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
(Amendment No. )
Filed by the Registrant þ Filed by a Party other than the Registrant ¨
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| ¨ | Preliminary Proxy Statement | |||
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| ¨ | Definitive Proxy Statement | |||
| þ | Definitive Additional Materials | |||
| ¨ | Soliciting Material Pursuant to §240.14a-12 | |||
| Juniper Networks, Inc. | ||||
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Dear Juniper Stockholder,
Juniper has filed its annual proxy statement in anticipation of our 2012 annual meeting of stockholders on May 22, 2012. We recognize that proxy season is a very busy time and we are committed to ensuring that our proxy communications and related materials are transparent and reflect our accountability to our stockholders.
The purpose of this note is to thank you in advance for your continued support of Juniper and to bring to your attention three important proposals in this year’s proxy. These proposals seek:
| • | Approval of a proposed amendment to the Juniper Networks, Inc. 2006 Equity Incentive Plan to authorize an additional 25 million common shares to be reserved for issuance under the plan; |
| • | Approval of a proposed amendment to the Juniper Networks, Inc. 2008 Employee Stock Purchase Plan to increase the maximum number of shares available for sale under the plan by 7 million; and, |
| • | A non-binding advisory vote in favor of our executive compensation program — known as a “say on pay” proposal, the vote is an opportunity for Juniper’s Board and Compensation Committee to review stockholder feedback as it makes future executive compensation decisions. |
The attached supplemental proxy materials will provide you with more information with regard to these proposals. We recognize your support of Juniper is essential to our future growth. We hope we can count on your vote.
 2012
PROXY PROPOSALS (ANNUAL MEETING DATE: MAY 22, 2012)
|
 2
Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
CONTENTS
2012 Proxy Proposals and Business Context
Executive and Equity Compensation
CEO Pay for Performance
1
1
2
2
3
3 |
 2012
PROXY PROPOSALS AND BUSINESS 2012 PROXY PROPOSALS AND BUSINESS
CONTEXT
CONTEXT |
    4
Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
JUNIPER NETWORKS 2012 PROXY PROPOSALS
*Note: 25M request reflects shares on an adjusted share basis.
1.
Elect
three Class I directors
2.
Ratify
the
appointment
of
Ernst
&
Young
LLP
as
auditors
for
the
fiscal
year
ending
December
31, 2012
3.
Approve
an
amendment
to
the
Juniper
Networks,
Inc.
2006
Equity
Incentive
Plan
that increases the number of shares reserved for issuance by 25,000,000
shares* 4.
Approve
an
amendment
to
the
Juniper
Networks,
Inc.
2008
Employee
Stock
Purchase
Plan
to
increase
the
maximum
number
of
shares
available
for
sale
by
7,000,000 shares
5.
Stockholder
proposal
to
declassify
the
board
of
directors
6.
