 2021 “Say-on-Pay” Advisory Vote on Executive Compensation

The TL&C Committee has consistently strived to balance the need to offer competitive executive compensation with what it believes is in the long-term best interests of Akamai and our stockholders. The TL&C Committee takes seriously stockholder input. We consider that input, best practices and the competitive environment to develop compensation programs that are designed to support our short- and long-term success without encouraging excessive risk-taking.

At our 2021 Annual Meeting of Stockholders, we held an advisory vote on our 2020 executive compensation program, and 88% of the votes cast were in support of the program.

 

Taking into account feedback we have received from investors, we have made the following changes to our executive compensation programs in recent years:

🌑     introduced a one-year minimum vesting requirement;

🌑     introduced a relative TSR metric;

🌑     increased the emphasis on PRSUs and relative TSR-Based RSUs to 60% of the target value of executive equity awards;

🌑     eliminated the subjective component of our annual incentive plan;

🌑     adopted a compensation recovery, or clawback, policy;

🌑     moved away from the issuance of stock options to our executive officers and directors;

🌑     amended our Change in Control Agreements for NEOs to eliminate single-trigger vesting for RSUs unless such awards are not assumed by the acquiring entity; and

🌑     added an ESG modifier to our executive bonus program.

How We Evaluate and Address Risk in Our Compensation Policies and Practices

Annual Risk Assessment

Annually, the TL&C Committee asks management and Meridian to review the potential risks associated with the structure and design of various Akamai compensation plans. The analysis includes assessing executive and non-executive compensation programs, with particular emphasis on incentive compensation plans, including sales compensation, against

 

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key risks that our company faces. Our review takes into account changes in compensation programs, as well as new risks we identify. In addition, our compensation plans and programs operate within strong governance and review structures that serve and support risk mitigation. In particular, we believe the following factors mitigate any components of our compensation programs that may encourage excessive risk-taking:

 

🌑   

our pay mix has a significant weighting towards long-term incentive compensation in order to discourage short-term risk-taking;

 

🌑   

our performance goals are appropriately set to avoid significant changes in payout for minimal changes in performance;

 

🌑   

our annual incentive awards, relative TSR-Based RSUs and PRSU payouts for NEOs are capped;

 

🌑   

our stock ownership requirements align the interests of management with those of our stockholders;

 

🌑   

our executives, other than our CEO who has a salary of $1, are provided a mix of fixed and variable compensation; and

 

🌑   

our incentive plans are balanced with different types of performance metrics.

In reviewing our compensation policies and practices for all employees, the TL&C Committee determined that they do not create risks that are reasonably likely to have a material adverse effect on Akamai.

Compensation Recovery Policy

In 2014, the TL&C Committee adopted a Compensation Recovery Policy that is applicable to our NEOs and other members of senior management. The policy provides that the TL&C Committee may require a covered person who engages in detrimental conduct (e.g., committing a felony, gross negligence or willful misconduct with respect to our financial statements) to reimburse us for all, or a portion of, any bonus, incentive payment, equity-based award or other compensation received by him or her during the 12 months preceding such detrimental conduct and remit to us any profits realized by him or her from the sale of Akamai securities during such 12-month period. In addition, if we need to restate our reported financial results to correct a material accounting error due to material noncompliance with a financial reporting requirement under U.S. securities laws, the TL&C Committee may seek to recover or cancel the excess portion of incentive compensation paid (including through vesting of equity awards) to such individual during the 36-month period preceding the filing of the restatement that is deemed by us to be unearned.

Stock Ownership Requirements

Our executive officers are subject to minimum stock ownership requirements. Our Chief Executive Officer must hold shares of our common stock with a value at least equal to six times his annual base salary. Other NEOs must hold shares of our common stock with a

 

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value at least equal to two times their annual base salary. An individual’s stock ownership includes all shares of our common stock owned by the individual outright or held in trust for the senior executive and/or his or her immediate family and any shares of Akamai common stock in employee plans. It does not include the executive officer’s unvested or unexercised equity.

If an executive fails to meet the ownership guidelines under the review procedures set forth in the guidelines as of the end of a five-year qualification period, he or she will not be permitted to sell shares of Akamai stock until such time as he or she has exceeded the required minimum ownership level. As of March 1, 2022, all of our NEOs had satisfied the minimum ownership requirement.

Anti-Hedging and Anti-Pledging Policy

We have an insider trading policy that is applicable to all of our employees, consultants and members of the Board. The policy prohibits those individuals and certain related persons from engaging in any speculative transactions involving our stock including the following activities: use of Akamai’s securities to secure a margin loan; short sales of our securities; buying or selling puts or calls on Akamai’s securities; transactions in publicly-traded options relating to our securities (i.e., options that are not granted by Akamai); and other transactions involving financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) that are designed to hedge or offset any decrease in the market value of our securities. In addition, Akamai’s executive officers and members of the Board may not pledge Akamai securities as collateral for a loan.

