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Section 1: DEF 14A (DEF 14A)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 SCHEDULE 14A
 
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
 
Filed by the Registrant þ

Filed by a Party other than the Registrant o
 
Check the appropriate box:
 
o Preliminary Proxy Statement
 
o Confidential, for Use of the Commission only
(as permitted by Rule 14a-6(e)(2))
 
þ Definitive Proxy Statement
 
o Definitive Additional Materials
 
o Soliciting Material Pursuant to § 240.14a-12

PLANTRONICS, INC.
(Name of Registrant as Specified In Its Charter)

Payment of Filing Fee (Check the appropriate box)
þ
 
No fee required.
o
 
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
1.
Title of each class of securities to which transaction applies:
 
2.
Aggregate number of securities to which transaction applies:
 
3.
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
4.
Proposed maximum aggregate value of transaction:
 
5.
Total fee paid:
o
 
Fee paid previously with preliminary materials.
o
 
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
1.
Amount Previously Paid:
 
2.
Form, Schedule or Registration Statement No.:
 
3.
Filing Party:
 
4.
Date Filed:
 




 
PROXY STATMENT
389124582_pltlogopra08.jpg

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held August 3, 2017 at 10:00 a.m. Pacific Daylight Time

To our Stockholders:

Our 2017 Annual Meeting of Stockholders will be held on Thursday, August 3, 2017 at 10:00 a.m., Pacific Daylight Time, at the headquarters of Plantronics, Inc. located at 345 Encinal Street, Santa Cruz, California 95060. Our Board of Directors is soliciting proxies for the Annual Meeting. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. We ask that you please read it carefully.

The purpose of the Annual Meeting is to:
1.
Elect eight (8) directors to serve until the next annual meeting or until their successors are duly elected and qualified.
2.
Approve the amendment and restatement of the Plantronics, Inc. 2003 Stock Plan.
3.
Approve the Plantronics, Inc. Executive Incentive Plan.
4.
Ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of Plantronics, Inc. for fiscal year 2018.
5.
Approve, on an advisory basis, the compensation of Plantronics' named executive officers.
6.
Approve, on an advisory basis, the frequency of the advisory vote on the compensation paid to Plantronics' named executive officers.
7.
Transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice.

Plantronics stockholders of record at the close of business on June 9, 2017 are entitled to vote at the Annual Meeting. To assure your representation at the Annual Meeting, you are urged to cast your vote, as instructed in the Notice of Internet Availability of Proxy Materials, over the Internet or by telephone as promptly as possible. If you prefer, you may also request a paper proxy card to submit your vote by mail. Any stockholder of record attending the Annual Meeting may vote in person, even if she or he has voted over the Internet, by telephone or returned a completed proxy card.


BY ORDER OF THE BOARD OF DIRECTORS
/s/ Mary Huser
Mary Huser
Secretary
Santa Cruz, California
June 16, 2017

YOUR VOTE IS IMPORTANT

TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE REQUESTED TO VOTE YOUR SHARES AS PROMPTLY AS POSSIBLE. EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, WE ENCOURAGE YOU TO VOTE OVER THE INTERNET AT WWW.PROXYVOTE.COM OR BY TELEPHONE 1-800-690-6903. ALTERNATIVELY, YOU MAY REQUEST A PAPER PROXY CARD, WHICH YOU MAY COMPLETE, SIGN AND RETURN BY MAIL.






TABLE OF CONTENTS
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





PROXY STATEMENT
FOR 2017 ANNUAL MEETING OF STOCKHOLDERS

INFORMATION CONCERNING SOLICITATION AND VOTING

The 2017 Annual Meeting of Stockholders (the "Annual Meeting") of Plantronics, Inc. ("Plantronics" or the "Company") will be held at 10:00 a.m. PDT on Thursday, August 3, 2017 at our headquarters located at 345 Encinal Street, Santa Cruz, California 95060. Our Board of Directors ("Board") is soliciting proxies for the Annual Meeting. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully. Your vote is very important.

We have elected to provide access to our proxy materials via the Internet. Accordingly, on or about June 16, 2017, we will mail a Notice of Internet Availability of Proxy Materials (the "Notice of Internet Availability") to our stockholders of record as of the close of business on June 9, 2017. On the date of mailing of the Notice of Internet Availability, all of the proxy materials will be made available free of charge on the website referred to in the Notice of Internet Availability. The Notice of Internet Availability will provide instructions on how you may view the proxy materials for the Annual Meeting on the Internet and how you may request a paper copy or email of such materials.

Please follow the instructions provided in the Notice of Internet Availability, or on the proxy card, if you plan to attend the Annual Meeting in person.

We will pay the costs of soliciting proxies from stockholders. We have engaged The Proxy Advisory Group, LLC to assist with the solicitation of proxies and provide proxy-related advice and informational support. Fees for these services, plus customary disbursements, are not expected to exceed $15,000. We may also compensate brokerage firms and other persons representing beneficial owners of shares for their customary fees and expenses in forwarding the voting materials to beneficial owners. Our directors, officers and regular employees may solicit proxies on our behalf, without additional compensation, personally or by telephone.

Our principal executive offices are located at 345 Encinal Street, Santa Cruz, California 95060. Our telephone numbers are (831) 426-5858 and (800) 544-4660. Our website is www.plantronics.com.

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS
AND THE ANNUAL MEETING

Who Can Vote?

The Board set June 9, 2017 as the record date for the Annual Meeting. All stockholders of record who owned Plantronics common stock at the close of business on June 9, 2017 may attend and vote at the Annual Meeting or any adjournments thereof. Each stockholder is entitled to one vote for each share of common stock held on each of the matters to be voted. Stockholders may not cumulate their votes for the election of directors. At the close of business on June 9, 2017, there were 33,791,910 shares of our common stock outstanding.

How Many Votes Are Required to Conduct Business at the Annual Meeting?

The required quorum for the transaction of business at the Annual Meeting is the presence in person or by proxy of a majority of shares of common stock issued and outstanding on the record date. Shares voted "FOR," "AGAINST" or "ABSTAIN" with respect to any proposal as well as broker non-votes are treated as being present at the meeting for purposes of establishing a quorum.


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How Are Abstentions and Broker Non-Votes Treated?

Shares voted "ABSTAIN" and "broker non-votes" are counted as present and are, therefore, included for purposes of determining whether a quorum is present at the Annual Meeting. Abstentions are considered present in person or represented by proxy and entitled to vote, accordingly, for purposes of proposals requiring approval by a majority of the shares present in person or represented by proxy and entitled to vote, shares voted “ABSTAIN” will have the effect of a vote against the proposal. Under our bylaws, abstentions are not counted as a “vote cast” in the election of directors and therefore, they will have no effect on Proposal One. However, for purposes of Proposal Two, Approval of the Amendment and Restatement of the 2003 Stock Plan, and Proposal Three, Approval of the Executive Incentive Plan, approval is required under the listing rules of the New York Stock Exchange (“NYSE”) and for purposes of complying with Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). Pursuant to the NYSE listing rules and Section 162(m) of the Code and the regulations promulgated thereunder, abstentions are counted as a vote against the proposal. Broker non-votes are not considered votes cast for purposes of determining the outcome of a proposal requiring the approval of a majority of the votes cast, so they will not affect the outcome of the vote, assuming a quorum is obtained. Broker non-votes are also not included in the tabulation of the voting results on proposals requiring the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote on the proposals and, therefore, will not affect the outcome of the vote on such proposals, assuming a quorum is obtained. A broker non-vote occurs when a nominee holding shares for a beneficial owner is not permitted to vote on a particular proposal because such proposal is deemed non-routine, meaning the nominee does not have discretionary voting power with respect to that item, and the nominee has not received instructions from the beneficial owner. Proposal Four, Ratification of Appointment of Independent Registered Public Accounting Firm, is the only routine matter for which nominees will have discretionary voting power.

How Many Votes Are Required to Pass a Proposal?

For Proposal One, Election of Directors, directors will be elected by a vote of a majority of the votes cast with respect to each nominee. In this context, a majority of the votes cast means that the number of votes "FOR" a nominee must exceed the number of votes cast "AGAINST" the nominee. For Proposal Two, Approval of the Amendment and Restatement of the 2003 Stock Plan, and Proposal Three, Approval of the Executive Incentive Plan, approval by a majority of votes cast is required for approval. For these purposes, votes "FOR" the amendments must exceed votes "AGAINST" and "ABSTAIN" votes. For Proposal Four, Ratification of Appointment of Independent Registered Public Accounting Firm, and non-binding Proposal Five, Advisory Vote to Approve Named Executive Officer Compensation, approval by a majority of votes present in person or represented by proxy and entitled to vote is required. The vote on Proposal Five, is advisory and, therefore, not binding on us, the Board or the Compensation Committee of the Board ("Compensation Committee"). For Proposal Six, Advisory Vote to Approve the Frequency of Advisory Votes on Named Executive Officer Compensation, the frequency (1-year, 2-years or 3-years) that receives the highest number of votes will be considered the frequency chosen by our stockholders. The Board and the Compensation Committee value the opinions of our stockholders and will take the votes of stockholders on Proposals Five and Six into account in their evaluation of the design and philosophy of our executive compensation program and our determination regarding the frequency of shareholder advisory votes on executive compensation in the future.

How Does the Board Recommend I Vote on each of the Proposals?

The Board recommends that you vote:

FOR each of the nominees for the Board listed in this Proxy Statement.

FOR the amendment and restatement of the Plantronics, Inc. 2003 Stock Plan.

FOR approval of the Plantronics, Inc. Executive Incentive Plan.

FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of Plantronics for fiscal year 2018.

FOR the approval, on an advisory basis, of the compensation of Plantronics' named executive officers.

FOR "1-Year" for the frequency of the advisory vote on the compensation paid to Plantronics' named executive officers.


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What Is the Difference Between Holding Shares as a Stockholder of Record and as a Beneficial Owner?

Set forth below are certain distinctions between stockholders of record and those whose shares are owned beneficially or in "street name":

Stockholder of Record If your shares are registered directly in your name with Computershare Trust Company, N.A., our transfer agent, you are considered the stockholder of record with respect to those shares and the Notice of Internet Availability is being sent directly to you by us. As the stockholder of record, you may grant your voting proxy directly to the proxyholders nominated by the Board and named in the proxy card distributed or made available to you concurrently with this Proxy Statement (the "Proxyholders") or you may vote in person at the Annual Meeting. The Board has named Joe Burton, Pam Strayer and Mary Huser as the Proxyholders for the Annual Meeting.

Beneficial Owner Most of our stockholders hold their shares through a broker, bank or other nominee rather than directly in their own name. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in "street name," and the Notice of Internet Availability is being forwarded to you by your broker, bank or nominee. As the beneficial owner, you have the right to direct your broker, bank or nominee how to vote on matters at the Annual Meeting and are also invited to attend the Annual Meeting; however, you may not cast a vote at the Annual Meeting without signed authorization from your broker, bank or nominee in the form of a legal proxy. Your broker, bank or nominee should have enclosed with the Notice of Internet Availability, or otherwise provided to you, a voting instruction card for your use in directing your broker, bank or nominee how to vote your shares.

How Can I Vote?

Stockholder of Record Registered stockholders may vote in person at the Annual Meeting or by one of the following methods:

You may vote over the Internet by timely following the instructions at www.proxyvote.com or on the Notice of Internet Availability.
You may vote by telephone by calling 1-800-690-6903.
You may request a proxy card from us and cast your vote by completing, signing and dating the card where indicated and by thereafter timely mailing or otherwise returning the card in the enclosed prepaid, pre-addressed envelope.

Please note that the Internet and telephone voting facilities for registered stockholders will close at 11:59 PM Eastern Daylight Time on August 2, 2017. If you are voting by paper proxy card, it must be mailed in time to be received by August 2, 2017 to ensure your vote is cast at the Annual Meeting.
 
Beneficial Owner If your shares are held by a broker, bank or other nominee, you must timely follow the instructions you receive from your broker, bank or other nominee to ensure your vote is cast. Please follow their instructions carefully. Also, please note that if the holder of record of your shares is a broker, bank or other nominee, and you wish to vote at the Annual Meeting, you must request from them a signed authorization in the form of a legal proxy. To vote your shares in person at the Annual Meeting, you must present that legal proxy and satisfactory proof of identification to the Corporate Secretary.
 
Subject to instructions provided by your broker, bank or other nominee, as a beneficial owner you may typically vote by one of the following methods:
 
By Mail - If you requested printed copies of the proxy materials be mailed to you, you may vote by completing, signing, dating and timely returning your voting instruction card in the enclosed prepaid, pre-addressed envelope;
 
By Methods Listed on the Voting Instruction Card - Please refer to your voting instruction card, or other information provided by your bank, broker or other nominee, to determine whether you may vote by telephone or via the Internet, and timely follow such instructions; or
 
In Person With a Legal Proxy from the Record Holder - You will need to obtain signed authorization in the form of a legal proxy from your bank, broker or other nominee to cast your vote in person at the Annual Meeting. Please consult the voting instruction card provided by your bank, broker or other nominee to determine how to timely obtain a legal proxy.


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All shares entitled to vote and which are represented by properly and timely completed proxies submitted via mail, telephone or the Internet, before the Annual Meeting and not revoked, will be voted at the Annual Meeting, as instructed. If you are a stockholder of record and timely submit a properly signed proxy by mail, telephone or the Internet, but do not indicate how your shares should be voted on a matter, the shares represented by your returned proxy will be voted as the Board recommends.

How Can I Vote My Shares in Person at the Annual Meeting?

Stockholder of Record Shares you hold directly as a stockholder of record may be voted in person at the Annual Meeting. Submitting your vote via the Internet or telephone, or by returning a completed proxy card does not affect your right to vote in person at the Annual Meeting.

Beneficial Owner If you hold shares in "street name" they may be voted in person only if you timely obtain signed authorization in the form of a legal proxy from the stockholder of record giving you the right to vote the shares. Submitting your vote via the Internet or telephone, or by returning a completed proxy card does not affect your right to vote in person at the Annual Meeting, provided that you have a proper legal proxy from the stockholder of record giving you a right to vote the shares.

If you choose to vote in person at the Annual Meeting either as a stockholder of record or as a holder in "street name," please bring satisfactory proof of identification to the Corporate Secretary on the day of the Annual Meeting.

EVEN IF YOU CURRENTLY PLAN TO ATTEND AND VOTE AT THE ANNUAL MEETING, WE RECOMMEND YOU ALSO SUBMIT YOUR PROXY AS DESCRIBED ABOVE SO THAT YOUR SHARES WILL BE VOTED ACCORDING TO YOUR INSTRUCTIONS IF YOU LATER DECIDE NOT TO ATTEND.

What Happens if Additional Proposals are Presented at the Annual Meeting?

Except for the proposals described in this Proxy Statement, we do not expect any other matters to be presented for a vote at the Annual Meeting. If you grant a proxy, the persons named as Proxyholders will have the discretion to vote your shares on additional matters, if any, properly presented for a vote at the Annual Meeting. Under our bylaws, the deadline has passed for notifying us of additional proposals to be presented at the Annual Meeting by stockholders.

Can I Change My Vote?

You may change your proxy instructions at any time prior to the vote at the Annual Meeting. For shares held directly in your name, you may change your vote by (i) executing a new proxy bearing a later date (which automatically revokes the earlier proxy) and delivering it to the Corporate Secretary at our principal executive office located at 345 Encinal Street, Santa Cruz, California 95060 at or prior to the vote at the Annual Meeting; (ii) voting again on a later date via the Internet or by telephone (however, only your latest proxy timely submitted prior to the Annual Meeting will be counted); (iii) advising the Corporate Secretary that you revoke your proxy by providing notice at our principal executive office at the address stated above, in writing before the vote at the Annual Meeting; or (iv) attending the Annual Meeting and voting in person. For shares you hold beneficially, you may change your vote by timely submitting new voting instructions to your broker, bank or other nominee. Attendance at the Annual Meeting, without casting a vote, will not cause your previously granted proxy to be revoked.

What Happens if I Do Not Cast a Vote?

If you hold your shares in "street name" and you do not instruct your broker, bank or other nominee how to vote your broker will only have discretion to vote any uninstructed shares on the proposal to ratify the appointment of our Independent Registered Public Accounting Firm for fiscal year 2018 (Proposal Four). No other votes will be cast on your behalf. If you are a stockholder of record and fail to timely return your proxy or vote at the Annual Meeting, no votes will be cast on your behalf on any of the items of business at the Annual Meeting. If you are a stockholder of record and you return, in a timely manner, a properly executed proxy without indicating how you wish to vote, your shares will be voted in accordance with the Board’s recommendation.


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How Can I Contact Plantronics to Request Materials or Information Referred to in these Questions and Answers?

You may contact us:

By mail addressed to:
Plantronics, Inc.
345 Encinal Street
Santa Cruz, California 95060
Attn: Investor Relations
By calling (831) 426-5858 and asking for Investor Relations
By leaving a message on the Investor Relations portal of our website at: www.plantronics.com

We encourage you to conserve natural resources and reduce printing and mailing costs by using electronic delivery of stockholder communications materials. If you have questions about electronic delivery, please call our Investor Relations office at the number above. To sign up for electronic delivery:

Stockholder of Record If you are a stockholder of record (you hold Plantronics shares in your own name through our transfer agent, Computershare Trust Company, N.A., or you have stock certificates), visit www.proxyvote.com to enroll.

Beneficial Owner If you are a beneficial owner (your shares are held by a broker, bank or other nominee), visit www.proxyvote.com to learn more about your electronic delivery options and enroll.

What is "Householding"?

We generally send a single Notice of Internet Availability and other stockholder communications to households at which two or more stockholders reside unless we receive contrary instructions. This process is called "householding." If your Notice of Internet Availability is being householded and you wish to receive separate copies, or, if you are receiving multiple copies and would like to receive a single copy, contact our Investor Relations office by mail, telephone or the Internet, as described above. If you would like to opt out of this practice for future mailings, please contact us at Plantronics, Inc., 345 Encinal Street, Santa Cruz, California 95060, Attn: Investor Relations, or by phone at 831-426-5858 and ask for Investor Relations.

What is the Deadline for Receipt of Stockholder Proposals for the 2018 Annual Meeting of Stockholders?

You may present proposals for action at a future stockholder meeting only if you comply with the requirements of the proxy rules established by the Securities and Exchange Commission ("SEC") and our bylaws. For a stockholder proposal to be included in our Proxy Statement and form of Proxy for our 2018 Annual Meeting of Stockholders ("2018 Annual Meeting") under rules set forth in the Securities Exchange Act of 1934, as amended (the "Securities Exchange Act"), we must receive the proposal not later than February 16, 2018.

Stockholders wishing to present business at an annual meeting may do so by filing with the Secretary a "Business Solicitation Statement," containing, among other things, certain information about the business the stockholder intends to bring before the annual meeting and the stockholder proposing such business. Stockholders wishing to nominate a director for election to the Board may do so by filing with the Secretary a "Nominee Solicitation Statement" containing, among other things, certain information about the nominee and the stockholder nominating such nominee.

The Business Solicitation Statement or the Nominee Solicitation Statement, as applicable, must be filed with our Corporate Secretary not later than the close of business on the 60th day (June 4, 2018) nor earlier than the close of business on the 90th day (May 5, 2018) prior to the one-year anniversary of the preceding year's annual meeting of stockholders. In the event that no annual meeting was held in the previous year, or if the date of the annual meeting is advanced by more than 30 days prior to or delayed by more than 60 days after the one-year anniversary of the date of the previous year's annual meeting, then, for notice by the stockholder to be timely, it must be received by the Corporate Secretary not later than the 10th day following the day on which a public announcement (as described in the bylaws) of the date of such meeting is first made by us. The deadlines for this year's Annual Meeting have passed, but for the 2018 Annual Meeting and subsequent annual meetings, please follow these instructions.
 
Our bylaws contain additional details about requirements for the Business Solicitation Statement and the Nominee Solicitation Statement as well as certain procedural requirements for the proposal of business and the nomination of directors. You should also review our Corporate Governance Guidelines and our Director Candidates Nomination Policy which contain additional information about the nomination of directors. Our bylaws, Corporate Governance Guidelines and Director Candidates Nomination Policy are available on the Corporate Governance portal of our website at http://investor.plantronics.com/govdocs.

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What is the Date of Our Fiscal Year End?

