SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-12
EQUINIX, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notes:
[LOGO] Equinix, Inc.
EQUINIX, INC.
2450 Bayshore Parkway
Mountain View, CA 94043
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held June 7, 2002
The Annual Meeting of Stockholders (the "Annual Meeting") of Equinix, Inc.
(the "Company") will be held at the Company's headquarters located at 2450
Bayshore Parkway, Mountain View, California, on Friday, June 7, 2002, at 10:30
a.m. for the following purposes:
To elect six (6) directors of the Board of Directors to serve until the
next Annual Meeting or until their successors have been duly elected and
qualified;
To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent public accountants for the fiscal year ending December 31, 2002;
and
To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the attached
Proxy Statement.
Only stockholders of record at the close of business on April 12, 2002 are
entitled to notice of, and to vote at, the Annual Meeting and at any
adjournments or postponements thereof. A list of such stockholders will be
available for inspection at the Company's headquarters located at 2450 Bayshore
Parkway, Mountain View, California, during ordinary business hours for the
ten-day period prior to the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Peter Van Camp
Peter F. Van Camp
Chairman of the Board
and Chief Executive Officer
Mountain View, California
April 29, 2002
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING.
IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO CHANGE YOUR PROXY
VOTE, YOU MAY DO SO AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
1
EQUINIX, INC.
2450 Bayshore Parkway
Mountain View, CA 94043
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To be held June 7, 2002
These proxy materials are furnished in connection with the solicitation of
proxies by the Board of Directors of Equinix, Inc., a Delaware corporation (the
"Company"), for the Annual Meeting of Stockholders (the "Annual Meeting") to be
held at the Company's headquarters located at 2450 Bayshore Parkway, Mountain
View, California, on Friday, June 7, 2002, at 10:30 a.m., and at any
adjournment or postponement of the Annual Meeting. These proxy materials were
first mailed to stockholders on or about May 3, 2002.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual Meeting
are summarized in the accompanying Notice of Annual Meeting of Stockholders.
Each proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
The Company's common stock is the only type of security entitled to vote at
the Annual Meeting. On April 12, 2002, the record date for determination of
stockholders entitled to vote at the Annual Meeting, there were 96,199,573
shares of common stock outstanding. Each stockholder of record on April 12,
2002 is entitled to one vote for each share of common stock held by such
stockholder on April 12, 2002. All votes will be tabulated by the inspector of
elections appointed for the meeting, who will separately tabulate affirmative
and negative votes, abstentions and broker non-votes.
Quorum Required
The Company's bylaws provide that the holders of a majority of the Company's
common stock issued and outstanding and entitled to vote at the Annual Meeting,
present in person or represented by proxy, shall constitute a quorum for the
transaction of business at the Annual Meeting. Abstentions and broker non-votes
will be counted as present for the purpose of determining the presence of a
quorum.
Votes Required
Proposal 1. Directors are elected by a plurality of the affirmative votes
cast by those shares present in person, or represented by proxy, and entitled
to vote at the Annual Meeting. The six (6) nominees for director receiving the
highest number of affirmative votes will be elected. Abstentions and broker
non-votes will not be counted toward a nominee's total.
Proposal 2. Ratification of the appointment of PricewaterhouseCoopers LLP
as the Company's independent public accountants for the fiscal year ending
December 31, 2002 requires the affirmative vote of a majority of those shares
present in person, or represented by proxy, and cast either affirmatively or
negatively at the Annual Meeting. Abstentions and broker non-votes will not be
counted as having been voted on the proposal.
2
Proxies
Whether or not you are able to attend the Company's Annual Meeting, you are
urged to complete and return the enclosed proxy, which is solicited by the
Company's Board of Directors and which will be voted as you direct on your
proxy when properly completed. In the event no directions are specified, such
proxies will be voted FOR the nominees of the Board of Directors (as set forth
in Proposal 1), FOR Proposal 2, and in the discretion of the proxy holders as
to other matters that may properly come before the Annual Meeting. You may also
revoke or change your proxy at any time before the Annual Meeting. To do this,
send a written notice of revocation or another signed proxy with a later date
to the Secretary of the Company at the Company's principal executive offices
before the beginning of the Annual Meeting. You may also automatically revoke
your proxy by attending the Annual Meeting and voting in person. All shares
represented by a valid proxy received prior to the Annual Meeting will be voted.
Solicitation of Proxies
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing, and mailing of this Proxy Statement, the
proxy, and any additional soliciting material furnished to stockholders. Copies
of solicitation material will be furnished to brokerage houses, fiduciaries,
and custodians holding shares in their names that are beneficially owned by
others so that they may forward this solicitation material to such beneficial
owners. In addition, the Company may reimburse such persons for their costs of
forwarding the solicitation material to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram, or other means by directors, officers or employees. No
additional compensation will be paid to directors, officers or employees for
such services.
3
PROPOSAL 1
ELECTION OF DIRECTORS
The directors who are being nominated for re-election to the Board of
Directors (the "Nominees"), their ages as of April 12, 2002, their positions
and offices held with the Company and certain biographical information are set
forth below. The proxy holders intend to vote all proxies received by them in
the accompanying form FOR the Nominees listed below unless otherwise
instructed. In the event 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 who may be designated by the present Board of Directors to fill the
vacancy. As of the date of this Proxy Statement, the Board of Directors is not
aware of any Nominee who is unable or will decline to serve as a director. The
six (6) nominees receiving the highest number of affirmative votes of the
shares entitled to vote at the Annual Meeting will be elected directors of the
Company to serve until the next Annual Meeting or until their successors have
been duly elected and qualified.
Nominees Age Positions and Offices Held with the Company
-------- --- -------------------------------------------
Peter F. Van Camp (3). 46 Chairman of the Board and Chief Executive Officer
Albert M. Avery, IV... 58 Director, Vice Chairman of the Board
Scott Kriens (1) (2).. 44 Director
Andrew S. Rachleff (2) 43 Director
John G. Taysom (2).... 48 Director
Michelangelo Volpi (1) 35 Director
--------
(1) Member of Compensation Committee
(2) Member of Audit Committee
(3) Member of Option Committee
Peter F. Van Camp has served as Equinix's chief executive officer since May
2000 and as chairman of the board since June 2001. From March 1999 to May 2000,
Mr. Van Camp was employed at UUNET, the Internet division of WorldCom, where he
served as president of Internet markets and, most recently, as president of the
Americas region. Before joining UUNET, Mr. Van Camp served as president of
WorldCom Advanced Networks from February 1998 to March 1999. During the period
from May 1995 to February 1998, Mr. Van Camp was president of Compuserve
Network Services, an Internet access provider. Before holding this position,
Mr. Van Camp held various positions at Compuserve, Inc. during the period
between October 1982 to May 1995. Mr. Van Camp currently serves as a director
of Paradyne Networks, Inc. and Packeteer, Inc., both public companies.
Albert M. Avery, IV, one of the Company's founders, has served as a director
of Equinix since inception in June 1998 and as vice chairman of the board since
June 2001. Mr. Avery has also served as the Company's president, from June 1998
to May 2001, chief executive officer, from June 1998 to May 2000, and chief
operating officer, from May 2000 to May 2001. During the period from February
1996 to June 1998, Mr. Avery was general manager of the Palo Alto Internet
Exchange, a neutral Internet exchange designed and built by Digital Equipment
Corporation ("DEC"), which was subsequently acquired in 1998 by Compaq, a
computing systems supplier. During the period from March 1994 to February 1996,
Mr. Avery served as chief of staff to the vice president of research and
advanced development at DEC. Before holding this position, Mr. Avery held a
variety of sales, business, product management and engineering management roles
at DEC, which he joined in 1968.