Severance Arrangements

We believe that having in place reasonable and competitive executive severance plans is essential to attracting and retaining highly-qualified executive officers. Akamai’s severance arrangements are designed to provide reasonable compensation to departing executive officers under certain circumstances to facilitate an executive officer’s transition to new employment. We seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring the executive officer to sign a separation and release agreement acceptable to Akamai as a condition to receiving severance benefits.

We do not consider specific amounts payable under the severance arrangements when establishing annual compensation. We do believe, however, that these arrangements are necessary to offer compensation packages that are competitive. In determining payment and benefit levels under the various circumstances triggering benefits under employment and severance agreements, the TL&C Committee has drawn a distinction between voluntary terminations or terminations for cause, and terminations without cause or as a result of a change in control. Payment in the latter circumstances has been deemed appropriate in light of the benefits to us described above, as well as the likelihood that the executive officer’s departure is due, at least in part, to circumstances not within his or her control. In contrast, we believe that payments are not appropriate in the event of a termination for cause or

 

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voluntary resignation because such events often reflect either inadequate performance or an affirmative decision by the executive officer to end his or her relationship with Akamai.

We have change in control agreements in place with each of our NEOs (except in the case of Dr. Leighton, who is party to an employment offer letter agreement). We believe that these agreements are designed to align the interests of management and stockholders when considering the long-term best future for Akamai. The primary purpose of these arrangements is to keep executive officers focused on pursuing corporate transaction activity that is in the best interests of stockholders regardless of whether those transactions may result in their own job loss. Reasonable post-acquisition benefits should serve the interests of both the executive officer and our investors.

Our Executive Severance Pay Plan, Change in Control Agreements and equity award programs have the following features:

 

🌑   

No single-trigger vesting of equity awards upon a change in control of Akamai unless such awards are not assumed by the acquiring entity. If they are assumed, then (a) performance-based equity awards granted in or prior to 2021 convert to time-based vesting awards based on an assumed target-level of performance regardless of whether a performance period has been completed, and (b) performance-based awards granted in or after 2022 convert to time-based vesting awards based on (i) an assumed target-level of performance for incomplete performance periods and (ii) the actual level of performance achieved for completed performance periods;

 

🌑   

no excise tax gross ups from existing agreements; and

 

🌑   

no perpetual terms for the Change in Control Agreements with our executives, thus providing flexibility to the TL&C Committee to revisit the benefits and other terms of these arrangements in response to future events.

See “Post-Employment Compensation and Other Employment Agreements” below for a more detailed discussion of our severance and change-in-control agreements referenced above, including the specific benefits payable to our NEOs, if any, upon termination of employment.

Code Section 162(m) Considerations

Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code, generally places a $1 million limit on the amount of compensation a public company may deduct in any one taxable year on compensation paid to a “covered employee.” While the TL&C Committee considers tax deductibility as one of many factors in determining executive compensation, the TL&C Committee will award or modify compensation that it determines to be consistent with the goals of our executive compensation program even if such compensation is not deductible by us.

 

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Financial Metrics Definitions

Below are definitions of the financial metrics we used in our 2021 performance-based compensation programs:

“Revenue (adjusted for foreign currency)” means revenue calculated in accordance with GAAP, adjusted for the impact of fluctuations in foreign currency exchange rates.

“Non-GAAP Operating Income” means our annual GAAP operating income excluding amortization of acquired intangible assets, stock-based compensation, amortization of capitalized stock-based compensation, amortization of capitalized interest expense, restructuring charges, acquisition-related costs, gains and losses on legal settlements, costs incurred related to endowments to the Akamai Foundation and similar items excluded by us in determining non-GAAP income from operations in issuing our public earnings announcements; adjusted for the impact of fluctuations in foreign currency exchange rates.

“Non-GAAP Earnings per Share” means our non-GAAP net income for the applicable fiscal year (adjusted for constant currency) divided by our non-GAAP diluted weighted average shares outstanding. Non-GAAP net income per share is GAAP net income adjusted for tax-affected items: amortization of acquired intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; gains and losses on legal settlements; costs incurred related to endowments to the Akamai Foundation; amortization of debt discount and issuance costs; amortization of capitalized interest expense; certain gains and losses on investments; income and losses from equity method investment; and other non-recurring or unusual items that may arise from time to time. Diluted weighted average shares outstanding are adjusted in non-GAAP per share calculations for the shares that would be delivered to Akamai pursuant to the note hedge transactions entered into in connection with the issuances of $1,150 million of convertible senior notes due 2027 and 2025, respectively.

Talent, Leadership and Compensation Committee Report

The TL&C Committee of the Board of Directors:

(1) has reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement as required by Item 402(b) of Regulation S-K under the Exchange Act with management; and

(2) based on the review and discussion referred to in paragraph (1) above, the members of the TL&C Committee have recommended to the Board the inclusion of this Compensation Discussion and Analysis in this Proxy Statement for the 2022 Annual Meeting.