Some of the information is stated as of the end of our fiscal year 2017 and some information is provided as of a more current date in accordance with legal requirements. Our fiscal years end on the Saturday closest to March 31. Our fiscal year 2017 ended on April 1, 2017. For purposes of consistent presentation, we have indicated in this Proxy Statement that each fiscal year ended "March 31" of the given year, even though the actual fiscal year ended on a different calendar date.

CORPORATE GOVERNANCE
 
Strong corporate governance is an integral part of our core values. Our corporate governance policies and procedures are available on the Corporate Governance portal of the Investor Relations section of our website at http://investor.plantronics.com/govdocs ("Governance Portal"). The Governance Portal includes the Corporate Governance Guidelines, Access to Board of Directors Policy, Director Candidates Nomination Policy, Bylaws, Board Committee Charters, Code of Conduct and the link to Report Accounting Issues for reporting issues regarding accounting, internal accounting controls, audition and other business conduct. These policies are also available in print to any stockholder by making a written request addressed to Plantronics, Inc., 345 Encinal Street, Santa Cruz, California 95060, Attn: Investor Relations.

Code of Conduct
 
We have a Code of Conduct ("Code") which applies to all employees, our executive officers, and directors. Any modification or waiver of any provision of the Code for a director or executive officer must be approved in writing by the Board. If required under applicable law, modifications and waivers will be promptly disclosed to our stockholders by posting on our website. For further information see the Governance Portal.

Ethics Hotline Policy
 
Our Audit Committee has established an ethics hotline and website available to all employees, stockholders, and the general public for the anonymous submission of suspected legal, ethical or other violations including accounting, internal controls, auditing matters and other business conduct at Plantronics. For further information see the Code or Report Accounting Issues link on the Governance Portal.

Directors and Committee Members

The names of, and certain information about, the members of our Board and its committees as of June 9, 2017 are:
Name of Nominee
 
Age
 
Director Since
 
Board
 
Audit
 
Compensation
 
Nominating and Corporate Governance
 
Strategy
 
Mergers and Acquisitions
Marv Tseu
 
69
 
1999
 
Chair
 
Member
 
Member
 
Member
 
Member
 

Joe Burton
 
52
 
2016
 
Member
 

 

 

 
 
 

Brian Dexheimer
 
54
 
2008
 
Member
 
Member
 

 
Chair
 
Member
 
Member
Robert Hagerty
 
65
 
2011
 
Member
 

 

 
Member
 
Chair
 
Chair
Gregg Hammann
 
54
 
2005
 
Member
 
Member
 
Chair
 

 
 
 

John Hart
 
71
 
2006
 
Member
 

 
Member
 
Member
 
Member
 

Maria Martinez
 
59
 
2015

Member
 

 

 
Member
 
Member
 

Marshall Mohr
 
61
 
2005
 
Member
 
Chair
 

 

 
 
 
Member

Director Independence

The Board has determined that, except for Joe Burton, our President and Chief Executive Officer ("CEO"), each of the current directors is independent under the rules of the NYSE. In determining director independence, not only were relationships between each director and Plantronics considered, but also relationships between Plantronics and organizations with which each director and certain people related to each director are affiliated.


6



In connection with its independence analysis, the Board evaluated the relationship between director Maria Martinez and her position as an executive officer of salesforce.com, Inc. ("Salesforce"), a significant service provider to Plantronics. After review, it was determined that Plantronics had entered into agreements with Salesforce for certain Salesforce commercially available services. It was also determined that each of these transactions were negotiated at arm's length without input or assistance from Ms. Martinez and she did not benefit directly or indirectly from the transactions other than as an employee of Salesforce generally. Based on the foregoing determinations, the Board decided the relationships between Plantronics, Ms. Martinez and Salesforce had not impaired and were unlikely in the future to impair her ability to exercise independent judgment.

Accordingly, the Board determined that none of the directors other than Mr. Burton have a material relationship with Plantronics (directly or indirectly through applicable relatives as a partner, stockholder, or officer of an organization), other than as a director of Plantronics, and that each is free from any relationship that would impair her or his ability to exercise independent judgment.

Board Leadership Structure
 
Our Corporate Governance Guidelines requires that the roles of Chair of the Board and the CEO be separate. The Chair of the Board is, at all times, selected from our non-employee directors. Marv Tseu currently serves as the Chair of the Board. He, in consultation with the CEO and other directors, sets the agenda for Board meetings and chairs all regular meetings of non-management directors and presides at executive sessions of the independent directors. The Board has determined that this structure of corporate governance is appropriate for our company at this time and believes it is considered a good governance practice by our stockholders. It allows the CEO to focus on the overall strategy and execution of our business and the Board to focus on our governance, including management of the Board agenda, making major strategic decisions, assessing the performance of the CEO and management, and overseeing our strategy and execution. However, no single leadership model is right for all companies or at all times. The Board recognizes that, depending on the circumstances, other leadership models might be appropriate. Accordingly, the Board periodically reviews its leadership structure.
 
A key responsibility of the Board is ensuring that an effective process is in place to provide continuity of leadership over time at all levels within the Company. Annually, the Board conducts a review on succession planning. During this review, the Board may discuss a variety of issues, including future candidates for senior leadership positions, succession timing for those positions, and development plans for candidates believed to have the highest potential. The Board or any of the directors may identify, evaluate or nominate potential successors to the CEO and may similarly do so for other senior leadership positions. This process promotes continuity of leadership over the long term, and forms the basis on which we make ongoing leadership assignments. It is a key success factor in managing our long-term planning for the executive leadership of our business.

Board Meetings and Committees

The Board held six regular meetings during fiscal year 2017. The directors met four times in executive session without the CEO present. During each member's tenure on the Board in the last fiscal year, each director attended at least 75% of the meetings of the Board and at least 75% of the aggregate number of Board and applicable Committee meetings.

The Board has four standing committees, an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and a Strategy Committee, each of which is described below. See the table in the section "Directors and Committee Members" above for a listing of the members and chairs of each committee. Each of the four standing committees has adopted a written charter that is available on the Governance Portal. This information is also available in print to any stockholder who makes a request to Plantronics, Inc., 345 Encinal Street, Santa Cruz, California 95060, Attn: Investor Relations.

The Board also has a Mergers & Acquisitions Committee ("M&A Committee") to advise management during the early stages of merger, acquisition and divestiture activity. The M&A Committee has authority to approve management actions with regard to any potential merger, acquisition or divestiture transaction that involves less than $5 million of consideration. Any merger, acquisition or divestiture transaction involving consideration of $5 million or more is reviewed by a quorum of the Board and is subject to its approval, in addition to any input from the M&A Committee and Strategy Committee, prior to completion.


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Audit Committee

The Audit Committee held eleven meetings during fiscal year 2017. This Committee is responsible for overseeing actions taken by our financial reporting staff, internal control processes, risk assessment and management relating to financial and internal control issues, and for hiring and supervising our independent registered public accounting firm, among other matters. The Board has determined that each member of the Audit Committee does, and did at all times during their respective tenures on the Audit Committee in fiscal year 2017, meet the requirements of independence for audit committee members as defined by the NYSE listing standards as well as Rule 10A-3(b) of the Securities Exchange Act, as amended, and that directors Mohr, Hammann and Tseu are each audit committee financial experts as defined by the SEC. A report of the Audit Committee is attached to this Proxy Statement as Appendix A.

Compensation Committee

The Compensation Committee held six meetings during fiscal year 2017. The Board has determined that each member of the Compensation Committee does, and did at all times during their respective tenures on the Compensation Committee in fiscal year 2017, meet the requirements for independence of compensation committee members as defined by the NYSE listing standards and each member was also a non-employee director as defined under Rule 16b-3 of the Securities Exchange Act and an outside director as defined under Section 162(m) of the Internal Revenue Code of 1986, as amended. The Compensation Committee has overall responsibility for: evaluating and recommending for approval by the Board, as necessary, our various compensation plans, policies and programs; determining and approving salaries, incentives and other forms of compensation for directors, executive officers (including our CEO) and certain other highly compensated employees; administering various incentive compensation and benefit plans; and risk management in the design and implementation of our compensation plans. The Compensation Committee may form and delegate subcommittees when appropriate. A report of the Compensation Committee is attached to this Proxy Statement as Appendix B. See also, the section entitled "Executive Compensation" for additional information regarding our compensation policies and practices.

The Compensation Committee has delegated the authority, within guidelines it has established and as set forth in our 2003 Stock Plan, as amended, to the RSA (restricted stock awards) Committee and the Management Equity Committee to make equity grants to employees who are not senior executive officers. The RSA Committee, composed of our CEO so long as he is a member of our Board, has the authority to grant restricted stock awards. Each member of our Management Equity Committee, which consists of our CEO, our Senior Vice President and Chief Financial Officer, our Senior Vice President and Chief Human Resources Officer and our Senior Vice President, General Counsel, has the authority to grant restricted stock unit awards and stock options.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee ("NCG Committee") held one meeting during fiscal year 2017. The Board has determined that each member of the NCG Committee does, and did at all times during their respective tenures on the NCG Committee in fiscal year 2017, meet the requirements for independence as defined by NYSE listing standards. The NCG Committee is responsible for identifying and interviewing potential additions or replacement members of the Board and assists the Board to evaluate governance risks and in determining the appropriate governance guidelines for us, the Board and management.

Identification of Director Candidates; Stockholder Nominations and Recommendations; and Director Qualifications

Generally, it is the policy of the NCG Committee to review the qualifications of and consider any director candidates who have been properly recommended or nominated by a stockholder on the same basis as candidates identified by management, individual members of the Board or, if the NCG Committee determines, a search firm hired to identify candidates. When evaluating a candidate, the NCG Committee evaluates the current composition and size of the Board, the candidate's qualifications, the needs of the Board and its respective committees, and such other factors it may consider appropriate; however, the NCG Committee has not established any specific minimum qualifications that must be met by or specific qualities or skills that are necessary for one or more members of the Board to possess.

The NCG Committee seeks nominees with a broad diversity of professional experience, skills, backgrounds, gender, race, national origin and ethnicity such that each director brings a different viewpoint and different skills to the Board. The NCG Committee does not have a formal policy with respect to diversity; however, the Board and the NCG Committee believe that it is essential that the directors represent diverse viewpoints and demographics. In considering candidates for the Board, the NCG Committee considers the entirety of each candidate's credentials in the context of these standards.

8




Stockholders wishing to nominate persons for election to the Board can do so by timely filing a Nominee Solicitation Statement with our Corporate Secretary which, in accordance with our Director Candidates Nomination Policy and our bylaws, contains, among other things, certain information concerning the nominee and the stockholder nominating such nominee as set forth in our bylaws and otherwise complying with the bylaws. The Nominee Solicitation Statement must be delivered to or mailed and received at 345 Encinal Street, Santa Cruz, CA 95060, Attn: Corporate Secretary not later than the close of business on the 60th day nor earlier than the close of business on the 90th day prior to the first anniversary of the preceding year's annual meeting of stockholders. In the event that no annual meeting was held in the previous year or if the date of the annual meeting is advanced by more than 30 days prior to or delayed by more than 60 days after the one-year anniversary of the date of the previous year's annual meeting, then, for notice by the stockholder to be timely, it must be received by our Corporate Secretary not later than the 10th day following the day on which we first publicly announce (as described in the bylaws) the date of such annual meeting. Additional information regarding our policies with respect to director nominations can be found in our bylaws, our Corporate Governance Guidelines and our Director Candidates Nomination Policy, all of which are posted on the Governance Portal.

Director Change in Primary Job Policy

The Board reviews the appropriateness of the continued service of directors who change their primary employment subsequent to their appointment or most recent election to the Board. If a director changes his or her primary job during his or her term of office, such director must submit a letter to the Board that (i) describes the circumstances surrounding the change; and (ii) contains an offer to resign from the Board. The Board then evaluates the circumstances surrounding the change and determines if the change will adversely affect the director's ability to perform his or her duties as a member of the Board. If so, the Board will accept the director's resignation.

Director Commitments

Each director must ensure other existing and anticipated future commitments do not materially interfere with her or his service to the Company. In any event, no director shall serve on the boards of more than four additional public companies. This limitation does not apply to anyone who was a director on or before June 1, 2007. Directors should advise the NCG Committee of any invitations to join a board of any other public company prior to accepting another directorship. With respect to Audit Committee members, no member may concurrently serve on the audit committee of more than three public companies, unless our Board determines such simultaneous service and related time commitments will not impair her or his ability to effectively serve on the Audit Committee, she or he takes steps to address any related issues and we disclose that determination in our proxy statement.

Director Evaluations

Pursuant to the charter of the NCG Committee, it oversees the self-evaluation of the Board. Each of the committees also undertakes periodic self-evaluations. In fiscal year 2017, we engaged outside counsel to conduct interviews with each director regarding, among other things, Board membership, structure, performance and areas for improvement. Following the interviews, the results were discussed with the Chair of the Board and presented to the full Board.

Strategy Committee

The Strategy Committee held five meetings during fiscal year 2017. Each member of the Strategy Committee does, and did at all times during their respective tenures on the Strategy Committee in fiscal year 2017, meet the requirements for independence as defined by NYSE listing standards. Under the direction and in support of the Board or management, the Strategy Committee periodically meets with management to: review and evaluate targeted areas of business development and implementation of our corporate strategy; review and assess material transactions and investments designed to implement our corporate strategy; and recommend areas of improvement and provide feedback to management.

Board Role in Risk Oversight
 
Our Board oversees an enterprise-wide approach to risk management which is designed to support the achievement of long-term organizational performance and enhance stockholder value. Fundamentals of our risk management include understanding the risks we face, management's processes for managing the risks and determining our appropriate level of risk tolerance. Our management is responsible for day-to-day business risk management, including disaster and crisis management, business and financial risk, strategic risk, legal risk, corporate governance risk and compliance risk. The Board, as a whole and through its committees, has the ultimate oversight responsibility for the risk management process.
 
Each of the Board committees focuses on particular aspects of risk management. The Audit Committee regularly discusses and evaluates policies concerning risk assessment and management, including our major financial, compliance and operational risks and steps management takes to monitor and control such risks. The Audit Committee also oversees our independent registered public accounting firm and our annual audit, including reviewing our key financial risk areas with our independent auditors.
 
In its design of our overall compensation policies, programs and philosophy, the Compensation Committee assists the Board to manage incentives for short and long-term performance. As part of its evaluation and design of employee compensation programs, the Compensation Committee assesses and seeks to avoid or mitigate incentives that it believes have the potential to encourage employees to take imprudent risks to achieve financial or other business objectives.

The NCG Committee assists the Board to fulfill its oversight responsibilities concerning risks associated with corporate governance and Board organization, membership, structure, and succession planning for directors. This Committee reviews our corporate governance structures and recommends compliance and corporate governance principles and practices to the Board.
 

9



The Strategy Committee examines our business strategy and provides guidance on balancing risks and potential rewards of our strategic choices.

Access to Board of Directors Policy
 
Our Access to Board of Directors Policy outlines methods by which stockholders or any interested party may contact the Board, any member of our Board, including the Chair of the Board who presides at executive sessions of the non-employee directors as a group. For further information see the Governance Portal.

Directors' Attendance at Annual Meetings

We recognize attendance by our directors at annual stockholder meetings can provide investors with an opportunity to communicate with directors about issues affecting us. Although we have not adopted a formal policy, we encourage all our directors to attend our annual meetings. If a director cannot attend in person, we encourage directors to attend telephonically. Six directors then in office and nominated for re-election attended the 2016 Annual Meeting of Stockholders, all telephonically.

Director Education

Our Corporate Governance Guidelines provide that our directors participate in continuing education programs on an "as needed" basis. The Board has a practice of receiving regular updates on corporate governance at Board meetings.


10



PROPOSAL ONE
ELECTION OF DIRECTORS

Nominees

Eight directors have been nominated for election to the Board at the Annual Meeting. The nominees are Marv Tseu, Joe Burton, Brian Dexheimer, Robert Hagerty, Gregg Hammann, John Hart, Maria Martinez and Marshall Mohr. Mr. Burton is standing for election for the first time since his appointment to the Board in October 2016 and was nominated and recommended by the Board, including all members of the NCG Committee, for election by stockholders at the Annual Meeting. All other nominees listed below are standing for re-election. Unless otherwise instructed, the Proxyholders will vote the proxies they hold for each nominee. If any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee designated by the present Board to fill such vacancy. We are not aware of any nominee who will be unable or will decline to serve as a director and all nominees have consented to act as a director. The term of office for each person elected will continue until the next annual meeting or until a successor has been elected and qualified

Vote Required

Each nominee will be elected by the vote of the majority of the votes cast with respect to the nominee if a quorum is present. In this context, a majority of the votes cast means the number of shares voted "FOR" a nominee must exceed the number of votes cast "AGAINST" such nominee.

In accordance with our Corporate Governance Guidelines with respect to majority voting in director elections, as a condition to nomination each director has submitted a contingent resignation of her or his membership on the Board in writing to the Chair of the NCG Committee. The Board may elect to accept the resignation if a director fails to receive a majority of the votes cast with respect to her or his re-election at the Annual Meeting. If a director nominee fails to receive the requisite vote under the bylaws, the NCG Committee will make a recommendation to the Board as to whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of certification of the Annual Meeting election results.

THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" EACH OF THE NOMINEES LISTED ABOVE.

Business Experience of Directors/Nominees

Mr. Tseu has been a member of the Board since 1999 and serves as Chair of the Board and presides over executive sessions. Since 2008, Mr. Tseu has served as a managing partner of Waypoint Strategies, a firm which advises companies’ boards, CEOs and management on alignment of roles, responsibilities and actions to improve corporate performance. In April 2014, Mr. Tseu became Chief Operating Officer of Future Ads, LLC, a digital media company. After the merger of Future Ads with Kitara Media Corp., another digital media company, to form Propel Media, Inc., in January 2015, Mr. Tseu was named CEO and appointed to the board of directors of Propel Media. Previously, from June 2009 to September 2013, Mr. Tseu served as Chief Operating Officer of Exponential Interactive, Inc., a leading global provider of advertising intelligence and digital media solutions to brand advertisers and he has worked in a variety of senior executive sales, marketing and management roles.

From May 2006 to November 2007, Mr. Tseu served as Chief Executive Officer and Director of Axesstel, Inc., a designer and developer of fixed wireless voice and broadband data products. From October 2002 to March 2006, Mr. Tseu served as the Chief Executive Officer and was a founder of Active Reasoning, Inc., a private company that produced resource management software to help enterprises manage their IT operations, which was acquired by Oracle Corporation in 2007. From 2000 to 2002, Mr. Tseu served as a consulting venture partner with ComVentures, LLP, a venture capital firm focusing on communications companies. From February 2001 to July 2001, Mr. Tseu was Chief Executive Officer of Method Networks, Inc., an Internet technology company helping enterprises automate the management of their Internet networks. From October 1999 to October 2000, Mr. Tseu served as President and Chief Executive Officer and was a co-founder of SiteSmith, Inc., a provider of outsourced Internet site operations. From August 1998 to July 1999, Mr. Tseu served as President of Structured Internetworks, Inc., a company engaged in the design and marketing of bandwidth allocation products. Mr. Tseu has a Bachelor of Arts degree in Economics from Stanford University.


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Mr. Tseu has more than 30 years of professional experience founding, developing and leading networking and communication companies. His demonstrated record of leadership capability and extensive knowledge of complex financial, managerial and operational issues facing a broad variety of companies provide valuable insight and guidance to the entire Board and the executive management team. Moreover, Mr. Tseu has been a member of the Board since 1999 and thus has the benefit of historical experience relating to Plantronics and the headset industry as a whole.

Mr. Burton is President, CEO and a member of the Board. He joined Plantronics in 2011 as Senior Vice President of Engineering and Development and Chief Technology Officer.  To reflect added responsibilities, in 2012 Mr. Burton's title was changed to Senior Vice President of Technology, Development & Strategy and Chief Technology Officer and in 2014 he became Executive Vice President Products, Technology & Strategy and Chief Technology Officer. In 2015, he became Executive Vice President and Chief Commercial Officer and was named President and CEO and was appointed to the Board in October 2016. 

Prior to joining Plantronics, Mr. Burton held various executive management, engineering leadership, strategy, and architecture-level positions.  From 2010 to 2011, Mr. Burton was employed by Polycom, Inc., a global provider of unified communications solutions for telepresence, video and voice, most recently as Executive Vice President, Chief Strategy and Technology Officer and, for a period of time, as General Manager, Service Provider concurrently with his technology leadership role.  From 2001 to 2010, Mr. Burton was employed by Cisco Systems, Inc., a global provider of networking equipment, and served in various roles with increasing responsibility including Vice President and Chief Technology Officer for Unified Communications and Vice President, SaaS Platform Engineering, Collaboration Software Group.  He holds a Bachelor of Science degree in Computer Information Systems from Excelsior College (formerly Regents College) and attended the Stanford Executive Program.

