SEC Form DEF 14A filed by A10 Networks Inc.

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Definitive Proxy Statement

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No fee required.

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1.

To elect each of the director nominees named in the accompanying proxy statement, to serve until the 2026 annual meeting of stockholders and until their successors are duly elected and qualified, subject to earlier resignation or removal;

2.

To approve an amendment to our 2014 Employee Stock Purchase Plan to increase the number of shares available for issuance by 2,500,000 shares;

3.

To approve, on an advisory and non-binding basis, the compensation of our named executive officers as described in the accompanying proxy statement;

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To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2025; and

5.

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

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Director Independence. 4 of the 5 individuals currently serving as directors are independent within the meaning of the listing standards of the New York Stock Exchange.

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Declassified Board. All directors are elected annually.

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Director Tenure. Our directors are not long service directors. 3 of 5 directors have less than 6 years of tenure. The average tenure of our directors is approximately 6.4 years.

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Director Age. Average age of our directors is approximately 57 years.

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Director Skills. Our directors have the following diverse experiences and perspectives in areas that we believe are critical to the success of our business and to the creation of sustainable stockholder value:

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Director Diversity. 60% of our directors currently self-identify as being from one or multiple diverse groups, including gender.

(1)

Member of our audit committee

(2)

Member of our compensation committee

(3)

Member of our nominating and corporate governance committee

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selecting and hiring our registered public accounting firm;

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evaluating the performance and independence of our registered public accounting firm;

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approving the audit and pre-approving any non-audit services to be performed by our registered public accounting firm;

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reviewing our financial statements and related disclosures and reviewing our critical accounting policies and practices;

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reviewing the adequacy and effectiveness of our internal control policies and procedures and our disclosure controls and procedures;

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overseeing procedures for the treatment of complaints on accounting, internal accounting controls, or audit matters;

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overseeing, monitoring and coordinating with regard to risk management, including those relating to enterprise risk management (ERM) and cybersecurity;

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reviewing and discussing with management and the independent registered public accounting firm the results of our annual audit, our quarterly financial statements, and our publicly filed reports;

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reviewing and approving in advance any proposed related person transactions; and

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preparing the audit committee report to be included in our annual proxy statement as required by the SEC.

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reviewing and approving our Chief Executive Officer’s and other executive officers’ annual base salaries, incentive compensation plans, including the specific goals and amounts, equity compensation, employment agreements, severance arrangements and change in control agreements, and any other benefits, compensation or arrangements;

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evaluating director compensation and making recommendations to the board regarding such compensation;

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administering our equity compensation plans;

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overseeing our overall compensation philosophy, compensation plans, and benefits programs; and

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preparing the compensation committee report to be included in our form 10-K or annual proxy statement as required by the SEC.

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evaluating and making recommendations regarding the composition, organization, and governance of the board and its committees;

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evaluating and making recommendations regarding the development, oversight, and implementation of the Company’s Environmental, Social, and Governance (“ESG”) policies, programs, and practices;

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evaluating and making recommendations regarding the policies, programs, practices, and reports concerning ESG, including sustainability, environmental protection, community and social responsibility, and human rights;

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evaluating and making recommendations regarding the creation of additional committees or the change in mandate or dissolution of committees;

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reviewing and making recommendations with regard to our corporate governance guidelines and compliance with laws and regulations; and

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reviewing actual and potential conflicts of interest of our directors and corporate officers, other than related person transactions reviewed by the audit committee and approving or prohibiting any involvement of such persons in matters that may involve a conflict of interest.

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no earlier than December 20, 2025; and

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no later than the close of business on January 19, 2026.

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the 90^th day prior to the 2026 annual meeting; or

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the 10^th day following the day on which we first announce publicly the date of the 2026 annual meeting.

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Environmental Sustainability Policy: We have adopted an Environmental Sustainability Policy, which can be accessed on our Investor Relations page under Corporate Responsibility https://investors.a10networks.com/.

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Ongoing Environmental Initiatives: We continuously evaluate environmental initiatives to further develop our corporate policies and objectives. One such initiative is a sustainability project focused on reducing carbon emissions. We have engaged a sustainability expert and established 2019 as the baseline year for our 10-year carbon reduction plan. This strategy aligns with the 1.5"C initiative scope protocols.