Monte Ford - Chair

Daniel Hesse

Jonathan Miller

Ben Verwaayen

Bill Wagner

 

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Summary Compensation Table

The following table sets forth information with respect to compensation paid to our NEOs during the years ended December 31, 2021, 2020 and 2019:

 

Name and Principal
Position

 

 

Year

 

 

Salary

($)

 

 

Bonus

($)

 

 

 

Stock

Awards

($)

(1)(2)(3)

 

 

 

Non-Equity

Incentive Plan

Compensation

($)

 

 

 

All Other

Compensation

($)(5)

 

 

Total ($)

 

 

(a)

 

 

 

(b)

 

 

 

(c)

 

 

 

(d)

 

 

 

(e)

 

 

 

(g)

 

 

 

(i)

 

 

 

(j)

 

 

Mr. Leighton

Chief Executive Officer

 

 

2021

 

 

 

1

 

 

 

 

 

 

11,951,573(5)

 

 

 

 

 

 

 

 

 

11,951,574

 

  2020

 

  1

 

 

 

  11,750,559(5)

 

 

 

 

 

  11,750,560

 

  2019

 

  1

 

 

 

  10,937,600(5)

 

 

 

 

 

  10,937,601

 

 

Mr. McGowan

EVP,

Chief Financial Officer

and Treasurer

  2021

 

  494,538

 

 

 

  3,631,420(5)

 

 

 

  6,000

 

  4,131,958

 

  2020

 

  462,308

 

 

 

  3,072,736(5)

 

 

 

  4,601

 

  3,539,645

 

  2019

 

  441,538

 

 

 

  1,952,036

 

  536,945

 

  6,000

 

  2,936,519

 

 

Mr. Ahola

EVP,

General Counsel and

Corporate Secretary

 

 

2021

 

 

444,885

 

 

 

 

2,557,382(5)

 

 

 

 

6,000

 

 

3,008,267

 

 

Dr. Blumofe

EVP,

Chief Technology

Officer

 

 

2021

 

 

 

505,000

 

 

 

 

 

 

3,241,257(5)

 

 

 

 

 

 

6,000

 

  3,752,257

 

  2020

 

  505,000

 

 

 

  3,758,284(5)

 

 

 

  6,000

 

  4,269,284

 

 

2019

 

 

497,500

 

 

 

 

3,053,222

 

 

598,761

 

 

6,000

 

 

4,155,483

 

 

Mr. Karon

COO and

General Manager of

the Edge Technology

Group

 

 

2021

 

 

 

537,019

 

 

 

 

 

 

4,526,232(5)

 

 

 

 

 

 

6,000

 

  5,069,251

 

  2020

 

  475,000

 

 

 

  3,824,738(5)

 

 

 

  6,000

 

  4,305,738

 

  2019   462,500     2,737,576   556,637   6,000   3,762,713

 

Mr. McConnell(6)

Former President and

General Manager of

the Security

Technology Group

 

 

2021

 

 

 

566,692

 

 

 

 

 

 

4,920,577(5)

 

 

 

 

 

 

5,944

 

  5,493,213

 

  2020

 

  580,000

 

 

 

  5,484,895(5)

 

 

 

  6,000

 

  6,070,895

 

  2019

 

  572,500

 

 

 

  4,211,482

 

  861,283

 

  6,000

 

  5,651,265

 

 

(1)

Amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for equity awards granted to the NEO during the applicable year. The assumptions we use in calculating these amounts are discussed in Note 18 of the notes to our consolidated financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K, which accompanies this Proxy Statement, except that the amounts reflected in the table above exclude the impact of estimated forfeitures of equity awards. As a result, the Summary Compensation Table does not reflect the value as determined by the TL&C Committee. For example, the amounts for fiscal 2021 represent the grant date fair value for the PRSUs at target for the fiscal 2021 tranche of the PRSUs issued in each of 2019, 2020 and 2021. These amounts do not include shares that may be earned in respect of the 2021 PRSUs based on performance against 2022 and 2023 targets because such targets will not be established until 2022 and 2023, respectively. The table below shows the value of the stock awards (assuming target-level vesting) granted to the NEOs in the years presented as approved by the TL&C Committee (including all tranches of PRSUs that may be earned at target by the NEOs).