Mr. Burton is a hands-on, visionary leader with a broad and detailed understanding of customer communications needs and challenges. His ability to anticipate market trends, years of in-depth experience guiding technology, product and brand strategies to meet customer needs and innovative and collaborative management approach provide distinctive and invaluable insights to the Board as a whole and exceptional leadership for the organization.

Mr. Dexheimer has been a member of the Board since 2008. During his more than 25 years at Seagate Technology, PLC, an industry leading company focused on core elements of data storage in the enterprise and consumer markets, until his retirement in July 2009, Mr. Dexheimer held a variety of sales, marketing and executive management roles including Chief Sales & Marketing Officer; Executive Vice President - Sales, Marketing and Customer Service; and Executive Vice President - Storage Businesses and Corporate Strategy, where he was primarily responsible for company strategy, road map and all go-to-market aspects of the company. In his most recent role prior to his retirement, Mr. Dexheimer served as President - Consumer Solutions, where he was responsible for the development, manufacturing and go-to-market of Seagate’s branded direct attached and network attached consumer products and services. Mr. Dexheimer has a Bachelor of Business Administration degree in Marketing from the University of Portland, a Masters of Business Administration from Pepperdine University and Director Certification from UCLA.

Mr. Dexheimer has extensive experience in strategy, sales, marketing and general management relating to commercial and consumer products and services. In addition, he has substantial expertise in supply chain management. His deep knowledge of these areas brings valuable insight to our Board.

Mr. Hagerty has been a member of the Board since September 2011. He previously served as CEO of iControl Networks, Inc., a software and services company for the broadband home management market, from September 2011 to March 2017. From 1998 to May 2010, Mr. Hagerty served as CEO, President and Chairman of Polycom, Inc., a provider of personal video systems, video and voice collaboration infrastructures and conference phones. Prior to joining Polycom, Mr. Hagerty served as President of Stylus Assets, Ltd., a developer of software and hardware products for fax, document management and Internet communications; held several key management positions with Logitech, Inc., including Operating Committee Member to the Office of the President, and Senior Vice President/General Manager of Logitech's retail division and worldwide operations; served as Vice President, High Performance Products for Conner Peripherals; and held key management positions at Signal Corporation and Digital Equipment Corporation. He has served on several boards of directors in the past including Smart Technologies, Inc. (a private company), Eye IO (a private company), Palm, Modulus Video, Inc., and as Chairman of the Board of Polycom. Mr. Hagerty holds a Bachelor of Science degree in Operations Research and Industrial Engineering from the University of Massachusetts and a Master of Arts degree in Management from St. Mary's College of California.

Mr. Hagerty has more than 13 years of experience as a CEO of a public communications technology company and has served on the board of directors for several technology companies. Through his professional experience, Mr. Hagerty has demonstrated leadership capability and extensive knowledge of the communications technology industry. In particular, his deep understanding of the unified communications market is invaluable to a key market in our growth strategy.



12





Mr. Hammann has been a member of the Board since 2005. Since April 2017, he has served as President and Chief Executive Officer and member of the board of directors of MetaCommunications, Inc., a marketing resource and digital project management provider. From March 2015 to April 2017, he served as Chief Operations Officer of Sedgwick Claims Management Services, Inc., a technology-enable claims and productivity management solution provider. From August 2014 to March 2015, he served as Executive Vice President and Chief Strategy Officer of Sedgwick Claims Management Services, Inc. Since 2007 he has acted as Chief Executive Officer of Action Advisors, where he assists global companies in strategic planning, succession planning and improving operational results. Since 2007, he has served as President of Frantz Ventures, a real estate investment company. Previously, he was Chairman, President and Chief Executive Officer of Nautilus, Inc., a home fitness equipment manufacturer and held executive positions at Levi Strauss & Company, Coca-Cola Company, J.H. Whitney & Co., a private equity firm, and Power Plate North America, a manufacturer of technologically advanced exercise equipment. Mr. Hammann has also held management positions at Famous Footwear, The Rayovac Corporation, and Procter & Gamble. Mr. Hammann earned a BBA from the University of Iowa and has a Master of Business Administration from the University of Wisconsin.

Mr. Hammann brings extensive experience as a chief executive officer to our Board and over twenty years of marketing experience with world class brands such as Coca-Cola and Levi Strauss. His contribution to the Board is valuable to our growth as we seek to expand our brand on a global basis.

Mr. Hart has been a member of the Board since March 2006. From September 1990 to September 2000, he was Senior Vice President and Chief Technology Officer of 3Com Corporation where he was responsible for the overall strategic direction of the company during the 10 year period. Prior to 3Com, Mr. Hart was Vice President of Engineering at Vitalink Communications Corporation where he led the group that invented, patented and shipped the industry’s first Ethernet switching products. Mr. Hart holds a Bachelor of Science in Mathematics from the University of Georgia.

Mr. Hart's experience determining the strategic direction for large technology companies is valuable to the Board because he can provide experienced and detailed advice to management on business and technological strategies.

Ms. Martinez has been a member of the Board since September 2015. Since February 2013, she has served as President, Sales and Customer Success at Salesforce.com, Inc., a leading provider of cloud computing solutions with a focus on customer relationship management. Previously at Salesforce, Ms. Martinez served as Executive Vice President & Chief Growth Officer from February 2012 to February 2013 and as Executive Vice President, Customers for Life from February 2010 to February 2012. Prior to February 2010, Ms. Martinez served in various senior leadership roles at Microsoft Corporation, Motorola, Inc., and AT&T/Bell Laboratories. Ms. Martinez received a B.S. in Electrical Engineering from the University of Puerto Rico and a M.S. in Computer Engineering from The Ohio State University.

Ms. Martinez has more than 30 years of professional experience in business and technology leadership roles. Her extensive experience at high technology corporations, and in depth knowledge of sales and providing support and services to promote customer success, bring invaluable insight to the Board and the Company’s executive management team and adds to the diversity of the Board in both perspective and demographics.

Mr. Mohr has been a member of the Board since 2005. Since March 2006, he has been Senior Vice President and Chief Financial Officer of Intuitive Surgical, Inc., a provider of surgical robotics. From 2003 to 2006, Mr. Mohr was Vice President and Chief Financial Officer of Adaptec, Inc., a computer hardware company. Prior to joining Adaptec, Mr. Mohr was an audit partner with PricewaterhouseCoopers LLP where he served in a variety of roles, concluding as the managing partner of the firm’s West Region Technology Industry Group, and led its Silicon Valley accounting and audit advisory practice. Mr. Mohr has been a member of the Board of Directors of Pacific Biosciences of California, Inc., a developer of integrated platforms for high resolution genetic analysis, since January 2012, and serves on its Audit and Compensation Committees. Mr. Mohr was a member of the Board of Directors and served as Chairman of the Audit Committee of Atheros Communications, Inc., a developer of semiconductor system solutions for wireless communications products, from November 2003 to May 2011 when Atheros was sold to QUALCOMM, Incorporated. Mr. Mohr received his Bachelor of Business Administration in Accounting and Finance from Western Michigan University.

Mr. Mohr's experience in financial and accounting matters is important to the Board's duty to oversee our financial reporting and to manage our relationship with our independent auditors.





13




COMPENSATION OF DIRECTORS

Under our Outside Director Compensation Policy in effect since fiscal year 2015, each non-employee director and each chair and member of the Audit, Compensation, NCG and Strategy committees received quarterly retainer fees in the amounts indicated in the table below during their respective tenures.

All cash compensation paid to the Chair of the Board and the chair of each applicable committee were in lieu of, and not in addition to, the amounts paid to the members of the Board and respective committees.
 
Fiscal Year 2017 Quarterly Retainer Fee
Board of Directors
 
Chair
$
22,500

Member
12,500

Audit Committee
 
Chair
7,500

Member
3,750

Compensation Committee
 
Chair
5,000

Member
2,500

Nominating and Corporate Governance Committee
 
Chair
3,000

Member
1,500

Strategy Committee
 
Chair
3,750

Member
1,875

M&A Committee
 
Chair

Member


No attendance fees were paid to directors for meetings of the Board or any of the committees in fiscal year 2017. Directors were, however, entitled to reimbursement of expenses incurred in connection with attendance at Board and committee meetings.

Also under our Outside Director Compensation Policy in effect in fiscal year 2017, each non-employee director who continues to serve as a director following each annual stockholders meeting receives a non-discretionary equity award in the form of restricted stock for shares of our common stock having a fair market value of $150,000. Directors elected or appointed to the Board between annual stockholders meetings are entitled to receive all or a portion of the $150,000 non-discretionary equity award depending upon the number of quarters remaining until the next annual stockholders meeting. The number of shares actually awarded is based on the closing price of our common stock as reported on the NYSE on the date of grant.

Each award fully vests on the first anniversary of the date of award provided the director remains a director continuously through the anniversary date. The actual grant date fair values of shares awarded to each non-employee director are set forth in the "Non-Employee Director Compensation Fiscal Year 2017" table set forth below.

Messrs. Burton and Kannappan are employees of Plantronics and, as such, are and were ineligible to receive compensation as directors, including the automatic, non-discretionary equity grants awarded to non-employee directors.






14



The following table summarizes the compensation paid to our directors, other than Messrs. Burton and Kannappan, for the fiscal year ended March 31, 2017:

NON-EMPLOYEE DIRECTOR COMPENSATION FISCAL YEAR 2017
Name
 
Fees Earned or Paid in Cash
 
Stock Awards (1)(2)
 
All Other Compensation (3)
 
Total
Marv Tseu
 
$
134,500

 
$
149,977

 
$
2,084

 
$
286,561

Brian Dexheimer
 
72,500

 
149,977

 
2,084

 
224,561

Robert Hagerty
 
71,000

 
149,977

 
2,084

 
223,061

Gregg Hammann
 
85,000

 
149,977

 
2,084

 
237,061

John Hart
 
73,500

 
149,977

 
2,084

 
225,561

Maria Martinez
 
63,500

 
149,977

 
2,185

 
215,662

Marshall Mohr
 
80,000

 
149,977

 
2,084

 
232,061


(1) 
Stock award amounts reported are the aggregate grant date fair value of stock-related awards in fiscal year 2017 computed in accordance with FASB ASC Topic 718. Refer to Note 2 – Significant Accounting Policies, Stock-Based Compensation Expense and Note 10 – Stock Plans and Stock-Based Compensation to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for fiscal year 2017 as filed with the SEC on May 10, 2017, for the assumptions used to value such awards. The amounts shown exclude the impact of estimated forfeitures.
(2) 
The aggregate number of stock award shares outstanding at March 31, 2017 were 3,332 for each of Messrs. Tseu, Dexheimer, Hagerty, Hammann, Hart, and Mohr and 2,939 for Ms. Martinez.
(3) 
Consists of dividends paid on unvested restricted stock awards.

Prior to the modification of the Outside Director Compensation Policy on June 19, 2014, each non-employee director was entitled to receive annual non-qualified stock options with a grant date Black-Scholes value of $50,000 immediately following each annual meeting of stockholders. At March 31, 2017, the aggregate number of stock options outstanding for each director based on previously granted stock options were: Mr. Tseu 11,531; Mr. Dexheimer 11,531; Mr. Hagerty 8,531; Mr. Hammann 4,293; Mr. Hart 11,531; and Mr. Mohr 14,531.


15



PROPOSAL TWO
APPROVAL OF AMENDMENT AND RESTATEMENT OF THE 2003 STOCK PLAN

General

Stockholders are being asked to approve an amendment and restatement of the 2003 Stock Plan (the "Plan") that increases the number of authorized shares under the Plan by 1,000,000 and to expressly approve the material terms of the Plan for purposes of Internal Revenue Code Section 162(m) ("Section 162(m)") as more fully described below. The Plan was originally approved by our stockholders on June 27, 2003. Since its original approval, it has been amended several times. Our stockholders most recently approved the Plan at our 2015 Annual Meeting held on July 30, 2015. The Board approved the amended Plan that is subject to this Proposal Two on May 20, 2017. If our stockholders approved the amended Plan, it will replace the current version of the Plan. The Plan does not have an expiration date although the Board may amend, alter, suspend or terminate it at any time.

Our Named Executive Officers ("NEO" or "NEOs") and directors have an interest in this proposal as each of them is eligible to receive grants under the Plan. On June 2, 2017, the fair market value of a share of our common stock as determined in accordance with the terms of the Plan was $55.33.

Stockholders are being asked to approve an increase in the number of shares of common stock authorized for issuance under the Plan from 14,900,000 to 15,900,000, an increase of 1,000,000 shares. As of June 2, 2017, 1,316,727 shares remained available for future awards under the Plan and there were options to purchase 1,160,229 shares of our common stock outstanding. The options to purchase 1,160,229 shares had a weighted average exercise price of $45.76 and a weighted average remaining contractual life of 4.28 years. As of June 2, 2017, 1,033,730 shares of restricted stock were issued and outstanding, and 278,123 restricted stock units, granted at no cost, were outstanding and remained unvested. Assuming stockholders had approved the increase of 1,000,000 shares as of June 2, 2017, there would be 2,316,727 shares available for issuance under the Plan.
From an historical perspective, the annual share usage, or burn rate, under our Plan over the last three years was as follows:
Annual Share Usage
Fiscal Year 2017
Fiscal Year 2016
Fiscal Year 2015
Three-Year Average
Stock Options Granted
251,316

287,000

298,000

278,772

Restricted Stock and Restricted Stock Units Granted
672,835

668,383

643,961

661,726

Total Options, Restricted Stock and Restricted Stock Units Granted
924,151

955,383

941,961

940,498

Basic Weighted Average Common Shares Outstanding
32,279,255

34,127,237

41,722,663

36,043,052

Annual Share Usage
2.9
%
2.8
%
2.3
%
2.6
%
Our burn rate, which we define as the number of shares subject to equity awards granted in a year divided by the weighted average common shares outstanding for that fiscal year, is below industry benchmarks recommended by Institutional Shareholder Services.
Looking forward, we currently expect to grant full value awards (likely in the form of awards of restricted stock or restricted stock units) covering approximately 860,000 shares in fiscal year 2018 (of which as of June 2, 2017, 681,557 shares have already been granted primarily as part of our annual worldwide employee review process) which is equal to approximately 2.0% of the 33,807,910 shares of our common outstanding as of June 2, 2017. Additionally, each year we experience some equity award cancellations. In fiscal year 2018, we anticipate cancellations of options and forfeitures of restricted stock awards and restricted stock units of approximately 60,000 shares. If our expectation for cancellations proves accurate, net grants (grants less cancellations) would be approximately 800,000 shares in fiscal year 2018, or approximately 2.4% of our common stock outstanding as of June 2, 2017. Our actual net grants in fiscal year 2017 were 856,319 shares or 2.5% of our common stock outstanding as of June 2, 2017, which was lower than the 1,100,000 shares we had forecast for fiscal year 2017 due primarily to fewer equity grants than forecast.


16



The Plan also contains provisions relating to Section 162(m) for which stockholder approval is being expressly sought. Approval of the Plan will allow us to fully deduct for federal income tax purposes the compensation recognized by our executive officers in connection with certain awards granted under the Plan. Section 162(m) generally denies a corporate tax deduction for annual compensation exceeding $1,000,000 paid to the chief executive officer and other “covered employees” as determined under Section 162(m) and applicable guidance. However, certain types of compensation, including performance-based compensation, are generally excluded from this deductibility limit. To enable compensation in connection with awards granted under the Plan to qualify as “performance-based compensation” within the meaning of Section 162(m), we are asking our stockholders to approve the amended and restated Plan thereby permitting the Company to receive a federal income tax deduction in connection with such awards. Even though the amended Plan would permit us to grant awards that qualify as performance-based compensation under Section 162(m), our Compensation Committee may choose to grant awards that are not intended to qualify as performance-based compensation under Section 162(m) if it determines that doing so would be in our best interests. See Appendix C for the complete text of the Amended and Restated 2003 Stock Plan.

The Plan includes the following limitations to the number or value of shares that may be granted, on an annual basis, through individual awards, which is necessary to allow us to be eligible to receive income tax deductions under Section 162(m) (subject to any adjustment provisions contained in the Plan):
Award Type
Limit During any Fiscal Year
Stock Options
500,000 shares, plus an initial 500,000 shares in connection with a participant’s initial employment
Restricted Stock
Aggregate value greater than $2,000,000 as determined based on the value of the shares on the date of grant
Restricted Stock Units
Aggregate value greater than $2,000,000 as determined based on the value of the shares on the date of grant

Specific performance criteria are included in the Plan so that certain awards may be granted subject to or conditioned upon the satisfaction of performance objectives, which in turn will allow us to be eligible to receive income tax deductions under Section 162(m). These performance criteria include: (1) stock price, (2) revenue, (3) profit, (4) bookings, (5) cash flow, (6) customer development, (7) customer retention, (8) customer satisfaction, (9) sales channel retention, (10) sales channel satisfaction, (11) sales channel development, (12) associate retention, (13) associate satisfaction, (14) associate development, (15) net bookings, (16) net income, (17) net profit, (18) operating cash flow, (19) operating expenses, (20) total earnings, (21) earnings per share, diluted or basic, (22) earnings per share from continuing operations, diluted or basic, (23) earnings before interest and taxes, (24) earnings before interest, taxes, depreciation and amortization, (25) pre-tax profit, (26) net asset turnover, (27) asset utilization, (28) inventory turnover, (29) capital expenditures, (30) net earnings, (31) operating earnings, (32) gross or operating margin, (33) profit margin, (34) debt, (35) working capital, (36) return on equity, (37) return on net assets, (38) return on total assets, (39) return on capital, (40) return on investment, (41) return on sales, (42) net or gross sales, (43) market share, (44) economic value added, (45) cost of capital, (46) change in assets, (47) technical development, (48) expense reduction levels, (49) debt reduction, (50) productivity, (51) new product introductions, (52) delivery performance, (53) implementation or improvement of new or existing business systems, and (54) total stockholder return.

Vote Required
 
The affirmative vote of a majority of votes cast is required to approve the amendment and restatement of the Plan. 

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE PLAN.

Summary of the 2003 Stock Plan

The following is a summary of the principal features of the Plan and its operation. The following summary is qualified in its entirety by reference to the Plan, as it is proposed to be amended and restated, as set forth in Appendix C, attached hereto.


17



Purposes

The purposes of the Plan are to attract and retain the best available personnel for positions of substantial responsibility; to provide additional incentive for our directors, employees and consultants; and to promote the success of our business.

Administration

The Plan is administered by the Board or any committee of individuals appointed by the Board, referred to as the Administrator. The Administrator may make any determinations deemed necessary or advisable for the Plan. The Administrator has full power to select the individuals to whom awards will be granted, to make any combination of awards to any participant and to determine the specific terms of each grant, subject to the provisions of the Plan. The interpretation and construction of any provision of the Plan by the Administrator will be final and conclusive.

Term of the Plan

The Plan became effective as of September 24, 2003, and will continue until terminated by the Board.

Eligibility

Nonstatutory stock options, restricted stock awards ("RSAs") and restricted stock units ("RSUs") may be granted to our employees, non-employee directors and consultants and those of our parent or subsidiary companies (each referred to herein as a "participant"). As of June 2, 2017, there were approximately 1,400 participants, including our CEO and seven non-employee directors, who are eligible to receive grants under the Plan.
 
Shares Subject to the Plan
 
As of June 2, 2017, the maximum number of shares of our common stock available for issuance under the Plan is 14,900,000, of which 1,316,727 are available for future grant under the Plan. On May 20, 2017, the Board approved an increase of 1,000,000 shares issuable under the Plan, subject to stockholder approval. Shares subject to options and full value awards will be counted against the share reserve as 1 share for every 1 share subject thereto. It has been our practice and will continue to be our internal practice to consider the value of a full value award to be 2.5 times the value of an option when determining the number of shares awarded. Many factors are considered when determining the equity value to be awarded to any participant.

Stock Options
 
Each option granted under the Plan is to be evidenced by a written award agreement between us and the participant and is subject to the following additional terms and conditions:

(a) Maximum Grant An individual may not be granted options to purchase more than 500,000 shares during any fiscal year. Notwithstanding this limit, in connection with an individual's initial employment with us, he or she may be granted options to purchase up to an additional 500,000 shares. Additional limitations regarding equity awards to our non-employee directors during any fiscal year are further described in "Non-Employee Director Annual Equity Award Limitations" below.