Scott Kriens has served as a director of Equinix since July 2000. Mr. Kriens
has been president, chief executive officer and chairman of the board of
directors of Juniper Networks, Inc., an Internet infrastructure solutions
company, since October 1996. From April 1986 to January 1996, Mr. Kriens served
as vice president of sales and vice president of operations at StrataCom, Inc.,
a telecommunications equipment company, which he co-founded in 1986. Mr. Kriens
serves on the board of directors of Verisign, Inc. and Juniper Networks, Inc.,
both public companies, as well as several privately held companies.
4
Andrew S. Rachleff has served as a director of Equinix since September 1998.
In May 1995, Mr. Rachleff co-founded Benchmark Capital, a venture capital firm,
and has served as a general partner since that time. Prior to co-founding
Benchmark Capital, Mr. Rachleff spent ten years as a general partner with
Merrill, Pickard, Anderson & Eyre, a venture capital firm. Mr. Rachleff also
serves on the board of directors of Loudcloud, Inc., one of the Company's
customers, and CacheFlow Inc., both public companies, as well as several
privately held companies.
John G. Taysom has served as a director of Equinix since March 2000. In
September 2001, Mr. Taysom founded RVC Europe Limited, a venture capital firm,
where he serves as managing investment partner. Prior to founding RVC Europe
Limited, Mr. Taysom spent 18 years with Reuters Limited, a global television
and news agency. In 1995, he launched Reuters formal venture capital activities
by starting the Reuters Greenhouse Fund. Mr. Taysom currently serves as a
director of Digimarc Corp., a public company, and several privately held
companies.
Michelangelo Volpi has served as a director of Equinix since November 1999.
Mr. Volpi joined Cisco Systems, Inc. ("Cisco"), a data communications equipment
manufacturer, in 1994. Currently, he holds the position of senior vice
president for Cisco's Internet switching and services group. Prior to his
current position, Mr. Volpi was chief strategy officer for Cisco where he
played an instrumental role in the creation of Cisco's acquisition and
investment strategies. Before joining Cisco, Mr. Volpi spent three years at
Hewlett Packard's Optoelectronics Division.
Board of Directors Meetings and Committees
During the fiscal year ended December 31, 2001, the Board of Directors held
four (4) meetings and acted by written consent on four (4) occasions. For the
fiscal year, each of the directors, during the term of their tenure, attended
or participated in at least 75% of the aggregate of (i) the total number of
meetings or actions by written consent of the Board of Directors and (ii) the
total number of meetings held by all committees of the Board of Directors on
which each such director served. The Board of Directors has three (3) standing
committees: the Audit Committee, the Compensation Committee and the Option
Committee.
The Audit Committee of the Company's Board of Directors (the "Audit
Committee") was created on July 19, 2000. The Audit Committee reviews, acts on
and reports to the Board of Directors with respect to various auditing and
accounting matters, including the selection of the Company's accountants, the
scope of the annual audits, fees to be paid to the Company's accountants, the
performance of the Company's accountants and the accounting practices of the
Company. The members of the Audit Committee are Messrs. Kriens, Rachleff and
Taysom. During the fiscal year ended December 31, 2001, the Audit Committee of
the Board of Directors held three (3) meetings. In addition, the Audit
Committee met once in February 2002 to discuss the results of the audit for the
last fiscal year.
The Compensation Committee of the Company's Board of Directors (the
"Compensation Committee") was created on July 19, 2000. The Compensation
Committee reviews the performance of the executive officers of the Company,
establishes compensation programs for the officers, and reviews the
compensation programs for other key employees, including salary and cash bonus
levels and option grants under the 2000 Equity Incentive Plan, Employee Stock
Purchase Plan and 2001 Supplemental Stock Plan. The members of the Compensation
Committee are Messrs. Kriens and Volpi. During the fiscal year ended December
31, 2001, the Compensation Committee of the Board of Directors held no meetings
and acted by written consent on four (4) occasions.
The Option Committee of the Company's Board of Directors (the "Option
Committee") was created on July 19, 2000. The Board has delegated to the Option
Committee the authority to approve the grant to non-officer employees and other
individuals. The sole member of the Option Committee during the 2001 fiscal
year was Mr. Van Camp. During the fiscal year ended December 31, 2001, the
Option Committee held no meetings and acted by written consent on sixty-seven
(67) occasions.
5
Compensation of Directors
Except for grants of stock options, directors of the Company generally do
not receive compensation for services provided as a director or for
participation on any committee of the Board of Directors. Directors are not
reimbursed for their out-of-pocket expenses in serving on the Board of
Directors or any committee of the Board of Directors. Non-employee directors
are eligible to receive options under the Company's 2000 Director Option Plan
(the "Directors' Plan"). Each non-employee director receives an option for
40,000 shares of the Company's common stock upon joining the Board. The option
becomes exercisable and vests in four equal annual installments from the date
of grant. In addition, at each of the Company's annual stockholders' meetings,
each non-employee director who will continue to be a director after that
meeting will automatically be granted at that meeting an option for 10,000
shares of the Company's common stock. This option becomes fully exercisable and
fully vested on the first anniversary of the date of grant. However, a new
non-employee director who is receiving the initial option will not receive the
annual option in the same calendar year.
The following table sets forth for each of the non-employee directors the
number of securities underlying options held by the non-employee directors at
December 31, 2001:
Number of Securities Underlying
Unexercised Options at
December 31, 2001 Weighted
------------------------------- Average
Exercisable Not Exercisable Exercise Price
------------- ----------------- --------------
Scott Kriens........................... 10,000 40,000 $5.87
Andrew S. Rachleff..................... 10,000 40,000 $5.87
John G. Taysom......................... 10,000 40,000 $5.87
Michelangelo Volpi (1)................. 0 0 --
--------
(1) Mr. Volpi, in compliance with his employer's policy regarding compensation
in relation to external board positions, has waived his right to any stock
grants or other compensation.
Non-employee directors are also eligible to receive options as well as
shares of common stock under the Company's 2000 Equity Incentive Plan.
Directors who are also employees of the Company are eligible to receive options
as well as shares of common stock under the Company's 2000 Equity Incentive
Plan and to participate in the Company's Employee Stock Purchase Plan.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED HEREIN.
6
Other Executive Officers
The following are additional executive officers of the Company, their ages
as of April 12, 2002, their positions and offices held with the Company and
certain biographical information. All executive officers serve at the
discretion of the Board of Directors.
Executive Officers Age Positions and Offices Held with the Company
------------------ --- -------------------------------------------
Marjorie S. Backaus.... 40 Chief Marketing Officer and Vice President of Market Strategy
Peter T. Ferris........ 44 Vice President, Worldwide Sales
Philip J. Koen......... 50 President, Chief Operating Officer
Renee F. Lanam......... 39 Chief Financial Officer, General Counsel and Secretary
Keith D. Taylor........ 40 Vice President, Finance and Chief Accounting Officer
Marjorie S. Backaus has served as Equinix's chief marketing officer since
November 1999, and as Vice President of Market Strategy since February 2000.