 

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Name

 

 

 

  Intended Value of 2021  

Stock Awards ($)

 

 

 

  Intended Value of 2020  

Stock Awards ($)

 

 

 

  Intended Value of 2019  

Stock Awards ($)

 

 

Dr. Leighton

 

   

 

 

 

 

9,750,000

 

 

 

   

 

 

 

 

8,750,000

 

 

 

   

 

 

 

 

8,500,000

 

 

 

 

Mr. McGowan

 

   

 

 

 

 

3,000,000

 

 

 

   

 

 

 

 

2,500,000

 

 

 

   

 

 

 

 

2,200,000

 

 

 

 

Mr. Ahola

 

   

 

 

 

 

1,950,000

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

Dr. Blumofe

 

   

 

 

 

 

2,300,000

 

 

 

   

 

 

 

 

2,800,000

 

 

 

   

 

 

 

 

2,700,000

 

 

 

 

Mr. Karon

 

   

 

 

 

 

3,755,000

 

 

 

   

 

 

 

 

3,000,000

 

 

 

   

 

 

 

 

2,800,000

 

 

 

 

Mr. McConnell

 

 

   

 

 

 

 

4,200,000

 

 

 

   

 

 

 

 

4,100,000

 

 

 

   

 

 

 

 

4,000,000

 

 

 

 

(2)

Includes time-vesting RSUs, PRSUs (at target) and relative TSR-Based RSUs (at target). See also footnote (4) with respect to payment of shares of our common stock in lieu of cash.

 

(3)

For PRSUs, because the performance-related component is based on separate measurements of our financial performance for each year in the three-year performance cycle, FASB ASC Topic 718 requires the grant date fair value to be calculated at the commencement of each separate year of the performance cycle when the respective performance measures are approved. The value of the 2019 PRSUs assuming vesting at target and maximum, respectively, in each case across 2019, 2020 and 2021 performance periods, is as follows: Dr. Leighton—$3,602,992 and $7,205,983, respectively; Mr. McGowan—$540,499 and $1,080,900, respectively; Dr. Blumofe—$1,320,727 and $2,641,454, respectively; Mr. Karon—$940,990 and $1,881,979, respectively; and Mr. McConnell—$1,644,897 and $3,289,795, respectively. The value of relative TSR-Based RSUs issued in 2019 assuming vesting at maximum would be as follows: Dr. Leighton—$4,108,253; Mr. McGowan—$1,063,270; Dr. Blumofe—$1,304,993; Mr. Karon—$1,353,269; and Mr. McConnell—$1,933,265. The value of the 2020 PRSUs assuming vesting at target and maximum, respectively, in each case across 2020, 2021 and 2022 performance periods, is as follows: Dr. Leighton—$4,243,250 and $8,486,501, respectively; Mr. McGowan—$879,237 and $1,758,475, respectively; Dr. Blumofe—$1,350,679 and $2,701,359, respectively; Mr. Karon—$1,317,094 and $2,634,190, respectively; and Mr. McConnell—$1,975,146 and $3,950,292, respectively. The value of relative TSR-Based RSUs issued in 2020 assuming vesting at maximum would be as follows: Dr. Leighton—$4,616,493; Mr. McGowan—$1,318,930; Dr. Blumofe—$1,477,068; Mr. Karon—$1,582,573; and Mr. McConnell—$2,162,969. The value of the 2021 PRSUs assuming vesting at target and maximum, respectively, in each case across 2021, 2022 and 2023 performance periods, is as follows: Dr. Leighton—$4,177,727 and $8,355,456, respectively; Mr. McGowan—$1,179,428 and $2,358,857, respectively; Mr. Ahola—$824,299 and $1,648,599, respectively; Dr. Blumofe—$1,223,765 and $2,447,529, respectively; Mr. Karon—$1,465,910 and $2,931,821, respectively; and Mr. McConnell—$1,911,635 and $3,823,270, respectively. The value of relative TSR-Based RSUs issued in 2021 assuming vesting at maximum would be as follows: Dr. Leighton—$3,538,583; Mr. McGowan—$1,088,647; Mr. Ahola—$707,717; Dr. Blumofe—$834,635; Mr. Karon—$1,362,681; and Mr. McConnell—$1,524,246.

(4)

Represents company matching contributions to the accounts of the NEOs under our 401(k) Plan.

(5)

Includes amounts that were earned in 2021, 2020 and 2019, respectively, under the terms of the NEOs’ annual bonus plans that were paid in shares of our common stock in lieu of cash in 2022, 2021 and 2020.

(6)

Mr. McConnell departed the Company on December 13, 2021.

 

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2021 Grants of Plan-Based Awards

The following table sets forth information with respect to grants of plan-based awards to our NEOs during the year ended December 31, 2021. All equity awards were issued under the Akamai Technologies, Inc. Amended and Restated 2013 Stock Incentive Plan (the “Plan”).