(b) Grants to Non-Employee Directors We may grant options to our non-employee directors. In all cases, Awards granted to non-employee directors shall be administered by a Committee comprised solely of two or more independent directors and are further limited as described in "Non-Employee Director Annual Equity Award Limitations" below.

(c) Exercise of the Option The Administrator determines when options become exercisable; however, options generally are not exercisable until at least 12 months have passed following the date of the option grant. An option is exercised by giving written or electronic notice of exercise to us, specifying the number of full shares of our common stock to be purchased and tendering payment of the purchase price to us. The acceptable methods of payment for shares issued upon exercise of an option are set forth in the award agreement and may consist of (1) cash, (2) check, (3) certain shares of common stock, (4) the delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, will require to effect a cashless exercise of the option and delivery to us of the amount of proceeds required to pay the exercise price, (5) a reduction of our liability to the participant, (6) any combination of the foregoing methods, or (7) such other consideration and method of payment permitted under applicable law; provided, however, that the issuance of a promissory note is not a permissible method of payment.


18



(d) Exercise Price The exercise price of options granted under the Plan is determined on the date of grant. The exercise price of a stock option must be at least 100% of the fair market value per share at the time of grant. The fair market value of a share of our common stock will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on the NYSE on the date of grant.

(e) Termination If a participant's membership on the Board, employment or consulting relationship with us (or our parent or subsidiary corporations) is terminated for any reason, including death or total and permanent disability, options may be exercised after such termination as to all of the shares as to which the participant was entitled to exercise at the date of such termination. The options may be exercised after termination within the period of time as is specified in the award agreement. If such period of time is not specified in the award agreement, then such period of time will equal 90 days or a period of 12 months in the case of termination upon death, disability or retirement. Notwithstanding the foregoing, all shares under an option must be exercised prior to the expiration of the term set forth in the award agreement.

(f) Term and Termination of Options At the time an option is granted, the Administrator determines the period within which the option may be exercised. In no event may the term of an option be longer than seven years. No person may exercise an option after the expiration of its term.

(g) Other Provisions The award agreement may contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator.

Restricted Stock Awards

Each restricted stock award granted under the Plan is to be evidenced by an award agreement between us and the participant and is subject to the following additional terms and conditions:

(a) Limitation During any fiscal year no participant may receive restricted stock having an aggregate value greater than $2,000,000 as determined based on the value of the shares on the date of grant. Additional limitations regarding equity awards to our non-employee directors during any fiscal year are further described in "Non-Employee Director Annual Equity Award Limitations" below.

(b) Termination Subject to the terms of an agreement between us and a participant, if a participant's membership on the Board, employment or consulting relationship with us is terminated for any reason, including death or total and permanent disability, any unvested shares will be forfeited to us or we may repurchase any unvested stock obtained by the participant pursuant to a restricted stock award. Unless the Administrator provides otherwise, the purchase price of the repurchased shares will equal the price originally paid by the participant, if any, for such shares.

(c) Term of Restricted Stock Awards The Administrator determines the period during which a restricted stock award will vest, which according to internal policy must generally be at least one year from the date of grant. Additionally, if a restricted stock award is not subject to achievement of performance goals, then according to our internally policies currently in effect such award generally will fully vest over at least three years from the grant date.

(d) Other Provisions The restricted stock award agreement may contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator.

Restricted Stock Units

Restricted stock units are awards that will result in a payment to a participant only if the performance goals or other vesting criteria established by the Administrator are achieved or the awards otherwise vest. Each award of restricted stock units will be evidenced by an award agreement between us and the participant and is subject to the following additional terms and conditions:

(a) Limitation During any fiscal year, no participant may receive restricted stock units having an aggregate value greater than $2,000,000 as determined based on the value of the shares on the date of grant. Additional limitations regarding equity awards to our non-employee directors during any fiscal year are further described in "Non-Employee Director Annual Equity Award Limitations" below.

19



(b) Terms of Restricted Stock Unit Awards The Administrator will establish organizational, individual performance goals or other vesting criteria in its discretion, which, depending on the extent to which they are met, will determine the number and/or the value of restricted stock units paid out to participants. According to our internal policies currently in effect, the vesting period generally must be at least one year from the date of grant, provided that if an award is not subject to the achievement of performance goals, then such award generally will fully vest over at least three years from the grant date (except in France where local law requires a two year vesting period and a two year holding period).

(c) Other Provisions The award agreement may contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator.

Non-Employee Director Annual Equity Award Limitations
 
In addition to the limitations on the number of shares participants may receive in any fiscal year in the form of an option grant and the aggregate grant date fair value of shares which may be awarded to participants in the forms of restricted stock awards and restricted stock units described above, equity awards granted to non-employee directors during any fiscal year are subject to an overall aggregate grant date fair market value limitation. Non-employee directors may not receive equity awards in the form of stock options, restricted stock awards, restricted stock units, or any combination of the three in any fiscal year in excess of an aggregate grant date fair market value of $500,000; provided, however, the foregoing $500,000 limitation does not apply to the extent a non-employee director has been or becomes an employee of the Company during the fiscal year.

Performance Goals
 
The granting or vesting of awards of restricted stock and restricted stock units under the Plan may be made subject to the attainment of performance goals relating to one or more business criteria within the meaning of Section 162(m) of the Internal Revenue Code and may provide for a targeted level or levels of achievement including: (1) stock price, (2) revenue, (3) profit, (4) bookings, (5) cash flow, (6) customer development, (7) customer retention, (8) customer satisfaction, (9) sales channel retention, (10) sales channel satisfaction, (11) sales channel development, (12) associate retention, (13) associate satisfaction, (14) associate development, (15) net bookings, (16) net income, (17) net profit, (18) operating cash flow, (19) operating expenses, (20) total earnings, (21) earnings per share, diluted or basic, (22) earnings per share from continuing operations, diluted or basic, (23) earnings before interest and taxes, (24) earnings before interest, taxes, depreciation and amortization, (25) pre-tax profit, (26) net asset turnover, (27) asset utilization, (28) inventory turnover, (29) capital expenditures, (30) net earnings, (31) operating earnings, (32) gross or operating margin, (33) profit margin, (34) debt, (35) working capital, (36) return on equity, (37) return on net assets, (38) return on total assets, (39) return on capital, (40) return on investment, (41) return on sales, (42) net or gross sales, (43) market share, (44) economic value added, (45) cost of capital, (46) change in assets, (47) technical development, (48) expense reduction levels, (49) debt reduction, (50) productivity, (51) new product introductions, (52) delivery performance, (53) implementation or improvement of new or existing business systems, and (54) total stockholder return. The performance goals may differ from participant to participant and from award to award and may be used to measure the performance of the Company as a whole or a business unit of the Company and may be measured relative to a peer group or index.

Nontransferability of Awards

Awards granted under the Plan are generally not transferable; however, the Administrator may grant limited transferability of identified and vested awards (i) by will, (ii) by the laws of descent and distribution, or (iii) to family members (as such term is defined in the general instructions to Form S-8 under the Securities Act of 1933, as amended, or any successor thereto) through gifts or domestic relations orders, as permitted by the instructions to Form S-8 of the Securities Act of 1933, as amended.

Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Merger or Change of Control

Changes in Capitalization Subject to any required action by our stockholders, in the event that our common stock changes by reason of any stock split, reverse stock split, stock dividend, combination, reclassification or other similar change in our capital structure effected without the receipt of consideration, appropriate adjustments will be made in the number of shares of common stock subject to the Plan, the number of shares of common stock subject to any outstanding award under the Plan, the exercise price of any such outstanding award, and any per-person or other share limits under the Plan. The Board will make any such adjustment and its determination in that respect will be final, binding and conclusive.


20



Dissolution or Liquidation In the event of a liquidation or dissolution, any unexercised award will terminate. The Administrator may, in its sole discretion, provide that a participant will have the right to exercise all or any part of his or her award, including shares as to which the award would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any shares purchased upon exercise of an award will lapse as to all such shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated.

Merger or Change of Control In connection with a merger of us with or into another corporation, or a "change in control," as defined in the Plan, each outstanding award will be assumed or substituted for by the successor corporation (or a parent or subsidiary or such successor corporation). If there is no assumption or substitution of outstanding awards, the Administrator will notify the participant that he or she has the right to exercise his or her options and as to all of the shares subject to the award for a period of 15 days from the date of such notice and that the award will terminate upon the expiration of such period; moreover, all restrictions on restricted stock and restricted stock units will lapse and all performance goals or other vesting criteria will be deemed achieved at target levels an all other terms and conditions met.

Amendment and Termination of the Plan

The Plan does not contain a set term or date on which it will automatically expire. Accordingly, unless and until terminated by the Board, the Plan will continue in full force and effect. The Board may amend the Plan at any time or from time to time or may terminate the Plan without approval of the stockholders; provided, however, that stockholder approval is required for any amendment to the Plan for which stockholder approval would be required under applicable law or regulation (including the requirements of the NYSE), as in effect at the time. In addition, pursuant to the terms of the Plan, the Board may not, without the approval of the stockholders, (i) materially increase the number of shares issuable under the Plan (unless such increase is made as an adjustment to a change in our capitalization), (ii) materially modify the requirements for eligibility to participate in the Plan, or (iii) reprice options issued under the Plan by lowering the exercise price of a previously granted option, by canceling options and issuing replacements or by otherwise replacing existing options with substitute options with a lower exercise price.

Federal Tax Aspects

The following paragraphs are a brief summary of the general federal income tax consequences to U.S. taxpayer participants and the Company due to awards granted under the Plan. Tax consequences for any particular individual may be different.

Nonstatutory Stock Options No taxable income is reportable when a nonstatutory stock option with an exercise price equal to the fair market value of our stock is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the shares purchased over the exercise price of the option. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss subject to appropriate holding periods.

Restricted Stock Awards and Restricted Stock Units A participant generally will not have taxable income at the time an award of RSAs or RSUs is granted. Instead, he or she will recognize ordinary income in the first taxable year in which his or her interest in the shares underlying the award becomes either (a) freely transferable or (b) no longer subject to substantial risk of forfeiture. However, the recipient of an RSA (but not an award of RSUs) may elect to recognize income at the time he or she receives the award in an amount equal to the fair market value of the shares underlying the award (less any cash paid for the shares) on the date the award is granted.

Section 409A Section 409A of the Internal Revenue Code imposes certain requirements on non-qualified deferred compensation arrangements. These include requirements with respect to an individual's election to defer compensation and the individual's selection of the timing and form of distribution of the deferred compensation. Section 409A also generally provides that distributions must be made on or following the occurrence of certain events (e.g., the individual's separation from service, a predetermined date, or the individual's death). Section 409A imposes restrictions on an individual's ability to change his or her distribution timing or form after the compensation has been deferred. For certain individuals who are considered our "specified employees," Section 409A requires that such individual's distribution commence no earlier than six months after such individual's separation from service. If an award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with Section 409A's provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation. In addition, certain states (such as California) have laws similar to Section 409A and as a result, failure to comply with such similar laws may result in additional state income, penalty and interest charges.


21



Tax Effect for the Company We will generally be entitled to a tax deduction in connection with an award under the Plan in an amount equal to the ordinary income realized by a participant at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option). Special rules limit the deductibility of compensation paid to our CEO and to each of the other three most highly compensated executive officers, other than our CFO. Under Section 162(m) of the Internal Revenue Code, the annual compensation paid to any of these specified executives will be deductible only to the extent that it does not exceed $1,000,000; however, we can preserve the deductibility of certain compensation in excess of $1,000,000 if the conditions of Section 162(m) are met. The Plan has been designed to permit the Administrator to grant awards that qualify as performance-based for purposes of satisfying the conditions of Section 162(m), thereby permitting us to receive a federal income tax deduction in connection with such awards.

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF AWARDS UNDER THE PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF AN INDIVIDUAL'S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH AN ELIGIBLE INDIVIDUAL MAY RESIDE.

Plan Benefits

The number of shares of our common stock a participant may receive under the Plan pursuant to equity awards is at the discretion of the Compensation Committee or Board and therefore cannot be determined in advance.

The following table sets forth (a) the aggregate number of shares subject to options granted under the Plan during fiscal year 2017, (b) the average per share exercise price of such options, (c) the aggregate number of shares subject to restricted stock awards and restricted stock units granted under the Plan during fiscal year 2017, and (d) the fair market value on the grant date of such restricted stock grants and restricted stock units:
 
 
 
 
(a)
 
(b)
 
(c)
 
(d)
Name
 
Position
 
Number of Shares Subject to Options
Granted
 
Average Per Share
Option Exercise Price (1)
 
Number of Restricted Stock or Restricted Stock Unit Shares Granted
 
Average Per Share Value of Restricted
Stock or Restricted Stock Unit Awards (2)
Joe Burton
 
Director, President and CEO
 
110,316

 
$
44.60

 
35,297

 
$
43.42

Ken Kannappan
 
Former Director, President and CEO
 
50,000

 
$
42.42

 
30,000

 
$
42.42

Pam Strayer
 
Senior Vice President and CFO
 
30,000

 
$
44.13

 
13,000

 
$
42.42

Mary Huser(3)
 
Senior Vice President, General Counsel and Corporate Secretary
 

 
$

 

 
$

Shantanu Sarkar
 
Senior Vice President of Product of Product Development
 

 
$

 
10,000

 
$
45.08

Richard Pickard
 
Former Vice President, Legal General Counsel and Secretary
 

 
$

 
3,000

 
$
42.42

Don Houston (4)
 
Former Senior Vice President, Sales
 

 
$

 

 
$

Executive Group (5)
 
 
 
190,316

 
$
43.95

 
91,297

 
$
43.10

Non-Employee Director Group (6)
 
 
 

 
$

 
20,573

 
$
51.03

Non-Executive Officer Employee Group (7)
 
 
 
61,000

 
$
44.13

 
560,965

 
$
44.87


(1) 
The average per share exercise price of stock options is calculated as a weighted average.
(2) 
Based on the market value of our common stock on the date of grant of restricted stock and restricted stock units during fiscal year 2017.
(3) 
Ms. Huser's employment commenced on March 13, 2017. Pursuant to Company policy, the equity awards set forth in her Employment Agreement were not granted until April 17, 2017. On April 17, 2017, she was awarded 14,500 shares in the form of non-qualified stock options at an exercise price of $52.11 and 5,500 shares in the form of restricted stock.
(4) 
Mr. Houston did not receive any equity awards in fiscal year 2017 due to his failure to comply with a preservation order related to ongoing litigation with GN-Netcom.
(5) 
The Executive Group is comprised of seven Executive Officers.
(6) 
The Non-Employee Director Group is comprised of all members of the Board except Joe Burton.
(7) 
The Non-Executive Officer Employee Group is comprised of all our employees worldwide minus the Executive Group.

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Fiscal Year 2018 Officer and Director Awards

On May 9, 2017, the Committee approved for grant on May 10, 2017, an aggregate of 69,932 shares of our common stock in the form of restricted stock awards and 61,640 shares of at-target performance-based restricted stock units ("PSUs") for our Executives, including certain Executives who are also fiscal year 2017 NEOs. The number of PSUs shares that may ultimately be awarded may be reduced below or exceed the at-target number of shares depending on the performance of our stock against a total shareholder return of stocks in the iShares S&P North American Tech-Multimedia Networking Index over a three year period. The maximum number of PSU shares awarded may not exceed 150% of the at-target amount or 92,459 shares.

The number of shares to be awarded to our non-employee directors in fiscal year 2018 is currently indeterminable in that the amount is dependent on the closing price of our common stock on the NYSE on the date of the Annual Meeting, August 3, 2017. If the closing price of our common stock on the date of the Annual Meeting is the same as the closing price of our common stock on June 2, 2017, $55.33, the aggregate number of shares awarded to each of our non-employee directors in the form of restricted stock awards on August 3, 2017 would be 2,711.

To the extent we hire or promote new executives or appoint or elect new non-employee directors in fiscal year 2018, the number of additional shares awarded to our executives, including our NEOs, and our non-employee directors in fiscal year 2018 will increase by a currently unknown amount.

Equity Compensation Plan Information
 
The following table sets forth information with respect to our equity compensation plans as of April 1, 2017, the end of our most recently completed fiscal year:
 
 
(a)
 
(b)
 
(c)
 
Plan Category
 
Number of securities to be issued upon exercise of outstanding options, warrants and rights
 
Weighted-average exercise price of outstanding options, warrants and rights
 
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
 
Equity compensation plans approved by security holders (1)
 
1,612,639

(2) 
$
38.16

(3) 
2,397,837

(4) 
Equity compensation plans not approved by security holders
 

 
$

 

 
Total
 
1,612,639

 
$
38.16

 
2,397,837

 
 
(1) 
Includes our 2003 Stock Plan ("Plan") and our 2002 Employee Stock Purchase Plan ("ESPP") but does not include the additional 1,000,000 shares for the Plan for which stockholder approval is being requested at the Annual Meeting.
(2) 
Includes 1,417,531 shares subject to stock option awards and 195,108 shares subject to restricted stock unit ("RSU") awards. Excludes purchase rights accruing under the ESPP.
(3) 
RSUs, which are included in the number of outstanding options, warrants and rights, do not have an exercise price and therefore, reduce the weighted-average exercise price of outstanding rights. Excluding RSUs, the weighted-average exercise price of outstanding stock options is $43.41.
(4) 
Consists of 1,967,159 shares available for future issuance under the Plan and 430,678 shares under the ESPP.


23



PROPOSAL THREE
APPROVAL OF EXECUTIVE INCENTIVE PLAN

General

Our Board of Directors has adopted and is requesting that stockholders approve the Plantronics, Inc. Executive Incentive Plan (“EIP”). The EIP was last approved by our stockholders at our 2011 Annual Meeting of Stockholders and most recently adopted by our Board of Directors on May 20, 2017. The EIP contains provisions relating to Section 162(m) for which stockholder approval is being expressly sought. Approval of the EIP will allow the Company to fully deduct for federal income tax purposes the compensation recognized by our executive officers in connection with certain payments under the EIP. Section 162(m) generally denies a corporate tax deduction for annual compensation exceeding $1,000,000 paid to the chief executive officer and other “covered employees” as determined under Section 162(m) and applicable guidance. However, certain types of compensation, including performance-based compensation, are generally excluded from this deductibility limit. To enable compensation paid under the EIP to qualify as “performance-based compensation” within the meaning of Section 162(m), thereby permitting us to receive a federal income tax deduction in connection with such awards, the material terms of the EIP must be periodically approved by our stockholders. See Appendix D for the complete text of the Executive Incentive Plan.

The EIP will first apply to fiscal year 2018, and all subsequent fiscal years, unless it is not approved at the 2017 Annual Meeting of Stockholders. The Compensation Committee has approved a bonus arrangement for participants under the EIP for fiscal year 2018, including our current executive officers set forth in the table below.
 
Fiscal Year 2018 Target Bonus
Name
(% of Annual Base Salary)

Joe Burton
100
%
Pam Strayer
65
%
Mary Huser
50
%
Shantanu Sarkar
50
%

The bonus pool for fiscal year 2018 will become funded upon achievement of a certain level of non-GAAP operating income. If the bonus pool is funded, then individual bonuses will be determined based on achievement of goals relating to net revenue (weighted 40%), non-GAAP operating margin (weighted 40%), and certain individual performance goals (weighted 20%).

If our stockholders do not approve this Proposal Three at the 2017 Annual Meeting, then the Compensation Committee will consider whether to put in place other incentive arrangements for the EIP participants.

Vote Required
 
The affirmative vote of a majority of votes cast is required to approve the EIP. 

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE EIP.

Summary of the EIP

The following paragraphs provide a summary of the principal features of the EIP and its operation. The following summary is qualified in its entirety by the EIP set forth in Appendix D.

Purpose

The purpose of the EIP is to increase stockholder value and corporate success by motivating key executives to perform to the best of their abilities and to achieve the Company's objectives. The EIP accomplishes this by paying awards only after the achievement of the specified goals.


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The EIP is also designed to qualify as “performance-based” compensation under Section 162(m). Under Section 162(m), we may not receive a federal income tax deduction for compensation paid to our Chief Executive Officer and certain other highly compensated executive officers to the extent any of these persons receives more than $1,000,000 in any one year. However, if we pay compensation that is “performance-based” under Section 162(m), we can still receive a federal income deduction for the compensation even if it exceeds $1,000,000 during a single year. The EIP allows us to pay incentive compensation that is performance-based and therefore fully tax deductible on our federal income tax return.