During the period from August 1996 to November 1999, Ms. Backaus was vice
president of marketing at Global One, an international telecommunications
company. From November 1987 to August 1996, Ms. Backaus served in various
positions at AT&T, a telecommunications company, including positions in
regulatory, product management and strategic alliances.
Peter T. Ferris has served as Equinix's vice president, worldwide sales
since July 1999. During the period from June 1997 to July 1999, Mr. Ferris was
vice president of sales for Frontier Global Center, a provider of complex web
site hosting services. From June 1996 to June 1997, Mr. Ferris served as vice
president, eastern sales at Genuity Inc., an Internet services provider. From
December 1993 to June 1996, Mr. Ferris was vice president, mid-Atlantic sales
at MFS DataNet Inc., a telecommunications services provider.
Philip J. Koen has served as Equinix's president and chief operating officer
since May 2001. From July 1999 to May 2001, Mr. Koen also served as Equinix's
chief financial officer and secretary. In addition, Mr. Koen served as the
Company's corporate development officer from May 2000 to May 2001. Before
joining Equinix, Mr. Koen was employed at PointCast, Inc., an Internet company,
where he served as chief executive officer during the period from March 1999 to
June 1999; chief operating officer during the period from November 1998 to
March 1999; and chief financial officer and executive vice president
responsible for software development and network operations during the period
from July 1997 to November 1998. From December 1993 to May 1997, Mr. Koen was
vice president of finance and chief financial officer of Etec Systems, Inc., a
semi-conductor equipment company. Mr. Koen currently serves as a director of
CacheFlow Inc., a public company.
Renee F. Lanam has served as Equinix's chief financial officer and secretary
since February 2002, and as general counsel since April 2000. From April 2000
to February 2002, Ms. Lanam also served as Equinix's assistant secretary. In
addition, Ms. Lanam served as vice president of corporate finance from November
2001 to February 2002. Before joining Equinix, Ms. Lanam was employed at the
law firm of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
(''Gunderson Dettmer "), where she was an associate from January 1996 to
January 2000 and a partner from January 2000 to April 2000. Prior to joining
Gunderson Dettmer, Ms. Lanam was an associate at the law firms of Jackson,
Tufts, Cole & Black and Brobeck, Phleger & Harrison, LLP.
Keith D. Taylor has served as Equinix's vice president, finance, and chief
accounting officer since February 2001. From February 1999 to February 2001,
Mr. Taylor served as Equinix's director of finance and administration. Before
joining Equinix, Mr. Taylor was employed by International Wireless
Communications, Inc., an operator, owner and developer of wireless
communication networks, as vice president finance and interim chief financial
officer. Prior to joining International Wireless Communications, Inc., Mr.
Taylor was employed by Becton Dickinson & Company, a medical and diagnostic
device manufacturer, as a senior sector analyst for the diagnostic businesses
in Asia, Latin America and Europe.
7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2002, certain information
with respect to shares beneficially owned by (i) each person who is known by
the Company to be the beneficial owner of more than five percent of the
Company's outstanding shares of common stock, (ii) each of the Company's
directors, (iii) each of the executive officers named in Executive Compensation
and Related Information, and (iv) all current directors and executive officers
as a group. Beneficial ownership has been determined in accordance with Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Under this rule, certain shares may be deemed to be beneficially owned
by more than one person (if, for example, persons share the power to vote or
the power to dispose of the shares). In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire shares
(for example, upon exercise of an option or warrant) within sixty (60) days of
the date as of which the information is provided. In computing the percentage
ownership of any person, the amount of shares is deemed to include the amount
of shares beneficially owned by such person (and only such person) by reason of
such acquisition rights. As a result, the percentage of outstanding shares of
any person as shown in the following table does not necessarily reflect the
person's actual voting power at any particular date. Unless otherwise
indicated, the address for each listed stockholder is c/o Equinix, Inc., 2450
Bayshore Parkway, Mountain View, California 94043.
Shares Beneficially Owned
------------------------------------
Name of Beneficial Owner Number of Shares Percentage of Total
------------------------ ---------------- -------------------
Peter F. Van Camp (1)................................................... 3,963,327 4.22%
Albert M. Avery, IV (2)................................................. 2,630,253 2.91%
Philip J. Koen (3)...................................................... 1,264,160 1.39%
Andrew S. Rachleff (4).................................................. 8,669,773 9.61%
John G. Taysom (5)...................................................... 10,000 *
Michelangelo Volpi (6).................................................. 0 --
Scott Kriens (7)........................................................ 10,000 *
Marjorie S. Backaus (8)................................................. 664,332 *
Peter T. Ferris (9)..................................................... 724,332 *
Entities affiliated with Benchmark Capital (10)......................... 8,667,625 9.60%
2480 Sand Hill Road, Suite 200
Menlo Park, CA 94025
Cisco Systems, Inc...................................................... 6,790,939 7.52%
170 West Tasman Drive
San Jose, CA 95134
All current directors and executive officers as a group (11 persons)(11) 18,851,865 19.61%
--------
*Less than 1%.
1) Includes 3,763,327 shares subject to options that are exercisable within 60
days of March 31, 2002.
2) Includes 89,333 shares subject to options that are exercisable within 60
days of March 31, 2002.
3) Includes 604,160 shares subject to options that are exercisable within 60
days of March 31, 2002. Also includes 15,000 shares held as custodian for
children; Mr. Koen disclaims beneficial ownership of these shares.
4) Represents 8,535,000 shares of common stock held by Benchmark Capital
Partners II, L.P., as nominee for Benchmark Capital Partners II, L.P.,
Benchmark Founders' Fund II, L.P., Benchmark Founders' Fund II-A, L.P. and
Benchmark Members' Fund II, L.P., and 118,523 shares of common stock held
by Benchmark Capital Partners IV, L.P., as nominee for Benchmark Capital
Partners, IV, L.P., Benchmark Founders' Fund IV, L.P., Benchmark Founders'
Fund IV-A, L.P. and related individuals. Mr. Rachleff is a managing member
of Benchmark Capital Management Co. II, LLC, the general partner of
Benchmark Capital Partners, II, L.P., Benchmark Founders' Fund II, L.P.
Benchmark Founders' Fund II-A, L.P. and
8
Benchmark Members' Fund II, L.P. Mr. Rachleff is also a managing member of
Benchmark Capital Management Co., IV, LLC, the general partner of Benchmark
Capital Partners, IV, L.P., Benchmark Founders' Fund IV, L.P. and Benchmark
Founders' Fund IV-A, L.P. Mr. Rachleff disclaims beneficial ownership of
these shares, except with respect to 3,984 shares of common stock and to the
extent of his pecuniary interest in the Benchmark funds. In addition,
includes 6,250 shares of common stock and 10,000 shares subject to options
that are exercisable within 60 days of March 31, 2002. Mr. Rachleff's
address is the same as the address provided for Benchmark Capital.
5) Includes 10,000 shares subject to options that are exercisable within 60
days of March 31, 2002. Mr. Taysom is the managing investment partner of
RVC Europe Limited, an entity affiliated with Reuters Investments (Bermuda)
Limited and Reuters Holdings Switzerland SA which collectively hold
1,269,064 shares of the Company.
6) Mr. Volpi is senior vice president of Cisco Systems, Inc., which
beneficially holds 6,790,939 shares of the Company's common stock.
7) Includes 10,000 shares subject to options that are exercisable within 60
days of March 31, 2002.
8) Includes 551,832 shares subject to options that are exercisable within 60
days of March 31, 2002.