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Sustainable Facilities & Energy Efficiency: Our corporate headquarters in San Jose, California, complies with the California Building Energy Efficiency Standards (Title 24) to reduce wasteful and unnecessary energy consumption. We have also planned for increased use of renewable energy in partnership with PG&E. Additionally, we provide EV charging stations for employees and visitors and facilitate recycling and proper disposal of e-waste, in accordance with local requirements.

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Conflict Minerals Supply Chain Policy: Under our Conflict Minerals Supply Chain Policy, we expect/inspect our suppliers to comply with our standards for responsible sourcing of minerals from conflict-affected and high-risk areas. Suppliers must cooperate with our due diligence inquiries, information requests, and certifications to meet reporting and disclosure obligations and ensure they do not knowingly contribute to local conflict or human rights abuses.

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We have implemented Diversity, Equal Opportunity, and Inclusion action planning teams focused on analysis from diversity surveys and focus groups.

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We offer a variety of training programs, such as engineering and product line management training, individual career development and coaching, training for sales and marketing and internship programs. Our training and employment opportunities aim to address both our business needs as well as employee growth.

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We are committed to providing a work environment free from unlawful harassment and we prohibit all employees from engaging in harassment whether directed toward other employees or non-employees with whom we have a business, service, or professional relationship. Periodic training on our code of conduct and harassment policies is required.

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We strive to be compliant with data privacy statutes globally. As a network security vendor, we review and apply security best practices. This includes onsite physical security of buildings and employees.

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We offer an attractive and competitive mix of compensation and benefit plans to support our employees and their families’ physical, mental, and financial well-being. We believe that we employ a fair and merit-based total compensation system for our employees. Employees are generally eligible for medical, dental, vision, wellness and other comprehensive benefits, most of which become effective on their start date.

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Almost all employees have an opportunity to acquire an ownership interest in our Company, and there are several programs that provide employees with the ability to own our stock. Generally, more than 90% of

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We have an independent and diverse board comprised of members from variety of industries and backgrounds that aspires to best practice corporate governance features.

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We have established standards and practices to which our board members, executives and employees are obligated to adhere, as outlined in the Code of Business Conduct and Ethics, Corporate Governance Guidelines, Executive Compensation Recoupment Policy, Conflict Minerals Supply Chain Policy, Whistleblower Policy, the Employee Handbook, and the Insider Trading Policy.

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Stockholder input is important to us in designing our executive compensation philosophy and program. See “2024 Say on Pay.”

(1)

The aggregate number of shares of our common stock subject to stock awards outstanding at December 31, 2024, for each non-employee director is as below. There were no outstanding stock options held by non-employee directors as of December 31, 2024:

(2)

The amount reported in the Stock Awards column is the aggregate grant date fair value of the stock award, computed in accordance with equity compensation provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. As required by the rules of the SEC, the amount shown excludes the impact of estimated forfeitures related to service-based vesting conditions. Note that the amount reported in this column does not correspond to the actual economic value that may be received by the director from the award.

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The historical number of shares purchased under the ESPP in the past three fiscal years, which were 281,107, 299,425 and 274,937, in fiscal years 2024, 2023 and 2022, respectively;

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The Company’s expectation that the additional shares should last at least 6 years;

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The proposed increase represents approximately 3.4% of our total outstanding shares as of February 21, 2025, which is well below the 10% guideline recommended by ISS; and

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The recommendations of management.

(1)

Audit Fees consist of professional services rendered in connection with the audit of our annual consolidated financial statements, including audited financial statements presented in our Annual Report on Form 10-K, quarterly reports on Form 10-Q, and services that are normally provided by the independent registered public accountants in connection with statutory and regulatory filings or engagements for those fiscal years.

(2)

Audit-Related Fees consist of fees for professional services for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services include accounting consultations concerning financial accounting and reporting standards.

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Tax Fees consist of fees for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and international tax compliance. Tax fees include $38,521 billed by Grant Thornton UK in connection with the UK Audit Services.

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All Other Fees consist of permitted services other than those that meet the criteria above.

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reviewed and discussed the audited financial statements with management and Grant Thornton;

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discussed with Grant Thornton the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board;

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received the written disclosures and the letter from Grant Thornton required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and

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discussed with Grant Thornton its independence.

(1)

Ms. Thomas resigned from her position as Executive Vice President, Worldwide Sales and Marketing, effective December 31, 2024.