 

Name/Award  

Grant

Date

  Date of
Approval
of Grant
if
Different
from
Grant
Date
  Estimated Future
Payouts Under Non-
Equity Incentive Plan
Awards
 

Estimated Future
Payouts Under

Equity Incentive Plan
Awards

  All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(#)
 

Grant
Date Fair
Value

of Stock

and

Options

Awards (1)

  Threshold
($)
  Target
($)
  Maxi-
mum
($)
  Thres-
hold
(#)
  Target   Maximum
(a)   (b)        (c)   (d)   (e)   (f)   (g)   (h)   (i)   (l)

Dr. Leighton

                                       

PRSUs (2)

  3/1/21   2/18/21           42,414   84,848     4,177,727

Time-Vesting RSUs (3)

  3/1/21   2/18/21               40,650   3,899,961

Relative TSR-Based RSUs (4)

  3/1/21   2/18/21         5,081   20,325   40,650     1,769,291

Annual Incentive Plan (5)

  2/22/22   2/18/21           1,250,000   2,750,000     2,104,594

Mr. McGowan

PRSUs (2)

  3/1/21   2/18/21           11,987   23,974     1,179,428

Time-Vesting RSUs (3)

  3/1/21   2/18/21               12,507   1,199,922

Relative TSR-Based RSUs (4)

  3/1/21   2/18/21         1,563   6,253   12,506     544,324

Annual Incentive Plan (5)

  2/22/22   2/18/21           420,358   924,788     707,746

Mr. Ahola

PRSUs (2)

  3/1/21   2/18/21           8,370   16,740     824,299

Time-Vesting RSUs (3)

  3/1/21   2/18/21               8,130   779,992

Relative TSR-Based RSUs (4)

  3/1/21   2/18/21         1,016   4,065   8,130     353,858

Annual Incentive Plan (5)

  2/22/22   2/18/21           355,908   782,998     599,233

Dr. Blumofe

PRSUs (2)

  3/1/21   2/18/21           12,395   24,790     1,223,765

Time-Vesting RSUs (3)

  3/1/21   2/18/21               9,589   919,969

Relative TSR-Based RSUs (4)

  3/1/21   2/18/21         1,199   4,794   9,588     417,318

Annual Incentive Plan (5)

  2/22/22   2/18/21           404,000   888,800     680,205

Mr. Karon

PRSUs (3)

  3/1/21   2/18/21           14,900   29,800     1,465,910

Time-Vesting RSUs (4)

  3/1/21   2/18/21               15,655   1,501,941

Relative TSR-Based RSUs (5)

  3/1/21   2/18/21         1,957   7,827   15,654     681,340

Annual Incentive Plan (5)

  2/22/22   2/18/21           520,909   1,146,000     877,041

Mr. McConnell (7)

PRSUs (2)

  3/1/21   2/18/21           19,394   38,788     1,911,635

Time-Vesting RSUs (3)

  3/1/21   2/18/21               17,510   1,679,909

Relative TSR-Based RSUs (4)

  3/1/21   2/18/21         2,189   8,755   17,510     762,123

Annual Incentive Plan (6)

  12/10/21   2/18/21           566,923   1,247,231     566,910

 

(1)

Amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for equity awards granted to the NEO during 2021 and assumes target level of achievement for both types of performance-based awards. The assumptions we use in calculating these amounts are discussed in Note 18 of the notes to our consolidated financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K, which accompanies this Proxy Statement, except that the amounts reflected in the table above exclude the impact of estimated forfeitures of equity awards.

 

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Table of Contents
(2)

Consists of PRSUs eligible for vesting in 2024. Grant date fair value is calculated based on the number of shares issuable at target achievement level. Because the performance-related component is based on separate measurements of our financial performance for each year in the three-year performance cycle, FASB ASC Topic 718 requires the grant date fair value to be calculated at the commencement of each separate year of the performance cycle when the respective performance measures are approved. The amounts for fiscal 2021 represent the grant date fair value for PRSUs at target granted in 2019, 2020 and 2021 for the fiscal 2021 tranche of such awards. The amounts do not include shares that may be earned based on performance against 2022 and 2023 targets.

(3)

Time-vesting RSUs vest in three equal annual installments over a three-year period from the date of grant.

(4)

Consists of relative TSR-Based RSUs eligible for vesting in 2024. The grant date fair value is calculated based on a Monte Carlo valuation.

(5)

Consists of a performance-based annual incentive plan bonus award that was denominated in dollars when the final performance outcome was determined on February 22, 2022 but was payable in shares of our common stock calculated based on a closing sale price of $100.44 on such date. The actual number of shares issued was 20,953 for Dr. Leighton, 7,046 for Mr. McGowan, 5,966 for Mr. Ahola, 6,772 for Dr. Blumofe and 8,731 for Mr. Karon.

(6)

Consists of a performance-based annual incentive plan bonus award that was denominated in dollars at the time of approval on December 6, 2021 but was payable in shares of our common stock calculated based on a closing sale price of $111.05 on such date. The actual number of shares issued was 5,105 for Mr. McConnell.

