SEC Form DEF 14A filed by NetScout Systems Inc.

Elect three Class I Directors nominated by our Board of Directors, each to serve for a three-year term and until their successors are duly elected and qualified;

Approve the NetScout Systems, Inc. 2019 Equity Incentive Plan, as amended;

Approve, on an advisory basis, the compensation of our named executive officers;

Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2025; and

Consider any other business properly brought before the meeting or any adjournment.

Date and Time

Thursday, September 12, 2024,

10:00 a.m. Eastern Time

Location

310 Littleton Road

Westford, MA 01886

Record Date

July 15, 2024

PROPOSAL

1.  To elect three Class I Directors nominated by our Board of Directors, each to serve for a three-year term and until their successors are duly elected and qualified

2.  To approve the NetScout Systems, Inc. 2019 Equity Incentive Plan, as amended

3.  To approve, on an advisory basis, the compensation of our named executive officers

4.  To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2025

from hardware-based to software-centric

from a handful of employees to about 2,200 employees across the globe

from one “development” site (our co-founder’s house) to over a dozen dedicated engineering sites and operations in 35 countries

from monitoring early internet speeds of 10 MB/ sec to now 100 GB/sec

from core technology principles around how to help customers “see” what is going on in their networks to now holding almost over 400 U.S. patents and over 275 international patents

■   Regular Board Evaluation. Annual evaluations, among other considerations, are used to identify desired characteristics for future Board members, as well as to review and assure sound governance practices.

■   Director Resignation Policy. Our Corporate Governance Guidelines require that an incumbent Director who receives a greater number of votes “withheld” from his or her election than votes “for” such election submit his or her offer of resignation for consideration by the Nominating and Corporate Governance Committee and the Board.

■   No Poison Pill. We do not have a poison pill in place.

■   Transparency Regarding Governance. We make efforts to fully disclose corporate governance practices of importance to our stockholders.

■   Majority of Board is Independent. Currently, all of our Directors other than our Chief Executive Officer (“CEO”) and our Chief Operating Officer (“COO”) are independent, and all of our Board Committees consist exclusively of independent Directors.

■   Lead Independent Director. We have a Lead Independent Director with significant responsibilities to provide independent oversight of management.

■   Annual Appointment of Lead Independent Director and Chair. Both the Lead Independent Director and the Chair of the Board are elected annually by the independent Directors.

■   Annual Appointment of Committee Members and Periodic Rotations. The Board appoints members of its Committees annually and rotates committee assignments periodically.

■   Regular Sessions of Independent Directors. The Board holds executive sessions of the independent Directors, chaired by the Lead Independent Director, following each regularly scheduled meeting of our Board.

■   Continual Stockholder Engagement. We conduct year-round stockholder outreach, including responding to questions regarding corporate governance and ESG priorities, with feedback provided to the Board.

■   Process for Communicating with Independent Directors. We maintain a process for stockholders and interested parties to communicate with the Lead Independent Director or other independent Directors.

■   Incorporated Stockholder Feedback. We have responded to investor interest in disclosure of the key skills of our Directors and our Board assessment and refreshment process, and we made and continue to make meaningful enhancements to our proxy materials, focusing on transparency, context, and readability.

■   No Non-Voting Shares or Multi-Class Shares. Common stock is the only class of shares outstanding, and each share of common stock is entitled to one vote.

■   Regular Board Refreshment. Since April 2018, five of our current Directors, including four independent Directors, were elected to the Board for the first time.

■   Commitment to Diversity. Our Corporate Governance Guidelines confirm the Board’s commitment to actively seeking out diverse candidates and including women and minority candidates in the pool from which the Board nominees are chosen.

■   Forty Percent of our Board Nominees and Continuing Directors, as a Group, are Diverse. Two of our Nominees and one of our continuing Directors are women. One of our Nominees and two of our continuing Directors are racially or ethnically diverse.

■   Diversity of Skills Reflected on the Board. Directors reflect a diverse mix of qualifications, skills, and experience relevant to our businesses and strategies.

■   High Board Attendance. During fiscal year 2024, our Directors attended on average 96% of the total of all meetings of the Board and the committees on which they served.

■   High Say on Pay Support. Say-on-pay vote received 88.8% stockholder support at the 2023 Annual Meeting of Stockholders.

■   Executive Incentives Align with Stockholder Value. Incentive compensation performance goals include outcome-based measures that align with stockholder value, such as relative TSR, non-GAAP earnings per share (“EPS”), non-GAAP revenue and non-GAAP cybersecurity revenue growth. Awarded a significant percentage of our NEOs’ equity compensation in performance-based restricted stock units (“PSUs”) in fiscal year 2024 in relation to total equity compensation.

