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Form PRE 14A AKAMAI TECHNOLOGIES INC For: May 10

March 2, 2024 6:08 AM EST
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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.
 
 
 


Dear Fellow Stockholders:

As we celebrated our 25th year in 2023, Akamai made tremendous progress toward realizing our goal to become the world’s most distributed cloud platform with leading solutions for content delivery, security, and cloud computing. With our strategy and expanded portfolio, we have transformed Akamai from a content delivery pioneer into the cloud company that powers and protects life online.

Total revenue in 2023 was $3.8 billion, up more than 5% year-over-year and up nearly 6% over 2022 adjusted for foreign exchange. For the first time ever, security represented the largest share of Akamai’s annual revenue, $1.8 billion, after growing 14% year-over-year and up 15% year-over-year adjusted for foreign exchange. This marked a significant milestone for our business since our expansion into security a decade ago. In another sign of our ability to expand Akamai’s business, our compute segment generated more than $500 million in revenue for the full year 2023, growing 24% year-over-year and up 25% year-over-year adjusted for foreign exchange. Combined, security and compute represented 60% of Akamai’s total revenue in 2023.

In addition to driving revenue expansion in rapidly growing market segments, we continued to optimize the business to enhance profitability. Akamai’s increased profitability resulted in enviable cash generation in 2023, as operating cash flow reached $1.35 billion.

We also continued to increase shareholder value by spending $654 million to buy back 7.8 million shares in 2023. Akamai has reduced the number of shares outstanding by approximately 15% since January 1, 2013. Akamai’s share price increased 40% in 2023, outperforming the S&P 500 (up 24%) while coming in slightly behind the NASDAQ composite (up 43%).

We are very excited about the growth opportunity we see in the large and rapidly growing cloud computing market, which Akamai entered in 2022 with our acquisition of Linode, our most significant acquisition in more than 20 years. Our plan is for cloud computing to become Akamai’s next billion-dollar business and the third pillar of our business along with content delivery and security.

We made great progress on our plan in 2023 with our launch of Akamai Connected Cloud and the rapid rollout of new core computing regions around the world, now 25 in total. This year, as part of our push to build the world’s most distributed cloud computing platform, Akamai plans to take cloud computing to the edge, by embedding cloud computing capabilities into our massive edge network that already powers our content delivery and security solutions.

From the day we entered this market, our cloud strategy has differed from the giant cloud providers’ centralized data center approach and the approaches of smaller CDN vendors who lack our network scale, performance, and global reach. By combining the computing power of our cloud platform with the proximity and efficiency of the edge, we are focused on positioning Akamai to put workloads closer to users, devices and sources of data than any other cloud provider. We are working to offer customers a new kind of cloud, one designed to meet the needs of modern applications that require higher performance, lower-latency, and true global scalability that current cloud architectures do not provide.

Last year, Akamai became a customer of our own cloud computing platform. By migrating workloads off of our previous cloud providers and onto Akamai Connected Cloud, we significantly reduced our spending with third-party cloud providers in 2023 and we plan to save even more in 2024. As a customer of our own cloud services, we gain unique insight into our value proposition for customers, helping us win customers through the power of our example and lessons learned from our experience as a customer.

In security, ransomware attacks continued to generate headlines in 2023, fueling customer interest in our market leading segmentation solution, which generated nearly $100 million in revenue last year. Application Security was another leading driver of Akamai’s security growth in 2023, as more customers identified API security risks as a top priority to manage. We expect these trends to continue to drive customer interest in Akamai’s security portfolio this year.

Our content delivery portfolio generated more than $1.5 billion in revenue in 2023. As the CDN leader, Akamai supports many of the world’s leading brands in delivering reliable, secure, and near-flawless online experiences.

Akamai’s business also benefits from strong synergy across our content delivery, security, and cloud computing offerings. Having all three product portfolios on one integrated platform enhances our top line when long-time delivery customers add our security and cloud computing products. And this synergy improves our bottom line as we capture the cost benefits of using a single infrastructure to provide security and cloud computing services as well as content delivery.

Akamai’s culture continued to earn our company recognition as a great place to work. The Wall Street Journal also once again named Akamai to its list of America’s best-run companies, The Management Top 250. This ranking of management effectiveness by the Drucker Institute analyzed publicly traded companies on 34 indicators across customer satisfaction, innovation, financial strength, employee engagement and development, and social responsibility.

I thank our highly talented employees for their hard work in a year that was especially difficult for people in certain parts of the world. Their work is what enables Akamai to make life better for billions of people, trillions of times a day.


We are hosting Akamai’s 2024 Annual Meeting of Stockholders on May 10, 2024, at 9:30 a.m. Eastern time. As in previous years, we will hold the meeting as a virtual-only event, accessible through a link on our investor relations website (www.ir.akamai.com). Details about how to access the meeting and the business to be conducted are more fully described in our Notice of 2024 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.

 

LOGO

 

Dr. Tom Leighton
Co-Founder and Chief Executive Officer


AKAMAI TECHNOLOGIES, INC.

145 BROADWAY

CAMBRIDGE, MASSACHUSETTS 02142

NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 10, 2024

The 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of Akamai Technologies, Inc. (“Akamai” or the “Company”) will be held on Friday, May 10, 2024, at 9:30 a.m., Eastern Time, via the internet at a virtual web conference at meetnow.global/MNKG6PZ.

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 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 2025 Annual Meeting of Stockholders;

 

  (2)

To approve an amendment to our Second Amended and Restated 2013 Stock Incentive Plan to increase the number of shares of common stock authorized for issuance thereunder by 5,000,000 shares (“Plan Proposal”);

 

  (3)

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

 

  (4)

To approve our Second Amended and Restated Certificate of Incorporation to limit the liability of certain officers as permitted by recent amendments to Delaware law and certain additional clarifying changes (the “Exculpation Proposal”);

 

  (5)

To ratify the selection of PricewaterhouseCoopers LLP as our independent auditors for the fiscal year ending December 31, 2024;

 

  (6)

To adjourn the Annual Meeting to a later date or dates, if necessary, to solicit additional proxies to establish a quorum or if there are insufficient votes to adopt any proposal (other than Proposal 7) (“Adjournment Proposal”);

 

  (7)

To vote upon a shareholder proposal regarding a simple majority vote, if properly presented at the Annual Meeting; and

 

  (8)

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 15, 2024 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 entitled to vote at the meeting will be available at least 10 days prior to the Annual Meeting at 145 Broadway, Cambridge, Massachusetts 02142.

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,

LOGO

 

Aaron S. Ahola

Executive Vice President, General Counsel and Corporate Secretary

 

Cambridge, Massachusetts

March [ ], 2024


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.


TABLE OF CONTENTS

 

         Page
Number
 
Executive Summary        2  
Part One   Corporate Governance Highlights — Our Commitment to Environmental, Social and Governance Matters      9  
Part Two   Executive Compensation Matters      46  
Part Three   Company Proposals      91  
 

Proposal 1 Election of Directors

     91  
 

Proposal 2 Second Amendment of Second Amended and Restated 2013 Stock Incentive Plan

     92  
 

Proposal 3 Advisory Vote on Executive Compensation

     109  
 

Proposal 4 Approval of our Amended and Restated Certificate of Incorporation

     110  
 

Proposal 5 Adjournment Proposal

     113  
 

Proposal 6 Ratification of Selection of Independent Auditors

     114  
Part Four  

Shareholder Proposal

     116  
 

Proposal 7 Shareholder Majority Vote Proposal

     116  
Part Five  

Information About These Proxy Materials and Voting

     120  

 


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,” “intend,” “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 and cloud computing solutions, or inability to increase profitability as projected; lack of market acceptance of our 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 wars involving Ukraine and Israel), civil unrest, adverse climate or weather related events, or 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, 2023 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 2023 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, 2023, 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, trillions 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, stream content, share videos with friends and so much more. These digital experiences make up life’s experiences — and Akamai helps make them possible.

With our combination of cloud computing, security and content 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 working to secure their data, applications, infrastructure, and people.

We’ve built a platform that spans more than 4,100 edge points-of-presence in approximately 130 countries and nearly 750 cities, with roughly 1,200 network partners. Akamai’s global infrastructure brings proximity, scale, security and innovation 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, wellness, 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, and the world is more connected than ever with more people accessing a myriad of apps on more devices, from more places around the world. This connectivity presents opportunities for businesses to improve productivity and efficiency, expand to new markets, support remote or hybrid workforces, build brand affinity and meet rising user expectations for immersive and

 

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personalized experiences. To meet the digital demands of customers and employees, organizations are re-evaluating how they build, deliver, secure and scale new digital apps and services.