(7)

On December 6, 2021, the TL&C Committee approved a fiscal 2021 bonus payout, prorated to reflect his previously reported resignation, payable in 5,105 restricted stock units which vested on December 10, 2021. Due to Mr. McConnell’s departure from the Company on December 13, 2021, Mr. McConnell forfeited his outstanding long-term incentive awards in their entirety, including the Time-Vesting RSUs, PRSUs and Relative TSR-Based RSUs granted in 2021, in accordance with the terms of the 2013 Stock Incentive Plan and applicable award agreement.

 

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Outstanding Equity Awards at December 31, 2021

The following table sets forth information with respect to outstanding equity incentive awards held by our NEOs as of December 31, 2021. Following Mr. McConnell’s departure from the Company on December 13, 2021, all of his unvested equity incentive awards were forfeited in their entirety in accordance with the terms of the 2013 Stock Incentive Plan and applicable award agreement.

 

 

        

Stock Awards

Name/Award   Award
Grant Date
   

Number of
Shares or
Units of
Stock That
Have Not
Vested

(#)

 

Market
Value of
Shares or

Units of
Stock That
Have Not

Vested

($) (1)

 

Equity
Incentive
Plan
Awards:
Number of

Unearned

Shares,
Units or
Other
Rights

That Have

Not Vested

(#)

 

Equity
Incentive
Plan
Awards:
Market or
Payout
Value of

Unearned
Shares,
Units or
Other
Rights

That Have
Not Vested

($) (1)

(a)

        

(g)

 

(h)

 

(i)

 

(j)

 

Dr. Leighton

 

           

 

2019 Time-Vesting RSUs (2)

 

    3/01/19     15,943   1,865,969    

 

2019 PRSUs (3)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

73,012

 

 

 

8,545,324

 

 

 

 

 

 

 

 

2019 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

16,524

 

 

 

1,933,969

 

 

 

 

 

 

 

 

2020 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

25,846

 

 

 

3,025,016

 

 

 

 

 

 

 

 

2020 PRSUs (5)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

38,147

 

 

 

4,464,725

 

 

25,846

 

 

 

3,025,016

 

 

2020 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

 

 

 

 

 

 

19,384

 

 

 

2,268,703

 

 

2021 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

40,650

 

 

 

4,757,676

 

 

 

 

 

 

 

 

2021 PRSUs (6)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

21,978

 

 

 

2,572,305

 

 

 

54,200

 

 

 

6,343,568

 

 

2021 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

 

 

 

 

 

 

20,325

 

 

 

2,378,838

 

 

Mr. McGowan

 

           

 

2019 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

4,127

 

 

 

483,024

 

 

 

 

 

 

 

 

2019 PRSUs (3)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

18,896

 

 

 

2,211,588

 

 

 

 

 

 

 

 

2019 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

4,277

 

 

 

500,580

 

 

 

 

 

 

 

 

2020 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

7,385

 

 

 

864,340

 

 

 

 

 

 

 

 

2020 PRSUs (5)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

10,898

 

 

 

1,272,502

 

 

 

7,384

 

 

 

864,223

 

 

2020 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

 

 

 

 

 

 

5,538

 

 

 

648,168

 

 

2021 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

12,507

 

 

 

1,463,819

 

 

 

 

 

 

 

 

2021 PRSUs (6)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

6,762

 

 

 

791,424

 

 

 

16,676

 

 

 

1,951,759

 

 

2021 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

 

 

 

 

 

 

6,253

 

 

 

731,851

 

 

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Stock Awards

Name/Award   Award
Grant Date
   

Number of
Shares or
Units of
Stock That
Have Not
Vested

(#)

 

Market
Value of
Shares or

Units of
Stock That
Have Not

Vested

($) (1)

 

Equity
Incentive
Plan
Awards:
Number of

Unearned

Shares,
Units or
Other
Rights

That Have

Not Vested

(#)

 

Equity
Incentive
Plan
Awards:
Market or
Payout
Value of

Unearned
Shares,
Units or
Other
Rights

That Have
Not Vested

($) (1)

(a)

        

(g)

 

(h)

 

(i)

 

(j)

 

Mr. Ahola

 

           

 

2019 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

3,001

 

 

 

351,237

 

 

 

 

 

 

 

 

2019 PRSUs (3)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

14,255

 

 

 

1,668,405

 

 

 

 

 

 

 

 

2019 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

3,111

 

 

 

364,111

 

 

 

 

 

 

 

 

 

2020 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

5,317

 

 

 

622,302

 

 

 

 

 

 

 

2020 PRSUs (5)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

7,846

 

 

 

918,296

 

 

 

5,318

 

 

 

622,419

 

 

2020 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

 

 

 

 

 

 

3,987

 

 

 

466,638

 

 

2021 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

8,130

 

 

 

951,535

 

 

 

 

 

 

 

 

2021 PRSUs (6)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

4,395

 

 

 

514,391

 

 

 

10,840

 

 

 

1,268,714

 

 

2021 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

 

 

 

 

 

 

4,065

 

 

 

475,768

 

 

Dr. Blumofe

 

