Keizersgracht 281, 1016 ED Amsterdam, the Netherlands
September 3, 2024
To the Shareholders of Elastic N.V.:
Notice is hereby given that an Annual General Meeting of Shareholders (the “Annual Meeting”) of Elastic N.V., a public company with limited liability (naamloze vennootschap) incorporated under the laws of the Netherlands (the “Company,” “Elastic,” or “we”), will be held on October 1, 2024, at 5:00 PM, Central European Summer Time (“CEST”), at the Company’s offices at Keizersgracht 281, 1016 ED Amsterdam, the Netherlands. At the Annual Meeting, shareholders will consider the following items of business:
Item 1
Opening and announcements
Item 2
Overview of the Company’s business, financial situation and sustainability, and discussion of the Company’s compliance with the revised 2022 Dutch Corporate Governance Code
Item 3
Appointment of Shay Banon as an executive director and Chetan Puttagunta and Shelley Leibowitz as non-executive directors (voting proposal no. 1)
Item 4
Financial statements and results
a.Discussion of the Company’s financial statements for the fiscal year that commenced on May 1, 2023 and ended on April 30, 2024 (“fiscal year 2024”), including the Dutch statutory board report and annual accounts
b.Proposal to adopt the Dutch statutory annual accounts of the Company for fiscal year 2024 (voting proposal no. 2)
Item 5
Proposal to appoint PricewaterhouseCoopers Accountants N.V. as the Company’s external auditor of the Company’s Dutch statutory annual accounts for the fiscal year ending April 30, 2025 (“fiscal year 2025”) (voting proposal no. 3)
Item 6
Ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2025 (voting proposal no. 4)
Item 7
Proposal to grant full discharge to the executive directors of the Company who were in office during fiscal year 2024 from liability for their duties performed as executive directors of the Company during fiscal year 2024 (voting proposal no. 5)
Item 8
Proposal to grant full discharge to the non-executive directors of the Company who were in office during fiscal year 2024 from liability for their duties performed as non-executive directors of the Company during fiscal year 2024 (voting proposal no. 6)
Item 9
Authorization of the board of directors to issue ordinary shares and grant rights to acquire ordinary shares (voting proposal no. 7)
Item 10
Authorization of the board of directors to restrict or exclude pre-emptive rights for issuances of ordinary shares and grants of rights (voting proposal no. 8)
Item 11
Authorization of the board of directors to repurchase ordinary shares in the capital of the Company (voting proposal no. 9)
Item 12
Proposal to approve, on a non-binding advisory basis, the compensation of our named executive officers as described in this proxy statement (voting proposal no. 10)
Item 13
Any other business that may properly come before the meeting
Each person authorized to attend the Annual Meeting may inspect the agenda of the Annual Meeting and the financial statements, including the Dutch statutory annual report, at the Company’s office in the Netherlands at Keizersgracht 281, 1016 ED Amsterdam.
The Board of Directors unanimously recommends that you vote “FOR” each director nominee named in voting proposal no. 1 and “FOR” each of the remaining voting proposals as noted above.
The record date for the Annual Meeting (the “Record Date”) is at 5:00 PM, Eastern Daylight Time (“EDT”) (11:00 PM, Central European Summer Time), on September 3, 2024. Only the holders of record of the Company’s shares at that date and time are entitled to receive this Notice of Annual General Meeting of Shareholders (the “Notice”) and to vote at the Annual Meeting.
If you intend to attend the Annual Meeting in person, you must notify the Company by submitting your name and the number of registered shares you hold to the Company’s e-mail address ir@elastic.co by 8:00 PM, EDT, on September 26, 2024. Please read this proxy statement carefully to ensure that you have proper evidence of share ownership as of September 3, 2024, as we will not be able to accommodate guests without such evidence at the Annual Meeting.
We provide our materials pursuant to the full set delivery option in connection with the Annual Meeting. Under the full set delivery option, a company delivers all proxy materials to its shareholders. The approximate date on which the proxy statement and proxy card are intended to be first sent or given to the Company’s shareholders is September 6, 2024. This delivery can be by mail or, if a shareholder has previously agreed, by e-mail. In addition to delivering proxy materials to shareholders, the Company must also post all proxy materials on a publicly accessible website and provide information to shareholders about how to access that website. Accordingly, you should receive our proxy materials by mail or, if you previously agreed, by e-mail. These proxy materials include this Notice of Annual General Meeting of Shareholders, this proxy statement, and the proxy card. These materials are available free of charge on our website at ir.elastic.co and at www.proxyvote.com.
Your vote is important regardless of the number of Elastic ordinary shares that you own. If you do not plan to attend the Annual Meeting and if you are a shareholder of record, please submit your proxy instructions via the Internet or, if you are a holder of shares in street name (a “beneficial owner”), please submit the voting instruction form you receive from your broker or nominee as soon as possible so your shares can be voted at the Annual Meeting. You may submit your voting instruction form by mail. If you are a shareholder of record, you may provide your proxy instructions by telephone or by submitting a proxy card by mail. If you are a beneficial owner, you will receive instructions from your broker or other nominee explaining how to instruct the record holder to vote your shares. You should follow the instructions on the voting instruction form you receive from your broker or nominee. You do not need to affix postage to the enclosed reply envelope if you mail it within the United States. If you attend the Annual Meeting, you may withdraw your proxy and vote your shares personally.
All proxies submitted to us will be tabulated by Broadridge Financial Solutions, Inc. All shares voted by shareholders of record present in person at the Annual Meeting will be tabulated by the secretary designated by the chairperson of the Annual Meeting.
All shareholders are extended an invitation to attend the Annual Meeting.
If you have any questions concerning this proxy statement, would like additional copies of this proxy statement, or need help voting your Elastic ordinary shares, please contact our Investor Relations department at ir@elastic.co.
Thank you for your ongoing support of Elastic.
By the order of the Board of Directors of Elastic N.V.
Carolyn Herzog
Chief Legal Officer and Corporate Secretary
The date of this proxy statement is August 27, 2024.
This proxy statement voting summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider, so please read the entire proxy statement carefully before voting.
Items of Business
The following table summarizes the proposals to be voted upon at the annual general meeting of shareholders of Elastic N.V. (the “Company,” “Elastic,” “we,” “us” or “our”) to be held on October 1, 2024 (the “Annual Meeting”) and the Board’s voting recommendations with respect to each proposal.
