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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report: August 3, 2010
(Date of earliest event reported)
ArcSight, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
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001-33923
(Commission File Number)
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52-2241535
(IRS Employer Identification No.) |
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5 Results Way |
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Cupertino, California
(Address of Principal Executive Offices)
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95014
(Zip Code) |
(408) 864-2600
(Registrants Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 5.02. |
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Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers. |
On August 3, 2010, the Compensation Committee (the Committee) of the Board of Directors of
ArcSight, Inc. (ArcSight) approved and adopted a revised management bonus plan for fiscal 2011
(the 2011 Bonus Plan). As revised, the 2011 Bonus Plan includes certain higher percentages of
base salary used to calculate bonus amounts than those set forth in the original management bonus
plan for fiscal 2011 as initially adopted by the Committee on June 9, 2010. Specifically, the
revisions adopted by the Committee provide that our executives officers other than Tom Reilly (our
Chief Executive Officer and President, and a director) and Kevin Mosher (our Senior Vice President
of Worldwide Field Operations) will receive an additional 10% of his or her base salary for each
stated revenue increment in the range of at least 100% of targeted revenues but less than 110% of
the targeted revenues. Under the current 2011 Bonus Plan, Mr. Reilly will receive an additional 5%
of his base salary than under the initial 2011 Bonus Plan if we achieve at least 100% but less than
101% of the targeted revenues goal. In all cases, bonus
payments are contingent on us meeting or exceeding our operating income target for that level of
performance relative to our revenue target. Mr. Mosher is not eligible to participate in the cash
bonus portion of the 2011 Bonus Plan; rather he participates in a separate plan. Set forth below is
a summary of the terms of our current 2011 Bonus Plan.
As was the case in ArcSights bonus plan for fiscal 2010, the 2011 Bonus Plan focuses on
revenues and operating income. Under the 2011 Bonus Plan, executive officers, other than Mr.
Mosher, will receive no payment unless ArcSight achieves at least 95% of the targeted revenues and
the related operating income goal for that particular period. If ArcSight achieves the annual
revenue and operating income goals, Mr. Reilly will receive (less the amount of any quarterly
bonuses as described below):
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a payment of 52.5% of base salary if we achieve at least 95% but less than 98% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 59.5% of base salary if we achieve at least 98% but less than 100% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 75% of base salary if we achieve at least 100% but less than 101% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 80% of base salary if we achieve at least 101% but less than 103% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 85% of base salary if we achieve at least 103% but less than 105% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 90% of base salary if we achieve at least 105% but less than 107% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 95% of base salary if we achieve at least 107% but less than 110% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; and |
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a payment of 100% of base salary if we achieve at least 110% of the targeted revenues
goal and we meet or exceed our operating income target for that level of performance
relative to our revenue target, |
Hugh S. Njemanze, a co-founder of ArcSight and our Chief Technology Officer and Executive Vice
President of Research and Development, Stewart Grierson, our Chief Financial Officer and our senior
vice presidents, including Jeffrey Scheel, our Senior Vice President of Business Development, will
receive (less the amount of any quarterly bonuses as described below):
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a payment of 33.75% of base salary if we achieve at least 95% but less than 98% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 38.25% of base salary if we achieve at least 98% but less than 100% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 55% of base salary if we achieve at least 100% but less than 101% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 65% of base salary if we achieve at least 101% but less than 103% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 75% of base salary if we achieve at least 103% but less than 105% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 85% of base salary if we achieve at least 105% but less than 107% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 95% of base salary if we achieve at least 107% but less than 110% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; and |
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a payment of 100% of base salary if we achieve at least 110% of the targeted revenues
goal and we meet or exceed our operating income target for that level of performance
relative to our revenue target, |
and our remaining executive officers (other than Mr. Mosher) will receive (less the amount of any
quarterly bonuses as described below):
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a payment of 26.25% of base salary if we achieve at least 95% but less than 98% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 29.75% of base salary if we achieve at least 98% but less than 100% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 45% of base salary if we achieve at least 100% but less than 101% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 55% of base salary if we achieve at least 101% but less than 103% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 65% of base salary if we achieve at least 103% but less than 105% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 75% of base salary if we achieve at least 105% but less than 107% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; |
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a payment of 85% of base salary if we achieve at least 107% but less than 110% of the
targeted revenues goal and we meet or exceed our operating income target for that level of
performance relative to our revenue target; and |
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a payment of 100% of base salary if we achieve at least 110% of the targeted revenues
goal and we meet or exceed our operating income target for that level of performance
relative to our revenue target. |
In addition to annual bonuses, under the 2011 Bonus Plan, each executive officer, other than
Mr. Mosher, is eligible to receive a bonus in each fiscal quarter based on our performance relative
to that quarters revenue goal and the related operating income goal. The amount of the bonus
payable, with respect to each quarter is 50% of the bonus amount payable based on such executive
officers base salary at the performance level achieved (provided that the maximum amount of such
quarterly bonus payable in each quarter is 50% of the bonus amount payable based on the percentage
of the executive officers base salary at the 100% target objective listed above), based on the
formulas described above, prorated for the period covered and for the executive officers tenure at
ArcSight during such period. For example, if we achieve our revenues and operating income at 100%
or greater of target in the first quarter, Mr. Reilly will receive a bonus for that quarter equal
to 50% x (75% x (CEO Annual Salary ÷ 4)). The amount of any annual bonus payable to each executive
officer under the 2011 Bonus Plan as described above will be reduced by the amount of any quarterly
bonuses paid or payable by ArcSight to such executive officer.