9) Includes 214,332 shares subject to options that are exercisable within 60
days of March 31, 2002.
10) Includes 8,535,000 shares of common stock held by Benchmark Capital
Partners II, L.P., Benchmark Founders' Fund II, L.P., Benchmark Founders'
Fund II-A, L.P. and Benchmark Members' Fund II, L.P. and 132,625 shares of
common stock held by Benchmark Capital Partners, IV, L.P., Benchmark
Founders' Fund IV, L.P., Benchmark Founders' Fund IV-A, L.P. and related
individuals.
11) Includes the shares described in Notes 1 through 9, plus shares held by or
subject to options exercisable within 60 days of March 31, 2002 held by
executive officers not named above.
9
COMPENSATION COMMITTEE REPORT
The Compensation Committee was formed on July 19, 2000. Since its formation,
the Compensation Committee has had the exclusive authority to establish the
level of base salary payable to the chief executive officer ("CEO") and certain
other executive officers of the Company and authority to administer the
Company's 2000 Equity Incentive Plan, 2001 Supplemental Option Plan and
Employee Stock Purchase Plan. In addition, the Compensation Committee has the
responsibility for approving the individual bonus programs to be in effect for
the CEO and certain other executive officers and other key employees each
fiscal year.
For the 2001 fiscal year, the process utilized by the Compensation Committee
in determining executive officer compensation levels was based on the
subjective judgment of the Compensation Committee. Among the factors considered
by the Compensation Committee were the recommendations of the CEO with respect
to the compensation of the Company's key executive officers. However, the
Committee makes the final compensation decisions concerning such officers.
General Compensation Policy. The Compensation Committee's fundamental
policy is to offer the Company's executive officers competitive compensation
opportunities based upon overall Company performance, their individual
contribution to the financial success of the Company and their personal
performance. It is the Committee's objective to have a substantial portion of
each officer's compensation contingent upon the Company's performance, as well
as upon his or her own level of performance. Accordingly, each executive
officer's compensation package consists of: (i) base salary, (ii) discretionary
cash bonus and (iii) long-term stock-based incentive awards.
Base Salary. The base salary for each executive officer is set on the basis
of general market levels and personal performance. Each individual's base pay
is positioned relative to the total compensation package, including cash
incentives and long-term incentives.
Annual Cash Bonuses. Executive officers who are eligible for bonuses
receive such bonuses if they achieve individual performance objectives that are
set on an annual basis. Actual bonuses paid reflect an individual's
accomplishment of these individual objectives and are based on a percentage of
the individual's base salary. For 2001, in an effort to conserve corporate
cash, no bonuses were paid, except for those earned by Mr. Koen and Ms. Backaus
for achieving individual performance goals related to corporate performance and
to Mr. Ferris for achieving individual performance targets related to sales and
certain employee referral bonuses were paid. In addition, certain officers
received assistance with respect to loans extended to them by the Company in
consideration for repaying the loans early.
Long-Term Incentive Compensation. During fiscal 2001, the Compensation
Committee approved significant option grants to the executive officers largely
in consideration of the challenges facing the Company, high exercise prices for
the officers' existing options and the decision to reduce bonuses in order to
conserve corporate cash. Generally, a significant grant is made in the year
that an officer commences employment. Thereafter, option grants may be made at
varying times and in varying amounts in the discretion of the Compensation
Committee. Generally, the size of each grant is set at a level that the
Committee deems appropriate to create a meaningful opportunity for stock
ownership based upon the individual's position with the Committee, the
individual's potential for future responsibility and promotion, the
individual's performance in the recent period, the exercise prices of that
individual's outstanding options relative to current market value, and the
number of unvested options held by the individual at the time of the new grant.
The relative weight given to each of these factors will vary from individual to
individual at the Compensation Committee's discretion.
Each grant allows the officer to acquire shares of the Company's common
stock at a fixed price per share (the market price on the grant date) over a
specified period of time. The option vests in periodic installments over a two
to four year period, contingent upon the executive officer's continued
employment with the Company. The vesting schedule and the number of shares
granted are established to ensure a meaningful incentive in each year
10
following the year of grant. Accordingly, the option will provide a return to
the executive officer only if he or she remains in the Company's employ, and
then only if the market price of the Company's common stock appreciates over
the option term.
CEO Compensation. The annual base salary for Mr. Van Camp, the Company's
CEO, was established in connection with his commencement of employment and has
not been increased. A significant option was granted during fiscal 2001 based
on the same factors as for the executive officers. In January 2002, the Board
of Directors forgave $874,000 of the CEO's employee loan totaling $1,512,000 in
exchange for the CEO waiving his right to any bonuses earned and expensed in
2001.
Tax Limitation. Under the Federal tax laws, a publicly held company such as
the Company will not be allowed a federal income tax deduction for compensation
paid to certain executive officers to the extent that compensation exceeds $1
million per officer in any year. To qualify for an exemption from the $1
million deduction limitation, the stockholders approved a limitation under the
Company's 2000 Equity Incentive Plan on the maximum number of shares of common
stock for which any one participant may be granted stock options per fiscal
year. Because this limitation was adopted, any compensation deemed paid to an
executive officer when he exercises an outstanding option under the 2000 Equity
Incentive Plan with an exercise price equal to the fair market value of the
option shares on the grant date will qualify as performance-based compensation
that will not be subject to the $1 million limitation. Since it is not expected
that the cash compensation to be paid to the Company's executive officers for
the 2002 fiscal year will exceed the $1 million limit per officer, the
Compensation Committee will defer any decision on whether to limit the dollar
amount of all other compensation payable to the Company's executive officers to
the $1 million cap.
Submitted by the following members of the Compensation Committee:
Scott Kriens
Michelangelo Volpi
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee was formed on July 19, 2000 and the current
members of the Compensation Committee are Messrs. Kriens and Volpi. None of the
members of the Compensation Committee was at any time during the 2001 fiscal
year or at any other time an officer or employee of the Company. No executive
officer of the Company serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
11
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee serves as the representative of the Board of Directors
for general oversight of the Company's financial accounting and reporting
process, system of internal control, audit process, and process for monitoring
compliance with laws and regulations and the Company's Standards of Business
Conduct. The Audit Committee annually recommends to the Board of Directors the
appointment of a firm of independent auditors to audit the financial statements
of the Company. A more detailed description of the functions of the Audit
Committee can be found in the Company's Audit Committee Charter, attached to
this proxy statement as Appendix A.
From January 1, 2001 to June 1, 2001, the Audit Committee consisted of
Messrs. Rachleff and Taysom and Ms. Dawn Lepore. Ms. Lepore resigned from the
Board of Directors on June 1, 2001. From June 1, 2001 to December 31, 2001, the
Audit Committee consisted of Messrs. Rachleff, Taysom and Kriens. The Audit
Committee held three meetings during the last fiscal year. In addition, the
Audit Committee met once in February 2002 to discuss the results of the audit
for the last fiscal year.
The Company's management has primary responsibility for preparing the
Company's financial statements and financial reporting process. The Company's
independent accountants, PricewaterhouseCoopers LLP, are responsible for
expressing an opinion on the conformity of the Company's audited financial
statements to generally accepted accounting principles. The Audit Committee
serves a board-level oversight role in which it provides advice, counsel and
direction to management and the auditors on the basis of the information it
receives, discussions with management and the auditors and the experience of
the Audit Committee's members in business, financial and accounting matters.