The centralized, data center-centric model of many other cloud providers was not designed for the challenges that many companies face today — challenges that require putting workloads closer to users.

At the same time, security threats are growing more prevalent and advanced. Applications and computing infrastructure no longer sit solely in data centers behind the firewall, making perimeter defense insufficient and making cybersecurity more challenging.

These trends continue to accelerate, and it is our view that the internet’s role in transforming the way we exchange ideas and information and conduct business is more vital than ever. Our strategy is to help continue to drive this transformation by offering compute, security and content delivery services on Akamai Connected Cloud that empower our customers to compete and operate with the scale, resilience and efficiency that their businesses demand.

Akamai Connected Cloud offers a continuum of computing services designed to enable developers to efficiently build, deploy and secure performant applications and workloads that require single-digit millisecond latency and global reach. The scale and distribution of our platform provides us with visibility and insight into traffic volumes, congestion, attack patterns, vulnerabilities and other activities across the internet’s complex intersections of networks and systems. Leveraging these insights, Akamai offers solutions designed to protect our customers from threats and attacks, while empowering them to securely deliver digital experiences to engage, entertain and interact with their customers. With Akamai Connected Cloud, we bring applications and experiences closer to users and devices — and help keep attacks and threats farther away.

We are organized into two groups, both of which utilize Akamai Connected Cloud and our global sales organization: the Security Technology Group and the Cloud Technology Group. The Security Technology Group offers solutions that are designed to keep infrastructure, websites, applications and users safe, while the Cloud Technology Group offers solutions that enable business online, cloud computing, media delivery, and web performance solutions.

 

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Akamai 2023 Performance Highlights

In 2023, Akamai realized achievements across our operations, including the following highlights.

 

 

Performance Highlights

 

 

🌑   Acquired Neosec, Inc. to complement our application and API security portfolio by extending our visibility and prevention capabilities further into the growing API threat landscape, and StorageOS, Inc., also known as Ondat, to strengthen our cloud computing offerings. We also added additional delivery customers to our Akamai Connected Cloud platform through asset acquisitions of select enterprise customer contracts from StackPath, LLC and Lumen Technologies, Inc.

 

🌑   Total Revenue grew to $3.8 billion in 2023.

 

🌑   In 2023, revenue from our security and compute solutions reached $2.3 billion, representing 60% of our total revenue. Revenue from our security solutions grew 14% year-over-year and up 15% year-over-year adjusted for foreign exchange and revenue from our compute solutions grew 24% year-over-year and up 25% year-over-year adjusted for foreign exchange.

 

🌑   Operating Cash Flow in 2023 reached $1.35 billion.

 

🌑   Continued to garner recognition for our ethical, sustainability, and governance practices by organizations focused on environmental, social, and corporate governance matters, including Forbes, Newsweek, JUST Capital, the Dow Jones Sustainability Index, FTSE4Good Index, and the Humans Rights Campaign.

 

🌑   We rank as a Great Place to Work in several surveys, including in India, Poland, Boston, among other locations. Akamai was included this year in the Bloomberg Gender-Equality Index, the JUST 100 (ranked #1 in the Internet sector for workers and the environment), the Top 100 Internship Programs ranked by Yello, and Battery Ventures ranking of “Highest Rated Cloud Companies to Work For.”

 

🌑   Earned recognition as Customers’ Choice in the Gartner Peer Insights ‘Voice of the Customer’ report for Cloud Web Application and API Protection (WAAP), as well as recognition as a Leader across multiple analyst competitive evaluations, including IDC MarketScape for Network Edge Security as a Service (NESaaS), IDC MarketScape Zero Trust Network Access, KuppingerCole Leadership Compass API Security and Management, KuppingerCole Leadership Compass Fraud Reduction Intelligence Platforms (FRIP).

 

 

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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 (“GAAP”), for the past three fiscal years.

 

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In particular, our security products have 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 company performance and stockholder interests. We work to achieve this objective by allocating the majority of our executive officers’ target compensation to performance-based incentive compensation. In particular, we grant performance-based equity awards that directly link the value of executive compensation to our stock price performance and the achievement of multi-year financial performance objectives and link annual bonuses to performance against specific annual financial and non-financial measures. Key aspects of our 2023 executive compensation program are highlighted below.

 

LOGO

Our 2023 annual bonus plan, payable in shares of vested common stock for our executive officers, was based on the achievement of pre-defined performance metrics and incorporated a payout modifier based on our achievement against pre-determined environmental, social and governance goals 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:

 

  🌑   

continually refining our corporate governance policies;

 

  🌑   

modifying annual bonuses based on the achievement of ESG goals;

 

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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 ESG issues they care about most.

Our ESG Office, comprised of members of our management team and other dedicated professionals, 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, privacy, security and the Akamai Foundation.

 

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Good Governance

Overview of the Board of Directors

Our Board of Directors, which we will often refer to as the Board below, currently consists of 10 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 certain experience and 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 seven incumbent directors transition off the Board and have added five new directors. 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 of many factors in our holistic approach. A summary of the tenure of our current directors as of December 31, 2023 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 (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, 2024. 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, 2024)
Total Number of Directors    10
      Female    Male    Non-Binary   

Did Not

Disclose

Gender

 Part I: Gender Identity

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

 Directors

       3        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

       1        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 (including our Chief Executive Officer, our Chief Financial Officer and our Chief Accounting Officer) and other employees. 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, 2023. 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.

 

 

LOGO

Sustainability

As a vital part of the modern internet, Akamai understands its role in minimizing the environmental impact caused by its operations. We have set our sights on achieving five goals by 2030 to uphold this responsibility:

 

  🌑   

Net-Zero Emissions – By 2030, we aim to mitigate 100% of our Scope 1 and Scope 2 greenhouse gas emissions related to Akamai Connected Cloud. Akamai is participating in the Science-Based Targets Business Ambition for the 1.5°C campaign, which helps guide us in the pursuit of our objectives.

 

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  🌑   

100% Renewable – Akamai has set the goal of using 100% renewable power across Akamai Connected Cloud by 2030. We plan to achieve this by procuring clean and renewable power sources and working 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.

 

  🌑   

Build Efficiency – Akamai has set a goal to make Akamai Connected Cloud more energy-efficient. To achieve this goal, we are constantly working toward innovating software and hardware optimizations across our platform, along with seeking ways to reduce the overall power consumption required to run our network.

 

  🌑   

Engage Suppliers – Akamai aims to collaborate with our suppliers to address climate change and minimize supply chain risks and promote sustainable practices among our suppliers. Our goal is to encourage and prioritize suppliers who adopt environmentally responsible practices in their operations.

 

  🌑   

Circularity – Akamai takes a circular approach, when feasible, to accomplish our objectives under our sustainability program. To fulfill this goal, we implement and follow e-Stewards e-Waste practices, monitor and seek continued improvements of our environmental progress through our environmental management system, encourage customer and employee engagement, organize community events and promote public awareness around the benefits of Akamai’s sustainability approach.

Our People

Promoting Inclusion, Diversity, and Engagement in the Workplace

Akamai remains committed to providing a work environment and culture where all employees are able to give, thrive and be productive. As an ever-expanding global company, our diverse workforce combines employees from different cultures, backgrounds, styles and experiences. We believe that bringing together an engaged and diverse workforce in an inclusive environment captures the experiences, cultures, talents and perspectives that continue to drive innovation and support our business strategy. 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 Inclusion, Diversity and Engagement strategy continues to prioritize four focus areas:

 

  🌑   

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

 

  🌑   

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

 

  🌑   

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.

Over the years, we have implemented and sustained a number of initiatives to foster inclusivity and to highlight the need for representation at all levels, including: incorporating an ESG component in our executive bonus plan; incorporating inclusion, diversity and engagement goals in both our corporate level annual Mission Critical Goals and the individual performance goals of our senior personnel; supporting eight Employee Resource Groups that are employee-led, voluntary internal global networks open for all to come together to help collaborate, which are focused on building community, creating opportunities for development and creating a positive business impact, and introducing and reinforcing 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 proud to be 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 aimed at underrepresented talent and others (e.g., 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 partner with the Women Business Collaborative as a Company of Purpose. We post our latest EEO-1 report on our website, which we file with the U.S. Equal Employment Opportunity Commission and summarizes the demographics of our U.S. employees based on federally mandated categories. 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. 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.