Notwithstanding the foregoing, in the event of a Corporate Transaction (as defined in
ArcSights 2007 Equity Incentive Plan (the Equity Plan)), each executive officer will receive a
true up bonus
payment determined as if the maximum amount of the bonus available in any previously completed
quarter of the fiscal year was based on 100% of the maximum bonus amount payable based on such
executives percentage of base salary at the performance level achieved, as listed above, prorated
for the period covered and for the participants tenure at ArcSight during such period,
irrespective of the fact that the initial quarterly bonus payments were limited to the bonus level
at the target objective, payable immediately prior to the closing of the Corporate Transaction
(i.e., each executive will receive a bonus equal to the maximum percentage of base salary adjusted
for such individuals actual achievements against his/her objectives as determined in connection
with the distribution(s) in prior quarters, if applicable, less the amount previously paid to such
executive in such prior quarters).
The annual and quarterly bonuses payable under the 2011 Bonus Plan, including the true up
bonus in the event of a Corporate Transaction, are subject to the individual achievement by each
executive officer, other than Mr. Reilly, against his or her individual objectives. Unlike previous
bonus plans, under the 2011 Bonus Plan, all or a portion of the annual cash bonus may be paid in
the form of a Stock Bonus Award under the Equity Plan (as such term is defined in the Equity
Plan) in lieu of payment in cash.
The 2011 Bonus Plan also provides for a pool of shares of common stock to be granted to
ArcSights officers, including its executive officers, on the achievement of the targeted revenue
and operating income goals and individual performance objectives. As in fiscal 2010, the size of
the equity pool will be determined by the Committee in connection with the fiscal year-end review
based on the number of officers participating, the cumulative achievement of quarterly revenue and
operating income targets within the fiscal year, the relative retention value of existing grants
held by key executive officers and in recognition of our benchmark targets in light of updated
compensation data from our compensation consultant, as well as other factors. ArcSight anticipates
that equity awards under the 2011 Bonus Plan will be granted in the first quarter of fiscal 2011.
Other than as described in this paragraph and in the paragraphs above regarding the bonuses, the
2011 Bonus Plan will be administered, and cash bonus and equity awards under the plan determined,
in the same manner as for ArcSights bonus plan for fiscal 2010.
As was the case in fiscal 2009 and 2010, under his separate Sales Commission Plan FY 2011
(the 2011 Mosher Plan), which was also approved and adopted by the Committee on June 9, 2010 and
revised by the Committee on August 3, 2010, Mr. Mosher is entitled to quarterly commission payments
based on achievement relative to quarterly revenues targets, in addition to his annual base salary
of $300,000. The quarterly commissions payable to Mr. Mosher for each portion of achievement or
overachievement of his fiscal 2011 quarterly revenue targets in each fiscal quarter are:
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provided that actual revenues exceed 90% of the revenues target for the period, $313
multiplied by the percentage of revenues target achieved up to 95%; plus |
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$1,563 multiplied by the percentage of revenues target achieved in excess of 95% up to
100%; plus |
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$3,750 multiplied by the percentage of revenues target achieved in excess of 100% up to
105%; plus |
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$7,500 multiplied by the percentage of revenues target achieved in excess of 105%; plus |
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if actual revenues met or exceeded the revenues target for the period, an additional
$10,000, |
in each case, where the percentage of revenues target achieved and the percentages defining each
range of performance above are rounded to the nearest tenth of a percent and multiplied by 100.
In addition, under the 2011 Mosher Plan, Mr. Mosher will receive an additional commission in
the event that he achieves or exceeds his revenues target and either (i) actual operating expenses
for the sales department are less than or equal to the sales operating expense target, or (ii)
actual contribution margins for the sales department are equal to or greater than the sales
contribution margin target. Actual sales contribution margins are determined by subtracting actual
sales operating expenses from actual revenues for the quarter. The quarterly commission amounts
payable to Mr. Mosher upon achievement of his fiscal 2011 quarterly operating expense or
contribution margin targets vary by level of achievement relative to his quarterly revenues target.
The potential amounts payable to Mr. Mosher in any fiscal quarter at each revenues target
achievement level are:
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Quarterly |
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Revenue Target Achievement Level |
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Up to 100% |
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10,000 |
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More than 100% and up to 105% |
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23,000 |
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More than 105% and up to 115% |
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35,000 |
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More than 115% |
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40,000 |
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Unlike previous sales commission plans, under the 2011 Mosher Plan, all or a portion of the
quarterly commission payable at greater than the 100% level may be paid in the form of a Stock
Bonus Award under the Equity Plan in lieu of payment in cash.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
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ArcSight, Inc.
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By: |
/s/ Stewart Grierson
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Stewart Grierson |
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Chief Financial Officer |
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Date: August 6, 2010