Adoption of Company’s Dutch statutory annual accounts (the “Dutch Statutory Annual Accounts”) for the fiscal year ended April 30, 2024 (“fiscal year 2024”)
Appointment of PricewaterhouseCoopers Accountants N.V. as external auditor of the Company’s Dutch Statutory Annual Accounts for the fiscal year ended April 30, 2025 (“fiscal year 2025”)
The board of directors of the Company is responsible for establishing broad corporate policies and overseeing the overall performance of the Company. The board of directors selects the Company’s senior management, delegates authority for the conduct of the Company’s day-to-day operations to senior management, and monitors their performance. Members of the board of directors exercise their oversight role by, among other actions, participating in meetings of the board of directors and committees and by reviewing analyses and reports provided to them.
We have a one-tier board of directors, consisting of executive and non-executive directors. The board of directors determines the number of executive and non-executive directors.
The board of directors is currently composed of nine directors. We have two executive directors, our Chief Executive Officer and our Chief Technology Officer, and seven non-executive directors.
We have a classified board of directors in which directors serve for staggered terms. Under the Company’s articles of association, each director may be appointed for a maximum term of three years, provided that the director’s term will lapse immediately after the close of the first annual general meeting held after three years (or less if the term is shorter than three years) have lapsed since the director’s appointment, or until the director’s earlier death, resignation or removal. A director may be reappointed, and the three-year maximum term may be deviated from, by resolution of the general meeting of shareholders upon a proposal of the board of directors.
The following table sets forth the names, ages as of August 21, 2024, and certain other information for each of the directors who are nominees for appointment as a director at the Annual Meeting and for each of the continuing members of our board of directors:
We believe that our board of directors should reflect a diversity of perspectives and backgrounds. We have had a formal diversity policy since our initial public offering. When assessing the background, qualifications and experience of a candidate for our board of directors, the board of directors takes into account a broad range of factors, including such diversity attributes, among others, as the candidate’s gender, race, ethnicity, education, professional background, and international experience. The table below presents certain self-identified characteristics of our director nominees and continuing directors.
Board Diversity Matrix
Total Number of Directors: 9
Female
Male
Non-Binary
Did Not Disclose Gender
Directors
3
6
-
-
Number of Directors Who Identify as:
African American or Black
-
-
-
-
Alaskan Native or Native American
-
-
-
-
Asian
-
3
-
-
Hispanic or Latinx
-
-
-
-
Middle Eastern
-
1
-
-
Native Hawaiian or Pacific Islander
-
-
-
-
White (not of Hispanic or Latinx origin)
3
2
-
-
Two or More Races or Ethnicities
-
-
-
-
LGBTQ+
-
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement3
Our board of directors has taken a thoughtful approach to board composition to ensure that our directors have backgrounds that collectively add value to the strategic decisions made by the Company and that enable them to provide oversight of management to ensure accountability to our shareholders. The matrix below summarizes some of the most relevant types of experience, qualifications, attributes, and skills shared among our board members.
Abbasi
Auvil
Banon
Gleeson
Kulkarni
Leibowitz
Marooney
Puttagunta
Schuurman
Industry and IT/Technical Expertise
Expertise in the technology industry to oversee our business and address the opportunities and risks we face
ü
ü
ü
ü
ü
ü
ü
ü
ü
Scaling a Cloud Business
Experience growing a successful cloud business, reaching multi-billion dollar scale and maturity
ü
ü
ü
ü
ü
ü
ü
CEO Experience
Experience as CEO of a publicly traded company
ü
ü
ü
Modern Cloud Technology Expertise
Deep knowledge in technology architecture for cloud-based platforms, integrated solutions and customers’ data journey
ü
ü
ü
ü
Financial Knowledge and Expertise
Knowledge of financial markets, financing and accounting and financial reporting processes
ü
ü
ü
ü
Diverse Backgrounds and Experiences, Including International Experience
Diverse backgrounds and experiences that provide unique perspectives and enhance decision-making
ü
ü
ü
ü
ü
ü
ü
ü
ü
Cybersecurity / Information Security / Security
Expertise to oversee cybersecurity, privacy, and information security management
ü
ü
ü
ü
ü
Sales, Marketing and Brand Management Experience
Sales, marketing, and brand management experience to provide expertise and guidance to grow sales and enhance our brand
ü
ü
ü
ü
ü
ü
Human Capital Management
Experience attracting and retaining diverse top talent to oversee our people and compensation policies in our competitive environment
ü
ü
ü
ü
ü
ü
ü
ü
ü
Public Company Board Experience and Corporate Governance
Experience to understand the dynamics and operation of a public company, and corporate governance requirements and compliance
ü
ü
ü
ü
ü
ü
ü
ü
Set forth below is biographical information, as of August 21, 2024, about the persons nominated for appointment at the Annual Meeting and the continuing directors, as well as the qualifications, experience, and skills the board of directors considered in determining that each such person should serve as a director.
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement4
Shay Banon co-founded our Company and has served as a member of our board of directors since July 2012 and as our CTO since January 2022. Mr. Banon served as our CEO from May 2017 to January 2022, and as our Chairperson and CEO from June 2018 to January 2022. He previously also served as our CTO from July 2012 to April 2017. Mr. Banon is the creator of our Elasticsearch product.
Age: 46
Education
Qualifications
Mr. Banon holds a B.Sc. in Computer Science from Technion, Israel Institute of Technology.
The board of directors believes that Mr. Banon is qualified to serve as a member of our board of directors because of the perspective and experience he brings as our CTO, our prior CEO and co-founder, and his experience as an executive in the technology industry.
Chetan Puttagunta (Chairperson and Lead Independent Director)
Background and Experience
Chetan Puttagunta has served as a member of our board of directors since January 2017, as our Chairperson since January 2022, and as our Lead Independent Director since June 2018. Mr. Puttagunta has served as General Partner of Benchmark Capital Partners, a venture capital firm, since July 2018.
Age: 38
Nominating and Corporate Governance Committee (Chair)
Audit Committee
•From October 2016 until July 2018, Mr. Puttagunta served as a General Partner of New Enterprise Associates, a venture capital firm he joined in April 2011.
•Mr. Puttagunta also serves on the boards of directors of various private companies.
Education
Qualifications
Mr. Puttagunta holds a B.S. in Electrical Engineering from Stanford University.
The board of directors believes that Mr. Puttagunta is qualified to serve as a member of our board of directors because of his knowledge of the technology industry and his extensive experience in the venture capital industry.