In this context, the Audit Committee hereby reports as follows:
. The Audit Committee has reviewed and discussed the audited financial
statements with the Company's management and the independent auditors.
. The Audit Committee has discussed with the independent accountants the
matters required to be discussed by Statement on Auditing Standards No.
61 (Codification of Statements on Auditing Standard, AU 380).
. The Audit Committee discussed with the independent auditor's the
auditor's independence from the Company and its management. The Audit
Committee has received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard
No. 1 (Independence Standards Board Standards No. 1, Independence
Discussions with Audit Committees) and has discussed with the independent
accountants the independent accountants' independence.
Audit Fees
Fees for the fiscal year 2001 audit and the review of Forms 10-Q were
$228,000 of which an aggregate amount of $201,000 had been billed through
December 31, 2001.
Financial Information Systems Design and Implementation Fees
In the past fiscal year, there were no fees billed by PricewaterhouseCoopers
LLP for professional services related to financial information systems design
and implementation.
All Other Fees
Aggregate fees billed for all other services rendered by
PricewaterhouseCoopers LLP for the fiscal year ended December 31, 2001 were
$113,000.
12
Based on the Audit Committee's discussion with management and the
independent auditors and the Audit Committee's review of the representations of
management and the report of the independent accountants to the Audit
Committee, the Audit Committee recommended to the Board of Directors, and the
Board of Directors has approved, that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001, for filing with the Securities and Exchange Commission. The
Audit Committee and the Board of Directors have also recommended, subject to
stockholder approval, the selection of PricewaterhouseCoopers LLP, as the
Company's independent auditors.
Each of the members of the Audit Committee is independent as defined under
the listing standards of the Nasdaq National Market.
Submitted by the following members of the Audit Committee:
Scott Kriens
Andrew S. Rachleff
John G. Taysom
13
STOCK PERFORMANCE GRAPH
The graph set forth below compares the cumulative total stockholder return
on the Company's common stock between August 11, 2000 (the date the Company's
common stock commenced public trading) and December 31, 2001 with the
cumulative total return of (i) the CRSP Total Return Index for the Nasdaq Stock
Market (U.S. Companies) (the "Nasdaq Stock Market-U.S. Index"), (ii) the Nasdaq
Telecommunications Index and (iii) Goldman Sachs Internet Index over the same
period. This graph assumes the investment of $100.00 on August 11, 2000, in the
Company's common stock, the Nasdaq Stock Market-U.S. Index, the Nasdaq
Telecommunications Index and the Goldman Sachs Internet Index and assumes the
reinvestment of dividends, if any.
The comparisons shown in the graph below are based upon historical data. The
Company cautions that the stock price performance shown in the graph below is
not indicative of, nor intended to forecast, the potential future performance
of the Company's common stock.
Comparison of Cumulative Total Return Among Equinix, Inc., the Nasdaq Stock
Market-U.S. Index and the Goldman Sachs Internet Index
[CHART]
EQUINIX, NASDAQ STOCK NASDAQ GOLDMAN SACHS
INC MARKET (U.S) TELECOMMUNICATIONS INTERNET
8/11/00 100.00 100.00 100.00 100.00
9/00 67.62 96.69 94.20 105.97
12/00 33.33 64.75 59.98 51.72
3/01 9.52 48.33 52.84 37.14
6/01 8.15 56.96 50.04 47.63
9/01 3.43 39.52 36.44 28.32
12/01 22.10 51.37 40.16 31.54
The Company effected its initial public offering of common stock on August
11, 2000 at a price of $12.00 per share. The graph above, however, commences
with the closing price of $13.125 per share on August 11, 2000 -- the date the
Company's common stock commenced public trading.
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate this Proxy
Statement or future filings made by the Company under those statutes, the
Compensation Committee Report and Stock Performance Graph shall not be deemed
filed with the Securities and Exchange Commission and shall not be deemed
incorporated by reference into any of those prior filings or into any future
filings made by the Company under those statutes.
14
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Compensation of Executive Officers
The following table sets forth information with respect to compensation for
the fiscal years ended December 31, 1999, 2000 and 2001 paid by the Company for
services rendered by the Company's chief executive officer and the four most
highly compensated executive officers whose salary and bonus for the fiscal
year ended December 31, 2001 were in excess of $100,000 for services rendered
in all capacities to the Company for that fiscal year (collectively, the "Named
Executive Officers"):
Long-term
Annual Compensation Compensation
---------------------- ----------------------
Awards Securities All Other
Year Salary Bonus Underlying Options (#) Compensation (6)
---- -------- -------- ---------------------- ----------------
Peter F. Van Camp (1)................ 2001 $308,708 $873,692(2) 2,200,000 $109,349
Chairman and Chief Executive Officer 2000 194,938 1,169 3,105,000 150,000
1999 -- -- -- --
Albert M. Avery, IV................. 2001 307,416 0 100,000 0
Vice Chairman of the Board 2000 310,000 0 56,000 0
1999 178,020 0 0 0
Philip J. Koen (3)................... 2001 245,000 91,018 1,760,000 0
President and Chief Operating 2000 209,139 4,341 80,000 0
Officer 1999 91,616 1,025 660,000 0
Marjorie S. Backaus (4).............. 2001 221,562 41,132 475,000 0
Chief Marketing Officer and 2000 200,781 4,328 56,000 51,789
Vice President of Market 1999 28,118 50,000 450,000 0
Peter F. Ferris (5).................. 2001 202,244 62,572 475,000 0
Vice President, Worldwide Sales 2000 192,995 64,157 56,000 0
1999 80,807 31,130 510,000 120,483
--------
(1) Mr. Van Camp joined the Company in May 2000.
(2) Represents the partial forgiveness of an employee loan in exchange for Mr.
Van Camp waiving his right to any bonuses earned and expensed in 2001.
(3) Mr. Koen joined the Company in July 1999.
(4) Ms. Backaus joined the Company in November 1999.
(5) Mr. Ferris joined the Company in July 1999.
(6) All Other Compensation reflects payment of relocation expenses.
15
Stock Option Grants
The following table shows for the year ended December 31, 2001, certain
information regarding options granted to the Named Executive Officers:
Potential Realizable Value
Number of at Assumed Annual Rates
Securities % of Total of Stock Price
Underlying Options Exercise Appreciation for Option
Options Granted or Base Term (4) ($)
Granted to Employees Price Expiration --------------------------
(#) (1) in 2001 (2) ($/sh)(3) Date 5% 10%
---------- ------------ --------- ---------- -------- ----------
Peter F. Van Camp.. 1,200,000 13.72% $0.92 4/9/2011 $694,300 $1,759,492
1,000,000 0.38 9/26/2011 238,980 605,622
Albert M. Avery, IV 100,000 0.62% 0.38 9/26/2011 23,898 60,562
Philip J. Koen..... 260,000 10.97% 3.72 1/9/2011 608,267 1,541,468
1,000,000 0.92 4/9/2011 578,583 1,466,243
500,000 0.38 9/26/2011 119,490 302,811
Marjorie S. Backaus 125,000 2.96% 3.72 1/9/2011 292,436 741,090
350,000 0.38 9/26/2011 83,643 211,968
Peter T. Ferris.... 125,000 2.96% 3.72 1/9/2011 292,436 741,090
350,000 0.38 9/26/2011 83,643 211,968
--------
(1) The options in the table that show an expiration date of January 9, 2011
were granted on January 9, 2001 and the options in the table that show an
expiration date of April 9, 2011 were granted on April 9, 2001. These
options are exercisable in 48 equal monthly installments from the grant
date. The options in the table that show an expiration date of September
26, 2011 were granted on September 26, 2001 and these options are
exercisable in 24 equal monthly installments from the grant date. The plan
administrator has the discretionary authority to re-price the options
through the cancellation of those options and the grant of replacement
options with an exercise price based on the fair market value of the option
shares on the re-grant date. The options have a maximum term of 10 years
measured from the option grant date, subject to earlier termination in the
event of the optionee's cessation of service with the Company. Under each
of the options, the option shares vest upon an acquisition of the Company
by merger or asset sale, unless the acquiring entity or its parent
corporation assumes the outstanding options. Any options which are assumed
or replaced in the transaction and do not otherwise accelerate at that time
automatically accelerate (and any unvested option shares which do not
otherwise vest at that time automatically vest) in the event the optionee's
service terminates by reason of an involuntary or constructive termination
within 18 months following the transaction. In addition, the options
granted on September 26, 2001 vest one additional year upon a change in
control of the Company.