Eligibility

Participants in the EIP are executive officers and key employees who are chosen solely at the discretion of the Compensation Committee ("Committee"). As of June 2, 2017, there were eight persons chosen to participate in the EIP for fiscal year 2018. Because our executive officers are eligible to receive awards under the EIP, they have an interest in this proposal. No person is automatically entitled to participate in the EIP in any fiscal year. Plantronics may also pay discretionary bonuses, or other types of compensation, outside of the EIP.

Administration

The EIP is administered by the Committee, consisting of no fewer than two members of the Board. With respect to incentive compensation intended to qualify as “performance-based compensation” within the meaning of Section 162(m), each member of the Committee who does not qualify as an “outside director” within the meaning of Section 162(m), if any, will recuse themselves or abstain from acting with respect to EIP determinations and at least two members of the Committee who do qualify as “outside directors” shall make EIP determinations. Subject to the terms of the EIP, our Committee has sole discretion to construe and interpret the terms of the EIP and to determine eligibility, award amounts, and the amount, manner and time of payments of awards.

Determination of Awards

Each performance period, our Committee assigns each participant a target award expressed as a percentage of base salary or a specific dollar amount. Under the EIP, participants are eligible to receive awards based upon the attainment and certification of certain performance criteria established by the Committee. The performance criteria may include one or more of the following: stock price, revenue, profit, bookings, cash flow, customer development, customer retention, customer satisfaction, sales channel retention, sales channel satisfaction, sales channel development, associate retention, associate satisfaction, associate development, net bookings, net income, net profit, operating cash flow, operating expenses, total earnings, earnings per share, diluted or basic, earnings per share from continuing operations, diluted or basic, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization, pre-tax profit, net asset turnover, asset utilization, inventory turnover, capital expenditures, net earnings, operating earnings, gross or operating margin, profit margin, debt, working capital, return on equity, return on net assets, return on total assets, return on capital, return on investment, return on sales, net or gross sales, market share, economic value added, cost of capital, change in assets, technical development, expense reduction levels, debt reduction, productivity, new product introductions, delivery performance, implementation or improvement of new or existing business systems, individual objectives, and total stockholder return.

The performance criteria may differ for each participant and for each award. Performance criteria may apply to the entire Company or to one or more of our business units or business functions.

The Committee retains the discretion to reduce or eliminate any award that would otherwise be payable pursuant to the EIP.

Payment of Awards

All awards will be paid in cash as soon as practicable following determination of the award, but no later than the dates set forth in the EIP. Subject to the terms and conditions of the EIP, a participant generally must remain employed through the end of a performance period to earn an award. Under certain circumstances, the Committee has discretion to pay out all or part of an award if a participant terminates employment or in the event of a change of control of the Company.

Actual Awards

After the performance period ends, the Committee certifies in writing the extent to which the pre-established performance goals actually were achieved or exceeded. The actual award payable to a participant is determined using a formula that increases or decreases the participant's target award based on the level of actual performance attained. The amounts, if any, to be paid pursuant to the EIP are not currently determinable. The maximum bonus payment any participant may receive under the EIP in any fiscal year is $5,000,000.

25




Amendment and Termination

The Committee may amend, alter, suspend or discontinue the EIP, in whole or in part, at any time, including the adoption of amendments deemed necessary or desirable to correct any defect or supply omitted data or reconcile any inconsistency in the EIP or in any award granted thereunder. The Committee may amend or alter the EIP in any respect, or terminate the EIP, without the consent of any affected participant, provided that generally no amendment or modification may impair payments to participants made prior to such amendment or modification. However, in no event may such amendment or modification result in an increase in the amount of compensation payable pursuant to any award. The EIP will first apply to fiscal year 2018, and all subsequent fiscal years, unless it is not approved at the 2017 Annual Meeting of Stockholders. If approved, the EIP will continue until the earlier of (i) the five-year anniversary of its approval by stockholders, or (ii) the date it is terminated pursuant to its terms.

Indemnification

Our Board of Directors and the Committee are generally indemnified by the Company for any liability arising from claims relating to the EIP.

Federal Income Tax Consequences

Under present federal income tax law, participants will recognize ordinary income equal to the amount of the award received in the year of receipt. That income will be subject to applicable income and employment tax withholding by the Company. If and to the extent that the EIP payments satisfy the requirements of Section 162(m) and otherwise satisfy the requirements for deductibility under federal income tax law, we will receive a deduction for the amount constituting ordinary income to the participant.

Awards to be Granted to Certain Individuals and Groups
    
Awards under the EIP are determined based on actual performance, so future actual awards (if any) cannot now be determined. The following table sets forth certain information regarding bonuses paid during fiscal year 2017 for each of the named executive officers and for all employees who participated in the EIP in fiscal year 2017 as a group:
Name
Position
Dollar Value of Executive Incentive Plan Compensation Paid in Fiscal Year 2017
Joe Burton
Director, President and CEO
$
458,974

Ken Kannappan
Former Director, President and CEO
$
807,694

Pam Strayer
Senior Vice President and CFO
$
279,148

Mary Huser (1)
Senior Vice President, General Counsel and Corporate Secretary
$

Shantanu Sarkar (2)
Senior Vice President of Product Development
$

Richard Pickard (3)
Former Vice President, Legal, General Counsel and Secretary
$

Don Houston
Former Senior Vice President, Sales
$
241,020

All fiscal year 2017 employees as a group (10)
 
$
2,420,876


(1) 
Ms. Huser's employment commenced on March 13, 2017 and as such she was ineligible to participate in the EIP in fiscal year 2017. She is participating in the fiscal year 2018 EIP.

(2) 
Mr. Sarkar was promoted to Senior Vice President of Product Development on October 2, 2016 and was ineligible to participate in the EIP for fiscal year 2017 pursuant to the terms of his promotion. Instead, he participated in our Associate Incentive Plan ("AIP") generally available to employees below the level of senior vice president and was awarded a cash bonus of $180,375 for fiscal year 2017. He is participating in the fiscal year 2018 EIP.

(3) 
As a Vice President, Mr. Pickard was ineligible to participate in the EIP in fiscal year 2017. Instead, at the commencement of fiscal year 2017 he was eligible to participate in the AIP. However, in accordance with his Transition Agreement effective October 2, 2016, his participation in the AIP ended and he received a lump sum payment equal to one-half ($96,450) of his at target bonus under the AIP.


26



PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

General

The Audit Committee of the Board has selected PricewaterhouseCoopers LLP ("PricewaterhouseCoopers"), an independent registered public accounting firm, to audit our consolidated financial statements for fiscal year 2018. The Board recommends that stockholders vote for ratification of such appointment. Approval of the independent registered public accounting firm is not required. However, Plantronics customarily seeks shareholder ratification as a matter of good governance. If this Proposal Four is not approved, the Audit Committee will reconsider its selection. Notwithstanding ratification by the stockholders, the Audit Committee may select a different registered public accounting firm at any time during the year if it determines that it would be in the best interests of the Company and its stockholders.

PricewaterhouseCoopers has audited our consolidated financial statements annually since 1988. A representative of PricewaterhouseCoopers will be available at the Annual Meeting to respond to questions and will have an opportunity to make a statement at the Annual Meeting if he or she desires to do so.

Audit and Related Fees

The following table summarizes the fees for audit and other services performed by PricewaterhouseCoopers, our independent registered public accounting firm, for the fiscal years ended March 31, 2017 and 2016. All figures are net of value added tax and other similar taxes assessed by non-U.S. jurisdictions on the amount billed by PricewaterhouseCoopers, but include out-of-pocket expenses. All services described in the fee table were approved in conformity with the Audit Committee’s pre-approval process.
 
 
Fiscal Year Ended March 31,
Fee Category
 
2017
 
2016
Audit Fees
 
$
1,782,420

 
$
2,120,341

Audit-Related Fees
 
70,000

 
124,500

Tax Fees
 
181,638

 
199,998

All Other Fees
 
4,140

 
6,416

Total
 
$
2,038,198

 
$
2,451,255


Audit Fees Consists of fees billed to us for professional services rendered by PricewaterhouseCoopers (i) for the audit of our annual consolidated financial statements included in our Form 10-K; (ii) for review of our interim consolidated financial statements included in our quarterly reports on Form 10-Q; (iii) in connection with the audit of the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes Oxley Act of 2002; and (iv) for consents and assistance in connection with other filings, including statutory audits and services, and other documents filed with the SEC.

Audit-Related Fees Consists of fees billed to us for professional services rendered by PricewaterhouseCoopers 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." Audit-related services principally include due diligence in connection with acquisitions, accounting consultations, attest services that are not required by statute or regulation, consultations concerning financial accounting and reporting standards, audits in connection with proposed or consummated acquisitions, and information systems audits.

Tax Fees Consists of fees billed to us for professional services rendered by PricewaterhouseCoopers for tax compliance, tax advice and tax planning.

All Other Fees Consists of fees billed to us for products and services provided by PricewaterhouseCoopers and not reported under "Audit Fees," "Audit-Related Fees" and "Tax Fees."

                                                                                                                           
Our Audit Committee believes that the services rendered by PricewaterhouseCoopers that led to the fees reported under "Audit Fees," "Tax Fees" and "All Other Fees" are compatible with maintaining PricewaterhouseCoopers' independence.

27



Vote Required

The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote is required to approve the ratification of the appointment of PricewaterhouseCoopers as our independent registered public accounting firm for fiscal year 2018.

THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2018.


28



PROPOSAL FIVE
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

General

Stockholders are urged to read the Compensation Discussion and Analysis section of this Proxy Statement, which discusses how our compensation program is designed and how our practices reflect our compensation philosophy, as well as the Summary Compensation table and the related compensation tables, notes and narrative. The Compensation Committee and the Board believe that our compensation program design and practices are effective in implementing our guiding principles.

 Under Section 14A of the Securities Exchange Act of 1934, as amended ("Exchange Act") we are required to submit this proposal to stockholders for a non-binding advisory vote to approve the compensation of our named executive officers ("NEOs"). This proposal, commonly known as a "say-on-pay" proposal, gives our stockholders the opportunity to express their views on the compensation of our NEOs. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the compensation principles, policies and practices described in this Proxy Statement. Accordingly, the following resolution is submitted for stockholder vote at the Annual Meeting:

 
RESOLVED, that the Company's stockholders approve the compensation of the Company's named executive officers as described in this Proxy Statement pursuant to Item 402 of Regulation S-K, including the "Compensation Discussion and Analysis" section, the compensation tables and other narrative compensation disclosures.

We hold an advisory vote on NEO compensation annually and intend to continue to do so unless a majority of stockholders indicate their desire for a less frequent interval by their vote on Proposal Six (Frequency of the Advisory Vote on the Compensation Paid to Plantronics' Named Executive Officers). Accordingly, we expect the next vote on NEO compensation will occur at our 2018 Annual Meeting.

Vote Required

The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote is required to approve this Proposal Five. However, this vote is advisory and therefore, not binding on us, the Compensation Committee, or the Board. The Board and the Compensation Committee value the opinions of our stockholders and will take the vote of the stockholders on this Proposal into account in their evaluation of the design and philosophy of our executive compensation program in the future.

THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DESCRIBED IN THIS PROXY STATEMENT.



29




PROPOSAL SIX
ADVISORY VOTE ON THE FREQUENCY OF HOLDING FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION

General

We are providing our stockholders with the opportunity to cast an advisory vote on how often we should include an advisory vote on executive compensation in our proxy materials for future annual stockholder meetings (or special stockholder meetings for which we must include executive compensation information in the proxy statement for that meeting). Stockholders may vote to have the advisory vote on executive compensation every year, every two years or every three years, or abstain from voting.

After careful consideration of the frequency alternatives, the Board and the Compensation Committee believe that conducting an advisory vote on executive compensation on an annual basis is appropriate for us and our stockholders at this time.

Vote Required

The frequency that receives the greatest number of votes will be considered the frequency chosen by stockholders. The Board will carefully consider the outcome of the vote when making future decisions regarding the frequency of advisory votes on executive compensation; however, because this vote is advisory and not binding, the Board may decide it is in our best interests and the interests of our stockholders to hold an advisory vote more or less often than the frequency selected by stockholders.

THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF AN ADVISORY VOTE ON THE COMPENSATION OF PLANTRONICS' NEOS EVERY YEAR.


30




ADDITIONAL INFORMATION

Security Ownership of Principal Stockholders and Management

The following table sets forth certain information with respect to beneficial ownership of our common stock as of June 2, 2017 (except as noted below) as to (i) each person who is known by us to own beneficially more than 5% of the outstanding shares of our common stock, (ii) each of our directors and each nominee for director, (iii) our CEO and former CEO, CFO, each of two other most highly compensated executive officers as of the end of fiscal year 2017 and two individuals who would have been considered executive officers had their employment as executive officers not terminated prior to the end of fiscal year 2017 (collectively, the "NEOs"), and (iv) all directors and Executive Officers as a group. Except as otherwise indicated, we believe that the beneficial owners of our common stock listed below have sole investment and voting power with respect to such shares, subject to community property laws. The information below is calculated in compliance with SEC rules, but does not necessarily indicate beneficial ownership for any other purpose.
Name and Address of Beneficial Owner (1)
 
Amount and Nature of Beneficial Ownership (2)
 
Percent of Class (3)
PRIMECAP Management Company (4)
 
4,923,150

 
14.6
%
177 E. Colorado Blvd., 11th Floor
 
 

 
 

Pasadena, California 91105
 
 

 
 

 
 
 
 
 
BlackRock, Inc. (5)
 
3,327,408

 
9.8
%
55 East 52nd Street
 
 

 
 

New York, NY 10055
 
 

 
 

 
 
 
 
 
The Vanguard Group, Inc. (6)
 
2,620,892

 
7.8
%
  100 Vanguard Blvd.
 
 
 
 
  Malvern, PA 19355
 
 
 
 
 
 
 
 
 
Ken Kannappan
 
390,442

 
1.1
%
Joe Burton
 
244,882

 
*

Don Houston
 
181,018

 
*

Pam Strayer
 
94,568

 
*

Marshall Mohr
 
31,915

 
*

Brian Dexheimer
 
26,683

 
*

Marv Tseu
 
25,915

 
*

John Hart
 
24,415

 
*

Robert Hagerty
 
20,915

 
*

Gregg Hammann
 
20,677

 
*

Shantanu Sarkar
 
18,164

 
*

Rich Pickard
 
15,918

 
*

Maria Martinez
 
5,813

 
*

Mary Huser
 
5,500

 
*

 
 
 
 
 
All Directors and Executive Officers as a Group (14 persons)
 
1,106,825

 
3.2
%
 
* Less than 1%.
 
(1) 
Unless otherwise indicated, the address for each beneficial owner named in the table is c/o Plantronics, Inc., 345 Encinal Street, Santa Cruz, California 95060.

31




(2) 
Includes stock options held by directors and NEOs that are exercisable within 60 days of June 2, 2017, as follows:
Director/Named Executive Officer
 
Stock Options
Ken Kannappan
 
319,305

Joe Burton
 
150,375

Don Houston
 
118,458

Pam Strayer
 
48,262

Marshall Mohr
 
11,531

Brian Dexheimer
 
11,531

Marv Tseu
 
11,531

John Hart
 
11,531

Robert Hagerty
 
8,531

Gregg Hammann
 
4,293

Shantanu Sarkar
 

Rich Pickard
 

Maria Martinez
 

Mary Huser
 

 
 
 
All Directors and All Executive Officers as a Group (14 persons)
 
695,348


(3) 
For each person and group included in the table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group calculated pursuant to Rule 13d-3 of the Securities Exchange Act and set forth in the table by the sum of 33,807,910 shares of common stock outstanding on June 2, 2017 and the number of shares of common stock that such person or group had the right to acquire on or within 60 days of June 2, 2017 as set forth in footnote 2 above.

(4) 
As of December 31, 2016, PRIMECAP Management Company ("PRIMECAP") reported sole dispositive power as to 4,923,150 shares and neither sole nor shared voting power over these shares, based solely upon PRIMECAP's Schedule 13G/A, Amendment 21, filed on February 9, 2017. PRIMECAP has indicated that 3,619,000 of these 4,923,150 shares were held by Vanguard Chester Funds – Vanguard PRIMECAP Fund, which is managed by PRIMECAP. In Amendment No. 26 to Schedule 13G/A filed February 13, 2017, Vanguard Chester Funds – Vanguard PRIMECAP Fund reported that, as of December 31, 2016, it had sole voting power over 3,619,000 of these shares and neither sole nor shared dispositive power over any of these shares. The address of Vanguard Chester Funds – Vanguard PRIMECAP Fund is 100 Vanguard Blvd., Malvern, PA 19355.

(5) 
As of January 31, 2017, BlackRock, Inc., reported sole voting power as to 3,256,782 shares and sole dispositive power as to 3,327,408 shares. Information provided herein is based solely upon BlackRock, Inc.'s Schedule 13G/A, Amendment No. 8 filed on February 8, 2017. BlackRock, Inc. is a publicly held entity listed on the NYSE.

(6) 
As of December 31, 2016, The Vanguard Group reported sole dispositive power as to 2,551,605 shares, shared dispositive power as to 69,287 shares and sole voting power as to 65,887 shares. Information provided herein is based solely upon The Vanguard Group's Schedule 13G/A, Amendment No. 6 filed on February 13, 2017.

Stock Ownership Requirements; Anti-Hedging and Anti-Pledging Policy

The NCG Committee has established stock ownership guidelines for all Executive Officers and directors. Under the guidelines, Executive Officers should own, and directors must own, a certain amount of our common stock as discussed below. For purposes of this requirement, "Executive Officers" are officers subject to the reporting requirements of Section 16(a) of the Exchange Act. Each director and Executive Officer then in office was in compliance with these ownership guidelines as of the beginning of fiscal years 2017 and 2018, respectively.


32



Non-Employee Directors

All non-employee directors must hold the lesser of (i) that number of shares (or the value of in-the-money vested stock options) equal in value to $25,000, or (ii) 1,000 shares of our common stock. Each non-employee director must attain the foregoing ownership requirement within four years of her or his appointment to the Board.

President and Chief Executive Officer

The President and CEO should hold the lesser of (i) that number of shares of our common stock (or the value of in-the-money vested stock options) equal in value to his or her annual base salary, or (ii) 25,000 shares of our common stock. The President and CEO should attain the foregoing ownership threshold within four years of her or his acceptance of such position.

Executive Officers

All Executive Officers (other than the President and CEO) should hold the lesser of (i) that number of shares of our common stock (or the value of in-the-money vested stock options) equal in value to $50,000, or (ii) 3,000 shares of our common stock. Each Executive Officer should attain the foregoing ownership threshold within four years of her or his acceptance of the position.

To determine the value of shares held by each of our non-employee directors and each Executive Officer, including the President and CEO, we divide the threshold value of stock to be held by each individual by the market price of our common stock at the beginning of each fiscal year. The value of shares of common stock is calculated based on the higher of the actual cost of the shares or their fair market value. The value of vested in-the-money stock options is the fair market value less the exercise price. Any subsequent change in the value of shares of our common stock during a fiscal year will not affect the amount of stock that an individual must hold during that year. The NCG Committee has the discretion to modify these guidelines, including on a case-by-case basis, as it deems appropriate.

Anti-Hedging and Anti-Pledging Policy

Under our Insider Trading Compliance Program and Policy, directors, officers, employees and other associated parties are prohibited from short selling our stock, hedging or trading in publicly-traded options such as puts, calls and other derivative securities (other than stock options issued by us) with respect to our stock, pledging our stock as collateral for loans, or holding our stock in margin accounts.