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement5
Shelley Leibowitz has served as a member of our board of directors since October 2021. Ms. Leibowitz has served since January 2016 as President of SL Advisory, which provides advice and insights in innovation and digital transformation, information technology portfolio and risk management, digital trust, performance metrics, and effective governance.
•From 2009 through 2012, Ms. Leibowitz served as Chief Information Officer for the World Bank Group.
•Prior to that service, Ms. Leibowitz held Chief Information Officer positions at top-tier financial institutions, including Morgan Stanley, a global financial services firm, and Greenwich Capital Markets, a fixed income financial services firm.
•She currently serves as a director of Morgan Stanley. Previously she served as a director of Massachusetts Mutual Life Insurance Company, an insurance and financial services provider, from October 2019 to April 2021, E*Trade Financial Corporation, a financial services company, from December 2014 to October 2020, and AllianceBernstein Holding L.P., a global asset management firm, from November 2017 to June 2019.
•Ms. Leibowitz also serves on the boards of directors of private companies in the cybersecurity and risk arenas.
Age: 63
Audit Committee Nominating and Corporate Governance Committee
Education
Qualifications
Ms. Leibowitz holds a B.A. in Mathematics from Williams College.
The board of directors believes that Ms. Leibowitz is qualified to serve as a member of our board of directors because of her current and prior executive and directorship experience and extensive leadership and experience in technology services, digital transformation, and information security.
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement6
Ashutosh Kulkarni has served as our CEO since January 2022 and as a member of our board of directors since March 2022. Mr. Kulkarni previously served as our Chief Product Officer (“CPO”) from January 2021 to January 2022.
•Prior to joining us, Mr. Kulkarni served as Executive Vice President and Chief Product Officer, Enterprise Business Group, at McAfee, a digital provider of cyber security services, from October 2018 until December 2020.
•Prior to joining McAfee, Mr. Kulkarni served as Senior Vice President and General Manager at Akamai Technologies, a content delivery network, cybersecurity, and cloud service company, in the Web Performance and Web Security division from August 2016 to October 2018 and in the Web Experience division from August 2015 to August 2016.
•Prior to that service, Mr. Kulkarni held various senior leadership, product management, product marketing and engineering roles at Akamai Technologies, Informatica, and Sun Microsystems.
Age: 49
Education
Qualifications
Mr. Kulkarni earned an M.S. in computer engineering from the University of Texas at Austin, an M.B.A. degree from the University of California, Berkeley and a B.E. in engineering from the University of Mumbai.
The board of directors believes that Mr. Kulkarni is qualified to serve as a member of the Board because of the perspective he brings as our CEO, our former CPO, and his experience as an executive in the technology industry.
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement7
Sohaib Abbasi has served as a member of our board of directors and as our Vice-Chairperson since July 2022. He has also served as a member of the Executive Council of Balderton Capital, a venture capital firm, since January 2018 and as a Senior Advisor of TPG Global, a private equity firm, since July 2017.
•From July 2004 to August 2015, Mr. Abbasi served as the Chief Executive Officer of Informatica, a data integration company, where he also served as the Chair and a member of the board of directors from March 2004 to December 2015.
•Mr. Abbasi previously served in various executive roles at Oracle, a computer technology corporation, most recently as a member of Oracle's executive committee and as Senior Vice President of the Oracle Tools and Oracle Education divisions.
•He currently serves on the board of directors of Udemy, an online global learning platform company and previously served as a director of McAfee, a computer security software company, from November 2018 to March 2022, New Relic, an enterprise software company, from May 2016 to September 2019, Nutanix, a cloud computing company, from March 2020 to December 2020, and Red Hat, a provider of enterprise open-source software solutions, from March 2011 to July 2019.
•He also currently serves on the boards of directors of several private companies
Age: 68
Compensation Committee
Education
Qualifications
Mr. Abbasi holds a B.S. and an M.S. in Computer Science from the University of Illinois at Urbana-Champaign.
The board of directors believes that Mr. Abbasi is qualified to serve as a member of our board of directors because of his prior experience as CEO of a public technology company and his current and prior executive and directorship experience for multiple large public and private technology companies.
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement8
Paul Auvil has served as a member of our board of directors since October 2023.
•From March 2007 to February 2023, Mr. Auvil served as the CFO of Proofpoint, an enterprise security company that provides software as a service and products for email security, data loss prevention, electronic discovery, and email archiving.
•From September 2006 to March 2007, Mr. Auvil was an entrepreneur-in-residence with Benchmark Capital, a venture capital firm. Prior to that position, from 2002 to July 2006, he served as the CFO at VMware, a virtualization company. Previously, he served as the CFO for Vitria Technology, an eBusiness platform company, and held various executive positions at VLSI Technology, a semiconductor and circuit manufacturing company, including Vice President of the Internet and Secure Products Division.
•Mr. Auvil previously served on the board of directors of 1Life Healthcare (doing business as One Medical) from September 2019 to February 2023, when it was acquired by Amazon.
•Mr. Auvil currently also serves on the board of directors of Cerebras, an artificial intelligence chipmaker, where he is the audit committee chair.
Age: 60
Audit Committee (Chair)
Compensation Committee
Education
Qualifications
Mr. Auvil holds a Bachelor of Engineering degree from Dartmouth College and a Master of Management degree from the J.L. Kellogg Graduate School of Management, Northwestern University.
The board of directors believes that Mr. Auvil is qualified to serve as a member of our board of directors because of his prior experience as CFO of public technology companies and his current and prior executive and directorship experience for multiple large public and private technology companies.
Alison Gleeson
Background and Experience
Alison Gleeson has served as a member of our board of directors since January 2020. She has served as a sales strategic advisor to Verkada, a professional monitoring and video verification threat detection company, since August 2021, and as Special Advisor and Operating Committee Member at Brighton Park Capital, an investment firm, since October 2019.
•From November 2018 to September 2019, Ms. Gleeson was a private investor.
•From January 1996 to October 2018, Ms. Gleeson served in various roles with Cisco, a provider of software-defined networking, cloud and security solutions, most recently as Senior Vice President, Americas from July 2014 to October 2018.
•Ms. Gleeson currently also serves on the boards of directors of 8x8, a cloud-based provider of voice over IP products, where she is the compensation committee chair, ZoomInfo Technologies, a comprehensive sales and marketing intelligence software-as-a-service platform, and various private companies.
Age: 59
Compensation Committee (Chair)
Education
Qualifications
Ms. Gleeson holds a B.A. in Marketing from Michigan State University.