(2) Based on an aggregate of 16,036,597 shares subject to options granted in
the fiscal year ended December 31, 2001.
(3) The exercise price for each option may be paid in cash, in shares of common
stock valued at fair market value on the exercise date or through a
cashless exercise procedure involving a same-day sale of the purchased
shares. The Company may also finance the option exercise by loaning the
optionee sufficient funds to pay the exercise price for the purchased
shares, together with any federal and state income tax liability incurred
by the optionee in connection with such exercise.
(4) In accordance with the rules of the Securities and Exchange Commission
("SEC"), the table sets forth the hypothetical gains or "option spreads"
that would exist for the options at the end of their respective ten-year
terms based on assumed annualized rates of compound stock price
appreciation of 5% and 10% from the dates the options were granted to the
end of the respective option terms. Actual gains, if any, on option
exercises are dependent on the future performance of the Company's common
stock and overall market conditions. There can be no assurance that the
potential realizable values shown in this table will be achieved.
16
Aggregate Option Exercises in 2001 and Fiscal Year-End Option Values
No options were exercised by the Named Executive Officers in 2001. The
following table sets forth for each of the Named Executive Officers the number
and value of securities underlying options held by the Named Executive Officers
at December 31, 2001:
Number of Securities
Underlying Value of Unexercised in-the-
Unexercised Options at Money Options at December 31,
December 31, 2001 (#) 2001 (1)
------------------------- -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Peter F. Van Camp............... 3,429,995 1,875,005 $710,990 $4,185,010
Albert M. Avery, IV............. 68,499 87,501 31,497 220,503
Philip J. Koen.................. 368,745 1,471,255 487,492 2,752,508
Marjorie S. Backaus............. 465,894 402,606 751,497 771,753
Peter T. Ferris................. 128,394 402,606 110,247 771,753
--------
(1) Based on the fair market value of the Company's common stock as of December
31, 2001 ($2.90 per share), minus the exercise price, multiplied by the
number of shares underlying the options.
Employment Agreements, Change of Control Arrangements and Severance Agreements
The Compensation Committee, as plan administrator of the 2000 Equity
Incentive Plan, has the authority to provide for accelerated vesting of the
shares of common stock subject to outstanding options held by the Named
Executive Officers and any other person in connection with certain changes in
control of Equinix. In connection with the adoption of the 2000 Equity
Incentive Plan, the Company has provided that upon a change in control of the
Company, each outstanding option and all shares of restricted stock will
generally become fully vested unless the surviving corporation assumes the
option or award or replaces it with a comparable award. Any options which are
assumed or replaced in the transaction and do not otherwise accelerate at that
time shall automatically accelerate (and any unvested option shares which do
not otherwise vest at that time shall automatically vest) in the event the
optionee's service terminates by reason of an involuntary or constructive
termination within 18 months following the transaction. In addition, options
granted to the executive officers of the Company prior to the Company's initial
public offering provide for an additional 12 months of vesting upon a change in
control of the Company and our form of offer letter for officers provides for
an additional 12 months of vesting upon a change in control, provided such
officer is employed upon closing of the change in control. Except as noted
below, none of the Company's executive officers have employment agreements with
the Company, and their employment may be terminated at any time.
The Company extended an offer of employment to Peter F. Van Camp, the
Company's chief executive officer, pursuant to an offer letter dated April 25,
2000. The agreement provides for 12 months of severance pay if Mr. Van Camp is
terminated by the Company for reasons other than cause or disability. Mr. Van
Camp's stock option agreement also provides that he will vest an additional 12
months in his initial option upon a change in control of the Company.
The Company extended an offer of employment to Philip J. Koen, the Company's
president and chief operating officer, pursuant to a letter agreement dated
July 9, 1999. The letter provides for six months of severance pay if Mr. Koen
is terminated by the Company for reasons other than cause.
The Company extended an offer of employment to Peter T. Ferris, the
Company's vice president, worldwide sales, pursuant to an offer letter dated
June 28, 1999. The letter provides for acceleration of vesting of option shares
for an additional 12 months if there are certain changes in control of the
Company. The Company also agreed to indemnify Mr. Ferris for any claims brought
by his former employer under an employment and non-compete agreement he had
with his former employer.
17
The Company entered into an agreement on February 8, 2000 with Albert M.
Avery, IV, its vice chairman of the Board of Directors, which provides that his
base compensation will be the same as the CEO's base compensation and also
provides for continuation of his salary and continued option vesting for 12
months should his employment with the Company cease. Any options granted to Mr.
Avery after February 8, 2000 will allow 24 months to exercise post-termination
of employment.
The Company extended an offer of employment to Marjorie S. Backaus, the
Company's Vice President of Marketing, pursuant to an offer letter dated
October 21, 1999. The agreement provides that she will vest an additional 12
months in her options upon a change in control of the Company.
PROPOSAL 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Company is asking the stockholders to ratify the appointment of
PricewaterhouseCoopers LLP as the Company's independent public accountants for
the fiscal year ending December 31, 2002. The affirmative vote of the holders
of a majority of shares present or represented by proxy and voting at the
Annual Meeting will be required to ratify the appointment of
PricewaterhouseCoopers LLP.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the appointment is ratified,
the Board of Directors, in its discretion, may direct the appointment of a
different independent accounting firm at any time during the year if the Board
of Directors feels that such a change would be in the Company's and its
stockholders' best interests.
PricewaterhouseCoopers LLP has audited the Company's financial statements
since 2000. Its representatives are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Lease Agreement with Entity Affiliated with 5% Stockholder. In March 1999,
the Company entered into an equipment lease facility with Cisco Systems Credit
Corporation, an entity affiliated with Cisco Systems, Inc. ("Cisco"), under
which the Company leased $137,000 of equipment for a 24-month term. Cisco is a
greater than 5% stockholder in the Company and Michelangelo Volpi, one of the
Company's directors, is an executive officer of Cisco.
Loans to Executive Officers. In September 1999, the Company loaned an
aggregate of $750,000 to Peter T. Ferris, one of the Company's executive
officers, to purchase a principal residence. The loan was evidenced by a
non-interest bearing promissory note. The note was paid in full in February
2002 in exchange for the Company paying the interest on the mortgage for his
principal residence for a 24-month period commencing in February 2002. The
largest aggregate amount of indebtedness owing on this note since the beginning
of the 2001 fiscal year was $750,000.