■   Sets the agenda of Board meetings

■   Presides over meetings of the full Board

■   Contributes to Board governance and Board processes

■   Communicates with all Directors on key issues and concerns outside of Board meetings

■   Presides over meetings of stockholders

■   Provides input regarding Board meetings, scheduling, and agendas

■   Presides over executive sessions of the independent Directors of the Board

■   Acts as a liaison between the independent Directors and the Chair and CEO on sensitive issues

■   Sets strategic direction for the Company

■   Implements the Company’s vision and mission

■   Leads the affairs of the Company, subject to the overall direction and supervision of the Board and its committees and subject to such powers as are reserved by the Board and its committees

DIVERSITY

40% of Directors are gender and/or racially diverse.

3 Directors are Female

1 Director is African American or Black

1 Director is Asian

1 Director Identifies as Two or More Races or Ethnicities

Board Size:

Total Number of Directors

Gender:

Number of Directors based on gender identity

Number of Directors who identify in any of the categories below:

Asian

White

African American or Black

Two or More Races or Ethnicities

The Board monitors the information it requests and receives from management and provides oversight and guidance to our senior management team concerning the assessment, monitoring, and management of enterprise risks. The Board is responsible for identifying, assessing, and managing strategic risk and opportunities. The Board approves NetScout’s high-level goals, strategies, and policies to set the tone and direction for appropriate risk taking within the business. The Board and its committees then emphasize this tone and direction in its oversight of the management team’s implementation of our goals, strategies, and policies. The Board also regularly receives various reports, summaries, and presentations related to cybersecurity strategy, threats, risk, and mitigation and reviews those items with management, including our Chief Information Officer (“CIO”) and Chief Information Security Officer (“CISO”).

Audit

Committee

Compensation

Committee

Nominating and

Corporate Governance Committee

The Compensation Committee monitors the design and administration of our incentive compensation programs to ensure that they include appropriate safeguards to avoid encouraging unnecessary or excessive risk taking by senior management team or by our employees. The Compensation Committee also reviews other relevant risk areas in connection with human capital management, including health and safety matters.

The Nominating and Corporate Governance Committee oversees risks related to corporate governance, including Board and Director performance, Director recruitment and succession, Director education, and our Corporate Governance Guidelines and other governance documents, as well as management succession and our ESG efforts. The Nominating and Corporate Governance Committee also oversees our Code of Conduct and Insider Trading Policy and monitors our health and safety programs.

Our senior management regularly attends meetings of the Board and its committees and provides the Board and its committees with reports regarding our operations, strategies, and objectives, and the risks inherent within them, and efforts to monitor and address risk exposures. Board and committee meetings also provide a forum for Directors to discuss issues with, request additional information from, and provide guidance to, senior management. In addition, our Directors have direct access to senior management to discuss any matters of interest, including those related to risk.

Under our ERM program, management identifies and evaluates the effectiveness of risk management and mitigation methods and processes. Our ERM processes include an Enterprise Risk Management Steering Committee, led by our Chief Compliance Officer (“CCO”) and including members of management, that meets regularly and considers assessing and mitigating risks that may have a material impact on our business.

The CCO reports to our General Counsel and reports periodically throughout the year to the Audit Committee on the ERM program to allow the Audit Committee to monitor the ERM process. The CCO also meets with the Audit Committee quarterly to discuss compliance and ethics-related trends, risks, and action plans. Our CCO oversees compliance and provides guidance with respect to legal and regulatory requirements of the jurisdictions where NetScout operates. The CCO is also responsible for, and works with senior leaders who share responsibility in, developing policies to safeguard the privacy of customer and employee information, ensuring adherence to internal compliance requirements, and investigating allegations related to violations of the Code of Conduct. Additionally, the CCO works closely with our executives to ensure appropriate training to reinforce the Company’s ethical culture throughout the enterprise.

Board

Evaluation

The Directors responded to a tailored set of questions meant to enhance the Board’s overall effectiveness by identifying the best practices of a highly effective board and suggested ways to implement these best practices in fiscal year 2025.

Committee

Evaluation

Additionally, the Directors responded to questions for each of their Committee assignments and identified Committee strengths and accomplishments in fiscal year 2024 together with recommended changes in committee practices for fiscal year 2025.

Director Self-

Assessment

Each Director individually assessed their professional background and areas of expertise with the Chair of our Nominating and Corporate Governance Committee and outside legal counsel to assess whether the Board has the appropriate mix of skills, experience, diversity, and independence to ensure that the Board as a whole can satisfactorily perform its oversight duty.