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Our 2024 fiscal year revenue was $261.7 million, up $10 million (4%) year-over-year, which just met the target threshold of the revenue portion of our corporate performance goals under our 2024 Executive Cash Incentive Plan. As a result, bonuses were earned at 100% based on the revenue portion of our corporate performance, which accounts for 50% of the payout under the 2024 Executive Cash Incentive Plan.

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Our 2024 fiscal year adjusted EBITDA margin was $74.5 million, which was approximately 99% of the target threshold corporate performance goals under our 2024 Executive Cash Incentive Plan. As a result, bonuses were earned at 99% based on the adjusted EBITDA portion of our corporate performance, which accounts for 50% of the payout under the 2024 Executive Cash Incentive Plan.

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89% of our CEO’s and 63% of our other current named executive officers’ 2024 long-term equity incentive awards were performance-based with rigorous performance goals and targets.

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Our one-year, two-year, three-year, four-year and five-year absolute TSR are 44%, 142%, 146%, 98% and 182%, respectively.

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our executive compensation is periodically benchmarked by our independent compensation consultant to our peers;

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annual cash incentives under the Executive Cash Incentive Plan are capped at 140% of target;

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our Executive Cash Incentive Plan preserves discretion to permit our compensation committee to elect not to pay otherwise achieved bonus amounts for any reason; and

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a meaningful component of compensation is equity grants with extended vesting periods designed to ensure that our executives value and focus on our long term performance.

(1)

Fixed amount of $775,000

(1)

For purposes of the Executive Cash Incentive Plan, “Revenue” is defined as our GAAP revenues; and “adjusted EBITDA” is defined as our GAAP net income excluding (i) interest and other income, net, (ii) depreciation and amortization expense, (iii) provision for income taxes, (iv) stock-based compensation and related payroll tax, (v) impairment expense, (vi) tax planning expense, (vii) workforce reduction expense, (viii) cyber incident remediation expense and (ix) one-time legal expense. As a result, these financial metrics may differ from the financial results we report in our quarterly earnings release materials.

(1)

The amounts reported in the Stock Awards column represent the grant date fair value of the stock award as computed in accordance with FASB ASC Topic 718. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Note that the amount reported in this column does not correspond to the actual economic value that may be received by the NEO from the award. The assumptions that we used to calculate these amounts are discussed in Note 8 to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. There were no stock options granted to our NEOs in fiscal year 2024.

(2)

The amounts reported in this column represent life insurance premiums paid on behalf of the executive and 401(k) matching contributions.

(3)

Ms. Thomas was appointed as our Executive Vice President, Worldwide Sales and Marketing in September 2023. The amounts reported in the Bonus column represent a sign on bonus and a bonus earned on Q1 2024 bookings. Ms. Thomas resigned in December 2024. In connection with her departure, Ms. Thomas received a lump-sum payment equal to 9 months’ base salary ($300,000) and is entitled to receive 9 months of company-paid COBRA premiums ($36,902), which amounts are reflected under the All Other Compensation column, as well as her bonus payment earned under the Company’s 2024 Executive Incentive Plan, which is reflected under the Non-Equity Incentive Plan Compensation column.

(1)

Awards granted under the “Bonus Plan” represent cash incentives granted under our 2024 Executive Cash Incentive Plan. Awards granted under the “2023 Plan” represent awards granted under our 2023 Stock Incentive Plan.

(2)

Our non-equity incentive plan awards, and how they were determined, are based on corporate performance; 50% revenue and 50% adjusted EBITDA, as discussed above in the “Compensation Discussion and Analysis.” The amounts listed in this table represent the threshold, target and maximum amounts that would have been earned under the 2024 Executive Cash Incentive Plan assuming each NEO met the minimum thresholds, the target and the maximum of both revenue and adjusted EBITDA portions of the bonus that was awarded to the individual for fiscal year 2024. The actual corporate performance portion earned for revenue or adjusted EBITDA is not dependent on achieving the minimum threshold levels for both revenue and adjusted EBITDA.