33



EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This section explains our executive compensation program as it relates to our "named executive officers" for fiscal year 2017 (each, a "NEO" and collectively, the "NEOs"), although much of the discussion also applies to all executives whose titles are senior vice president and above ("Executives") generally. Our NEOs include our CEO, our CFO and two other highest paid executive officers. As required by SEC rules, we have also included our former President and CEO and two employees who as of the end of fiscal year 2017 were no longer serving as executive officers and who would have been deemed to be named executive officers if they had still been serving as executive officers at the end of fiscal year 2017. Our NEOs for 2017 are:
Joe Burton
President and CEO
Ken Kannappan (1)
Former President and CEO
Pam Strayer
Senior Vice President and CFO
Mary Huser
Senior Vice President, General Counsel and Corporate Secretary
Shantanu Sarkar
Senior Vice President of Product Development
Richard Pickard (1)
Former Vice President, Legal, General Counsel and Secretary
Don Houston (1)
Former Senior Vice President, Sales

(1) 
Both Mr. Kannappan's role as President and CEO and Mr. Pickard's role as Vice President, Legal, General Counsel and Secretary ceased on October 1, 2016, although they continued to perform transition-related services on a part-time basis throughout fiscal year 2017. Mr. Houston's role as Senior Vice President, Sales, ceased on March 13, 2017, and he was named Senior Vice President, New Business Sales, his duties modified accordingly and, as a result, his status as an executive officer was rescinded.

The discussion that follows includes statements regarding financial and operating performance targets in the limited context of our Executive compensation program. Investors should not evaluate these statements in any other context. These are not statements of management’s expectations of future results or guidance.

Executive Summary

Our philosophy is that Executive compensation should be competitive and vary with the actual performance of the Company and each individual. Accordingly, our Executive compensation program is designed to target total compensation based on achievement of corporate goals and the contributions of each Executive, and his or her team, to realizing those goals.

The guiding principles of our Executive compensation program are to provide appropriate compensation to:

Attract highly qualified executives and motivate them to perform at the highest levels
Reward outstanding performance while avoiding excessive risk
Retain executives whose skills are essential for maintaining and building upon the successes of our business and creating long-term value
Establish annual short-term targets for cash incentives that are directly tied to metrics we deem important to financial performance as well as to individual areas of accountability
Create greater stockholder value by awarding long-term equity compensation tied to the achievement of consistent positive corporate results
Recruit and retain successful individuals by providing comprehensive compensation packages competitive with those of executives in similar positions at comparable companies


34




Our fiscal year 2017 Executive compensation program consisted of the following key elements:

Key Elements of Executive Compensation
Element
 
Description
 
Purpose
Base Salaries
 
Fixed cash compensation based on responsibility, performance, experience, tenure and potential.
 
Provide a fixed baseline level of cash compensation.
Variable Annual Cash Bonus Plan
 
Annual performance-based cash incentive awards payable after the close of the fiscal year contingent upon achievement of company-wide and functional specific goals.
 
Motivate Executives to achieve our annual strategic and financial objectives.
Equity Incentive Awards
 
A mix of any of stock options, restricted stock awards ("RSAs") and restricted stock unit awards ("RSUs").
 
Encourage positive long-term performance aimed at aligning and rewarding Executives' interests with those of the Company and its shareholders.
Other Benefits
 
Life, health, disability insurance generally applicable to all employees but may be enhanced for certain Executives, deferred compensation and retirement savings and matching contribution programs, as well as vehicle allowances.
 
Attract and retain Executive talent based on peer-comparable compensation offerings.

DETERMINING EXECUTIVE COMPENSATION

Role of the Compensation Committee

The Compensation Committee of our Board ("Committee") reviews, approves and oversees all elements of Executive compensation with the assistance of senior management and our compensation consultant, Compensia. Each Committee member is an independent, non-employee director with experience managing executives and making executive compensation decisions.

The Committee believes compensation must be viewed holistically and, therefore, evaluates compensation in its totality. We refer to this as total direct compensation ("TDC"). The Committee compares the median of the range of TDC for each Executive to executives in similar positions with similar responsibilities at comparable companies. Consistent with our strategy, when annual company-wide performance exceeds pre-established targets, our Executives generally earn greater than median pay and when performance falls below targets, they typically earn less. The Committee believes a program that enables greater than median compensation when performance exceeds pre-established targets supports its goal of increasing stockholder value.

In determining base salaries, annual and long-term incentive targets and all other elements of Executive compensation, the Committee relies on its general experience and subjective considerations of various factors, including our strategic business goals, compensation survey data and each Executive’s position, experience, level of responsibility, individual job performance, contributions to overall corporate performance, job tenure and future potential. The Committee does not set specific benchmarks for overall compensation or allocations between different elements and types of compensation.

Role of Our Stockholders

We value our relationships with our stockholders. All stockholders are welcome to submit suggestions regarding our governance, including our Executive compensation practices. Suggestions should be sent to Plantronics, Inc., 345 Encinal Street, Santa Cruz, California 95060, Attn: Investor Relations, or made by phone at 831-426-5858.

Annually, stockholders may cast an advisory vote on our NEO compensation ("say-on-pay"). At our 2016 Annual Meeting of Stockholders, our say-on-pay proposal received approval of over 91% of the votes cast. This followed the say-on-pay vote at our 2015 Annual Meeting at which over 93% of the votes cast were also in favor.

Based on our outreach and prior stockholder voting results, the Committee believes our stockholders strongly support our approach to NEO and Executive compensation. For fiscal year 2018, the Committee left our NEO and Executive compensation programs materially intact. However, to further align our Executive's interests with those of our stockholders and based on feedback from investors, the Committee chose to replace the time-based stock options portion of our Executive compensation with performance-based restricted stock units tied to the comparative price of our common stock to an index of comparable listed companies. A further description of our performance-based equity awards can be found in the Section "Fiscal Year 2018 NEO Equity Awards" of this Proxy Statement.


35



Role of Management

The Committee conducts an annual review of Executive compensation to determine if changes are appropriate. As part of this process, our CEO, Senior Vice President and Chief Human Resources Officer and other appropriate personnel provide the Committee with an assessment of each Executive's prior year performance against her or his specific performance objectives for the year and her or his influence on overall corporate performance.

Based on his assessments, together with information provided by our compensation consultant, our CEO recommends each Executive's compensation package and performance objectives for each fiscal year. Neither our CEO nor Senior Vice President and Chief Human Resources Officer participates in any assessment of his or her own performance or makes any recommendation with respect to his or her own compensation package.

Following a review of management’s recommendations, the Committee approves the compensation recommendations for the Executives with modifications the Committee considers appropriate. The Committee may also adjust compensation for specific individuals at other times during the year as it deems advisable.

Role of Our Compensation Consultant

Our independent third party compensation consultant, Compensia, provides information, analysis and advice regarding Executive compensation practices and reports directly to the Committee Chair.

The Committee considers a variety of factors when evaluating the capabilities and independence of compensation consultants including, the consultant's provision of other services to us, the fees paid or expected to be paid, the consultant's policies and procedures designed to prevent conflicts of interest, any business or personal relationships between members of the Committee or members of executive management and the consultant or its personnel, and whether the consultant or its personnel own any of our stock as required by NYSE listing rules. For fiscal year 2017, the Committee determined there were no conflicts of interest with Compensia and Compensia was independent.

At the Committee's direction, Compensia provided various services in connection with fiscal year 2017 Executive compensation including: (i) advice on achievement targets and funding metrics for our Executive compensation program; (ii) ongoing advice on the design of our annual cash-based Executive Incentive Plans, Associate Incentive Plan and equity incentive plans generally; (iii) assistance assessing risks related to our compensation programs; and (iv) information on executive and non-employee director compensation including trends, developments and market practices.

A Compensia representative attended a majority of the meetings and executive sessions of the Committee in fiscal year 2017. Additionally, its personnel contacted our employees for information and assistance necessary to fulfill its assignments and makes reports and presentations to and on behalf of the Committee that our Executives and other employees may also receive. All decisions concerning the amount or form of Executive compensation are made by the Committee alone or in conjunction with our Board, although our CEO does not participate or vote on matters concerning his own compensation.

Executive Compensation Market Analysis

Executive recruitment and retention requires market competitive compensation packages. For fiscal year 2017, Compensia, in collaboration with the Committee, gathered objective external compensation data to benchmark our Executive pay against a peer group of similar-industry and similar-size companies (“Peer Group”).

In selecting the Peer Group, the Committee approved relevant metrics proposed by Compensia to establish a group of like companies based on key factors such as industry comparability, revenue and revenue growth, market capitalization, profitability, headcount, and location. In fiscal year 2017, Compensia recommended, and the Committee considered as potential peers, companies in the technology hardware and equipment fields, particularly communication equipment entities, along with software companies, primarily systems, application or internet, and manufacturers and services providers in computer and peripherals, electronic equipment and instruments, office electronics and semiconductor fields, and direct labor competitors. Other selection criteria included: (i) consistency with prior periods, such as whether we included a company in our prior fiscal year Peer Group; (ii) whether a company had positive net income in the prior year; and (iii) whether we were included in the company's peer group in the prior year. Based on Compensia's summary, the Committee selected 17 publicly traded companies in the technology, hardware, equipment, software, and direct labor industries with annual revenues between $378 million and $1.7 billion and market capitalization between $858 million and $5.9 billion. The Peer Group approved by the Committee for fiscal year 2017 was:

36



ADTRAN
Cadence Design Systems
Coherent
Dolby Laboratories
Finisar
Infinera
Ixia
Mentor Graphics
MicroStrategy
NETGEAR
Polycom
Progress Software
Rovi
Synchronoss Technologies
Ubiquiti Networks
Verint Systems
ViaSat
 
 
 

For fiscal year 2017, Compensia recommended that the Company remove six companies and add four new companies to the Peer Group. Five of the six peers from fiscal year 2016, Aruba Networks, Emulex, Informatica, Riverbed Technology, and TIBCO Software, were removed due to their respective acquisitions. ARRIS International plc no longer met the criteria set by the Committee. The Committee approved the addition of Dolby Laboratories, Ixia, Synchronoss Technologies and Ubiquiti Networks. Each added company met the pre-established criteria used to evaluate the peer companies including industry, revenue range, market capitalization range, and net income. Three of the four companies also met the additional criteria of having a California and/or San Francisco Bay Area headquarters location.

For Executive compensation comparisons, Compensia provided data from the most recently reported proxy statements and SEC filings of the selected Peer Group companies. Because proxy statements and SEC filings are generally limited to each company's top five most highly compensated executives, sufficient publicly available data is not available for all our Executives. Therefore, as an additional resource, we reviewed applicable compensation data for similar executives at the Peer Group companies as reported in The Radford Global Technology Survey.

Key Executive Compensation Elements for Fiscal Year 2017

Base Salaries

Base salaries are the basis of our Executive compensation program, establishing a fixed base level of cash compensation for each Executive. Base salaries are intended to reflect the Committee's assessment of each Executive's: functional role and responsibilities as they relate to organizational success; ability to fulfill her or his primary responsibilities; past performance and future potential; tenure; and succession and retention considerations. Base salaries are also the foundation for determining bonuses under our annual variable cash compensation plans.

Base salaries are typically set annually. To remain competitive, base salaries are evaluated against the median of the range of salaries for executives in similar positions at Peer Group companies; however, the Committee does not target a specific percentile when setting compensation levels.

In fiscal year 2017, base salaries were frozen for the majority of our employees, including each of our NEOs, at fiscal year 2016 levels other than in connection with promotions, new hires or other changes in roles or responsibilities.
 
 
Ending Fiscal Year 2017 Base Salary (as of April 1, 2017)
Name
 
Joe Burton (1)
 
$
550,000

Ken Kannappan (2)
 
$
362,500

Pam Strayer
 
$
387,000

Mary Huser
 
$
360,000

Shantanu Sarkar (3)
 
$
325,000

Richard Pickard (4)
 
$
120,000

Don Houston
 
$
412,000


(1) 
On July 31, 2016, Mr. Burton executed an Employment Agreement effective October 2, 2016, accepting a promotion to President and CEO upon the retirement of Mr. Kannappan. In connection with his promotion, Mr. Burton's annual base salary was increased from $455,000 to $550,000.

(2) On July 31, 2016, Mr. Kannappan executed an Employment Agreement effective October 2, 2016, providing for his part-time employment following his retirement as President and CEO. Under the terms of his Employment Agreement, Mr. Kannappan's annual base salary decreased from $725,000 to $362,500.
  
(3) Mr. Sarkar was promoted to Senior Vice President of Product Development on October 2, 2016 and his base salary was increased to $325,000 on that date.

37




(4) On September 6, 2016, Mr. Pickard executed a Transition Agreement effective October 2, 2016, providing for his part-time employment following his retirement and pending the hiring of his replacement. Under the terms of his Transition Agreement, Mr. Pickard's annual base salary decreased from $385,800 to $120,000.

Annual Bonus Incentive Plans

All Executives other than Messrs. Pickard and Sarkar and Ms. Huser participated in Executive Incentive Plans ("EIP") in fiscal year 2017. Because of the timing of her start date of March 13, 2017, Ms. Huser was ineligible for an EIP for fiscal year 2017. Because of the timing of his promotion to Senior Vice President of Product Development on October 2, 2016, Mr. Sarkar was ineligible to participate in an EIP and therefore maintained his participation in our Associate Incentive Plan ("AIP") through the end of fiscal year 2017. Our AIP is similar to our EIPs although generally available only to employees whose titles are below the level of senior vice president. Both our EIPs and the AIP provide eligible employees the opportunity to receive annual cash bonuses. Payment of bonuses is based on (i) the funding of a bonus pool by achievement of corporate goals, and (ii) corporate and individual performance criteria used to determine the amount an individual may receive as a bonus from the bonus pool.

Additionally, until the effective date of his Transition Agreement, Mr. Pickard participated in our AIP. Under the terms of his Transition Agreement, Mr. Pickard accepted a lump sum payment of $96,450 in lieu of his continued participation in our AIP.

Bonus Pool Amount and Fiscal Year 2017 Funding

Annually, the Committee sets the total potential amount payable as bonuses to employees under our EIPs and the AIP ("Corporate Pool Funding"). For the EIPs, the amount of the pool is based on achieving or surpassing threshold corporate-wide performance goals. For the AIP in which the majority of our other employees, including Mr. Sarkar, participated in fiscal year 2017, funding is based on achievement of the fiscal year Corporate Pool Funding metrics.

For fiscal year 2017, the goals for the Corporate Pool Funding metrics for both the EIPs and the AIP were in each instance equal to or greater than the goals under our Board-approved fiscal year 2017 business plan. The table below shows our fiscal year 2017 goals for the EIPs and the AIP (for Corporate Pool Funding purposes the three Funding Metrics were identical in fiscal years 2016 and 2017) including weighting and threshold, target, and maximum allowable funding:
 
 
 
 
Corporate Performance Goals
 
 
 
 
Threshold
 
Target
 
Maximum
Fiscal Year 2017 Funding Metrics
 
Weight
 
(50% of Target)
 
(100% of Target)
 
(150% of Target)
Net Revenue
 
20
%
 
$840M

 
$880M

 
$920M

Non-GAAP Operating Income *
 
60
%
 
$134M

 
$164M

 
$194M

Inventory Turns
 
20
%
 
6.60

 
7.60

 
8.60

 
 
100
%
 
 

 
 

 
 


The funding metrics are defined as follows:

"Net Revenue," as reported in Plantronics’ public filings with the Securities and Exchange Commission, is a measure of the revenue earned from sales of all our products to the business and consumer markets, net of any deductions such as discounts, returns or other adjustments, that need to be taken against that revenue.

*"Non-GAAP Operating Income" measures the Company’s overall success in generating profits, which can then be used to help the Company grow. For purposes of the Executive Incentive Plans, Non-GAAP Operating Income excludes certain amounts related to litigation with GN Netcom. (See footnote 1 below for more details).

"Inventory Turns" is a ratio measuring the number of times the Company’s inventory is sold and replaced over a full year.

(1)    At the beginning of fiscal year 2017, after careful consideration of the status of certain litigation with GN Netcom, Inc., described in Part I, Item 3 "Legal Proceedings" and Part II, Item 8 "Financial Statements and Supplementary Data", Note 8 "Commitments and Contingencies" of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 10, 2017, the Committee chose to continue to exclude GN Netcom-related litigation costs from our basis for calculating Non-GAAP Operating Income under the EIPs and the AIP. From the outset of fiscal year 2017, the funding metrics within the EIPs and the AIP as well as performance against those metrics were calculated excluding these litigation costs. After the commencement of fiscal year 2017, however, we were penalized $4.9 million for spoliation of evidence by the U.S. District Court overseeing the GN Netcom litigation. Given the nature of the claim, the Committee exercised negative discretion to include the amount of the penalty against Executives

38



under the EIPs. Conversely, the Committee chose not to penalize employees in general under the AIP. In general, management and the Board do not include the GN-related litigation costs in their evaluation of corporate performance so the Committee does not believe they should be included for purposes of calculating bonuses under the EIPs or the AIP.
The Committee selected Net Revenue, Non-GAAP Operating Income, and Inventory Turns as the criteria for fiscal year 2017 Corporate Pool Funding because it believes achievement of these goals is consistent with both our long-term interests and those of our stockholders.

When setting the funding metrics and weighting for threshold, target and maximum amounts for Corporate Pool Funding, the Committee takes into account a range of factors including historical performance, our fiscal year business plan, likelihood of increasing stockholder value, and other external market factors. Under the EIPs, if the threshold goal is not achieved for a metric, no bonus funds are allocated to the bonus pool for that metric. Under the AIP, the Committee reserves the right to fund all or a portion of the pool for below threshold achievement of any metric but did not do so in fiscal year 2017. For both the EIPs and the AIP, increasingly larger amounts are allocated to the pool for achievement between the threshold and maximum performance goals.

Funding of the EIPs and the AIP based on achievement of each metric is summarized in the following table:

Achievement of Funding Metric
 
Executive Incentive Plans Funding Percentage
 
Associate Incentive Plan Funding Percentage
Less than threshold
 
0%
 
1%-49%
Threshold to target
 
50%-99%
 
50%-99%
Target to maximum
 
100%-149%
 
100%-149%
Maximum and above
 
150%
 
150%

The tables below show actual corporate results for the Executive Incentive Plans and Associate Incentive Plan Corporate Pool Funding in fiscal year 2017:
Executive Incentive Plans Performance to Funding Metrics
 
Fiscal Year
2017 Results
 
% Achievement
 
Actual Bonus % Earned after Award Multiplier
 
Weight
 
Weighted Bonus % Funding (1)
Net Revenue
 
$881.2M

 
100
%
 
101
%
 
20
%
 
20
%
Non-GAAP Operating Income (2)
 
$167.2M

 
102
%
 
105
%
 
60
%
 
63
%
Inventory Turns (3)
 
8.0

 
105
%
 
120
%
 
20
%
 
24
%
Fiscal Year 2017 Bonus Pool Funding
 
 

 
 

 
 
 
100%

 
107.4
%

(1) 
Weighting of each of the Funding Metrics was calculated independently.
(2) 
Excludes certain legal costs in connection with the GN Netcom, Inc. litigation as described above.
(3) Inventory turns are calculated as the average of the four fiscal quarters.
Associate Incentive Plan Performance to Funding Metrics
 
Fiscal Year
2017 Results
 
% Achievement
 
Actual Bonus % Earned after Award Multiplier
 
Weight
 
Weighted Bonus % Funding (1)
Net Revenue (2)
 
$881.2M

 
100
%
 
101
%
 
20
%
 
20
%
Non-GAAP Operating Income (2) (3)
 
$172.2M

 
105
%
 
114
%
 
60
%
 
68
%
Inventory Turns (4)
 
8.0

 
105
%
 
120
%
 
20
%
 
24
%
Fiscal Year 2017 Bonus Pool Funding
 
 

 
 

 
 
 
100%

 
112.4
%

(1) 
Weighting of each of the Funding Metrics was calculated independently.
(2) 
Excludes $4.9 million relating to the GN litigation-related spoliation matter discussed above.
(3) Excludes certain legal costs in connection with the GN-Netcom, Inc. litigation as described above.
(4) 
Inventory turns are calculated as the average of the four fiscal quarters.

39



Bonus Plans Achievement Goals and Funding

If the bonus pool is funded based on all or partial achievement of the Corporate Pool Funding metrics, the bonus amounts payable under the plans are based on the base salary and specific performance goals established for each employee.

Except for the CEO EIPs for both Mr. Burton and Mr. Kannappan and the AIP for Mr. Sarkar, the formula for computing annual bonus payouts under each of the EIPs is as follows:
Base Salary
x
Target Bonus Percentage (% of Base Salary)
x
Corporate Pool Funding (Weighted Bonus % Funding)
x
Functional Goals Achievement (%)
x
Individual Performance Adjustment Factor

=
Bonus Earned ($)

The EIPs for each of our Executives other than Messrs. Burton and Kannappan provided (i) 70% of her or his bonus target was based on achievement of the Shared Corporate Goals and 30% for achievement of functional-related goals specific to her or his duties ("Functional Goals"), and (ii) the CEO or Committee could provide a positive or negative discretionary adjustment for individual performance to a minimum of 0% or a maximum of 200% of her or his target bonus so long as the sum of all Executive bonuses did not exceed the lesser of (i) the Corporate Pool Funding achievement percentage, or 150%.