Employee Well-Being, Health and Safety

Our employees are our most valuable resource, and they are fundamental to our innovation, our ability to remain nimble and resilient amidst changing market dynamics, the success of our technology, 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

 

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implementing health and safety procedures. We seek feedback on our initiatives from employees through a variety of mechanisms, including quarterly employee engagement surveys.

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, wellness days, adoption and fertility assistance, employee assistance programs, tuition assistance, fitness reimbursements and holistic wellness programs, among others. Our wellness programs include educational offerings on healthy lifestyles, access to mental health experts and access to ergonomic advice and equipment.

Given our proven ability to deliver results while working virtually, we have designated over 95% of our employees as flexible with the ability to perform their responsibilities remotely. We believe flexible workforce opportunities 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 rolled out our FlexBase program in May 2022, which allows our workforce designated as flexible to choose whether they want to work from an Akamai office, their home office or a combination of both. As part of the rollout of the FlexBase program, we designed and developed a number of tools and resources to support this program. Those include content aimed at leaders for how to lead in a hybrid work environment, as well as content targeted at all employees, focusing on how to thrive in a hybrid work environment. Our IT team offers productivity “tech-bytes,” which are bite-sized articles that provide quick access to productivity enhancing tips and tricks using Akamai’s productivity tools.

Striving for Fair and Equitable Pay

Pay equity is core to our values at Akamai. We are committed to fostering an inclusive workforce that welcomes diversity and we have strived to design our compensation systems to be fair and equitable for all employees globally. Because this is a human process, it’s essential for us to ensure that we’re meeting our intended outcomes. Since signing the White House Equal Pay Pledge in 2016, we have committed to monitoring our pay practices and making adjustments when we deem it advisable. Akamai conducts biennial internal pay equity analyses (with the assistance of a nationally recognized outside consultant), which include gender globally, and race and gender in the United States. We completed our most recent pay equity analysis in 2023.

Responsible Business Practices

Ethics and Compliance

We work with internal stakeholders to develop risk-based procedures and internal controls integrated with various business processes across Akamai. These procedures focus on

 

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ethical conduct, transparency, anti-bribery, sanctions and conflicts of interest. We also actively monitor changes in business climate and emerging laws and regulations to assess risks and adapt our procedures. Akamai maintains an independently hosted Ethics Hotline for all employees and stakeholders that is also available on our website at akamai.ethicspoint.com. Reported concerns are investigated and reviewed quarterly with the Audit Committee.

Human Rights

Respect for human rights is a fundamental value at Akamai. We are committed to providing an inclusive environment that discourages inappropriate behavior, unlawful harassment and discrimination. We are proud to be consistently recognized as a great place to work in various locations in which we operate.

Our Human Rights Policy is available on our website at https://www.akamai.com/company/corporate-responsibility/human-rights. It 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 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.

We have also adopted a Modern Slavery and Human Trafficking Statement available on our website at https://www.akamai.com/site/en/documents/akamai/2023/modern-slavery-and-human-trafficking-statement.pdf. It reflects our belief that respect for human rights is fundamental to unlocking the potential of the internet and an essential value for our employees and the communities in which we operate. We are committed to providing an inclusive environment that is free from illegal and inappropriate behavior.

Data, Privacy and Security

Information and Cyber Security

The data that flows through Akamai’s globally distributed content delivery network is critical to millions of organizations and billions of users worldwide. Protecting that data from cyber threats is important to the position of trust we maintain with our customers and stakeholders. Akamai has a well-established governance structure that enhances our ability to effectively identify, assess, and mitigate cyber risks.

A dedicated Information Security Committee works cross-functionally with other Akamai departments, including legal, business, policy and technical functions, as appropriate, to exchange information related to cybersecurity. At the Board level, the Audit Committee receives at least quarterly security updates.

Commitment to Privacy Best Practices

In carrying out our mission to power and protect life online, we accept that the way we process personal data is a critical part of the trust that our customers, employees and the

 

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internet community places in us. We also understand the importance of the data protection rights of internet users, customers and employees and compliance with the data protection laws of the countries in which we operate. Akamai’s Data Protection and Privacy Program is designed to protect the personal information that we process through an ethical data program based on privacy principles. Our program has five main components that we work toward achieving:

Principles-based Compliance:

 

  🌑   

Established principles based upon fundamental privacy principles that underlie virtually all privacy laws globally, including: Collection Limitation, Data Quality, Purpose Limitation, Use Limitation, Security, Transparency, Individual Participation and Accountability.

Awareness:

 

  🌑   

Promoting a culture of respect for, and thoughtful consideration of, privacy and personal data protection throughout Akamai through an ethical principles-based approach to privacy.

 

  🌑   

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

 

  🌑   

Instilling an 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 that are designed to enable compliance with the law and privacy principles consistent with our culture and mission.

 

  🌑   

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

 

  🌑   

Conducting Privacy Impact Assessments on data use initiatives.

Training:

 

  🌑   

Conducting trainings designed to promote awareness and provide employees with privacy-related information and requirements 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.

 

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  🌑   

Conducting independent audits of practices and controls.

 

  🌑   

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

Details and information regarding our privacy policies and practices can be found on our Privacy Trust Center at: https://www.akamai.com/legal/compliance/privacy-trust-center.

Akamai Foundation

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 humanitarian and disaster relief efforts, such as refugee health and safety efforts and the Russia-Ukraine and Israel-Hamas wars, as well as 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 2023, the Akamai Foundation awarded 64 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 2023, our senior leadership team conducted 100% outreach to our 25 largest stockholders, which 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, combined with additional investor outreach, 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.

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

 

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Global Public Policy group 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.

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 ten persons. Set forth below is information about the professional experiences of each of our ten nominees for election at the 2024 Annual Meeting, including his or her specific experience, qualifications and attributes that we believe qualify him or her to serve on the Board.

Each of the nominees listed below is currently a director of the Company who was previously elected by the stockholders. The information provided is accurate as of March 1, 2024.

 

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Nominees for Director for Terms That Will Expire in 2025

 

 

LOGO

 

Sharon Bowen, age 67

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, Inc., 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 Bakkt Holdings, Inc.

 

Neuberger Berman Group, a private investment management firm

 

 

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 65

Director since 2020

Audit Committee, Finance Committee Chair

 

  

 

Retired former executive at Fidelity National Information Services, Inc. (“FIS”), a global financial services technology company, where she was Corporate Executive Vice President and Co-Chief Operating Officer 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

 

International Business Machines Corporation (IBM), a multinational technology company

 

Prior Public Company Boards in Last 5 Years

 

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 and drive operational efficiency

 

 

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LOGO

 

Monte Ford, age 64

Director since 2013

TL&C Committee Chair, ESG Committee

 

  

 

Principal Partner of CIO Strategy Exchange, a membership organization for chief information officers, since 2015

 

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 provider

 

Centene Corporation, a healthcare insurer

 

Prior Public Company Boards in Last 5 Years

 

The Michaels Companies, an arts and crafts retailer

 

 

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 inclusion, diversity and engagement issues impacting Akamai and our environment

 

 

 

LOGO

 

Dan Hesse, age 70

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

 

Prior Public Company Boards in Last 5 Years

 

Tech and Energy Transition Corporation, a non-operating special purpose acquisition company that was subsequently dissolved

 

 

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

 

 

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LOGO

 

Tom Killalea, age 56

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

 

Chair of MongoDB, a database technology company

 

Satellogic, an earth observation 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

 

Deep experience with cloud computing industry, a key potential area of growth for Akamai

 

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 67

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

 

Extensive engagement with Akamai’s investors, customers and prospective customers on a global basis

 

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 67

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

 

Prior Public Company Boards in Last 5 Years

 

AMC Networks, an American entertainment company

 

Nielsen Holdings plc, a global measurement and data analytics company (subsequently acquired by Evergreen Coast Capital Corporation in October 2022)

 

Ziff Davis, Inc. (formerly J2 Global), a vertically focused digital media and internet 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 59

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

 

 

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

 

 

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LOGO

 

Ben Verwaayen, age 71

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 57

Director since 2018

TL&C Committee, Finance Committee

 

  

 

Former President and CEO of GoTo (formerly LogMeIn, Inc.), a publicly-traded 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, GoTo transitioned from being a publicly-traded company to being privately held.

 

Other Current Boards

 

Avery Dennison Corporation

 

Semrush Holdings, Inc.

 

Blackline Inc.

 

Prior Public Company Boards in Last 5 Years

 

GoTo (formerly LogMeIn, Inc.)