The board of directors believes that Ms. Gleeson is qualified to serve as a member of our board of directors because of her prior executive and go-to-market experience for a large public company.
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement9
Caryn Marooney has served as a member of our board of directors since April 2019. She has served as a General Partner of Coatue Management, a technology-focused venture capital firm, since November 2019.
•From May 2011 to May 2019, Ms. Marooney served in various roles at Meta (formerly Facebook), a social networking and technology company, most recently serving as Vice President, Global Communications from March 2012 to May 2019.
•From June 1997 to March 2011, Ms. Marooney served in various roles, including President and CEO, with The OutCast Agency, a public relations firm.
•Ms. Marooney served as a member of the board of directors of Zendesk, a software development company that provides a software-as-a-service customer service platform, from January 2014 to May 2020.
•Ms. Marooney also serves on the boards of various private companies.
Age: 57
Nominating and Corporate Governance Committee
Education
Qualifications
Ms. Marooney holds a B.S. in Labor Relations from Cornell University.
The board of directors believes that Ms. Marooney is qualified to serve as a member of our board of directors because of her prior executive experience and her experience advising technology companies.
Steven Schuurman
Background and Experience
Steven Schuurman co-founded our Company and has served as a member of our board of directors since July 2012 and previously served as our CEO from July 2012 to May 2017. Mr. Schuurman serves on the boards of various private companies.
Age: 48
Education
Qualifications
Mr. Schuurman holds a B.Sc. in Electrical Engineering from TH Rijswijk, now known as The Hague University of Applied Sciences.
The board of directors believes that Mr. Schuurman is qualified to serve as a member of our board of directors because of his deep understanding of our business, operations, and strategy due to his role as our co-founder and former CEO.
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement10
Under the rules of the New York Stock Exchange (“NYSE”), on which our ordinary shares are listed, independent directors must constitute a majority of a listed company’s board of directors, as determined by the board of directors in accordance with the NYSE rules. Under those rules, to determine that a director is independent, the board of directors must determine that the director has no material relationship with the listed company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the listed company. When assessing the materiality of a director’s relationship, if any, with the listed company, the board of directors must consider materiality from the standpoint of the director and from the standpoint of persons or organizations with which the director has an affiliation.
In addition, the rules of the NYSE require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees must be independent. Compensation committee members may not have a relationship with the listed company that is material to the director’s ability to be independent from management in connection with the duties of a compensation committee member. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). To be considered independent for purposes of Rule 10A-3, members of an audit committee of a listed company may not, other than in their capacity as a member of the audit committee, the board of directors or any other board committee, accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries or be an affiliated person of the listed company or any of its subsidiaries.
Our board of directors has undertaken a review of the independence of each director and considered whether any director has a material relationship with us that could compromise the director’s ability to exercise independent judgment in carrying out their responsibilities on the board of directors. In its determination, the board of directors considered information requested from and provided by each director concerning their background, employment and affiliations, including family relationships and beneficial ownership of our shares. As a result of this review, our board of directors determined that each of our seven non-executive directors, Messrs. Abbasi, Auvil, Puttagunta, and Schuurman, and Mses. Gleeson, Leibowitz, and Marooney, are independent under the rules of the NYSE and our corporate governance guidelines, which incorporate the director independence standards of those rules. All seven of our non-executive directors, including each of the two non-executive director nominees standing for appointment at the Annual Meeting and all five of the non-executive directors who will serve as continuing directors after the Annual Meeting, are independent. The board of directors further determined that the current members of our Compensation Committee and our Audit Committee met the additional independence requirements for membership on the committees specified in the rules of the NYSE and Rule 10A-3 under the Exchange Act.
In addition to the independence requirements under the NYSE rules, the Dutch Corporate Governance Code (the “DCGC”) requires a majority of the non-executive directors of our board of directors, a majority of the members of each of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee, and the Lead Independent Director to be independent. The DCGC provides for a definition of an “independent director” that differs from the definition under the NYSE rules and assesses only independence of non-executive directors. A non-executive director of the Company is considered not independent under the DCGC if the director or the director’s spouse, registered partner or life companion, foster child or relative by blood or marriage up to the second degree:
•has been an employee, managing director, or executive director of the Company in the five years prior to appointment;
•has received personal financial compensation from us for work not in keeping with the normal course of business;
•has had an important business relationship with the Company in the years prior to appointment;
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement11
•is a member of the management board of a company in which an executive director of the Company is a supervisory board member;
•has temporarily performed management duties for us;
•is a major shareholder of the Company (holding at least 10% of the issued and outstanding share capital of the Company); or
•represents one or more major shareholders.
The first five criteria specified above may apply to at most one non-executive director. The total number of non-executive directors who are not independent under this definition may account for less than half of the total number of non-executive directors. There may be at most one non-executive director who can be considered to be affiliated with or representing any shareholder, or group of affiliated shareholders, that directly or indirectly holds more than 10% of the issued and outstanding share capital of the Company. Our board of directors has determined that it complies with the independence requirements of the DCGC.
Corporate Governance Guidelines and Code of Business Conduct and Ethics
Our board of directors has adopted corporate governance guidelines that address items such as the qualifications and responsibilities of our directors and director candidates and corporate governance policies and standards applicable to us in general. In addition, our board of directors has adopted a code of business conduct and ethics (“Code of Conduct”) that applies to all of our employees, officers, and directors, including our CEO, CFO, and other executive and senior financial officers. The full text of our corporate governance guidelines and our Code of Conduct is available on our website at ir.elastic.co.
Board Leadership Structure and Role of the Independent Chairperson and Lead Independent Director
As noted above, our one-tier board structure consists of two executive directors and seven non-executive directors. Additionally, our articles of association provide for one of our independent, non-executive directors to be designated as Lead Independent Director by our board of directors. The role of Chairperson and Lead Independent Director may, but is not required to, be fulfilled by the same individual. Our board of directors has designated Mr. Puttagunta to serve as our Chairperson and Lead Independent Director. As Chairperson of our board of directors and Lead Independent Director, Mr. Puttagunta presides at all meetings of the board of directors, presides over executive sessions of our independent directors, presides as chairperson of our general meeting (or if not present, may designate another non-executive director for that purpose), serves as a liaison between our executive directors and our independent directors, and performs such additional duties as our board of directors may otherwise determine and delegate and as required by the DCGC, our articles of association and board rules governing the internal proceedings of the board of directors. Our articles of association also provide for one of our independent, non-executive directors to be designed as Vice-Chairperson by our board of directors. Our board of directors has designated Mr. Abbasi to serve as our Vice-Chairperson. As Vice-Chairperson, Mr. Abbasi is entrusted with the duties of Lead Independent Director if the Lead Independent Director is absent or unwilling to take the chair.