           

 

2019 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

5,065

 

 

 

592,808

 

 

 

 

 

 

 

 

2019 PRSUs (3)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

23,912

 

 

 

2,714,392

 

 

 

 

 

 

 

 

2019 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

5,249

 

 

 

614,343

 

 

 

 

 

 

 

 

2020 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

8,271

 

 

 

968,038

 

 

 

 

 

 

 

 

2020 PRSUs (5)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

12,205

 

 

 

1,428,473

 

 

 

8,270

 

 

 

967,921

 

 

2020 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

 

 

 

 

 

 

6,202

 

 

 

725,882

 

 

2021 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

9,589

 

 

 

1,122,297

 

 

 

 

 

 

 

 

2021 PRSUs (6)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

5,183

 

 

 

606,618

 

 

 

12,786

 

 

 

1,496,473

 

 

2021 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

 

 

 

 

 

 

4,794

 

 

 

561,090

 

 

Mr. Karon

 

           

 

2019 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

5,252

 

 

 

614,694

 

 

 

 

 

 

 

 

2019 PRSUs (3)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

24,049

 

 

 

2,814,695

 

 

 

 

 

 

 

 

2019 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/01/19

 

 

 

 

 

 

5,444

 

 

 

637,166

 

 

 

 

 

 

 

 

2020 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

8,861

 

 

 

1,037,091

 

 

 

 

 

 

 

 

2020 PRSUs (5)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

13,076

 

 

 

1,530,415

 

 

 

8,862

 

 

 

1,037,208

 

 

2020 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/03/20

 

 

 

 

 

 

 

 

 

 

 

 

6,645

 

 

 

777,731

 

 

2021 Time-Vesting RSUs (2)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

15,655

 

 

 

1,832,261

 

 

 

 

 

 

 

 

2021 PRSUs (6)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

8,463

 

 

 

990,510

 

 

 

20,874

 

 

 

2,443,093

 

 

 

2021 Relative TSR-Based RSUs (4)

 

 

 

 

 

 

3/01/21

 

 

 

 

 

 

 

 

 

 

 

 

7,827

 

 

 

916,072

 

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Table of Contents
(1)

Based on the $117.04 closing sale price of our common stock on December 31, 2021 as reported by the Nasdaq Global Select Market.

(2)

Consists of time-vesting RSUs that vest in three equal annual installments on the first, second and third anniversaries of the date of grant.

(3)

Consists of performance-based RSUs that vest based on achievement against two targets for each of 2019, 2020 and 2021; such shares vested on February 21, 2022, the date that financial results for 2021 were certified by the TL&C Committee. Reflects actual number of shares earned based on performance against 2019, 2020 and 2021 targets.

(4)

For relative TSR-Based RSUs granted in 2019, reflects the actual number of RSUs earned. For relative TSR-based RSUs granted in 2020 and 2021, assumes target level of performance.

(5)

Consists of performance-based RSUs that vest based on achievement against two targets for each of 2020, 2021 and 2022; earned shares vest on the date that financial results for 2022 are certified by the TL&C Committee. Reflects actual number of shares earned based on performance against 2020 and 2021 targets and maximum number of shares issuable in respect of performance against 2022 targets.

(6)

Consists of performance-based RSUs that vest based on achievement against two targets for each of 2021, 2022 and 2023; earned shares vest on the date that financial results for 2023 are certified by the TL&C Committee. Reflects actual number of shares earned based on performance against 2021 targets and maximum number of shares issuable in respect of performance against 2022 and 2023 targets.

2021 Option Exercises and Stock Vested

The following table sets forth the value realized upon vesting of RSU awards in 2021. There were no stock option exercises by our NEOs in 2021.

 

    

 

Stock Awards

 

 

Name

(a)

 

  

 

Number of Shares

Acquired on

Vesting (#) (1)

(d)

 

    

 

Value

Realized on

Vesting ($) (2)

(e)

 

 

 

Dr. Leighton

 

  

 

 

 

 

195,400

 

 

 

 

  

 

 

 

 

19,915,925

 

 

 

 

 

Mr. McGowan

 

  

 

 

 

 

30,854

 

 

 

 

  

 

 

 

 

3,122,637

 

 

 

 

 

Mr. Ahola

 

  

 

 

 

 

33,319

 

 

 

 

  

 

 

 

 

3,382,815

 

 

 

 

 

Dr. Blumofe

 

  

 

 

 

 

62,189

 

 

 

 

  

 

 

 

 

6,338,153

 

 

 

 

 

Mr. Karon

 

  

 

 

 

 

55,310

 

 

 

 

  

 

 

 

 

5,623,531

 

 

 

 

 

Mr. McConnell (3)

 

  

 

 

 

 

95,155

 

 

 

 

  

 

 

 

 

9,747,255

 

 

 

 

 

(1)

Consists of RSUs vesting during 2021.