 

 

Experience 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

 

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

 

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

 

 

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Our Executive Officers

Our executive officers as of March 1, 2024 were:

 

LOGO   Tom Leighton, age 67, 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 and, while currently on leave, has been Professor of Applied Mathematics at the Massachusetts Institute of Technology since 1982. From 2003 to 2005, Dr, Leighton served as the Chair of the Presidential Informational Technology Advisory Committee on Cybersecurity, and has received numerous awards and accolades related to science, math, technology and engineering.
LOGO   Aaron Ahola, age 54, 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. Prior to joining Akamai, he worked as a corporate and M&A attorney at Ropes & Gray LLP in Boston and Cleary, Gottlieb, Steen & Hamilton LLP in New York. Mr. Ahola currently serves on the Nasdaq Listing and Hearing Review Council.
LOGO   Robert Blumofe, age 59, 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, including leading the performance team and developing the Akamai Intelligent Edge Platform. Prior to his employment at Akamai, Mr. Blumofe was an Associate Professor of Computer Science at the University of Texas at Austin. He has been widely published in the areas of algorithms and systems for highly distributed and parallel computing.

 

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LOGO   Paul Joseph, age 50, became our Executive Vice President, Global Sales and Services 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. Prior to such roles, he served in business development and account executive roles at Akamai.
LOGO   Adam Karon, age 52, became our Chief Operating Officer and General Manager, Cloud 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. Prior to joining Akamai, Mr. Karon served as a Client Director for Leftbrain, Inc. and as the Director of Technology for Transportation Components, Inc.
LOGO   Edward McGowan, age 53, 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. Before joining Akamai, Mr. McGowan served as Controller for iCast Corporation, a CMGI company. Mr. McGowan also serves as a member of the Board of Directors of WinVest Acquisition Corp. Mr. McGowan is a certified public accountant and started his career in public accounting, working for Arthur Andersen’s High Technology Practice and for PwC in their Transaction Services Group.

 

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LOGO   Kim Salem-Jackson, age 47, 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. Ms. Salem-Jackson started her career serving in a variety of marketing and public relations roles. Ms. Salem-Jackson also serves as a member of the Board of Directors of the Akamai Foundation, a member of Fast Company, a member of the Forbes Communications Council, and is a founding member of Chief, a network designed to empower women in business and leadership roles.
LOGO   Mani Sundaram, age 48, 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 2018 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. Prior to Akamai, Mr. Sundaram worked in various roles in engineering, marketing and client services at Virtify Inc. and Stratus Technologies.
LOGO   Anthony Williams, age 50, 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.

 

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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 February 12, 2024, 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 February 12, 2024 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 February 12, 2024, including through the exercise of any stock option or the release, vesting or settlement of other convertible securities. Unless otherwise indicated, the address of each person identified in the table below is c/o Akamai Technologies, Inc., 145 Broadway, Cambridge, Massachusetts 02142. On February 12, 2024, there were 151,320,568 shares of our common stock outstanding.

 

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Name of Beneficial Owner                       

Number of Shares of Common

Stock Beneficially Owned

   

Percentage of Common

Stock Outstanding (%)

 

 5% Stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Vanguard Group (1)

 

 

 

 

 

 

 

 

 

 

 

 

    17,639,604       11.7%  

BlackRock, Inc. (2)

 

 

 

 

 

 

 

 

 

 

 

 

    14,300,241       9.5%  

 Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sharon Bowen

 

 

 

 

 

 

 

 

 

 

 

 

    4,291       *  

Marianne Brown

 

 

 

 

 

 

 

 

 

 

 

 

    6,240       *  

Monte Ford

 

 

 

 

 

 

 

 

 

 

 

 

    20,143       *  

Dan Hesse

 

 

 

 

 

 

 

 

 

 

 

 

    15,427       *  

Tom Killalea

 

 

 

 

 

 

 

 

 

 

 

 

    10,796       *  

Tom Leighton (3)

 

 

 

 

 

 

 

 

 

 

 

 

    2,549,242       1.7%  

Jonathan Miller

 

 

 

 

 

 

 

 

 

 

 

 

    27,591       *  

Madhu Ranganathan

 

 

 

 

 

 

 

 

 

 

 

 

    5,356       *  

Ben Verwaayen

 

 

 

 

 

 

 

 

 

 

 

 

    18,224       *  

Bill Wagner

 

 

 

 

 

 

 

 

 

 

 

 

    15,519       *  

Other Named Executive Officers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Edward McGowan (4)

 

 

 

 

 

 

 

 

 

 

 

 

    52,112       *  

Paul Joseph (5)

 

 

 

 

 

 

 

 

 

 

 

 

    45,356       *  

Adam Karon (6)

 

 

 

 

 

 

 

 

 

 

 

 

    66,917       *  

Mani Sundaram (7)

 

 

 

 

 

 

 

 

 

 

 

 

    62,489       *  

All executive officers and directors as of February 12, 2024 as a group (18 persons) (8)

 

 

 

 

 

 

 

 

 

 

 

 

    3,049,006       2.0%  

 

*

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 13, 2024 by The Vanguard Group, Inc. (“Vanguard”), which reports its address as 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. Vanguard reports that it holds shared voting power with respect to 188,446 shares, sole dispositive power with respect to 16,999,718 shares and shared dispositive power with respect to 639,886 shares.

(2)

The information reported Is based on a Schedule 13G/A filed with the Commission on January 24, 2024 by BlackRock, Inc. (“BlackRock”), which reports its address as 50 Hudson Yards, New York, New York 10001. BlackRock reports that it holds sole dispositive power with respect to 14,300,241 shares and sole voting power with respect to 13,165,324 shares held by it.

(3)

Includes (i) 108,358 shares held by the TBL Foundation of which Dr. Leighton serves as a trustee, (ii) 2,310,140 shares held by the F. Thomson Leighton and Bonnie B. Leighton Revocable Trust dtd 11/3/99 over which Dr. Leighton disclaims beneficial ownership, (iii) 20,963 shares held by the David T. Leighton Trust of which F. Thomson Leighton is a trustee over which Dr. Leighton disclaims beneficial ownership and (iv) 109,781 shares issuable upon the vesting of RSUs within 60 days after February 12, 2024.

 

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(4)

Includes 36,400 shares issuable upon the vesting of RSUs within 60 days after February 12, 2024.

(5)

Includes 20,065 shares are held by the PJ Joseph Trust 2020 of which Mr. Joseph serves as a trustee and (ii) 25,291 shares issuable upon the vesting of RSUs within 60 days after February 12, 2024.

(6)

Includes (i) 21,963 shares and (ii) 44,954 shares issuable upon the vesting of RSUs within 60 days after February 12, 2024.

(7)

Includes (i) 18,457 shares held by the MMMM Family Living Trust of which Mr. Sundaram serves as a trustee and (ii) 23,762 shares issuable upon the vesting of RSUs within 60 days after February 12, 2024.

(8)

Includes 87,765 shares issuable upon the vesting of RSUs within 60 days after February 12, 2024.

Board Leadership and Role in Risk Oversight

Chair of the Board

Daniel Hesse has served as our independent Chair of the Board since June 2021. 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 2022 and 2023 board evaluation processes.

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. If our various facts and circumstances change, the Board may consider whether a different structure is appropriate. Mr. Hesse, as a strong independent director, plays a key role in working to ensure Board effectiveness, management oversight and adherence to good governance principles. Dr. Leighton, our Chief Executive Officer, 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

In carrying out its risk oversight responsibilities, the Board reviews the long- and short-term internal and external risks facing the Company through its participation in long-range strategic planning and ongoing reports from various standing committees of the Board that address risks inherent to their respective areas of oversight. The Board receives updates at least quarterly from senior management and periodically from outside advisors which may include topics such as the various risks we face, including operational, product, economic,

 

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financial, legal, regulatory, geopolitical, talent, health, cybersecurity and competitive risks. In addition, Akamai’s Chief Ethics & Compliance Officer, who reports to the General Counsel, provides at least quarterly updates to the Audit Committee. In addition to regular reports, on an ongoing basis, the Board and management assess the potential impact and likelihood of identified long- and short-term risks, and where appropriate and depending on the immediacy of the risk assessed, implement operational measures and controls. At the management level, we have established disclosure controls to monitor our compliance with securities disclosure obligations.

The Board and our management team have increased their focus on cybersecurity risk oversight and management in recent years. On a quarterly basis and as needed, our Chief Security Officer reports to the Audit Committee to provide information, as applicable and appropriate, on cybersecurity risk management programs and other cyber matters. In addition, all of our employees are required to take annual security compliance training.