(3)

The amounts shown represent shares potentially issuable pursuant to performance-based restricted stock units (or PSUs) granted under our 2023 Plan, as discussed above in the “Compensation Discussion and Analysis”. These awards have both performance-based vesting and service-based vesting. One-half (1/2) of the shares of our common stock subject to the PSU award will become eligible to vest (the “Eligible Portion”) upon the achievement of each of the two stock price targets as follows (the “Performance Milestones”): $15.23 and $16.71, as well as continued service to the Company. The service-based vesting of any Eligible Portion is scheduled to occur in three installments, with the first one-half (1/2) of the Eligible Portion to vest within thirty (30) days of achievement of the respective Performance Milestone and an additional one-fourth (1/4) to vest on each of the first and second anniversaries of achievement of the respective Performance Milestone, subject in each case to the NEO’s continued service on each such date. The stock price achievements will be determined based on the 100-Day Volume Weighted Average Stock Price, as reported by Bloomberg L.P. or such other source the plan administrator deems reliable, for each trading day occurring in the trailing, one hundred (100) calendar days ending with (and inclusive of) the date of achievement during the period beginning on the grant date of the PSU award and ending on the four (4) year anniversary of the grant date. In the event that we terminate the NEO’s employment without cause, excluding death or disability, or the NEO resigns for good reason at any time during the period beginning on the date that we enter into an agreement resulting in our change in control and ending on the date 12 months after the change in control, the Eligible Portion of the award will vest in full.

(4)

These RSUs are scheduled to vest in three equal annual installments on the first, second- and third-year anniversaries of February 1, 2024, subject in each case to the NEO's continued service to the Company through each applicable vesting date. In the event that we terminate the NEO’s employment without cause, excluding death or disability, or the NEO resigns for good reason at any time during the period beginning on the date that we enter into an agreement resulting in our change in control and ending on the date 12 months after the change in control, the award will accelerate vesting in full as provided under the terms of the NEO’s Change in Control and Severance Agreement or the terms of the specific award agreement related to such award.

(5)

Amounts reported in this column represent the grant date fair value of RSU and PSU awards, calculated in accordance with FASB ASC Topic 718.

(6)

Ms. Thomas resigned on December 31, 2024 and forfeited the unvested portions of her RSUs and PSUs granted in 2024.

(1)

Each of the outstanding RSU awards and PSU awards was granted under our 2014 Equity Incentive Plan.

(2)

In the event that we terminate the NEO’s employment without cause, excluding death or disability, or the NEO resigns for good reason at any time during the period beginning on the date that we enter into an agreement resulting in our change in control and ending on the date 12 months after the change in control, the award will accelerate vesting in full as provided under the terms of the NEO’s Change in Control and Severance Agreement or the terms of the specific award agreement related to such award.

(3)

One third (1/3) of the shares of our common stock subject to the RSU award is scheduled to vest in three successive, equal, yearly installments commencing on the one-year anniversary of February 1, 2022, subject in each case to NEO remaining a Service Provider through the applicable vesting date.

(4)

The first of three performance milestones (the “$17.25 Performance Milestone”) of this PSU was met on January 23, 2023 and two-thirds (2/3rds) of shares subject to the $17.25 Performance Milestone have vested and the remaining one-third (1/3) is scheduled to vest on the second anniversary of the achievement of the $17.25 Performance Milestone, subject to continued service to the Company. The remaining two-thirds (2/3rds) of the shares of our common stock subject to the PSU award will become eligible to vest upon the achievement of the remaining stock price targets as follows (the “Performance Milestones”): $18.00 and $18.75, as well as continued service to the Company, with vesting of any portion for which the Performance Milestone is achieved to be scheduled to occur in three equal installments, with the first installment to vest within 30 days of the date of achievement of the Performance Milestone and the balance of the installments on the 1st and 2nd anniversaries of achievement of the corresponding Performance Milestone, subject in each case to NEO remaining a Service Provider through the applicable vesting date. The stock price achievement will be determined based on the average of the volume weighted average price (VWAP), as reported by Bloomberg L.P. or such other source the Administrator deems reliable, for each trading day occurring in the trailing, one hundred (100) calendar days ending with (and inclusive of) the date of determination (the “100-Day Stock Price”) during the period beginning on the grant date of the PSU Award and ending on the four (4) year anniversary of the grant date (the “Performance Period”). In the event that we terminate the NEO’s employment without cause or the NEO resigns for good reason at any time during the period beginning on the date that we enter into an agreement resulting in our change in control and ending on the date 12 months after the change in control, the portion of the award for which any milestone has been met will vest in full.

(5)

One third (1/3) of the shares of our common stock subject to the RSU award is scheduled to vest in three successive, equal, yearly installments commencing on the one-year anniversary of February 1, 2023, subject in each case to NEO remaining a Service Provider through the applicable vesting date.