In January 2000, the Company loaned an aggregate of $250,000 to Marjorie S.
Backaus, one of the Company's executive officers, to purchase a principal
residence. The loan was evidenced by a non-interest bearing promissory note.
The note was paid in full in March 2002 in exchange for the Company paying the
interest on the mortgage for her principal residence for a 24-month period
commencing in May 2002. The largest aggregate amount of indebtedness owing on
this note since the beginning of the 2001 fiscal year was $250,000.
In February 2001, the Company loaned an aggregate of $1,512,000 to Peter F.
Van Camp, the Company's chief executive officer, to purchase a principal
residence. The loan was evidenced by a non-interest bearing promissory note. In
January 2002, the Board of Directors forgave $874,000 of this loan in exchange
for Mr. Van Camp waiving his right to any bonuses earned and expensed in 2001.
The remaining amount due under the loan of $638,000 was repaid to the Company
in full in February 2002. The largest aggregate amount of indebtedness owing on
this note during the 2001 fiscal year was $1,512,000.
Mr. Ferris and Ms. Backaus each repaid their loans early in consideration of
the Company's agreeing to provide certain benefits, including assisting each
borrower with interest payments on a bank loan used to finance the repayment of
the Company's loan.
Significant Customer Relationship with Affiliated Company. For the year
ended December 31, 2001, Loudcloud, Inc. ("Loudcloud") was the Company's second
largest customer. Revenues from Loudcloud amounted to $5,105,000, which
represented 8% of the Company's total revenues for the last fiscal year. Andrew
S. Rachleff, one of the Company's directors, is a co-founder and general
partner of Benchmark Capital. Benchmark Capital is a greater than 5%
stockholder of Loudcloud, and Mr. Rachleff currently serves on the Board of
Directors of Loudcloud.
Equipment Reseller Agreements with Affiliated Companies. In March 2002, the
Company entered into an agreement to resell equipment with Cisco Systems, Inc.
("Cisco"), a greater than 5% stockholder in the Company. Michelangelo Volpi,
one of the Company's directors, is an executive officer of Cisco. The Company
plans to recognize revenue from this arrangement on a gross basis in accordance
with Emerging Issue Task Force Issue No. 99-19, Recording Revenue as a
Principal versus Net as an Agent. The Company acts as the principal in the
transaction as the Company's customer services agreement identifies the Company
as the party responsible for the fulfillment of product/ services to the
Company's customers and has full pricing discretion. In the case of products
sold under this arrangement, the Company takes title to the products and bears
the inventory risk as the Company has made minimum purchase commitments for
equipment to various vendors. The Company has credit risk, as it is responsible
for collecting the sales price from a customer, but must pay the amount owed to
its suppliers after the suppliers perform, regardless of whether the sales
price is fully collected. In addition, the Company will often determine the
required equipment configuration. As of March 31, 2002, the Company purchased
and resold equipment for $928,000 under the agreement with Cisco. The Company
intends to enter into additional equipment transactions with Cisco in 2002.
19
In February 2002, the Company entered into an agreement to resell equipment
with Juniper Networks (IS), Inc., an entity affiliated with Juniper Networks,
Inc. ("Juniper"). Scott Kriens, one of the Company's directors, is both a
director and an executive officer of Juniper. The Company plans to recognize
revenue from this arrangement on a gross basis in accordance with Emerging
Issue Task Force Issue No. 99-19, Recording Revenue as a Principal versus Net
as an Agent. The Company acts as the principal in the transaction as the
Company's customer services agreement identifies the Company as the party
responsible for the fulfillment of product/ services to the Company's customers
and has full pricing discretion. In the case of products sold under this
agreement, the Company takes title to the products and bears the inventory risk
as the Company has made minimum purchase commitments for equipment to various
vendors. The Company has credit risk, as it is responsible for collecting the
sales price from a customer, but must pay the amount owed to its suppliers
after the suppliers perform, regardless of whether the sales price is fully
collected. In addition, the Company will often determine the required equipment
configuration. As of March 31, 2002, the Company purchased and resold equipment
for $576,000 under the agreement with Juniper. The Company intends to enter
into additional equipment transactions with Juniper in 2002.
20
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The members of the Board of Directors, the executive officers of the
Company, persons who hold more than 10% of the Company's outstanding common
stock and Ms. Dawn Lepore, a former director of the Company ("Section 16
Insiders") are subject to the reporting requirements of Section 16(a) of the
Exchange Act, which require them to file reports with respect to their
ownership of the Company's common stock and their transactions in such common
stock. Based upon (i) the copies of Section 16(a) reports that the Company
received from such persons for their 2001 fiscal year transactions in the
common stock and their common stock holdings and (ii) the written
representations received from one or more of such persons that no annual Form 5
reports were required to be filed by them for the 2001 fiscal year, the Company
believes that all reporting requirements under Section 16(a) for such fiscal
year were met in a timely manner by Section 16 Insiders.
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Stockholders who intend to have a proposal considered for inclusion in the
Company's proxy materials for presentation at the 2003 Annual Meeting of
Stockholders ("2003 Annual Meeting") pursuant to Rule 14a-8 of the Exchange Act
must submit the proposal to the Company no later than December 30, 2002.
Pursuant to Rule 14a-4(c) of the Exchange Act and the Company's bylaws, as
amended, stockholders who intend to present a proposal at the 2003 Annual
Meeting without inclusion of such proposal in the proxy materials are required
to notify the Company of such proposal not earlier than February 14, 2003 and
not later than March 14, 2003. If the Company does not receive notification of
the proposal within that time frame, the proxy holders will be allowed to use
their discretionary voting authority to vote on such proposal when the proposal
is raised at the 2003 Annual Meeting.
All stockholder proposals and notice of stockholder proposals should be sent
to the Company at its offices at 2450 Bayshore Parkway, Mountain View,
California 94043, Attn: General Counsel. The Company reserves the right to
reject, rule out of order, or take other appropriate action with respect to any
stockholder proposal that does not satisfy the conditions and rules established
by the Securities and Exchange Commission.
21
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for
stockholder action at the Annual Meeting. However, if other matters do properly
come before the Annual Meeting or any adjournments or postponements thereof,
the Board of Directors intends that the persons named in the proxies will vote
upon such matters in accordance with their best judgment.
The Company will mail without charge, upon written request, a copy of the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001. Requests should be sent to Equinix, Inc., at 2450 Bayshore Parkway,
Mountain View, California 94043, Attn: Investor Relations.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Peter F. Van Camp
Peter F. Van Camp
Chairman of the Board
and Chief Executive Officer
Mountain View, California
April 29, 2002
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE ANNUAL MEETING.
IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO CHANGE YOUR PROXY
VOTE, YOU MAY DO SO AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
THANK YOU FOR YOUR ATTENTION TO THIS MATTER. YOUR PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING.
22
APPENDIX A
AUDIT COMMITTEE CHARTER
Purpose and Policy
The Audit Committee shall provide assistance and guidance to the Board of
Directors of the Company in fulfilling its oversight responsibilities to the
Company's shareholders with respect to the Company's corporate accounting and
reporting practices, as well as the quality and integrity of the Company's
financial statements and reports. The policy of the Audit Committee, in
discharging these obligations, shall be to maintain and foster an open avenue
of communication between the Audit Committee, the independent auditors and the
Company's senior management.
Composition and Organization
The Audit Committee shall consist of at least three members of the Board of
Directors. The members of the Audit Committee shall satisfy the independence
and experience requirements of the Nasdaq Market.