Non-binding advisory vote
on executive compensation |
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Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
JUNIPER NETWORKS: A GROWTH COMPANY
Strong
track
record
of
growth
–
10yr
revenue
CAGR:
17.5%
(2001-2011)
Large and growing addressable market
Our innovation drives growth in our addressable market and
creates opportunities in new markets
Compensation programs support hiring of world-class talent to
drive future growth |
 EXECUTIVE AND EQUITY COMPENSATION |
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Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
JUNIPER’S EXECUTIVE COMPENSATION PROGRAMS ARE BASED ON
RESPONSIBLE GUIDING PRINCIPLES
Principle
Strategy
1. Enhance Accountability
Executive compensation linked to a clear set of business
objectives
2. Manage to Balanced Results
Compensation strategy that drives balanced results between
the following:
–
Short-and long-term objectives
–
Individual and team performance
–
Financial and non-financial objectives
–
Customer satisfaction and growth
3. Reward High Performance
Upside potential in the incentive plans for superior performance
with downside risk for underperformance
4. Attract & Retain Talent
Market-competitive programs with flexibility to be aggressive
for mission-critical talent retention and acquisition
5. Align with Shareholder Interests
Programs that are transparent, easily understood and meet
fiduciary commitments to shareholders
6. Encourage Health and Financial
Well-Being
Market-competitive benefit programs that encourage wellness
and financial savings
Equity-based compensation is a key element of our rewards program that supports
the above principles |
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Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
JUNIPER’S COMMITMENT IS TO KEEP ITS 2012 BURN RATE AT OR
BELOW 2.75% OF COMMON SHARES OUTSTANDING (“CSO”)
For 2009-2011 Management
achieved its objective of keeping
annual burn rate below 3% of CSO
Our reduction in annual grants since
2009 allows us to request 25M shares
in 2012 vs. requests of 30M shares
each year in 2010-2011
At 12/31/11, weighted average
eligibility of employees to receive
focal equity was approximately 55%*
Burn rate =
Number of shares granted at FYE**
CSO at FYE
Burn Rate:
Pure Shares Granted as % of CSO
Numerator for burn rate reflects shares granted in each year with performance share
awards at target (18,000,000, 18,000,000, 13,200,000, 11,700,000, and
14,700,000 shares granted in 2007-2011, respectively). Denominator for
burn rate reflects CSO used in computing net income per share in the Company’s Form 10-K filings
(537,800,000, 530,300,000, 523,600,000, 522,400,000, and 529,800,000 shares in
2007-2011, respectively). 3.35%
3.39%
2.52%
2.24%
2.77%
2.75%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
2007
2008
2009
2010
2011
2012
Proposed
2009-2011: Management Objective
to
Remain Under 3%
2012
Commitment:
Remain at
2.75% or Less
**Options, RSUs and PSAs are all counted as
one share each.
*Based on headcount at 12/31/11 and eligibility
for focal equity during fiscal year 2012. |
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Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
OUR CURRENT OVERHANG HAS REDUCED FROM 14% OF CSO TO 11%
Current Overhang:
Options, RSUs & PSAs Outstanding as % of CSO
14.00%
15.24%
14.73%
12.11%
11.06%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2007
2008
2009
2010
2011
Current Overhang =
Number of granted and outstanding shares at FYE
CSO at FYE
Current overhang provides a point-in-time
view of potential dilution based on shares
already granted
Current overhang has declined due to
managing annual grants within the 3% of CSO
objective, as well as exercises, vesting, and
expirations.
58% and 73% of our current outstanding
options expire in 2015 and 2016 as indicated
in the table below:
38% of our 2011 grants were options, compared to
75% in 2009, mitigating incremental overhang build up
via stock options
Numerator for current overhang is the sum of outstanding options, RSUs and PSAs
(includes the maximum number of shares issuable thereunder per our Form
10-K filings) at fiscal year end (73,200,000, 80,300,000, 76,500,000,
63,600,000, and 58,200,000 shares outstanding in 2007-2011, respectively).
Denominator
for
current
overhang
reflects
CSO
at
fiscal
year
end
in
our
From
10-K
filings
(522,800,000,
526,800,000, 519,300,000, 525,400,000, and 526,400,000 shares outstanding in
2007-2011, respectively). Outstanding
as of
12/31/2011
# of Options Expiring
Through Fiscal Year
2015
2016
Stock
Options
38.6M
22.3M
28M |
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Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
SHARE BUY-BACK PROGRAM REDUCES THE IMPACT OF EQUITY PLANS
Impact of Share Buy-Back Program
From time to time the Company
repurchases and retires
repurchased shares
This reduces the impact of our
equity plans on the aggregate
number of shares outstanding
The table provides information
on the number of shares
repurchased by the Company as
compared to the number of
shares issued by the Company
in connection with stock option
exercises, restricted stock unit
vesting and performance share
award vesting for each of the
fiscal years from 2007 through
2011
Fiscal
Year
Employee
Headcount
@ 12/31
Shares
Granted *
Shares
Issued**
Shares
Repurchased
2007
5,879
18,005,225
22,402,274
69,443,946
2008
7,014
18,003,215
7,615,406
25,088,226
2009
7,231
13,211,625
10,080,096
20,696,771
2010
8,772
11,687,750
23,833,186
19,653,004
2011
9,129
14,692,794
16,289,639
17,499,840
*Options, RSUs and PSAs are all counted as one share each
**In connection with stock option exercises, restricted stock unit vesting and
performance share award vesting |
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Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
OUR EQUITY COMPENSATION STRATEGY SINCE 2009 DEMONSTRATES
RESPONSIBLE EQUITY RESERVE MANAGEMENT UNDER OUR 2006
EQUITY INCENTIVE PLAN
1.