Board Oversight of ESG

Investing in our ESG initiatives is a core part of our purpose to make life better for billions of people, trillions of times a day. Board oversight of ESG matters primarily occurs through the committees of the Board, including our ESG Committee, which oversees management’s environmental initiatives, including our sustainability goals, corporate governance matters and social matters (including receiving periodic management reports on social matters, corporate culture, inclusion, diversity and engagement as it relates to employees, and the charitable activities of the Akamai Foundation); the Audit Committee, which provides regular oversight of our ethics and compliance, data privacy protection program and cyber and network security and resiliency 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, employee and leadership development, and recommends to the Board certain ESG compensation metrics. Our Board also exercises direct oversight of our ESG initiatives. For example, the Board conducts at least 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, the Finance Committee and the TL&C 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/corporate-governance/highlights. 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 (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 (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, 2024 is reflected in the chart below.

 

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Membership in Standing Committees as of March 1, 2024

 

      Audit    ESG    Finance    TL&C

 Sharon Bowen

   X    X     

 

    

 

 Marianne Brown

   X     

 

   X*     

 

 Monte Ford

    

 

   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 and scope provided by our independent auditors, the independence of such auditors from our management, our annual financial statements, our use of non-GAAP measures and metrics and our system of internal financial and IT controls, including cybersecurity, privacy and network resiliency matters. At least quarterly, our Chief Compliance Officer and our General Counsel also review with the Audit Committee any material ethics or compliance issues or investigations and, at least annually, review the Company’s framework for compliance with applicable laws and regulations. Our Chief Security Officer also meets at least quarterly with the Audit Committee regarding our existing information security organization. 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, or as may be delegated to it by the Board from time to time. Our Audit Committee reports to the Board at least quarterly on 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 ten meetings in 2023.

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; assisting the Board in determining and monitoring whether a director or prospective director is “independent” within the meaning of any applicable rules and laws; overseeing the self-evaluation of the Board, including the performance of individual directors; reviewing the Board’s leadership roles; reviewing corporate culture; reviewing stockholder proposals relating to corporate

 

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governance matters and making recommendations to the Board in response thereto; and reviewing and making recommendations to the Board with respect to corporate governance practices, including the Company’s Corporate Governance Guidelines, Bylaws and other key governance policies. The ESG Committee also spends significant time reviewing management’s initiatives with respect to environmental, social and governance matters as well as overseeing risks related to such environmental, social and governance matters and the mitigation of such risks. The ESG Committee held five meetings in 2023.

The Finance Committee is responsible for, among other things, reviewing matters pertaining to the Company’s capital structure and corporate finance strategy, overseeing the Treasury function, reviewing proposed acquisitions and similar strategic transactions and material contractual commitments, evaluating and assessing completed acquisitions, overseeing our defined contribution and other benefit and retirement plans, reviewing Akamai’s material insurance programs and assisting and advising management on its operating plans, including any specific plans in place from time to time related to margin improvement, creation of long-term stockholder value or meeting other financial goals. The Finance Committee held ten meetings in 2023.

The TL&C Committee assists the Board in discharging its oversight responsibilities relating to talent development, 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, including administering our bonus, incentive compensation and stock plans, approving equity grants and approving the salaries and other compensation 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 eight meetings in 2023.

Meeting Attendance

The Board held nine meetings during 2023. 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, 2023. All directors are expected to attend regular Board meetings, Board committee meetings for committees on which the director serves and our annual meeting of stockholders. All of our directors then in office attended the 2023 Annual Meeting of Stockholders.

 

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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).

In making its independence determination with respect to Ms. Ranganathan, the Board considered that, in 2023, 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 2023 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 2024.

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 review its competitiveness to the market every few years.

 

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The following table sets forth compensation paid in 2023 to individuals who served on the Board for any portion of that year for their service as directors, other than Dr. Leighton, who does not receive any compensation for his services as a director and whose compensation is reflected in “Executive Compensation Matters” below.

 

 Name              Fees Earned
or Paid in Cash ($) (1)
   Stock Awards
($) (2)
   Total ($)

 Sharon Bowen (3)

   

 

 

 

   

 

 

 

       75,000           274,944           349,944

 Marianne Brown (4)

   

 

 

 

   

 

 

 

       80,000           304,930           384,930

 Monte Ford (5)

   

 

 

 

   

 

 

 

       80,000           304,930           384,930

 Dan Hesse (6)

   

 

 

 

   

 

 

 

       100,000           349,952           449,952

 Tom Killalea (7)

   

 

 

 

   

 

 

 

       75,000           274,944           349,944

 Jonathan Miller (8)

   

 

 

 

   

 

 

 

       75,000           274,944           349,944

 Madhu Ranganathan (9)

   

 

 

 

   

 

 

 

       80,000           304,930           384,930

 Ben Verwaayen (10)

   

 

 

 

   

 

 

 

       80,000           294,963           374,963

 Bill Wagner (11)

   

 

 

 

   

 

 

 

       75,000           274,944           349,944

 

(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)

Consists of deferred stock units (“DSUs”) granted to directors on May 11, 2023. Amounts reflect the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board (“FASB”), Accounting standards Codification (“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, 2023 included in our Annual Report on Form 10-K.

(3)

At December 31, 2023, Ms. Bowen held 1,164 unvested RSUs and 3,200 unvested DSUs.

(4)

At December 31, 2023, Ms. Brown held 3,549 unvested DSUs.

(5)

At December 31, 2023, Mr. Ford held 3,549 unvested DSUs.

(6)

At December 31, 2023, Mr. Hesse held 4,073 unvested DSUs.

(7)

At December 31, 2023, Mr. Killalea held 3,200 unvested DSUs.

(8)

At December 31, 2023, Mr. Miller held 3,200 unvested DSUs.

(9)

At December 31, 2023, Ms. Ranganathan held 3,549 unvested DSUs.

(10)

At December 31, 2023, Mr. Verwaayen held 3,433 unvested DSUs.

(11)

At December 31, 2023, Mr. Wagner held 3,200 unvested DSUs.

Our independent compensation consultant conducts a benchmarking review of our outside director compensation every other year and, in 2022 our consultant conducted a benchmarking review of our non-employee director compensation, covering both compensation levels and program design as compared to our peer group and shared its findings with TL&C Committee members. Based on the results of the review, we made certain adjustments to align our overall non-employee director program with our peers in 2022, both in terms of practices and structure as well as pay levels.

 

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Under our non-employee director compensation plan, non-employee directors are entitled to receive annual compensation of $350,000, of which $75,000 is paid in cash and $275,000 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 $30,000 of additional compensation, of which $5,000 is paid in cash and $25,000 is paid in DSUs. 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 senior executives who participate in the executive compensation program overseen by the TL&C Committee, one times 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 annual cash retainer. Non-employee directors have three years from the date of election or appointment to attain required ownership levels. The Chief Executive Officer and each other senior executive has five years from the date of his or her respective appointments to attain required ownership levels. Unvested options, RSUs and DSUs and vested but unexercised options do not count toward satisfying the requirements; vested but undistributed DSUs held by directors do count toward satisfying the requirements.

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, provided that such restriction does not apply to sales on such individual’s behalf to meet any tax withholding obligations. A more detailed description of these

 

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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.

Insider Trading Policies

The Company has adopted insider trading policies governing the purchase, sale and/or other dispositions of the Company’s securities by directors, officers and employees. The policies are designed to promote compliance with applicable insider trading laws, rules and regulations.

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 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, ability to exercise sound judgments in matters that relate to the current and long-term objectives of the Company and willingness to contribute positively to the decision-making process of the Company;

 

  🌑   

commitment to understand the Company’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 that would impair the ability to represent the interests of the Company and its stockholders; 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, perspectives, 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 material 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 ESG Committee considers whether the director’s new status continues to complement the Board’s skills and qualities and recommends to the Board whether to accept such director’s resignation. A more detailed description of the director qualification standards is set forth in our Corporate Governance Guidelines, which are posted on our website at www.ir.akamai.com/corporate-governance/highlights.

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 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, sexual orientation, gender identity or expression 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

 

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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 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 the Amended and Restated Bylaws of Akamai Technologies, Inc., as amended by Amendment No. 1 (“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 2024 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.

 

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Compensation Committee Interlocks and Insider Participation

Messrs. Ford, Hesse, Miller, Verwaayen and Wagner were members of the TL&C Committee during all of 2023. No member of the TL&C Committee was at any time during 2023, 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.

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 2023.

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, including our use of non-GAAP measures and metrics;

 

  🌑   

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 and data privacy 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, which was revised in June 2023, 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 and Exchange Act.