The Audit Committee shall hold such regular or special meetings as its
members shall deem necessary or appropriate. Minutes of each meeting of the
Audit Committee shall be prepared and distributed to each director of the
Company promptly after each meeting. The operation of the Audit Committee shall
be subject to the Bylaws of the Company as in effect from time to time and the
Delaware General Corporation Law.
Responsibilities
In fulfilling its responsibilities, the Audit Committee believes that its
functions and procedures should remain flexible in order to address changing
conditions most effectively. To implement the policy of the Audit Committee,
the Committee shall be charged with the following functions:
1. To recommend annually to the Board of Directors the firm of certified
public accountants to be employed by the Company as its independent auditors
for the ensuing year, which firm is ultimately accountable to the Audit
Committee and the Board, as representatives of the Company's shareholders.
2. To review the engagement of the independent auditors, including the
scope, extent and procedures of the audit and the compensation to be paid
therefor, and all other matters the Audit Committee deems appropriate.
3. To evaluate, together with the Board, the performance of the independent
auditors and, if so determined by the Audit Committee, to recommend that the
Board replace the independent auditors.
4. To receive written statements from the independent auditors delineating
all relationships between the auditors and the Company consistent with
Independence Standards Board Standard No. 1, to consider and discuss with the
auditors any disclosed relationships or services that could affect the
auditors' objectivity and independence and otherwise to take, and if so
determined by the Audit Committee, to recommend that the Board take,
appropriate action to oversee the independence of the auditors.
5. To review, upon completion of the audit, the financial statements to be
included in the Company's Annual Report on Form 10-K.
6. To discuss with the independent auditors the results of the annual
audit, including the auditors' assessment of the quality, not just
acceptability, of accounting principles, the reasonableness of significant
judgments, the nature of significant risks and exposures, the adequacy of the
disclosures in the financial statements and any other matters required to be
communicated to the Committee by the independent auditors under generally
accepted accounting standards.
7. To evaluate the cooperation received by the independent auditors during
their audit examination, including any restrictions on the scope of their
activities or access to required records, data and information.
A-1
8. To review with the independent auditors the interim financial
statements before the Company files their Form 10-Q with the Commission.
9. To confer with the independent auditors and with the senior management
of the Company regarding the scope, adequacy and effectiveness of internal
accounting and financial reporting controls in effect.
10. To confer with the independent auditors and senior management in
separate executive sessions to discuss any matters that the Audit Committee,
the independent auditors or senior management believe should be discussed
privately with the Audit Committee.
11. To review with counsel any significant regulatory or other legal
matters that could have a material impact on the Company's financial
statements, if, in the judgment of the Audit Committee, such review is
necessary or appropriate.
12. To investigate any matter brought to the attention of the Audit
Committee within the scope of its duties, with the power to retain outside
counsel and a separate accounting firm for this purpose if, in the judgment of
the Audit Committee, such investigation or retention is necessary or
appropriate.
13. To prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Company's annual proxy statement.
14. To review and assess the adequacy of this charter annually and
recommend any proposed changes to the Board for approval.
15. To report to the Board of Directors from time to time or whenever it
shall be called upon to do so.
16. To perform such other functions and to have such powers as may be
necessary or appropriate in the efficient and lawful discharge of the foregoing.
A-2
DETACH HERE
PROXY
EQUINIX, INC.
2450 Bayshore Parkway
Mountain View, California 94043
This Proxy is Solicited on Behalf of the Board of Directors of Equinix, Inc.
for the Annual Meeting of Stockholders to be held June 7, 2002
The undersigned holder of Common Stock, par value $.001, of Equinix, Inc.
(the "Company") hereby appoints Peter F. Van Camp and Philip J. Koen, or either
of them, proxies for the undersigned, each with full power of substitution, to
represent and to vote as specified in this Proxy all Common Stock of the Company
that the undersigned stockholder would be entitled to vote if personally present
at the Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Friday, June 7, 2002, 10:30 a.m. local time, at the Company's headquarters
located at 2450 Bayshore Parkway, Mountain View, California, and at any
adjournments or postponements of the Annual Meeting. The undersigned stockholder
hereby revokes any proxy or proxies heretofore executed for such matters.
This proxy, when properly executed, will be voted in the manner as directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION OF THE DIRECTORS, AND "FOR" PROPOSAL 2, AND IN THE
DISCRETION OF THE PROXIES AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE
THE MEETING. The undersigned stockholder may revoke this proxy at any time
before it is voted by delivering to the Corporate Secretary of the Company
either a written revocation of the proxy or a duly executed proxy bearing a
later date, or by appearing at the Annual Meeting and voting in person.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS
AND "FOR" PROPOSAL 2.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED RETURN
ENVELOPE. If you receive more than one proxy card, please sign and return ALL
cards in the enclosed envelope.
----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
----------- -----------
EQUINIX, INC.
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940
-----------------
Vote by Telephone
-----------------
It's fast, convenient and immediate!
Call Toll-Free on a Touch-Tone Phone
1-877-PRX-VOTE (1-877-779-8683).
--------------------------------------------------------------------------------
Follow these four easy steps:
1. Read the accompanying Proxy Statement and Proxy Card.
2. Call the toll-free number
1-877-PRX-VOTE (1-877-779-8683).
3. Enter your Voter Control Number located on your Proxy Card above your name.
4. Follow the recorded instructions.
--------------------------------------------------------------------------------
----------------
Vote by Internet
----------------
It's fast, convenient, and your vote is immediately confirmed and posted.
--------------------------------------------------------------------------------
Follow these four easy steps.
1. Read the accompanying Proxy Statement and Proxy Card.
2. Go to the Website
http://www.eproxyvote.com/eqix
3. Enter your Voter Control Number located on your Proxy Card above your name.
4. Follow the instructions provided.
--------------------------------------------------------------------------------
Do not return your Proxy Card if you are voting by Telephone or Internet
DETACH HERE
[X] Please mark votes as
in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE DIRECTORS AND
"FOR" PROPOSAL 2.
1. To elect the following directors to serve for a term ending upon the 2003
Annual Meeting of Stockholders or until their successors are elected and
qualified:
Nominees: (01) Albert M. Avery, IV,
(02) Peter F. Van Camp,
(03) Scott Kriens,
(04) Andrew S. Rachleff,
(05) John G. Taysom and
(06) Michelangelo Volpi.
FOR WITHHOLD
ALL FROM ALL
NOMINEES NOMINEES
[_] [_]
[_]
----------------------------------------
For all nominees except as noted above.
2. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ending December 31, 2002.
FOR AGAINST ABSTAIN
[_] [_] [_]
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting.
Please date and sign exactly as your name(s) is (are) shown on the share
certificate(s) to which the Proxy applies. When shares are held as
joint-tenants, both should sign. When signing as an executor, administrator,
trustee, guardian, attorney-in-fact, or other fiduciary, please give full title
as such. When signing as a corporation, please sign in full corporate name by
President or other authorized officer. When signing as a partnership, please
sign in partnership name by an authorized person.
The undersigned acknowledges receipt of the accompanying Notice of Annual
Meeting of Stockholders and Proxy Statement.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED RETURN
ENVELOPE. If you receive more than one proxy card, please sign and return ALL
cards in the enclosed envelope.
Signature: Date:
-------------------------------------------- ---------------
Signature
(if held jointly) Date:
-------------------------------------- ---------------