Less than 3% annual burn rate 2009-2011
2.
Commitment to manage 2012 at or below 2.75% of CSO
3.
Weighted average eligibility of employees to receive focal equity
is approximately 55% in 2012*
4.
Shift from an equity compensation approach that used options
as 75% of total grants in 2009 to 38% of total grants in 2011
5.
Declining current overhang with large tranche of legacy option
overhang expiring in 2015-2016
6.
Stock buy-back program reduces the impact of the equity
programs
*Based
on
headcount
at
12/31/11
and
eligibility
for
focal
equity
in
fiscal
year
2012. |
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Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
YOUR SUPPORT IS ESSENTIAL TO OUR FUTURE GROWTH
Ensures stock incentives available for future growth
Enables us to plan for additional growth in FY12 and beyond
Supports continued execution on our growth agenda
Your vote FOR proxy proposals #3 and #4: |
 DECLASSIFICATION OF THE BOARD |
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Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
DECLASSIFICATION INCREASES BOARD AND MANAGEMENT
ACCOUNTABILITY TO STOCKHOLDERS
By the 2015 annual meeting of stockholders, all director
nominees will stand for election each year
The decision to seek declassification was made as part of the
regular review of our governance practices, and recognizes
the desire of our shareholders to express their views on the
performance of the entire Board each year |
 CEO
PAY FOR PERFORMANCE CEO PAY FOR PERFORMANCE |
 16
Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
CEO PAY FOR PERFORMANCE
DISCLOSED
VS.
REALIZABLE
COMPENSATION
–
OVERVIEW
We believe that in assessing the relationship between CEO pay and company
performance, it is important to consider the value of CEO pay at the end of
the fiscal year We
believe
that
the
presentation
of
an
“actual
realizable
compensation”
measure
that
looks
at
pay
at
the end of the fiscal year provides useful information to our stockholders, in that
it aligns both pay and performance based on fiscal year end results
Summary Compensation Table
Actual Realizable Compensation
Base Salary
•
Actual payroll earnings for fiscal year
•
As reported in Summary Compensation
Table (SCT)
Bonus
•
Actual amount paid in 2011
•
As reported in SCT
Restricted Stock Awards
•
Number of shares multiplied by closing stock
price on date of grant
•
Number of shares multiplied by stock
price at end of fiscal year
Performance Share Awards
•
Number of target shares multiplied by
closing stock price on date of grant
•
Number of target shares multiplied by
stock price at end of fiscal year
Option Awards
•
Number of options multiplied by Black
Scholes value of closing stock price on date
of grant
•
Number of options multiplied by the
difference between stock price at fiscal
year end and exercise price. Underwater
options valued at $0
Non-Equity Incentive Plan
Compensation
•
Actual payment based on 2011 results
•
As reported in SCT
All Other Compensation
•
Value received in 2011
•
As reported in SCT
Total Compensation
•
Sum of the above
•
Sum of the above |
 17
Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
Year
Source
Salary
Stock Awards
Option Awards
Non Equity
Incentive Plan
Compensation
All Other
Compensation*
Total
Compensation
2011
Summary Comp
Table (SCT)
Disclosure
$960,000
$4,400,000
$4,565,850
$754,320
$13,233
$10,693,403
Actual Realizable
Comp
(2011)
1
$2,041,000
$0
$3,768,553
2010
SCT
$820,000
$2,744,000
$2,789,130
$1,599,000
$2,061,442
$10,013,572
Actual Realizable
Comp
(2010)
2
$3,692,000
$2,844,000
$11,016,442
2009
SCT
$740,000
$2,936,000
$1,893,210
$574,425
$1,602,291
$7,745,926
Actual Realizable
Comp
(2009)
3
$2,667,000
$3,597,000
$9,180,716
CEO PAY FOR PERFORMANCE
DISCLOSED
VS.