NetScout’s outside corporate counsel compiled the Directors’ responses to protect the anonymity and the integrity of the evaluation process. The findings were presented in a memorandum to our Nominating and Corporate Governance Committee.

Discussion

of Results

NetScout’s Nominating and Corporate Governance Committee Chair then presented the results of the annual Board and Committee assessments to all of the Directors in an executive session of the Board. The Directors discussed the results of the annual evaluations and identified any appropriate follow-up actions.

1

Identify the
Candidate

The Nominating and Corporate Governance Committee identifies candidates for Director nominees in consultation with the CEO and with the support of the General Counsel, through the use of search firms or other advisers, or through such other methods as our Nominating and Corporate Governance Committee deems to be helpful to identify candidates.

2

Confirm Candidate
Qualifications

Once a candidate has been identified, our Nominating and Corporate Governance Committee confirms that the candidate meets all of the minimum qualifications for Director nominees, including having:

■   The highest ethical character and integrity and sharing the values of the Company

■   Reputations consistent with the image and reputation of the Company

■   No conflicts of interest

■   The ability to exercise sound business judgment

■   The willingness and ability to devote sufficient time to the business of the Company and be diligent in fulfilling the responsibilities of a Board member

■   Substantial business or professional experience and expertise

■   A commitment to enhancing stockholder value

Our Nominating and Corporate Governance Committee also considers numerous other qualities, skills, and characteristics when evaluating Director nominees, such as:

■   An understanding of and experience in the network performance management solutions market, the market for networking solutions generally, awareness of the cybersecurity market, or related accounting, legal, finance, product, sales, or marketing matters

■   Experience on other public or private company boards, unless the Candidate otherwise provides complementary capabilities or qualifies as an “audit committee financial expert” or both

■   Leadership experience with public companies or other major organizations

The Nominating and Corporate Governance Committee also takes steps to ensure that diverse, qualified candidates, including women and underrepresented minority candidates, are included as part of the search process for any new Directors.

3

Candidate
Evaluation

The Nominating and Corporate Governance Committee, supported by the General Counsel, gathers information about the candidate through interviews, questionnaires, background checks, or any other means that the Nominating and Corporate Governance Committee deems to be helpful in the evaluation process, including the use of executive search firms.

4

Committee Meeting

and Discussion

The Nominating and Corporate Governance Committee then meets to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of our Board.

5

Board & Committee Approval

Based on the results of the evaluation process, the Nominating and Corporate Governance Committee recommends candidates for our Board’s approval as Director nominees for election to the Board. The Nominating and Corporate Governance Committee also recommends candidates for the Board’s appointment to the committees of our Board.

6

Stockholder Vote

Since April 2018, five of our current Directors, including four independent Directors, were elected to our Board for the first time. We believe each director brings a diverse set of skills and perspectives that add significant value to our governance and oversight.

■   Discuss stockholder proposals (if any).

■   Publish our Annual Report and Proxy Statement.

■   The Nominating and Corporate Governance Committee receives updates on feedback received from stockholders.

■   Conduct engagements with stockholders (as requested or necessary).

■   Receive voting results for Board and stockholder proposals.

■   Discuss voting results from the Annual Meeting.

■   Review corporate governance trends, recent regulatory developments, investors’ perspectives and priorities on a broad array of topics including corporate governance and ESG matters, and the Company’s own corporate governance documents, policies, and procedures.

■   Consider topics for discussions during off-season stockholder engagements.

■   One-on-One meetings between stockholders, our Directors (if appropriate or requested), and members of management.

■   Attend and participate in investor and corporate governance-related events.

■   Evaluate corporate governance and other relevant matters based on stockholder feedback, including stockholders’ proxy voting guidelines and comments to the Company.

INDEPENDENT DIRECTORS

Robert E. Donahue

John R. Egan

Alfred Grasso

Joseph G. Hadzima, Jr.

Shannon Nash

Marlene Pelage

Christopher Perretta

Vivian Vitale

INSIDE DIRECTORS

Anil K. Singhal

Michael Szabados

The Board

Nominating and Corporate

Governance Committee

The Nominating and Corporate Governance Committee meets regularly to review and advise on ESG strategy and monitors and provides strategic guidance regarding NetScout’s ESG and health and safety programs. The Committee typically receives reports quarterly from management and discusses, reviews, and provides guidance to management about the program. The Committee Chair typically reports quarterly to the Board about the ESG program so that the Board as a whole has visibility and an opportunity to provide guidance and oversight.

The Compensation Committee reviews compensation policy and practice-related risk.

The committee also regularly monitors and provides strategic guidance on ESG-related topics such as human capital and talent management, and employee engagement, as well as programs designed to foster diversity, equity, and inclusion.