The CEO EIPs were based entirely on achievement of company-wide performance goals ("Shared Corporate Goals") and the maximum amount payable was the lesser of (i) the Corporate Pool Funding achievement percentage, or (ii) 150% of the target bonuses and was intended to comply with Internal Revenue Code Section 162(m) ("Section 162(m)"). Mr. Sarkar's bonus under the AIP was based entirely on functional-related goals specific to his duties and an individual performance adjustment factor. The maximum bonus amount payable was 200% of target.

Overall, our bonus programs are designed to achieve payouts over multiple years that average the target levels set by the Committee. To determine target cash compensation (base salary and annual cash bonus) for each Executive, the Committee established target amounts in part by examining the median of the range of cash bonuses and the total cash compensation targets of executives in similar positions with similar responsibilities at Peer Group companies; however, the Committee also used its own judgment to determine proper levels of compensation for each Executive. Actual bonuses paid to individual Executives could be above or below the targeted amounts but were subject to the maximum allowed under the applicable plans.

For fiscal year 2017, the "Shared Corporate Goals" of the Executives other than Messrs. Burton, Kannappan and Sarkar: Non-GAAP Operating Income; Operational Effectiveness; Management Effectiveness; and Market Share.

(i)
Non-GAAP Operating Income was the measure of the Company’s overall success in generating profits against the annual target. Both the achievement and the annual target exclude legal costs associated with litigation brought by GN-Netcom;
(ii)
Operational Effectiveness is a measure of the timeliness of our customer deliveries against established targets;
(iii)
Management Effectiveness initiatives are intended to develop managerial and leadership skills and maintain a productive and enjoyable workplace attractive to talented potential and existing employees. It was measured by a People Manager Effectiveness Composite Score tracking (1) enrollment in external and internal management development programs, (2) program effectiveness scores, and (3) and our improvement across dimensions of manager effectiveness in an annually administered Employee Engagement Survey; and
(iv)
Market Share is an important measure of the percentage of the total addressable market for our Enterprise products, measured by net revenues from Enterprise products divided by the sum of such net revenues plus similar net product revenue as reported from a leading competitor. We measured Market Share in this manner as, to our knowledge, no other public data on the Enterprise revenue of other competitors was readily available.

The target for each metric was set by the Committee as a reasonable goal based on our business plan and historical analysis.

Executive performance is evaluated annually against performance criteria after the close of the fiscal year and bonuses are typically paid in the first fiscal quarter of the following fiscal year.

Target Bonus Percentages

Target bonus percentages are determined based on each Executive’s position and level of responsibility. In the first quarter of each fiscal year, the Committee approves a target bonus for each eligible Executive under the EIPs. For each Executive their target bonus was expressed as a percentage of their annual base salary. Under the terms of both the EIP and AIP, in the case of individuals who are promoted or otherwise given increased pay or responsibility during the performance period, target bonuses are calculated using their annual base pay and target percentage at the end of the applicable fiscal year.

40




The NEO target bonus percentages for fiscal year 2017 were as follows:
 
 
Fiscal Year 2017 Target Bonus (% of Annual Base Salary)
 
 
Name
 
Joe Burton
 
100
%
Ken Kannappan
 
110
%
Pam Strayer
 
65
%
Shantanu Sarkar
 
50
%
Don Houston
 
65
%

Mr. Burton's target bonus percentage increased from 75% to 100% with his promotion to President and CEO. The fiscal year 2017 target bonus percentages for Mr. Kannappan and Ms. Strayer remained unchanged from fiscal year 2016.

Mr. Sarkar's target bonus percentage under the AIP increased from 35% to 50% with his promotion to Senior Vice President of Product Development. Because Mr. Sarkar's promotion did not occur within 90 days after the start of the fiscal year 2017, the Committee deemed him ineligible to participate in the fiscal year 2017 EIP. He therefore continued to participate in the AIP throughout fiscal year 2017. He is participating in the fiscal year 2018 EIP.

Mary Huser commenced her employment in the last quarter of fiscal year 2017 and was ineligible to participate in an EIP.

By the terms of his Transition Agreement, Mr. Pickard waived his right to participate in the AIP for fiscal year 2017.

Fiscal Year 2017 Executive Bonuses

The tables that follow illustrate the fiscal year 2017 targeted and actual bonuses for each NEO under the EIPs and the AIP, as applicable, with the financial objective measured at the consolidated level. In the tables below, if the financial objective was measured at a level below the consolidated level (such as at the level of geographic region or product category) and is not publicly disclosed information, the target goal itself is not included in the tables, but the percent achieved is shown. Accordingly, "Target" and "Actual" achievement results have been intentionally omitted as they constitute competitively sensitive commercial and financial information.

Additionally, within the limits of the aggregate Corporate Pool Funding, the Committee retained discretion to adjust individual awards consistent with the terms of the EIPs and the AIP. In awarding bonuses under the CEO EIPs, the Committee assesses achievement of the Shared Corporate Goals and may only apply negative discretion to reduce the amount of the bonus based on the Committee's evaluation of individual performance. For those other Executives under EIPs, the Committee evaluates their performance based on their contributions toward achievement of the Shared Corporate Goals and their individual efforts in connection with meeting their Functional Goals, each of which are set at the beginning of the fiscal year. Based on the Committee's evaluation of each individual's performance, it may award individual bonuses from the lower of zero percent up to a maximum of 200% of their individual target bonus. For Mr. Sarkar whose bonus was awarded under the AIP, the Committee evaluated his performance against his Functional Goals and could have awarded a bonus between the lower of zero percent up to a maximum of 200% of his individual target bonus. Variances in the tables below between the "Total Target Bonus Weighted Score" and "Actual Bonus Payout as a Percent of Individual Target" reflect the Committee's exercise of its discretion.


41



Joseph Burton

Joseph Burton's fiscal year 2017 EIP and actual performance were as follows:
Performance Metric
Basis of Performance Metric
Target
Actual
% Achievement
Weight
Weighted Score
Non-GAAP Operating Income (in thousands)
Consolidated
$
164,000

$
167,238

105.4
%
35.0
%
36.9
%
Operational Effectiveness
Consolidated


80.0
%
10.0
%
8.0
%
Management Effectiveness
 


88.3
%
10.0
%
8.8
%
Market Share
Enterprise


60.0
%
15.0
%
9.0
%
Functional Objectives
 
 
 
50.0
%
30.0
%
15.0
%
Total Target Bonus (in whole $)
 
550,000

 
 

100.0
%
77.7
%
Corporate Pool Funding Achievement Percent


107.4
%
 




Actual Bonus Payout as Percent of Individual Target
 
 
83.4
%
 
 
 
Total Bonus Payout
 
 

$
458,974

 

 

 


Mr. Burton was promoted to President and CEO on October 2, 2016. Pursuant to his Employment Agreement dated July 1, 2016, Mr. Burton's annual bonus for fiscal year 2017 was calculated using an annual base salary of $550,000 and target bonus under his EIP of 100% of his annual base salary. Mr. Burton's Weighted Score was based on the Performance Metrics established at the beginning of fiscal year 2017 before his promotion. His Performance Metrics at the beginning of fiscal year 2017 were identical to the CEO EIP Performance Metrics he later assumed, except they also included Functional Objectives weighted at 30% and Non-GAAP Operating Income weighted at 35%. Mr. Burton's Functional Objectives included initiatives to launch new business models, implement strategic initiatives, and improve processes and efficiency. His Total Bonus Payout was based on the terms of the fiscal year 2017 EIP for the CEO, namely his Individual Target Bonus times the Corporate Pool Funding Achievement Percent, times the Weighted Score of Shared Corporate Goals. During the five year period from fiscal year 2013 to fiscal year 2017, he was paid bonuses ranging from 33.0% to 116.5% of the target amounts for those years with an average over that period of 91.2%. In three of the five years, his bonus was greater than 100%.

Ken Kannappan

Ken Kannappan's fiscal year 2017 EIP and actual performance were as follows:
Performance Metric
Basis of Performance Metric
Target
Actual
% Achievement
Weight
Weighted Score
Non-GAAP Operating Income (in thousands)
Consolidated
$
164,000

$
167,238

105.4
%
65.0
%
68.5
%
Operational Effectiveness
Consolidated


80.0
%
10.0
%
8.0
%
Management Effectiveness
 


88.3
%
10.0
%
8.8
%
Market Share
Enterprise


60.0
%
15.0
%
9.0
%
Total Target Bonus (in whole $)
 
$
797,500

 
 

100.0
%
94.3
%
Corporate Pool Funding Achievement Percent
 
107.4
%
 
 
 
Actual Bonus Payout as Percent of Individual Target
 
 
101.3
%
 
 
 
Total Bonus Payout
 
 

$
807,694

 

 

 



42



Pursuant to his Employment Agreement dated July 31, 2016, we agreed that for fiscal year 2017 Mr. Kannappan's CEO EIP previously established by the Committee would continue in place as adopted. Under the terms of his previously approved CEO EIP, Mr. Kannappan was eligible for 110% of his annual base salary as an at target bonus. Additionally, for purposes of calculating Mr. Kannappan’s incentive bonus for fiscal year 2017, the annual base salary in effect immediately prior to his retirement, $725,000, was used. Under the terms of the fiscal year 2017 EIP for Mr. Kannappan, his bonus was based on the Individual Target Bonus times the Corporate Pool Funding Achievement Percent, times the Weighted Score of Shared Corporate Goals. During the five year period from fiscal year 2013 to fiscal year 2017, he was paid bonuses ranging from 26.0% to 112.0% of the target amounts for those years with an average over that period of 89.7%. In four of the five years, his bonus was greater than 100%.

Pam Strayer

Pam Strayer's fiscal year 2017 EIP and actual performance were as follows:
Performance Metric
Basis of Performance Metric
Target
Actual
% Achievement
Weight
Weighted Score
Non-GAAP Operating Income (in thousands)
Consolidated
$
164,000

$
167,238

105.4
%
35.0
%
36.9
%
Operational Effectiveness
Consolidated


80.0
%
10.0
%
8.0
%
Management Effectiveness
 


88.3
%
10.0
%
8.8
%
Market Share
Enterprise


60.0
%
15.0
%
9.0
%
Functional Goals
 
 
 
50.0
%
30.0
%
15.0
%
Total Target Bonus (in whole $)
 
251,485

 
 

100.0
%
77.7
%
Corporate Pool Funding Achievement Percent
 
107.4
%
 
 
 
Actual Bonus Payout as Percent of Individual Target
 
 
111.0
%
 
 
 
Total Bonus Payout
 
 

$
279,148

 

 

 


Ms. Strayer manages Finance, Internal Audit, Information Technology and for most of fiscal year 2017, Legal. Four of Ms. Strayer's objectives were Shared Corporate Goals comprising 70% of her Bonus. The remaining 30% was tied to achievement of her Functional Goals including maintaining and improving accounting quality, implementing certain global pricing initiatives, improving process efficiency and effectiveness, and achieving targets for a new market offering for subscription-based revenue.

Ms. Strayer joined Plantronics and began participating in the EIP in fiscal year 2013. During the five year period from fiscal year 2013 to fiscal year 2017, she was paid bonuses ranging from 32.0% to 111.0% of the target amounts for those years with an average over that period of 92.4%. Her actual bonus payout for fiscal year 2013 was prorated based on the period of her employment commencement date to the end of fiscal year 2013. In four of the five years, her bonus was greater than 100%.

Shantanu Sarkar

Shantanu Sarkar's fiscal year 2017 AIP and actual performance were as follows:
Performance Metric
Target
Actual
Corporate Pool Funding Achievement Percent
 
112.4
%
Actual Bonus Payout as Percent of Individual Target
 
111.0
%
Total Bonus Payout
162,500

$
180,375


Prior to his promotion in October 2016, Mr. Sarkar managed Engineering and Quality. Upon his promotion, the scope of his responsibilities expanded to include Product Development. His specific fiscal year 2017 goals and objectives included initiatives to launch new business models, implement strategic initiatives, improve processes and efficiency, and implement new methodologies.


43



Under the AIP, each participant's actual bonus amount is determined based on her or his supervisor’s assessment of their individual performance and relative contribution to the organization’s performance as measured by their goals, objectives and competencies. The supervisor has the discretion to override performance of goals, objectives and competencies to raise or lower scores. A participant may receive between 0% and 200% of her or his target bonus. In light of his promotion, the Committee choose to assess Mr. Sarkar's individual performance and relative contribution to the organization based on input from Mr. Burton and our Senior Vice President and Chief Human Resources Officer.

Richard Pickard

By the terms of his Transition Agreement, Mr. Pickard's participation in the AIP ended in September 2016 and in lieu thereof he was paid a lump sum amount equal to one-half ($96,450) of his at target bonus under the AIP.

Don Houston

Don Houston's fiscal year 2017 EIP and actual performance were as follows:
Performance Metric
Basis of Performance Metric
Target
Actual
% Achievement
Weight
Weighted Score
Non-GAAP Operating Income (in thousands)
Consolidated
$
164,000

$
167,238

105.4
%
35.0
%
36.9
%
Operational Effectiveness
Consolidated


80.0
%
10.0
%
8.0
%
Management Effectiveness
 


88.3
%
10.0
%
8.8
%
Market Share
Enterprise


60.0
%
15.0
%
9.0
%
Functional Goals
 


50.0
%
30.0
%
15.0
%
Total Target Bonus (in whole $)
 
$
267,800

 
 

100.0
%
77.7
%
Corporate Pool Funding Achievement Percent
 
107.4
%
 
 
 
Actual Bonus Payout as Percent of Individual Target
 
 
90.0
%
 
 
 
Total Bonus Payout
 
 

$
241,020

 

 

 


Mr. Houston managed the Americas and Asia-Pacific sales regions in fiscal year 2017. Four of Mr. Houston's objectives were Shared Corporate Goals comprising 70% of his bonus. The remaining 30% was tied to achievement of his Functional Goals, including revenue targets for all our products, targets for a new market offering for subscription-based revenue, and implementing certain global pricing initiatives.

During the five-year period from fiscal year 2013 to fiscal year 2017, he was paid bonuses ranging from 0.0% to 115.0% of the target amounts for those years with an average over that period of 80.6%. In two of the five years, his bonus was greater than 100%.

Clawback Policy

The Committee has the right to require any EIP participant to repay any bonus amounts paid if there is a material financial restatement of corporate results for any prior year which resulted in overpayment under a plan; however, it is not our practice to automatically require repayment except as required under applicable laws and regulations. We have not had a financial restatement since the adoption of this policy. In the future, if we are required to restate our financial results for any prior year, the Committee will evaluate the facts and circumstances and may require repayment from Executives who received undue amounts as a result of material or negligent misrepresentation of financial results.

Our right to recoupment expires, unless demand is made, within three years following payment of an applicable bonus and does not apply to equity awards. Our recoupment right is in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities. Our actual ability to collect repayment, if legal under state and federal laws, may vary.


44



Equity Incentive Awards

We offer equity awards to our Executives through our 2003 Stock Plan to encourage achievement of corporate objectives for the long-term benefit of the Company and our stockholders. In any given fiscal year, the Committee may approve grants of stock options, RSAs or RSUs, or any combination of the three, to Executives after consideration of a variety of factors including:

Equity granted to executives in similar jobs at comparable companies
An Executive's scope of responsibilities and actual performance
Input from our CEO (other than with respect to the CEO's equity awards)
The potential for particular Executives to influence our long-term growth and profitability

The Committee gives no particular weight to any factor. A subjective determination is made after considering the foregoing factors in the aggregate.

Review and Approval Process for Equity Awards

Typically, in the first quarter of a fiscal year the CEO and Senior Vice President and Chief Human Resources Officer provide the Committee with an assessment of each Executive's prior year performance other than their own. The CEO also provides an assessment of how each of the other Executives influenced overall corporate performance. Together with information provided by our compensation consultants, the CEO recommends the types of equity grants (historically, a combination of RSAs or RSUs and stock options) and the number of shares under each type for each Executive other than himself.

The Committee then makes the final decision as to the types of equity awards and establishes a target total number of shares to be awarded each Executive. The Committee generally awards all targeted RSAs and RSUs to Executives in one annual award and stock options in two semi-annual awards. The Committee uses this approach to balance potential benefits or penalties that may result from price volatility of our common stock. Further, granting options split into two semi-annual awards permits the Committee to assess Executive performance throughout the year. The Committee retains the discretion to modify (including increasing, decreasing, or eliminating) the second installment, based on criteria it deems appropriate.

The Committee typically grants the RSAs and RSUs and the first of the two stock option awards at or shortly after the beginning of each fiscal year and the second stock option award, if any, shortly after our financial and operating results for the first half of the fiscal year are final. Equity awards are generally granted effective after financial results are publicly announced, typically three days after an applicable quarterly or annual earnings release. The Committee believes this follows best practices by allowing financial markets sufficient time to adjust after announcement of our operating results.


45



Stock options generally have a seven year term and vest over three years from the date of grant, with one-third of the shares vesting on the anniversary of the date of grant and the remaining shares vesting monthly thereafter until fully vested. During fiscal year 2014, we modified our vesting policy for RSAs and RSUs such that all RSAs and RSUs generally vest one-third of the shares annually over three years. RSAs and RSUs awarded prior to fiscal year 2014 continue to vest annually at the rate of twenty-five percent over four years. All vesting is subject to the continued employment of the Executive on each vesting date.

Fiscal Year 2017 NEO Equity Awards

In developing Executive equity recommendations in fiscal year 2017, then-CEO, Mr. Kannappan, considered the following information:

The history of prior awards to our Executives, the current and potential value of each of their vested and unvested holdings and each Executive's past performance, future contribution potential and other key compensation elements.
The total pool of our common stock budgeted for all employee awards for fiscal year 2017, and the portion allocated to all Executives as a percentage of the total.
Compensia's review of market-competitive compensation levels, as well as general market trends in equity grant practices.
The historical grant levels and historical market data regarding equity awards for comparable jobs in similar companies.
The anticipated current and Black-Scholes future value of the equity awards.
An appropriate split of the total number of shares awarded between varying types of equity awards. The actual split for each Executive was based on an evaluation of market practice, our CEO's assessment and recommendation, and the Committee's review and approval. In each case, factors considered included the benefit that would be received from stock options only if the stock price were to increase versus the fact that a benefit would be received from restricted stock whether the stock price increased or not.

Based upon all of the above-referenced factors, Mr. Kannappan recommended the Committee take into consideration market-competitive long-term incentive and total direct compensation levels, with appropriate variation based upon individual Executive performance. Mr. Kannappan reviewed his recommendations with Compensia and thereafter recommended for all Executives other than Mr. Houston, a mix of between approximately 32% to 41% of the value of the Executive equity awards as stock options and 59% to 68% as RSAs or RSUs. As vice-presidents who did not report directly to the CEO at the time of grant, Messrs. Pickard and Sarkar were ineligible for stock options and therefore received only RSAs. Mr. Kannappan did not recommend any equity awards for Mr. Houston as a result of his failure to comply with a preservation order related to litigation with GN-Netcom and the Committee agreed with his recommendation.

The Committee evaluated Mr. Kannappan's recommendations and such other information it deemed appropriate, giving no particular weight to any factor, and made a subjective determination, after considering all of the relevant factors in aggregate to approve the equity awards as set forth below.

In evaluating equity awards for Mr. Kannappan, the Committee considered, with the assistance of Compensia, factors similar to those above but specific to Mr. Kannappan. The total number of stock options, RSAs and RSUs awarded to him was determined by taking into account that the Committee chose not to increase Mr. Kannappan's base salary and that his target total direct compensation was approximately 30% below the market median.

In addition, with his promotion to President and CEO effective October 2, 2016, Mr. Burton was awarded additional RSAs and stock options having a combined value of approximately $800,000. The number of RSAs and stock option shares awarded were 10,297 and 30,316, respectively. The number of each was based on multiplying $800,000 by the same percentage of RSAs and stock options awarded to Mr. Burton in May 2016 and dividing that by the closing price of our common stock on November 4, 2016, of $45.84.

Similarly, on November 4, 2016, Mr. Sarkar received an additional award of 5,000 RSAs in connection with his October 2, 2016, promotion.