(6)

One half (1/2) of the shares of our common stock subject to the PSU award will become eligible to vest upon the achievement of certain stock price targets as follows (the “Performance Milestones”): $17.50 and $19.00, as well as continued service to the Company, with vesting of any portion for which the Performance Milestone is achieved to be scheduled to occur in three installments, with the first fifty percent (50%) installment to vest within 30 days of the date of achievement of the Performance Milestone and the balance of the installments of twenty-five percent (25%) each, to vest on the 1st and 2nd anniversaries of achievement of the corresponding Performance Milestone, subject in each case to NEO remaining a Service Provider through the applicable vesting date. The stock price achievement will be determined based on the average of the 100-Day Stock Price during the Performance Period. In the event that we terminate the NEO’s employment without cause or the NEO resigns for good reason at any time during the period beginning on the date that we enter into an agreement resulting in our change in control and ending on the date 12 months after the change in control, the portion of the award for which any milestone has been met will vest in full.

(7)

Each of the outstanding RSU awards and PSU awards was granted under our 2023 Stock Incentive Plan.

(8)

One third (1/3) of the shares of our common stock subject to the RSU award is scheduled to vest in three successive, equal, yearly installments commencing on the one-year anniversary of February 1, 2024, subject in each case to NEO remaining a Service Provider through the applicable vesting date.

(9)

The first of two performance milestones (the “$15.23 Performance Milestone”) of this PSU was met on December 13, 2024 and one-half (1/2) of shares subject to the $15.23 Performance Milestone have vested and the remaining shares subject to the $15.23 Performance Milestone are scheduled to vest one-quarter (1/4) on each of the first and second anniversaries of the achievement of the $15.23 Performance Milestone, subject to continued service to the Company. The remaining one-half (1/2) of the shares of our common stock subject to the PSU award will become eligible to vest upon the achievement of the remaining stock price target of $16.71 per share (the “$16.71 Performance Milestone”), as well as continued service to the Company, with vesting of any portion for which the $16.71 Performance Milestone is achieved to be scheduled to occur in three installments, with the first one-half (1/2) to vest within 30 days of the date of achievement of the $16.71 Performance Milestone and the balance of the installments of one-quarter (1/4) on each of the 1st and 2nd anniversaries of achievement of the $16.71 Performance Milestone, subject in each case to NEO remaining a Service Provider through the applicable vesting date. The stock price achievement will be determined based on the average of the volume weighted average price (VWAP), as reported by Bloomberg L.P. or such other source the Administrator deems reliable, for each trading day occurring in the trailing, one hundred (100) calendar days ending with (and inclusive of) the date of determination (the “100-Day Stock Price”) during the period beginning on the grant date of the PSU Award and ending on the four (4) year anniversary of the grant date (the “Performance Period”). In the event that we terminate the NEO’s employment without cause or the NEO resigns for good reason at any time during the period beginning on the date that we enter into an agreement resulting in our change in control and ending on the date 12 months after the change in control, the portion of the award for which any milestone has been met will vest in full.

(10)

One quarter (1/4) of the shares of our common stock subject to the RSU award is scheduled to vest in four successive, equal, yearly installments commencing on the one-year anniversary of July 5, 2022, subject in each case to NEO remaining a service provider through the applicable vesting date.

(11)

The shares of our common stock subject to the PSU award will become eligible to vest upon the achievement of the $18.00 stock price target (the “Weber Performance Milestone”), as well as continued service to the Company. Upon achievement of the Weber Performance Milestone, the shares of the Company’s common stock subject to the PSU award will vest in three installments, with the first fifty percent (50%) of the shares of the Company’s common stock subject to the PSU award to vest within thirty (30) days of achievement of the Weber Performance Milestone and an additional twenty-five percent (25%) to vest on each of the first and second anniversaries of achievement of the Weber Performance Milestone, subject in each case to the NEO’s continued service on each applicable vesting date. Achievement of the Weber Performance Milestone will be determined based on the average of the 100-Day Stock Price during the Performance Period. In the event that we terminate the NEO’s employment without cause or the NEO resigns for good reason at any time during the period beginning on the date that we enter into an agreement resulting in our change in control and ending on the date 12 months after the change in control, the portion of the award for which any milestone has been met will vest in full.