The DCGC requires that, in addition to meeting the DCGC independence requirements summarized above, the Lead Independent Director may not be a former executive director of our Company.
The board of directors believes that its current leadership structure, in which the position of Chairperson is separated from the position of CEO, and the positions of Chairperson and Lead Independent Director are held by an independent, non-executive director with broad authority who is supported by a Vice-Chairperson who also is an independent, non-executive director, is appropriate at this time and currently provides the most effective leadership for Elastic in a highly competitive and rapidly changing technology industry. We believe that separation of the positions of our Chairperson from the CEO reinforces the independence of the board of directors in its oversight of the business and affairs of the Company. The balance of responsibilities between our CEO and our Chairperson facilitates the active
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement12
participation of our independent directors and enables our board of directors to provide more effective oversight of management. Non-executive directors and members of management sometimes have different perspectives and roles in strategy development. Our non-executive directors bring to deliberations of the board of directors experience, oversight and expertise from outside of our Company, while our CEO brings Company-specific experience and expertise. In addition, we believe that having an independent Chairperson creates an environment that is more conducive to objective evaluation and oversight of management’s performance, increasing management accountability and improving the ability of the board of directors to assess whether management’s actions are in the best interests of the Company and its stakeholders.
Risk Management
Risk is inherent with every business, and we face a number of risks, including strategic, financial, business and operational, legal and compliance, and reputational risks. We have designed and implemented processes to manage risk in our operations. Management is responsible for the day-to-day management of risks the Company faces, while our board of directors, as a whole and assisted by its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are appropriate and functioning as designed.
Our board of directors believes that open communication between management and our board of directors is essential for effective risk management and oversight. Our board of directors meets with members of the senior management team at quarterly meetings of our board of directors, as well as at such other times as deemed appropriate, where, among other topics, they discuss strategy and risks facing the Company.
While our board of directors is ultimately responsible for risk oversight, our board committees assist our board of directors in fulfilling its oversight responsibilities in certain areas of risk.
Our Audit Committee assists our board of directors in fulfilling its oversight responsibilities with respect to risk management in the areas of internal control over financial reporting and disclosure controls and procedures, legal and regulatory compliance, and discusses with management and the independent auditor guidelines and policies with respect to risk assessment and risk management. Our Audit Committee also reviews our major financial risk exposures and the steps management has taken to monitor and control these exposures. Additionally, our Audit Committee reviews and discusses with management the adequacy and effectiveness of the Company’s information and technology security and privacy policies and the internal controls regarding information and technology security, cybersecurity, and privacy.
Our Compensation Committee, in consultation with management and the Committee’s independent compensation consultant, Compensia, Inc. (“Compensia”), at least annually assesses and considers potential risks when reviewing and approving our compensation programs, policies and practices for all employees, including our executive officers and other senior management. Based on its most recent assessment, our Compensation Committee believes that our compensation programs, policies and practices do not encourage excessive and unnecessary risk-taking or create risks that are reasonably likely to have a material adverse effect on the Company or its operations.
Our Nominating and Corporate Governance Committee assists our board of directors in fulfilling its oversight responsibilities with respect to the management of risk associated with board organization, membership and structure, and corporate governance.
Finally, our full board of directors reviews strategic and operational risk in the context of reports from the management team, regularly receives reports on significant committee activities, evaluates the risks inherent in significant transactions, and provides guidance to management.
Management Succession Planning
Our board of directors and the Nominating and Corporate Governance Committee review the risks associated with our executive management team to ensure succession plans are in place. Pursuant to
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement13
our corporate governance guidelines and the Nominating and Corporate Governance Committee charter, the Nominating and Corporate Governance Committee, in consultation with the full board of directors, is primarily responsible for succession planning for the role of CEO, including developing plans for interim succession for the CEO in the event of an unexpected occurrence. In addition, the Nominating and Corporate Governance Committee works with the CEO and the board of directors to plan for succession of executive directors and non-executive directors and other members of the Company’s executive management team, as well as to develop plans for interim succession of each of the other executive directors and non-executive directors or other members of the Company’s executive management team, in the event of an unexpected occurrence. The Nominating and Corporate Governance Committee also periodically reviews the succession planning process for the CEO, executive directors, non-executive directors, and any other members of our executive management team, reports its findings and recommendations to the board of directors, and assists the board of directors in evaluating potential successors.
Board Meetings
During fiscal year 2024, the board of directors held four meetings (including regularly scheduled and special meetings), and all of our directors attended at least 75% of the aggregate of (i) the total number of meetings of our board of directors held during the period for which they served and (ii) the total number of meetings held by all committees of our board of directors on which they served during the periods for which they served. During fiscal year 2024, the board of directors also acted by written consent in lieu of a meeting.
Although we do not have a formal policy regarding attendance by members of our board of directors at annual general meetings of shareholders, we encourage our directors to attend these meetings. Of the nine directors then serving on the board of directors, six directors attended the annual general meeting of shareholders on October 5, 2023.
Committees of Board of Directors
Our board of directors has the authority to appoint committees to perform certain management and administrative functions. In accordance with the NYSE rules, our board of directors has established an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, each of which has the composition and responsibilities described below. Members serve on these committees until their resignation or until otherwise determined by our board of directors. Under the NYSE rules, executive directors may not be members of the Audit Committee, the Compensation Committee, or the Nominating and Corporate Governance Committee. Additionally, under the DCGC, the Audit Committee and the Compensation Committee may not be chaired by the Lead Independent Director or by a former executive director. Our board of directors may from time to time establish ad hoc committees.