Ms. Huser's employment commenced on March 13, 2017. Pursuant to Company policy, the equity awards set forth in her Employment Agreement were not granted until April 17, 2017. On April 17, 2017, she was awarded 14,500 shares in the form of non-qualified stock options at an exercise price of $52.11 and 5,500 shares in the form of restricted stock.

The equity awards granted to our NEOs during fiscal year 2017 were as follows:

46



 
 
Equity Awards Granted in May 2016
 
Equity Awards Granted in November 2016
Name
 
RSA Shares
Stock Option Shares
 
RSA Shares
Stock Option Shares
Joe Burton
 
25,000
40,000
 
10,297
73,316
Ken Kannappan
 
30,000
50,000
 
Pam Strayer
 
13,000
15,000
 
15,000
Shantanu Sarkar
 
5,000
 
5,000
Rich Pickard
 
3,000
 

The actual grant date values of equity awards are reported in the Summary Compensation Table and Grant of Plan Based Awards table, below.

Fiscal Year 2018 NEO Equity Awards

For our current fiscal year 2018, the Committee met on May 9, 2017, as part of its regular annual review of Executive equity awards. After deliberation, the Committee set a value for each Executive's fiscal year 2018 equity awards, including Executives who are fiscal year 2017 NEOs. The Committee furthermore determined that each Executive's equity awards would be split between RSAs and performance-based restricted stock units ("PSUs") tied to the performance of our common stock against an index of stocks. No stock options were granted.

For the PSUs, the number of shares ultimately awarded may be reduced below or exceed the at-target number of shares depending on the performance of our stock against a total shareholder return of stocks in the iShares S&P North American Tech-Multimedia Networking Index over a three year period. For each Executive, the maximum number of shares may not exceed 150% of the at-target amount approved by the Committee.

The number of RSAs and PSUs awarded to each Executive was determined by dividing the at-target value established by the Committee by the closing price of our stock on May 10, 2017. Both the RSAs and PSUs vest in three annual installments.

The following table sets forth (a) the fiscal year 2018 value of equity awards for each Executive as established by the Committee, (b) the percentage of the value of equity awards split between RSA and PSUs, (c) the number of RSA shares awarded in fiscal year 2018 based on the $55.48 closing price of our stock on May 10, 2017, (d) the at-target number of PSU shares awarded in fiscal year 2018 based on the $55.48 closing price of our stock, (e) the minimum number of shares which may be potentially issued under the fiscal year 2018 PSU awards, and (f) the maximum number of shares which may be potentially issued under the PSU awards:
Name
Value Set for Equity Awards in Fiscal Year 2018
% of Value as RSAs
% of Value as PSUs
RSA Shares Awarded
At-Target PSU Shares Awarded
Minimum Potential PSU Shares
Maximum Potential PSU Shares
Joe Burton
$
3,500,000

50
%
50
%
31,542

31,542


47,313

Pam Strayer
$
1,300,000

60
%
40
%
14,059

9,372


14,058

Mary Huser (1)
$
250,000

%
100
%

4,506


6,759

Shantanu Sarkar
$
500,000

60
%
40
%
5,407

3,604


5,406


(1) 
Ms. Huser's employment commenced on March 13, 2017. Pursuant to Company policy, the equity awards set forth in her Employment Agreement were not granted until April 17, 2017. On April 17, 2017, she was awarded 14,500 shares in the form of non-qualified stock options at an exercise price of $52.11 and 5,500 shares in the form of restricted stock.

Benefits Programs

We provide various employee benefit programs to our Executives, including medical, dental, life and disability insurance, a 401(k) plan and the opportunity to purchase our common stock through payroll deductions at a discounted price through our Employee Stock Purchase Plan. In addition, we provide limited matching contributions to participants of our 401(k) plan. These benefit programs are generally available to all our employees on substantially equal terms.


47



Perquisites

In addition to the standard benefits generally available to all employees, each Executive was eligible to receive an auto allowance. Additionally, each Executive, including Mr. Sarkar after his promotion in October 2016, but excluding Mr. Pickard, was eligible to participate in or receive the following additional perquisites in fiscal year 2017:

Financial, estate and tax services reimbursement
Business club membership reimbursement
Personal liability insurance reimbursement

Furthermore, during fiscal year 2017, each Executive was eligible to participate in an executive physical program that is intended to encourage our Executives to engage in preventive medical care.  Under the program, Executives are able to undergo physicals overseen by physicians. The examinations may include testing and consultations, as appropriate, based on each Executive’s medical situation.

The value of these additional benefits, constitute only a small percentage of each NEO's TDC and the amounts are included in the "Summary Compensation Table" located below in this Proxy Statement.

Deferred Compensation Plan

In 2013, we implemented a Deferred Compensation Plan (“2013 DCP”) which allows eligible employees, including our NEOs, to voluntarily defer receipt of some of their earned compensation on a pre-tax basis. The amounts deferred exceed the amounts they could otherwise defer under our 401(k) savings plan due to the annual deferral and compensation limits imposed by the Internal Revenue Code. We implemented the 2013 DCP as a competitive practice to help attract and retain top talent, and we intend to re-evaluate it periodically. Due to its conservative design, we do not consider the 2013 DCP benefits material to any NEO’s overall compensation. For more information concerning the 2013 DCP, please see the "Non-Qualified Deferred Compensation" table located below in this Proxy Statement.

Relocation Assistance

Periodically, we may also provide relocation benefits to our Executives and other select employees to induce job candidates to accept job offers or new roles for certain open positions we deem critical to our business needs. These benefits may include transportation of household goods and cars, travel, temporary housing, car rental, storage, miscellaneous relocation allowances, and house-hunting trips. We do not provide home sale and purchase assistance or tax protection to offset costs incurred by Executives as a result of these relocations. Relocation benefits provided to NEOs, if any, are reported in the “All Other Compensation” column of the “Summary Compensation Table”.
Tax Considerations
When making Executive compensation decisions, the Committee considers the tax deductibility of the various compensation arrangements under Section 162(m). However, tax deductibility is not the primary factor in determining appropriate levels or modes of compensation. Since corporate objectives may not always coincide with tax deductibility requirements, we may, consistent with our compensation philosophy, approve programs under which payments are not fully deductible.
 
For fiscal year 2017, the Committee intended the CEO EIP be compliant with Section 162(m). The higher potential bonuses available to our other Executives were intended to more heavily emphasize achievement of key corporate goals by individual performance. As part of its decision to allow potentially greater bonus payments to our non-CEO Executives, the Committee determined it was unlikely more than one Executive would exceed the Section 162(m) $1 million deduction limit.

In addition, the Committee intended that Executive equity awards in fiscal year 2017 meet the requirements for tax deductibility under Section 162(m). We intend to continue to evaluate the effects of the statute and any applicable regulations and to comply with Section 162(m) in the future to the extent consistent with the best interests of the Company and our stockholders.


48





Risk

We designed our compensation programs to avoid excessive risk. The following are some of the features of our programs intended to help us appropriately manage business risk:

an assortment of vehicles for delivering compensation, both fixed and variable, short-term and long-term, including cash and equity, intended to focus our employees, including our Executives, on specific objectives that help us achieve our business plan in alignment with long-term stockholder interests;
diversification of incentive-related risk by employing a variety of performance measures;
weighting of the various performance measures to avoid excessive attention to achievement of one measure over another;
annual equity grants, so employees, including our Executives, always have unvested awards that could decrease significantly in value if our business is not managed for the long-term;
annual goals and annual payment of bonuses to discourage short-term quarterly risk-taking;
potential repayment of unearned portions of bonuses in the event of material financial restatements; and
fixed maximum award levels for performance-based awards.

Annually, with Compensia’s input and assistance, we conduct a risk assessment of our compensation policies and practices, including those relating to our executive compensation program, and discuss the findings with the Committee. Based on this assessment, the Committee determined that our compensation policies and practices for fiscal year 2017 were not reasonably likely to have a material adverse effect on the Company.

Employment, Transition and Change of Control Severance Agreements for Our NEOs

To retain our Executives in the event of an acquisition, the Committee previously developed and approved change of control severance agreements ("Change of Control Agreements") that remained in effect throughout fiscal year 2017 for the majority of our Executives and all of the NEOs. In entering into these agreements, the Committee's primary objective was to maintain the continued dedication and objectivity of our Executives for our benefit and the benefit of our stockholders, notwithstanding the possibility of an acquisition.

Mr. Burton's Employment Agreement

In connection with his promotion to President and CEO, Mr. Burton signed an Employment Agreement dated July 31, 2016 ("Burton Employment Agreement") that became effective on October 2, 2016. In negotiating the Burton Employment Agreement, the Board intended it to be consistent with current industry practices, and it therefore does not include many of the provisions in Mr. Kannappan's employment agreement that were market norms at the time it was entered into in 1999. Under the terms of the Burton Employment Agreement, if Mr. Burton's employment is terminated other than for Cause (as defined in the Burton Employment Agreement), death or Disability (as defined in the Burton Employment Agreement), or if he resigns for Good Reason (as defined in the Burton Employment Agreement) (such termination, a “Qualifying Termination”), and the Qualifying Termination does not occur in the 24 month period following a Change of Control (as defined in the Burton Employment Agreement), then subject to his signing and not revoking a release of claims with us and subject to his continued compliance with the terms of the Burton Employment Agreement, Mr. Burton will receive the following:

Continuing payments of severance pay at a rate equal to his then-current base salary for a period of 12 months;
A lump sum payment equal to his annual incentive bonus earned but not then paid (disregarding the requirement that he be employed by us on the date of payment to earn any portion of or all of his annual incentive bonus); and
If he elects continuation coverage pursuant to COBRA for himself and his eligible dependents, we will reimburse him for the COBRA premiums for such coverage until the earlier of (A) 12 months, (B) the date upon which he and/or his eligible dependents are covered under similar plans or (C) the date upon which he ceases to be eligible for coverage under COBRA.

In the event a Qualifying Termination occurs in connection with a Change of Control (as defined in the Burton Employment Agreement) or in the 24 month period following a Change of Control, then subject to Mr. Burton signing and not revoking a release of claims and subject to his continued compliance with the terms of the Burton Employment Agreement, Mr. Burton will receive the following:


49



A lump sum severance payment equal to (A) 200% of his base salary, with such base salary amount calculated based on his then-current base salary (or if higher, as of immediately prior to the Change of Control), plus (B) 200% of the higher of (1) his target bonus as in effect for the fiscal year in which the Change of Control occurs or (2) his target bonus as in effect for the fiscal year in which the Qualifying Termination occurs, plus (C) a lump sum payment equal to that prorata portion or all of his annual incentive bonus that he has earned but has not yet been paid (disregarding the requirement that he must have been employed by us on the date of payment to earn any portion of or all of his annual incentive bonus);

If he elects continuation coverage pursuant to COBRA for himself and his eligible dependents, we will reimburse him for the COBRA premiums for such coverage until the earlier of (A) 18 months, (B) the date upon which he and/or his eligible dependents are covered under similar plans or (C) the date upon which he ceases to be eligible for coverage under COBRA; and

100% of his then unvested equity awards will become vested in full and in the case of stock options and stock appreciation rights, will become exercisable.

In the event that the severance and other benefits payable to Mr. Burton constitute “parachute payments” under Section 280G of the U.S. tax code and would be subject to the applicable excise tax, then his severance benefits will be either (A) delivered in full or (B) delivered to such lesser extent which would result in no portion of such benefits being subject to the excise tax, whichever results in the receipt by him on an after-tax basis of the greatest amount of benefits.

The Burton Employment Agreement further provides that cash severance benefits will be payable only following Mr. Burton's "separation from service" with us within the meaning of Section 409A and such payments may be subject to a six-month delay period if required under Section 409A.

Payments Upon a Qualifying Termination Not in connection with a Change of Control

The following table shows the potential payments to Mr. Burton upon a Qualifying Termination not in connection to a Change of Control or within 24 months of a Change of Control if either had occurred on April 1, 2017:
Executive Benefits and Payments Upon Separation
 
Termination for Any Reason Other Than For Cause
 
 
Termination Other Than For Cause in Connection with or within 24 Months of a Change in Control
 
 
Termination for Cause
Compensation
 
$
1,008,974

 
 
$
2,658,974

 
 
$

COBRA Reimbursement
 
$
38,595

(1) 
 
$
57,893

 
 
$


(1) 
COBRA Continuation Coverage reasonably estimated based on Mr. Burton's fiscal year 2017 medical benefit elections.

Accelerated Equity Vesting Upon a Qualifying Termination in connection with a Change of Control or within 24 months of a Change of Control

The following table shows the potential value of accelerated vesting of Mr. Burton's outstanding unvested equity awards had his employment terminated as a Qualifying Termination in connection with a Change of Control or within 24 months of a Change of Control:
Number of Stock Options Shares Vesting
Value of Stock Option Shares Vesting (1)
Number of RSA or RSU Shares Vesting
Value of RSA or RSU Shares Vesting (2)
Total Value of Equity on Vesting Event
141,775

$
1,097,601

55,296

$
2,992,067

$
4,089,668

(1)  
The value is calculated by multiplying the number of unvested shares by the difference between our common stock price of $54.11 on April 1, 2017 and the exercise price of the stock options, with negative values, if any, reported as zero.
(2) 
The value is calculated by multiplying the number of unvested RSA and RSU shares by our common stock price of $54.11 on April 1, 2017.

If Mr. Burton's employment is terminated for Cause, all unvested equity awards terminate on his termination date.


50



Mr. Kannappan's Employment Agreements

At the commencement of fiscal year 2017, Mr. Kannappan's employment was governed by an agreement dating back to his initial promotion to President and CEO in 1999. Since 1999, that agreement had been amended, generally to conform to legal requirements like Internal Revenue Code Section 409A. It was last materially revised in a Second Amended and Restated Employment Agreement dated November 17, 2009 ("2009 Agreement").

In connection with his retirement, to take advantage of his more than two decades as a leader of the Company and with a goal of making the transition from Mr. Kannappan to Mr. Burton seamless, the Board sought to preserve the existing terms of Mr. Kannappan's 2009 Agreement and also incentivize him for an additional one year period to support Mr. Burton as he adapted to his new role. Along with providing advice regarding corporate operations overall, it was expected that Mr. Kannappan would travel worldwide with Mr. Burton providing introductions and performing substantial outreach with our employees, customers, suppliers, key investors, and analysts.

Accordingly, after extensive negotiations the Board reached agreement with Mr. Kannappan in July 2016 to supplement the terms of his then current 2009 Agreement for the additional transition services described above. On July 31, 2016, Mr. Kannappan executed a new Employment Agreement with us that became effective October 2, 2016 ("2016 Agreement"). Under the 2016 Agreement, Mr. Kannappan agreed to perform services on a part-time basis to transition his duties to Mr. Burton. Although the 2016 Agreement is written to supersede in its entirety the 2009 Agreement, the Committee's and Mr. Kannappan's intention was to preserve the benefits under the 2009 Agreement and provide additional incentives least one year of transitional services.

Under the 2016 Agreement, Mr. Kannappan agreed to perform part-time services from October 2, 2016 through September 30, 2017 ("Employment Period"). For his services, we agreed to pay Mr. Kannappan (i) an annual base salary of $362,500, (ii) maintain his participation in the fiscal year 2017 EIP bonus program with an at target bonus of 110% of his annual base salary as in effect on October 1, 2016, and (iii) a fiscal year 2018 at target bonus of 110% of his $362,500 annual base salary, prorated from the beginning of fiscal year 2018 through September 30, 2017. After September 30, 2017, we will enter into a Consulting Agreement with Mr. Kannappan during which he will be paid $1,000 per month for an additional 18 months.

If, (i) prior to September 30, 2017 (A) we terminate Mr. Kannappan’s employment without Cause (as defined in the 2016 Agreement), (B) he resigns for any reason, or (C) his employment terminates as a result of his death or Disability (as defined in the 2016 Agreement), or (ii) he remains employed through September 30, 2017 (on which day, his employment will terminate and he will enter into the Consulting Agreement), and provided that he signs and does not revoke a release of claims, then subject to his continued compliance with the terms of the 2016 Agreement, he will receive the following: (1) continued cash compensation payments equal to 150% of the average annual cash compensation (base salary and incentive bonus) calculated in accordance with the 2016 Agreement payable over 24 months (the “Severance Payment Period”), and (2) continued provision of “Company Benefits” (as defined in the 2016 Agreement) during the Severance Payment Period. The severance benefits mirror what Mr. Kannappan would have received under the 2009 Agreement and were preserved in the 2016 Agreement.

If prior to September 30, 2017, Mr. Kannappan’s employment terminates as the result of an “Involuntary Termination” (as defined in the 2016 Agreement) or terminates as result of his death or Disability, and provided that he signs and does not revoke a release of claims, then he will receive the following: (1) a lump sum payment equal to the annual base salary he would have received had he remained employed through September 30, 2017, (2) continued eligibility to earn a prorated portion of his annual incentive bonus determined by multiplying (x) the fiscal year 2018 bonus amount based on the achievement of the established performance goals, by (y) a fraction, the numerator of which is the number of days that have passed since the commencement of the 2018 fiscal year through the termination date and a denominator of 365, payable at the same time bonuses are paid to our other senior executives, and (3) his equity awards that would otherwise have vested through March 31, 2019 had he remained an employee will vest and become exercisable and all of his outstanding stock options will remain exercisable through no later than March 31, 2020.

Further, in the event of a “Change of Control” (as defined in the 2016 Agreement) that occurs during the Employment Period, 100% of Mr. Kannappan’s equity awards will vest.

During the Consulting Period, if Mr. Kannappan’s service as a consultant is terminated without Cause (as defined in the Consulting Agreement), and provided that he signs and does not revoke a release of claims, then he will receive (i) a lump-sum cash payment equal to the amount of remaining payments that would have been paid under the Consulting Agreement had he continued to provide services through March 31, 2019, and (ii) his equity awards that would otherwise have vested through March 31, 2019 had he remained a consultant will vest and become exercisable. Additionally, all of Mr. Kannappan’s outstanding stock options will remain exercisable through no later than March 31, 2020 unless they would have expired before March 31, 2020.


51



The 2016 Agreement provides that cash severance benefits will be payable only following Mr. Kannappan's "separation from service" with us within the meaning of Section 409A and such payments may be subject to a six-month delay period if required under Section 409A.

Payments Upon Termination or Change of Control

The following table shows the potential payments to Mr. Kannappan upon termination or had a Change of Control occurred on April 1, 2017:
Executive Benefits and Payments Upon Termination
 
Separation from Service Other than for Cause / Expiration of Employment Period
 
Death or Disability or Involuntary Termination Other Than For Cause
 
Termination for Cause
 
Change of Control
 
Termination other than an Involuntary Termination or Other Preceding Circumstances
 
Compensation
 
$
2,007,510

(1) 
$
2,996,454

(2) 
$

 
$

 
$

 
Company Benefits
 
$
1,350,398

(3) 
$
1,350,398

- 
$

 
$

 
$

 

(1) 
Comprised of continued cash compensation payments equal to one hundred fifty percent (150%) of the average annual cash compensation earned using the 12 full fiscal quarters immediately preceding the Effective Date (for purposes of calculating the Base Salary amount) and the 12 full fiscal quarters immediately preceding the last day of fiscal year 2017 (for purposes of calculating the cash bonus amount).
(2) 
Comprised of (i) a lump sum payment equal to the sum of the annual base salary Mr. Kannappan would have received had his employment continued through September 30, 2017 ($181,250), (ii) the cash bonus he would have received for fiscal year 2017 ($807,694), and (iii) the amount received in the column in the table above entitled "Separation from Service Other than for Cause/Expiration of Employment Period" ($2,007,510).
(3) 
Comprised of (i) 24 months of certain Company Benefits estimated at $50,199 per year based on fiscal year 2017 disability, life, executive health physical examination COBRA continuation coverage and other group insurance benefits ($100,398) and (ii) a self-insured disability benefit of $1,250,000.

Accelerated Equity Vesting Upon Termination or Change of Control

The following table shows the potential value of accelerated vesting of Mr. Kannappan's outstanding unvested equity awards had his employment terminated upon his voluntary resignation, involuntary termination, or a change of control, on April 1, 2017:
Vesting Event
Number of Stock Options Shares Vesting
Value of Stock Option Shares Vesting (1)
Number of RSA or RSU Shares Vesting
Value of RSA or RSU Shares Vesting (2)
Total Value of Equity on Vesting Event
Termination without Cause, Voluntary Resignation, Death, or Disability

$


$