The Audit Committee regularly reviews ESG-related topics such as enterprise risk management, our anticorruption program, ethics and compliance matters, supply chain matters, including human rights protections, and cybersecurity and data privacy matters.

Management-level ESG Steering Committee

Our management-level ESG Steering Committee, under the strategic direction of our CEO and chaired by NetScout’s Senior Vice President and General Counsel, provides guidance and management oversight for our ESG program.

With representation across all key business functions, the mandate of the ESG Steering Committee is to consider our existing ESG efforts, understand stakeholder perspectives, identify areas for improvement and further alignment with our business, and work collaboratively to support programs designed to accelerate our ESG initiatives.

Office of ESG

The Office of ESG, chaired by NetScout’s Senior Vice President and General Counsel in his role as Chief ESG Officer, is responsible for the development and implementation of our ESG program.

Directors are elected by a plurality of the votes cast by the stockholders entitled to vote at such election. Accordingly, subject to our Director Resignation Policy described in the “Corporate Governance Section” below, the three nominees receiving the highest number of affirmative votes will be elected.

Qualifications, Expertise, &

Attributes

Leadership: Experience leading an organization of significant size with proven ability to develop and execute a strategy to drive results and long-term stockholder value creation.

Financial: Expertise with corporate finance and capital structure and proven ability to identify and understand issues associated with our business and financial model, including, but not limited to, our financial risk exposures, and oversight of internal controls over financial reporting.

Human Capital and Talent Management: Demonstrated strengths for attracting, developing, and retaining top talent and succession planning.

Service Assurance & Cybersecurity Industry: Experience in the service assurance and cybersecurity industry in which our Company operates.

Innovation & Product Development: Experience developing and leading forward-thinking product innovation and emerging technologies, including SaaS and cybersecurity technologies.

Sales & Go-to-Market: Experience building brand and product awareness and developing strategies to grow sales and market share for both existing and new products.

International Markets: An understanding of global markets, economic conditions, regulatory environments, and cultures, and a perspective on global market opportunities.

Strategic Planning: Experience developing and executing a long-term growth strategy of a technology company, through business combinations and acquisitions, product innovation, and market approaches.

Risk Management & Governance: Experience in public company corporate governance, legal and regulatory compliance, policy making, and risk oversight with an emphasis on comprehensive enterprise risk management.

Environmental & Social: Experience with overseeing environmental and social matters within the context of a corporate environmental, social, and governance (“ESG”) program to drive corporate strategy and stockholder value by operating sustainably and taking into account the interests of key stakeholders.

Cybersecurity & Data Privacy Oversight: Experience with and understanding of cybersecurity and data privacy issues including companywide risk management and the legal and regulatory landscape.

Board of Directors ⁽¹⁾

Audit Committee

Compensation Committee

Nominating and Corporate Governance Committee

Finance Committee

Mr. Egan, as the Lead Independent Director, receives a Chair Retainer rather than our Chair, Mr. Singhal, who does not receive a retainer as an employee Director.

Name

Robert E. Donahue

John R. Egan

Alfred Grasso

Joseph G. Hadzima, Jr.

Shannon Nash

Marlene Pelage

Christopher Perretta

Susan L. Spradley⁽³⁾

Vivian Vitale

Amounts represent the aggregate dollar amount of fiscal year 2024 fees earned or paid in cash for services as a Director, including annual retainer fees and committee fees.

Amounts shown do not reflect compensation actually received by the listed Directors but represent the aggregate full grant date fair value of restricted stock unit awards granted to our non-employee Directors calculated in accordance with FASB ASC 718. The grant date fair value of the RSU awards was calculated by multiplying the closing price of our common stock on the Nasdaq Global Select Market on the date of grant by the number of RSUs granted. The fair value shown above may not be indicative of the value realized on the date the RSUs vest due to variability in the share price of our common stock. The number of unvested RSUs held by each independent director as of the last day of the fiscal year were as follows: Mr. Donahue: 7,000; Mr. Egan: 7,000; Mr. Grasso: 7,000; Mr. Hadzima: 7,000; Ms. Nash: 7,000; Ms. Pelage: 7,000; Mr. Perretta: 7,000; Ms. Spradley: 7,000; and Ms. Vitale: 7,000.

Ms. Spradley’s service as a Director ended at the conclusion of the 2023 Annual Meeting.

Executive Officer

Position

Anil K. Singhal

Co-Founder, President, Chief Executive Officer and Chairman of the Board

Michael Szabados

Chief Operating Officer and Vice Chairman of the Board

Jean Bua

65

Executive Vice President, Chief Financial Officer,
Chief Accounting Officer, & Treasurer

John W. Downing

Executive Vice President, Worldwide Sales