Audit Committee
Our Audit Committee is currently composed of Messrs. Auvil and Puttagunta and Ms. Leibowitz, each of whom is a non-executive member of our board of directors. Mr. Auvil has served as the chair of our Audit Committee since his appointment to our board of directors at our 2023 annual general meeting of shareholders. Our board of directors has determined that each member of our Audit Committee satisfies the requirements for independence and financial literacy under the rules and regulations of the NYSE and the U.S. Securities and Exchange Commission (“SEC”). Our board of directors has also determined that Mr. Auvil qualifies as an “audit committee financial expert” as defined in the rules of the SEC and possesses accounting or related financial management expertise as required under the NYSE rules. The Audit Committee is responsible for exercising oversight with respect to the following matters, among others:
•our accounting and financial reporting processes;
•the integrity and audits of our consolidated financial statements and financial reporting process;
•our systems of disclosure controls and procedures and internal control over financial reporting;
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement14
•our compliance with financial, legal and regulatory requirements related to our financial statements and other public disclosures, our compliance with our policies related thereto, and our policy in respect of tax planning;
•the engagement and retention of the registered independent public accounting firm to audit our financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the recommendation for nomination by our board of directors for the instruction (appointment) by our general meeting of an external auditor to audit the Dutch Statutory Annual Accounts and board report, and the evaluation of the qualifications, independence, and performance of the independent public accounting firm, including the provision of non-audit services;
•the application of information and communication technology;
•the role and performance of our internal audit function;
•significant cybersecurity matters and concerns, including information security, data protection, related legal and regulatory matters and compliance, and the impact of cybersecurity incidents and responses to such incidents;
•significant tax and treasury matters, including, among others, tax planning and compliance, cash management, investing activities and currency exposures and approval of policies related to such matters;
•review of all related person transactions in accordance with our related person transactions policy;
•our overall risk profile; and
•such other matters as are specifically delegated to our Audit Committee by our board of directors from time to time.
During fiscal year 2024, our Audit Committee held six meetings and also acted by unanimous written consent.
Compensation Committee
Our Compensation Committee is currently composed of Ms. Gleeson and Messrs. Abbasi and Auvil, each of whom is a non-executive member of our board of directors. Mr. Auvil has served on our Compensation Committee since his appointment to our board of directors at our 2023 annual general meeting of shareholders. Ms. Gleeson is currently the chair of our Compensation Committee. Our board of directors has determined that each member of our Compensation Committee meets the requirements for independence under the rules of the NYSE and the SEC and is a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act. The Compensation Committee is responsible for the following matters, among others:
•reviewing and approving the compensation, including equity compensation, change-in-control benefits and severance arrangements, of our executive officers (other than the executive directors) and other senior management and overseeing their performance;
•reviewing and making recommendations to our board of directors with respect to the compensation of our directors;
•reviewing and making recommendations to our board of directors with respect to our executive compensation policies and plans;
•implementing and administering our incentive and equity-based compensation plans;
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement15
•determining or, with respect to our executive directors, recommending to the board of directors the number of shares underlying, and the terms of, restricted share awards and options to be granted to our directors, executive officers, and other employees pursuant to these plans;
•assisting management in complying with our proxy statement and annual report disclosure requirements and evolving regulations related to such requirements;
•producing a report on executive compensation to be included in our annual proxy statement;
•assisting our board of directors in producing the compensation report to be included in our annual report filed in the Netherlands and to be posted on our website in accordance with best practices of the DCGC;
•reviewing and monitoring matters related to human capital management, including corporate culture, diversity, equity and inclusion, recruiting, retention, attrition, talent management, and career development and progression; and
•attending to such other matters as are specifically delegated to our Compensation Committee by our board of directors from time to time.
During fiscal year 2024, our Compensation Committee held four meetings and also acted by unanimous written consent.
During the fiscal year, the Compensation Committee retained the services of Compensia, to advise on executive compensation matters, including competitive market pay practices for our named executive officers and the composition of our compensation peer group. The terms of Compensia’s engagement include reporting directly to the Compensation Committee chair. Compensia also coordinated with our management for data collection and job matching for our executive officers. In fiscal year 2024, Compensia provided only compensation-related services for us.
The Compensation Committee has evaluated Compensia’s independence from management. This review process included a review of the services that such compensation consultant provided, the quality of those services, and the fees associated with the services provided during fiscal year 2024. Based on this review, as well as consideration of the factors affecting independence set forth in the rules of the SEC and NYSE relating to the independence of the Compensation Committee’s compensation advisors, and such other factors as were deemed relevant under the circumstances, the Compensation Committee has determined that no conflict of interest was raised as a result of the work performed by Compensia.
For additional information about the roles of each of our Compensation Committee, our management, and Compensia in our compensation process, see “Executive Compensation—Compensation Discussion and Analysis—Compensation-Setting Process” below.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee is currently composed of Mr. Puttagunta, Ms. Leibowitz, and Ms. Marooney, each of whom is a non-executive member of our board of directors. Mr. Puttagunta is the chair of our Nominating and Corporate Governance Committee. Our board of directors has determined that each member of our Nominating and Corporate Governance Committee meets the requirements for independence under the rules of the NYSE. The Nominating and Corporate Governance Committee is responsible for the following matters, among others:
•identifying, recruiting, and recommending to our board of directors qualified candidates for appointment as directors and recommending nominees for appointment as directors at our annual general meeting of shareholders;
•developing and recommending to our board of directors corporate governance guidelines as set forth in our rules of the board of directors, including the Nominating and Corporate Governance Committee’s selection criteria for director nominees, and implementing and monitoring such guidelines;
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement16
•overseeing compliance with legal and regulatory requirements applicable to us;
•reviewing and making recommendations on matters involving the general operation of our board of directors, including board size and composition, and committee composition and structure;
•recommending to our board of directors nominees for each committee of our board of directors;
•annually facilitating the assessment of our board of directors’ performance as a whole and of the individual directors, and the performance of our committees of the board of directors as required by applicable law, regulations, corporate governance guidelines, and exchange listing standards;
•overseeing, and periodically reviewing, our environmental, social and governance activities, programs and public disclosure, including in light of any feedback received from relevant stakeholders of the Company; and
•overseeing our board of directors’ evaluation of executive officers.
During fiscal year 2024, our Nominating and Corporate Governance Committee held one meeting and also acted by unanimous written consent.
We have posted the charters of our Audit, Compensation, and Nominating and Corporate Governance Committees, as amended from time to time, on our website at ir.elastic.co.
Environmental, Social, and Governance Matters
In our environmental, social, and governance (“ESG”) efforts, we seek to address relevant societal challenges with transparency and accountability to make a positive impact on our employees, customers, and society at large. We measure our progress against the Sustainability Accounting Standards Board (SASB) standards for the Software and IT Services industry, select United Nations Sustainable Development Goals (UN SDGs), and the Task Force on Climate-related Financial Disclosures (TCFD), with a focus on ESG-related impacts, risks, and opportunities. We organize our efforts around four core ESG pillars: social impact, governance, environmental impact, and our products' societal impact. We believe that operating Elastic in an environmentally and socially responsible manner, while employing principled, effective, and transparent governance practices, will help drive sustainable long-term value for all of our stakeholders, including our shareholders, employees, customers, creditors, and communities.