REALIZABLE
COMPENSATION
–
COMPARISON
*Includes sign-on bonus of $2M in 2010 and $1.5M in 2009
1
Reflects 100,000 performance shares at target valued using $20.41 stock price on 12/31/11 and 300,000
options valued at $0 given Juniper’s 12/31/11 stock price is below the exercise price of
$44. 2
Reflects 100,000 performance shares at target valued using $36.92 stock price on 12/31/10 and 300,000
options valued at the difference between $36.92 stock price and $27.44 exercise price.
3
Reflects 100,000 performance shares at target valued using $26.67 stock price on 12/31/09 and 300,000
options valued at the difference between $26.67 stock price and $14.68 exercise price. The table below provides the details on actual realizable compensation for
Juniper’s CEO vs. disclosed amounts in our Summary Compensation
Table |
 18
Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
We believe that our CEO’s actual realizable compensation is closely aligned
with performance and stockholder value creation on a relative basis vs. our
Peer Group as set forth in our Proxy and on an absolute basis relative to our stock price performance, reflecting both
measured
performance
results
in
the
Executive
Annual
Incentive
Plan
and
Performance
Share
Plans,
and
the
impact
of
declining
share prices on
the actual pay delivered to our CEO
Relative
Pay-for-Performance:
This
approach
calculates
the
percentile
rank
of
actual
realizable
compensation
for
our
CEO
at
the
end
of
each
fiscal
year
over
the
past
3-year
period
(2009,
2010,
2011)
relative
to
the
actual
realizable
compensation
for
CEOs
in
Juniper’s
Peer Group
as set forth in our Proxy. We measure Juniper’s Total Shareholder Return
(“TSR”) rank relative to the Peer Group over the same time period as
well. TSR reflects value for stockholders through share price appreciation and
dividends and is calculated as follows: Absolute
Pay-for-Performance:
This
approach
calculates
the
actual
realizable
compensation
for
our
CEO
at
the
end
of
each
fiscal
year over the
past 3-year period and compares it to the Company’s stock price at the end
of the respective years (2009, 2010, 2011) JUNIPER’S CEO PAY IS CLOSELY
ALIGNED WITH PERFORMANCE *Note: Shading in Relative Pay for Performance chart
indicates aligned pay for performance. *
*Stock price close data from finance.google.com
Juniper CEO
0%
50%
100%
0%
50%
100%
Pay Percentile Rank
Relative Pay for Performance
2009
2010
2011
Total CEO Pay (000s)
$9,181
$11,016
$3,769
Stock Price (@ 12/31)
$26.67
$36.92
$20.41
$0
$5
$10
$15
$20
$25
$30
$35
$40
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Absolute Pay for Performance
Stock
Price
at
Ending
Date
-
Stock
Price
at
Beginning
Date
+
Dividends
Stock
Price
at
Beginning
Date |
 19
Copyright ©
2012 Juniper Networks, Inc. www.juniper.net
YOUR SUPPORT IS ESSENTIAL TO ATTRACT AND RETAIN AN EXECUTIVE
LEADERSHIP TEAM TO POSITION US FOR GROWTH
Ensures
continued
executive
compensation
programs
that
align
pay
with
performance
Enables us to attract and retain executive leadership that positions the
company for future growth
Your vote FOR proxy proposal #6: |
 |