(2)

Calculated by multiplying the number of shares vested by the fair market value of one share of our common stock on the vesting date used to calculate taxable compensation to the NEO.

(3)

Mr. McConnell departed the Company on December 13, 2021.

 

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Post-Employment Compensation and Other Employment Agreements

Severance Arrangements. Each of our currently-serving NEOs, other than Dr. Leighton, is eligible to participate in the Executive Severance Pay Plan, which we refer to herein as the Severance Plan. Under the Severance Plan, participants who are terminated for any reason other than “cause” (as defined in the Severance Plan) and have signed a separation and release agreement acceptable to Akamai are entitled to:

 

🌑   

a lump sum payment equal to one year of the participant’s then-current base salary;

 

🌑   

a lump sum payment equal to the annual bonus at target that would have been payable to the executive officer under Akamai’s then-current annual incentive plan, if any, in the year of the executive officer’s termination had both Akamai and the executive officer achieved the target bonus objectives set forth in such executive’s bonus plan during such year; and

 

🌑   

a payment equal to 12 times the monthly premium for continued health and dental insurance coverage.

Executive Equity and Change in Control Agreements. Each of our NEOs had entered into Change in Control Agreements (except in the case of Dr. Leighton) that expired as of December 31, 2021 (the “2021 Change in Control Agreements”) and RSU grant agreements that provide for acceleration of all or a portion of equity awards held by such NEOs in connection with a termination other than for cause or the NEO’s voluntary resignation for good reason within the 12 months following a change in control of Akamai.

Under the terms of the 2021 Change in Control Agreements, in the event of a termination without cause (as defined in the agreement), or a resignation for “good reason” (as defined in the agreement) within one year following a change in control of Akamai, such NEOs will receive:

 

🌑   

full acceleration of stock options so that such stock options become 100% vested and exercisable;

 

🌑   

full acceleration of time-vesting RSUs;

 

🌑   

a lump sum payment equal to one year of the NEO’s then-current base salary;

 

🌑   

a prorated lump sum payment equal to the annual bonus at target that would have been payable to the NEO under our annual incentive plan in effect immediately before the change in control event; and

 

🌑   

reimbursement for up to 12 months of health and dental insurance coverage.

 

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Under the terms of grant agreements governing PRSUs and relative TSR-Based RSUs, such awards (at the target level) accelerate immediately prior to a change in control of Akamai if the awards are not assumed by the acquiring company. If the awards are assumed by the acquiring company and the NEO is subsequently terminated without “cause” of for “good reason,” each as defined in the appliable grant agreement, within 12 months of the change in control, vesting of such awards accelerates at the target level of performance. If PRSUs and relative TSR-Based RSUs are assumed by the acquiror, they automatically convert into time-vesting RSUs at the target level. See “Potential Payments Upon Termination or Change in Control” below for a description of the benefits payable to our NEOs upon a change in control of Akamai.

In February 2022, the TL&C Committee approved a new form of change in control and severance agreement (the “2022 Change in Control Agreement”) for its executive officers and members of senior management. The 2022 Change in Control Agreement provides, if the executive is terminated within one year of the change in control event other than for “cause” or the executive terminates his or her employment for “good reason,” each as defined in the 2022 Change in Control Agreement, the executive is entitled to a lump sum payment equal to the executive’s target annual incentive bonus under our bonus plan multiplied by a ratio of the number of days in the year before the termination date divided by the total number of days in the year. In addition, the executive would receive severance pay and benefits, including a lump sum payment equal to the executive’s base salary, a lump sum payment equal to the executive’s then current target annual incentive bonus plan and reimbursement for up to twelve months of the amount paid by the executive for continued health and dental insurance coverage. Unvested equity awards are treated as set forth in grant agreements.

Dr. Leighton’s Employment Offer Letter Agreement. In February 2013, we entered into a letter agreement with Dr. Leighton in connection with his becoming our Chief Executive Officer; the agreement was amended in November 2015 to eliminate single-trigger vesting of PRSUs following a change in control for awards issued after that date. The amended agreement provides that, in addition to his annual salary, Dr. Leighton is eligible to receive a bonus in any year that Akamai enters into a bonus plan for its senior executive team. Either Akamai or Dr. Leighton may terminate the agreement upon 30 days’ advance written notice to the other party; provided however, that in the event Dr. Leighton is terminated for “cause” (as defined in the amended agreement), Akamai may elect to pay Dr. Leighton an amount equal to 30 days of his then-current salary in lieu of providing him 30 days’ notice of the termination of his employment. If Dr. Leighton is terminated other than for cause or terminates his employment for “good reason” (as defined in the letter agreement) following a “change in control” (as defined in the letter agreement) of Akamai, he shall be entitled to:

 

🌑   

accelerated vesting of any options and any unvested RSUs held by him;

 

🌑   

a lump sum cash payment equal to one year of his then-current base salary; and

 

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