ESG Oversight
At the board of directors level, our Nominating and Corporate Governance Committee is tasked with oversight for our sustainability and ESG activities, programs, and disclosures. Additionally, we have established an ESG steering committee consisting of several senior executives with responsibility for functional areas covering our ESG activities. The ESG steering committee’s responsibility is to provide strategic direction and applicable approvals to our cross-functional ESG working group, which implements ESG initiatives throughout Elastic and contributes to developing ESG disclosures. The ESG steering committee also provides updates to the Nominating and Corporate Governance Committee and the Board.
Environment
We believe that environmentally responsible operating practices are important to generating value for our stakeholders, being a good partner to our customers, and being a good employer to our employees.
As a company that’s distributed by design, we operate with a relatively low office energy use footprint compared to companies with a traditional in-office workforce. We aim to maintain a low in-office people-to-desk ratio, which helps to minimize employee commuting, office energy and water
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement17
consumption, and waste generation. We are also focused on managing greenhouse gas emissions in order to do our part to help ensure a more stable and secure future. We are thinking beyond our own direct impact and addressing the largest sources of impact within our supply chain.
While we do have physical office spaces throughout the world, we strive to limit the amount of space used to what is necessary to support our operations globally. Further, our workplace team runs several in-office initiatives with the aim to reduce our environmental impacts on a daily basis, including plastic water bottle removal, packaging reduction, in-office recycling, bio-waste reduction and water management.
We do not have our own data centers. Instead, for Elastic Cloud offerings, we strategically partner with leading cloud service providers, including Amazon Web Services, Google Cloud, and Microsoft Azure. These industry leaders are committed to minimizing the environmental impact of their global cloud platforms.
Social Impact (Human Capital Management)
We believe that our employees (whom we call “Elasticians”) and our culture are vital to Elastic’s long-term success. We support both with human capital management efforts focused on:
•attracting, engaging, and retaining a talented and diverse employee base;
•maintaining our strong company culture;
•enhancing our commitment to diversity, equity, and inclusion (“DEI”);
•facilitating strong employee engagement;
•promoting continuous employee learning and development; and
•providing a comprehensive total rewards package that seeks to offer fair and consistent pay practices with an emphasis on employee well-being.
Our management regularly updates our board of directors and its committees on human capital trends and employee-focused activities and initiatives.
We have presented a comprehensive discussion of our human capital management goals and activities in our Annual Report on Form 10-K for fiscal year 2024 delivered to our shareholders together with this proxy statement.
Governance
Corporate Governance Practices and Policies
We believe it is the duty of the board of directors to serve our shareholders and our other stakeholders in overseeing the management of the Company’s business. To fulfill its responsibilities, the board of directors is guided by the procedures and standards set forth in our corporate governance guidelines, board rules, Code of Conduct and other governance policies. We conduct mandatory training for employees with respect to our Code of Conduct and other significant compliance policies. We also maintain an ethics hotline where employees and third parties can confidentially report any concerns about possible violations of our Code of Conduct and compliance policies. We investigate compliance-related reports we receive through the hotline or other reporting channels and take appropriate remedial action when warranted. You can find certain of our governance documents, compliance policies, and our ethics hotline on our website at www.elastic.co.
Our efforts for effective corporate governance are supported by the following practices and policies:
•All of our non-executive continuing directors and director nominees standing for appointment at the Annual Meeting are independent under the rules of the NYSE.
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement18
•The Chairperson of our board of directors is independent.
•Our board of directors has both a Lead Independent Director and a Vice-Chairperson, both of whom are independent.
•All of our board committees are composed solely of independent directors.
•The functioning of our board of directors and board committees, including the leadership structure of our board of directors, is evaluated at least annually.
•Our key corporate governance and compliance policies are reviewed regularly.
•Our board of directors and its committees may hire outside advisors independent of management.
•Our insider trading policy contains anti-hedging and anti-pledging provisions.
•Our share ownership policy contains ownership requirements aimed to align the interests of our directors and senior management with the interests of long-term stakeholders.
Privacy and Information Security
We are committed to the highest ethical standards and strive to comply with all applicable laws and safeguard all data entrusted to us. Elastic’s privacy and security program leverages technology and robust governance practices in an effort to protect data. We have dedicated teams that include our director of privacy and privacy and compliance counsel, our chief information security officer, and experienced security operations teams. We invest in technical, organizational, and administrative measures throughout our infrastructure, including our cloud offerings, to protect the data entrusted to us. Elastic’s program includes transparency, physical and logical controls, vulnerability monitoring, data availability, supply-chain risk management and a legal compliance framework designed to address applicable laws and regulations relating to privacy and information security.
Vendor Code of Conduct
Our commitment to responsibly managing and partnering with our suppliers is embodied in our Global Vendor Code of Conduct (“GVCC”), which applies to all suppliers of products or services to Elastic. Through the GVCC, we seek to require our suppliers to operate with honesty and integrity and comply with all applicable laws and regulations, including the same standards we have set for ourselves for complying with human rights and labor laws and standards. The full text of our GVCC is available on our website at elastic.co/trust/business-integrity.
Shareholder Engagement
We value our shareholders’ opinions and feedback and are committed to maintaining an active dialogue to understand their priorities and concerns. We believe that ongoing engagement builds mutual trust and alignment with our shareholders and is essential to our long-term success.
We consider our history of actively engaging with and listening to our shareholders, and regularly providing shareholders with opportunities to deliver feedback through our shareholder engagement program, a vital part of our overall corporate governance program and a source of long-term value. Our Investor Relations team, often with participation by our Chief Executive Officer and Chief Financial Officer, as well as other business leaders, regularly meets with investors, prospective investors, and investment analysts. Our Investor Relations team regularly communicates topics discussed with shareholders and shareholder feedback to senior management, which in turn is discussed with our board of directors. We believe that our approach to engaging directly and openly with our shareholders drives increased corporate accountability, improves decision making, and ultimately helps create sustainable long-term value for our stakeholders.
In fiscal year 2024, we engaged with institutional shareholders to discuss a variety of topics, including:
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement19
•environmental policy and sustainability, including board oversight of ESG matters; and
•board composition.