 

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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 (“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, including our use of non-GAAP measures and metrics. 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 Senior Director 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 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, 2023, 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, 2023 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 2024.

 

Audit Committee      
Madhu Ranganathan—Chair    Marianne Brown   
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 in 2023 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 guided by 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 Akamai and our stockholders and the conditions, if any, under which such transactions 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, 2023 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.

Our NEOs

This discussion is focused on the following persons who served as Akamai executive officers in 2023. We refer to them as our Named Executive Officers (“NEOs”).

 

Name

  Title   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

Paul Joseph

  EVP, Global Sales and Services   December 2021   2000

Adam Karon

  COO and General Manager, Cloud Technology Group   March 2021   2005

Mani Sundaram

  EVP and General Manager, Security Technology Group   December 2021   2007

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 and Values

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;

 

  🌑   

utilizing restricted stock units (“RSUs”) subject to performance-based vesting (“PRSUs”), that require achievement of rigorous financial targets in order to vest; and

 

  🌑   

granting RSUs that require us to meet relative total shareholder return (“TSR”) targets in order to vest (“relative TSR-Based RSUs”).

 

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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” 2023 compensation for our Chief Executive Officer and the average for our 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

In addition to seeking to align executive compensation with performance, Akamai incentivizes management to lead in an environmentally and socially responsible manner. Our executive bonuses include an ESG modifier. Following year-end, the TL&C Committee conducts a performance assessment of executive management’s efforts to achieve certain key ESG-related benchmarks. Following review of the performance assessment, the TL&C Committee determines achievement against such ESG benchmarks and such determination can positively or negatively affect the amount of the executive bonuses.

 

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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, current strategic priorities 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 2023 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 metrics and ESG goals 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. 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 Akamai 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 (other than Dr. Leighton and unless required by law)
      No repricing underwater stock options without stockholder approval
      No excise tax gross-ups upon change in control

 

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CEO Compensation

Dr. Leighton became our Chief Executive Officer 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 compensation history, his significant equity holdings, peer group practices and the desire for performance-based compensation to constitute 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, with the remainder of his annual compensation to be market competitive and consisting solely of equity-based awards. As in prior years, the TL&C Committee and Dr. Leighton agreed that his earned 2023 annual bonus would be paid to him entirely 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.

2023 Executive Compensation Program and Results

In this section, we describe in detail our 2023 NEO compensation program, including the impact of our 2023 financial performance on overall achievement. The TL&C Committee set 2023 total direct compensation for Messrs. Leighton, Joseph, Karon, McGowan and Sundaram 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 each NEO’s total compensation. There were no base salary adjustments for our NEOs in 2023. The table below reflects 2023 salary levels for our NEOs as well as the percentage increase from prior year base salaries:

 

Year-End 2023 Base Salaries for NEOs

 

Name    2023 Salary Level    Percentage Increase from 2022

Dr. Leighton

   $1    0%

Mr. McGowan

   $515,000    0%

Mr. Joseph

   $500,000    0%

Mr. Karon

   $550,000    0%

Mr. Sundaram

   $480,000    0%

 

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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, which, for each NEO other than Dr. Leighton’s, whose base salary is $1, is 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 2023 annual incentive program, each NEO had the opportunity to earn between 0% and 200% of his Target Annual Bonus Opportunity based on performance against pre-determined 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, 2022 and 2023 annual incentive programs incorporate 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 based 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 2023 annual bonuses for the NEOs would be paid entirely 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 2023 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 151.9% due to above-target performance on revenue (adjusted for foreign exchange) and non-GAAP operating income.

 

               
Metric   %
Weighting
  Why We Use This Metric  

2023

Threshold

(0%
payout)
(millions)

 

2023

Target
(100%
payout)
(millions)

 

2023

Maximum
(200%
payout)
(millions)

 

2023

Actual
(millions)

 

Payout %

Against
Target

 
               

Revenue
(adjusted for

foreign exchange)*

  50%   Revenue is a fundamental
measure of our success
at selling our solutions,
innovating and
competing in the
marketplace.
  $3,423.7   $3,804.1   $4,184.6   $3,818.6     103.81%  
               
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 annual
bonus plan to align our
NEOs’ interests with
those of our investors.
  $907.5   $1,008.3   $1,109.1   $1,143.2     200.00%  
   

Overall Payout as a % Against Target

 

    151.9%  

 

*

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 a positive achievement of 2.72 percentage points, resulting in a final bonus funding, factoring in the ESG modifier, of 156.03%.

 

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The table below shows each NEO’s target bonus as a percentage of base salary (if applicable), target bonus payout for 2023 and actual bonus earned for 2023. The target bonus payout is calculated by multiplying the NEO’s base salary by his target bonus percentage (if applicable). The actual bonus earned is calculated by multiplying the NEO’s target bonus payout by our overall payout percentage, which was 156.03% for 2023 as described above.

 

Name    2023 Target
Bonus Percentage
  2023 Target Payout    2023 Actual
Bonus Earned

Dr. Leighton

       *Not applicable     $ 1,500,000      $ 2,340,475 

Mr. McGowan

       85%     $ 437,750      $ 683,029 

Mr. Joseph

       100%     $ 500,000      $ 780,158 

Mr. Karon

       100%     $ 550,000      $ 858,174 

Mr. Sundaram

       80%     $ 384,000      $ 599,162 

 

*

In accordance with the terms of his annual incentive plan, Dr. Leighton’s 2023 annual bonus is not based on a percentage of his base salary of $1.

 

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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 2023.

 

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

    

 

 

 

50

 

%

 

PRSUs

  

 

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

  

 

3-year
cliff*

    

 

 

 

20

 

%

 

Relative TSR-Based RSUs

  

 

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

  

 

3-year
cliff*

    

 

 

 

30

 

%

 

*

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

**

Grants made prior to 2023 were measured against the S&P 500 Technology Index Group. Effective 2023, the TL&C Committee determined that the broader S&P 500 Index was to be used as the comparison group for these relative TSR-Based RSUs. The TL&C Committee’s determination to change the reference Index to the S&P 500 Index was based on a variety of factors, including investor sentiment and the broader sample size.

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 table below shows 2023 grant-date target long-term equity incentive values for our NEOs and the allocation of target value among the long-term equity awards granted to our NEOs:

 

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

Dr. Leighton

     $ 5,250,000       $ 2,100,000       $ 3,150,000       $ 10,500,000

Mr. McGowan

     $ 2,025,000       $ 810,000         $1,215,000         $4,050,000

Mr. Joseph

     $ 1,500,000       $ 600,000         $900,000         $3,000,000

Mr. Karon

     $ 2,450,000       $ 980,000         $1,470,000         $4,900,000

Mr. Sundaram

     $ 1,500,000       $ 600,000         $900,000         $3,000,000

 

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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 (adjusted for foreign exchange) and non-GAAP earnings per share performance targets for each of 2023, 2024 and 2025. 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 2023 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 granted in 2023 does not, however, occur until the date of the TL&C Committee’s certification of results for 2025.

In structuring our PRSUs, the TL&C Committee considered the difficulties involved 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 (adjusted for foreign exchange) as a performance metric for our PRSUs and for 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. FASB 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 year 2023 based on probable achievement of such metrics. As a result, for the 2023 PRSUs, the Summary Compensation Table does not include the value of the PRSUs based on the annual financial metrics for fiscal year 2024 or fiscal year 2025. Such amounts will be included in the Summary Compensation Table for fiscal year 2024 and fiscal year 2025, respectively, when the applicable annual financial metrics are established.

 

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The chart below shows the applicable 2023 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.

2023 PRSU Targets and Results

 

                 
Metric   %
Weighting
  Why We Use This Metric  

2023

Threshold
(0%
payout)

 

2023

Target
(100%
payout)

 

2023

Maximum
(200%
payout)

 

2023

Actual

 

Achievement
% Against

Target

 

% of
PRSUs
Earned

Against
Target

                 
Revenue (adjusted for foreign exchange)*   50%  

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

  $3,423.7

million

  $3,804.1

million

  $4,184.6

million

  $3,818.6

million

  100.4%   103.8%
                 
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.   $4.82/per 
share
  $5.36/per 
share
  $5.89/per 
share
  $6.24/per 
share
  116.5%   200.0%
   

Overall Payout as a % Against Target

      151.9%

 

*

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

The metrics described above also apply to the 2023 performance period used to calculate the number of PRSUs earned under grants made to NEOs in 2021 and 2022.

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, 2025. 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, 2026; Dividends per Share Paid means cumulative dividends per share of common stock paid between January 1, 2023 through December 31, 2025, if any (and are assumed to be reinvested); and Beginning Price means the average closing stock price of one share of common stock over the 90 trading days immediately preceding January 1, 2023. Relative TSR-Based RSUs granted in 2023, to the extent earned, will vest following the TL&C Committee’s certification of our financial results for 2025.

 

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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 4% of the target, up to a maximum of 200% of the target if our TSR ranking is at or above the 75th 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%

75th

   200%

Higher than 75th

   200%

The chart below shows target performance, achieved performance and percent of target earned with respect to relative TSR-Based RSU awards granted in 2021 and earned over the three-year period ending December 31, 2023.

 

           
Metric   Why We Use
This Metric
  Target  

2021-23 

TSR 

  2021-23
Percentile
Ranking
 

% of

Target
RSUs

Earned

           

2021-2023
TSR

Performance

  Alignment of share performance with executive compensation   50th percentile as
compared to return for the Index Group
  2.8%   33.8th Percentile   51.5%

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 and above market.

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 2023 were also consistent with the financial guidance we gave to investors on our public earnings call in February 2023. 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 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 (adjusted for foreign exchange) 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, the portion of the bonuses attributable to revenue performance are not payable under our annual incentive plan unless revenue (adjusted for foreign exchange) 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.

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.

 

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How We Select and Use Peer Groups

The TL&C Committee works closely with Meridian Compensation Partners, LLC (“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, therefore inappropriate for benchmarking NEO compensation levels but that we believe 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 2023 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 2023 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

Akamai’s revenue for 2023 was $3.8 billion, and our market capitalization at the end of that year was approximately $18 billion. The median 2023 revenue for our benchmarking peer group was approximately $3.3 billion, and the median market capitalization for the group at the end of that year was approximately $20.8 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 these companies generally are considerably larger than Akamai, 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 2023 design reference peer group consisted of the following companies:

 

Alphabet

  Amazon.com   Apple    Cisco Systems

Cloudflare

  eBay   Meta Platforms    Microsoft

Netflix

  Oracle   Salesforce.com    Zscaler

 

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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 2023 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 goals for performance-based compensation based on Akamai’s operating plans and long-term strategy approved by the

 

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Board, and the ESG focus areas recommended by the ESG Committee, 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 evaluates and makes a determination of our CEO’s performance and the TL&C Committee takes this into account when setting his compensation levels and opportunities.

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 2023, 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 Chief Executive Officer conducts a self-assessment of prior year performance. The Board (without the participation of the Chief Executive Officer) 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 2023 executive compensation program. Meridian is retained by and reports directly to the Chair

 

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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) assisting in a director pay analysis, (v) providing an executive compensation program risk overview, (vi) developing a long-term executive compensation strategy and (vii) 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 and that Meridian’s work has not raised any conflict of interest.

How We Considered the 2023 “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 2023 Annual Meeting of Stockholders, we held an advisory vote on our 2022 executive compensation program, and approximately 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 for equity awards;

 

 

  🌑 

introduced equity awards that vest based on relative TSR;

 

 

  🌑 

increased the emphasis on relative TSR-Based RSUs from 20% to 30% of the target value of executive equity awards;

 

 

  🌑 

eliminated the subjective component of our annual incentive plan;

 

 

  🌑 

changed the reference Index for relative TSR-Based RSUs to better reflect investment attributes that many investors seek when investing in Akamai;

 

 

  🌑 

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.

 

 

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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 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 Chief Executive Officer 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 these policies and practices do not create risks that are reasonably likely to have a material adverse effect on Akamai.

Compensation Recovery Policies

In 2014, the TL&C Committee adopted a Compensation Recovery Policy that is applicable to our NEOs and other members of senior management (the “2014 Clawback Policy”). The 2014 Clawback 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

 

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under United States 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.

In November 2023, the TL&C Committee adopted a second Compensation Recovery Policy that complies with Section 10D of the Exchange Act and Nasdaq listing standards (the “2023 Clawback Policy”). Under the 2023 Clawback Policy, in the event that we are required to prepare a financial restatement, we must recover erroneously awarded incentive-based compensation received by current and former executive officers during the three year period preceding the date on which we were required to prepare a financial restatement on a pre-tax basis, subject to very limited exceptions. The 2023 Clawback Policy requires recovery regardless of whether a covered person engaged in any misconduct or contributed to the need for a restatement.

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 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 February 29, 2024, 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.

 

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Severance Arrangements

We believe that having in place reasonable and competitive executive severance arrangements 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 voluntary resignation because such events often reflect either inadequate performance or an affirmative, voluntary decision by the executive officer to end his or her relationship with Akamai.

As further described below under the section titled “Post-Employment Compensation and Other Employment Agreements,” 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.

As further described below under the section titled “Post-Employment Compensation and Other Employment Agreements,” our Executive Severance Pay Plan, as amended, 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-

 

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level of performance for incomplete performance periods and (ii) the actual level of performance achieved for completed performance periods; and

 

🌑   

no excise tax gross ups.

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 (“the Code”), generally places a $1 million limit on the amount that a public company may deduct in any one taxable year with respect to 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.

Financial Metrics Definitions

Below are definitions of the financial metrics we used in our 2023 performance-based compensation programs:

“Revenue (adjusted for foreign exchange)” means revenue calculated in accordance with GAAP, adjusted for the impact of fluctuations in foreign currency exchange rates and other non-recurring or unusual items that may arise from time to time.

“Non-GAAP Operating Income” means our annual GAAP operating income adjusted for the following items: amortization of acquired intangible assets, stock-based compensation, amortization of capitalized stock-based compensation, amortization of capitalized interest expense, restructuring charges, acquisition-related costs, the impact of fluctuations in foreign currency exchange rates and other non-recurring or unusual items that may arise from time to time.

“Non-GAAP Earnings per Share” means our non-GAAP net income for the applicable fiscal year (adjusted for foreign exchange) divided by our non-GAAP diluted weighted average shares outstanding. Non-GAAP net income per share is GAAP net income adjusted for the following tax-affected items: amortization of acquired intangible assets; stock-based compensation; amortization of capitalized stock-based compensation; acquisition-related costs; restructuring charges; 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. Non-GAAP 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 an aggregate of $3,565 million of convertible senior notes due 2029, 2027 and 2025, respectively.

 

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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 2024 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, 2023, 2022 and 2021:

 

               
Name and Principal
Position
  Year    

Salary

($)(1)

   

Bonus

($)

   

Stock

Awards

($)

(2)(3)(4)

   

Non-Equity

Incentive Plan

Compensation

($)

   

All Other

Compensation

($)(5)

    Total ($)  
         
(a)   (b)     (c)     (d)     (e)     (g)     (i)     (j)  
         

Dr. Leighton

Chief Executive Officer

    2023       1             13,384,974(6)                   13,384,975  
    2022       1             11,982,770(6)                   11,982,771  
    2021       1             11,951,573(6)                   11,951,574  
         

Mr. McGowan

EVP, Chief Financial Officer and Treasurer

    2023       515,000             4,852,329(6)             6,000       5,373,329  
    2022       515,000             4,208,604(6)             3,565       4,727,169  
    2021       494,538             3,631,420(6)             6,000       4,131,958  
         

Mr. Joseph

EVP, Global Sales and Services

    2023       500,000             3,847,084(6)             6,000       4,353,084  
    2022       495,577             3,085,351(6)             6,000       3,586,928  
         

Mr. Karon

COO and General Manager of the Cloud Technology Group

 

    2023       550,000             5,912,653(6)             6,000       6,468,653  
    2022       550,000             5,087,310(6)             5,923       5,643,233  
    2021       537,019             4,526,232(6)             6,000       5,069,251  
         

Mr. Sundaram

EVP and General Manager, Security Technology Group

    2023       480,000             3,644,849(6)             6,000       4,130,849  
    2022       479,231             3,076,704(6)             5,753       3,561,688  
                                                       

 

(1)

The amounts reported for Mr. McGowan include amounts deferred under the Deferred Compensation Plan (as defined below).

(2)

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, 2023 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 2023 represent the grant date fair value for the PRSUs at target for the fiscal 2023 tranche of the PRSUs issued in each of 2021, 2022 and 2023. These amounts do not include shares that may be earned in respect of the 2023 PRSUs based on performance against 2024 and 2025 targets because such targets will not be established until 2024 and 2025, 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 2023 

Stock Awards ($)

 

 Intended Value of 2022 

Stock Awards ($)

 

 Intended Value of 2021 

Stock Awards ($)

       

Dr. Leighton

  10,500,000   10,000,000   9,750,000
       

Mr. McGowan

   4,050,000    3,750,000   3,000,000
       

Mr. Joseph

   3,000,000    2,800,000   2,000,000
       

Mr. Karon

   4,900,000    4,500,000   3,755,000
       

Mr. Sundaram

   3,000,000    2,800,000   1,800,000

 

(3)

Includes time-vesting RSUs, PRSUs (at target) and relative TSR-Based RSUs (at target). See also footnote (6) with respect to payment of shares of our common stock in lieu of cash pursuant to our annual bonus plans.

 

(4)

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 2021 PRSUs assuming vesting at target and maximum, respectively, in each case across 2021, 2022 and 2023 performance periods, is as follows: Dr. Leighton—$3,899,961 and $7,799,922, respectively; Mr. McGowan—$1,199,922 and $2,399,843, respectively; and Mr. Karon—$1,501,941 and $3,003,881, respectively. The value of relative TSR-Based RSUs issued in 2021 assuming vesting at maximum would be as follows: Dr. Leighton—$3,889,961; Mr. McGowan—$1,199,826; and Mr. Karon—$1,501,845. The value of the 2022 PRSUs assuming vesting at target and maximum, respectively, in each case across 2022, 2023 and 2024 performance periods, is as follows: Dr. Leighton—$3,999,989 and $7,999,978, respectively; Mr. McGowan—$1,499,926 and $2,999,852, respectively; Mr. Joseph—$1,119,988 and $2,239,975, respectively; Mr. Karon—$1,799,889 and $3,599,777, respectively; and Mr. Sundaram—$1,119,988 and $2,239,976, respectively. The value of relative TSR-Based RSUs issued in 2022 assuming vesting at maximum would be as follows: Dr. Leighton—$3,999,877; Mr. McGowan—$1,499,814; Mr. Joseph—$1,119,876; Mr. Karon—$1,799,777; and Mr. Sundaram—$1,119,876. The value of the 2023 PRSUs assuming vesting at target and maximum, respectively, in each case across 2023, 2024 and 2025 performance periods, is as follows: Dr. Leighton—$2,099,969 and $4,199,937, respectively; Mr. McGowan—$809,952 and $1,619,903, respectively; Mr. Joseph—$599,970 and $1,199,939, respectively; Mr. Karon—$979,990 and $1,959,981, respectively; and Mr. Sundaram—$599,970 and $1,199,939, respectively. The value of relative TSR-Based RSUs issued in 2023 assuming vesting at maximum would be as follows: Dr. Leighton—$6,299,906; Mr. McGowan—$2,429,855; Mr. Joseph—$1,799,909; Mr. Karon—$2,939,896; and Mr. Sundaram—$1,799,909.

 

(5)

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

 

(6)

Includes amounts that were earned in 2023, 2022 and 2021, respectively, under the terms of the annual incentive plans that were paid in shares of our common stock in lieu of cash in 2024, 2023 and 2022.

 

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2023 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, 2023. All equity awards were issued under the Akamai Technologies, Inc. Second Amended and Restated 2013 Stock Incentive Plan, as amended.

 

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

Option

Awards (1)

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

Dr. Leighton

                                       
                     

PRSUs (2)

  3/6/23   2/21/23           34,793   69,586     2,644,549
                     

Time-Vesting RSUs (3)

  3/6/23   2/21/23               70,056   5,249,997
                     

Relative TSR-Based RSUs (4)

  3/6/23   2/21/23         10,508   42,033   84,066     3,149,953
                     

Annual Incentive Plan (5)

  2/21/24   2/21/23           1,500,000   3,000,000     2,340,475
 

Mr. McGowan

                     

PRSUs (2)

  3/6/23   2/21/23           12,234   24,468     929,419
                     

Time-Vesting RSUs (3)

  3/6/23   2/21/23               27,021   2,024,954
                     

Relative TSR-Based RSUs (4)

  3/6/23   2/21/23         4,053   16,212   32,424     1,214,927
                     

Annual Incentive Plan (5)

  2/21/24   2/21/23           437,750   875,500     683,029
 

Mr. Joseph

                     

PRSUs (2)

  3/6/23   2/21/23           8,781   17,562     666,973
                     

Time-Vesting RSUs (3)

  3/6/23   2/21/23               20,016   1,499,999
                     

Relative TSR-Based RSUs (4)

  3/6/23   2/21/23         3,002   12,009   24,018     899,954
                     

Annual Incentive Plan (5)

  2/21/24   2/21/23           500,000   1,000,000     780,158
 

Mr. Karon

                     

PRSUs (3)

  3/6/23   2/21/23           14,934   29,868     1,134,593
                     

Time-Vesting RSUs (4)

  3/6/23   2/21/23               32,692   2,449,938
                     

Relative TSR-Based RSUs (5)

  3/6/23   2/21/23         4,904   19,615   39,230     1,469,948
                     

Annual Incentive Plan (5)

  2/21/24   2/21/23           550,000   1,100,000     858,174
 

Mr. Sundaram

                     

PRSUs (2)

  3/6/23   2/21/23           8,503   17,006     645,734
                     

Time-Vesting RSUs (3)

  3/6/23   2/21/23               20,016   1,499,999
                     

Relative TSR-Based RSUs (4)

  3/6/23   2/21/23         3,002   12,009   24,018     899,954
                     

Annual Incentive Plan (5)

  2/21/24   2/21/23           384,000   768,000     599,162

 

(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 2023 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, 2023 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.

 

(2)

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 2023 represent the grant date fair

 

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  value for PRSUs at target granted in 2021, 2022 and 2023 for the fiscal year 2023 tranche of such awards. The amounts do not include shares that may be earned based on performance against 2024 and 2025 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 2026. 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 21, 2024 but was payable in shares of our common stock calculated based on a closing sale price of $107.16 on such date. The actual number of shares issued was 21,840 for Dr. Leighton, 6,373 for Mr. McGowan, 7,280 for Mr. Joseph, 8,008 for Mr. Karon and 5,591 for Mr. Sundaram.

Outstanding Equity Awards at December 31, 2023

The following table sets forth information with respect to outstanding equity incentive awards held by our NEOs as of December 31, 2023.

 

Name/Award

 

Award
Grant Date

 

Stock Awards

 

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

                   
           

2021 Time-Vesting RSUs (2)

  3/1/21   13,551   1,603,761    
           

2021 PRSUs (3)

  3/1/21   50,229   5,944,602    
           

2021 Relative TSR-Based RSUs (4)

  3/1/21   10,468   1,238,888    
           

2022 Time-Vesting RSUs (2)

  3/7/22   23,808   2,817,677    
           

2022 PRSUs (5)

  3/7/22   24,817   2,937,092   11,905   1,408,957
           

2022 Relative TSR-Based RSUs (4)

  3/7/22       35,710   4,226,279
           

2023 Time-Vesting RSUs (2)

  3/6/23   70,056   8,291,128    
           

2023 PRSUs (6)

  3/6/23   14,187   1,679,031   18,682   2,211,015
           

2023 Relative TSR-Based RSUs (4)

  3/6/23           84,066   9,949,211
   

Mr. McGowan

                   
           

2021 Time-Vesting RSUs (2)

  3/1/21   4,170   493,520    
           

2021 PRSUs (3)

  3/1/21   15,453   1,828,863        
           

2021 Relative TSR-Based RSUs (4)

  3/1/21   3,221   381,205        
           

2022 Time-Vesting RSUs (2)

  3/7/22   8,928   1,056,629    
           

2022 PRSUs (5)

  3/7/22   9,305   1,101,247   4,465   528,433
           

2022 Relative TSR-Based RSUs (4)

  3/7/22       13,390   1,584,707
           

2023 Time-Vesting RSUs (2)

  3/6/23   27,021   3,197,935    
           

2023 PRSUs (6)

  3/6/23   5,471   647,493   7,206   852,830
           

2023 Relative TSR-Based RSUs (4)

  3/6/23           32,424   3,837,380

 

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Name/Award

 

Award
Grant Date

   

Stock Awards

 
 

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. Joseph                                        
           

2021 Time-Vesting RSUs (2)

    3/1/21       2,780       329,013              
           

2021 PRSUs (3)

    3/1/21       10,301       1,219,123                  
           

2021 Relative TSR-Based RSUs (4)

    3/1/21       2,148       254,216                  
           

2022 Time-Vesting RSUs (2)

    3/7/22