Product Societal Impact
Elastic, the Search AI Company, is committed to building products that create a positive societal impact. The Elastic Search AI Platform (“our platform”), combines the power of search with AI to help companies solve real-time business problems, unlock potential value, and achieve better outcomes. Our platform, available as both a hosted, managed service across public clouds as well as self-managed software, allows our customers to find insights and drive AI and machine learning use cases from large amounts of data. The company’s open-source roots allow Elastic to provide its solutions to a large community of users for free. This encourages innovation and efficiency to operate at scale for both non-profit organizations and for-profit customers. We believe Elastic’s solutions have allowed our customers to positively impact society in various ways, including but not limited to enabling human security and combating trafficking, reducing carbon footprint, and providing energy-savings through efficient and reduced power consumption.
Elastic Community Engagement
At Elastic, community matters. We recognize that our team extends beyond our employees to our community of users, which includes all the users who download our software. Our users interact with us on our website and forums and on X (formerly known as Twitter), GitHub, Stack Overflow, LinkedIn, Facebook, Slack, Reddit, Instagram, YouTube, and more. To build products that best meet our users’ needs, we focus on, and invest in, continuing to build a strong community. Each download of the Elastic Stack is a new opportunity to educate our next contributor, hear about a new use case, explore the need for a new feature, or meet a future member of the team.
To recognize the contributions of our community members, we have an Elastic Contributor Program to recognize the hard work of our valued contributors, encourage knowledge sharing within the Elastic community and build friendly competition around contributions. Through programs such as the Elastic Contributor Program and Elastic Excellence Awards, we aim to acknowledge our valued community members.
Policies Governing Director Nominations
Director Nomination Process
Our board of directors is responsible for selecting nominees to the board of directors, who are then appointed by shareholders. Our board of directors delegates the selection and nomination process to the Nominating and Corporate Governance Committee, with the expectation that other members of the board of directors, and of management, will be requested to take part in the process as appropriate. The committee makes recommendations to the board of directors regarding the size and composition of the board of directors. The Nominating and Corporate Governance Committee is responsible for ensuring that the composition of the board of directors accurately reflects the needs of the Company’s business and, in
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement20
furtherance of this goal, for proposing the addition of members and the necessary resignation of members for purposes of obtaining the appropriate members and skills. The committee recommends, and our board of directors makes a binding nomination for, a candidate to stand for appointment as director by the meeting of shareholders.
Generally, our Nominating and Corporate Governance Committee identifies candidates for director nominees in consultation with management, through the use of other advisors, through the recommendations submitted by shareholders, or through such other methods as the committee deems to be helpful to identify candidates. Candidates recommended by shareholders and other stakeholders are given appropriate consideration in the same manner as other candidates. Once candidates have been identified, the Nominating and Corporate Governance Committee confirms that the candidates meet all of the minimum qualifications for director nominees established by the board. The committee may gather information about the candidates through interviews, detailed questionnaires, background checks or any other means that the Nominating and Corporate Governance Committee deems to be appropriate in the evaluation process. The committee then discusses and evaluates the qualifications and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of the board of directors. Based on the results of the evaluation process, the committee recommends candidates as director nominees to our board of directors. The board of directors considers the committee’s recommendation and determines whether to make a binding nomination for appointment of those candidates by the meeting of shareholders.
Shareholders may submit proposals related to the composition of the board of directors as provided in our articles of association and by Dutch law. Such proposals are forwarded to the chair of the Nominating and Corporate Governance Committee for consideration. Directors are appointed by the annual general meeting of shareholders (or an extraordinary meeting of shareholders) at the binding nomination of the board of directors. Additionally, if a binding nomination of the board of directors has been overruled and a subsequent non-binding nomination by the board of directors has been rejected, shareholders may propose a resolution to appoint a board member who was not nominated by the board of directors. Any such resolution requires at least a two-thirds majority of the votes cast at the annual general meeting, provided such majority represents more than half of our issued share capital.
Qualifications
In recommending candidates to the board of directors, the Nominating and Corporate Governance Committee takes into consideration the board of directors’ criteria for selecting new directors described above, as well as such factors as the candidate’s integrity, judgment, intelligence, and ability to devote adequate time to duties of the board of directors. The committee does not assign specific weights to particular criteria. No particular criterion is a prerequisite for any candidate. As discussed earlier, we also consider diversity attributes in reviewing director candidates. In order for the board of directors to fulfill its responsibilities, the committee believes that the board of directors should include directors possessing a blend of experience, knowledge and ability, regardless of other characteristics.
Communication with the Board
The Company has established a process for shareholders, other stakeholders and other interested parties who wish to communicate with our board of directors, or with an individual member or members of our board of directors. Shareholders, other stakeholders and other interested parties who wish to communicate with our board of directors may write to our board of directors at the address of the Company’s registered office at Keizersgracht 281, 1016 ED Amsterdam, the Netherlands. These communications will be reviewed by our Chief Legal Officer and will be presented to our board of directors at the discretion of our Chief Legal Officer, in consultation with appropriate directors, as necessary. Certain items that are unrelated to our board of directors’ duties and responsibilities may be excluded, such as mass mailings, product complaints or inquiries, job inquiries, business solicitations and patently offensive or otherwise inappropriate material. The full text of our stakeholder engagement policy, including information regarding how to contact our non-management directors, is available on our website at ir.elastic.co.
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement21
Compensation Committee Interlocks and Insider Participation
None of the members of our Compensation Committee during our fiscal year 2024 was or has formerly been an officer or employee of our Company. None of our executive officers currently serves, or in the past year has served, as a member of the compensation committee or director (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of any entity that has one or more executive officers serving on our Compensation Committee or our board of directors.
Non-Executive Director Compensation
Each non-executive director is eligible to receive compensation for service on the board of directors and its committees consisting of annual cash retainers and equity awards. Our board of directors has the discretion to revise non-executive director compensation as it deems necessary or appropriate, in accordance with our remuneration policy as previously adopted by an annual general meeting of shareholders (the “Remuneration Policy”).
Cash Compensation. For fiscal year 2024, all non-executive directors were eligible to receive the following cash compensation for their services:
•$35,000 per year for service as a board member;
•$20,000 per year additionally for service as Lead Independent Director;
•$20,000 per year additionally for service as chair of the Audit Committee;
•$10,000 per year additionally for service as an Audit Committee member;
•$15,000 per year additionally for service as chair of the Compensation Committee;
•$7,675 per year additionally for service as a Compensation Committee member;
•$11,000 per year additionally for service as chair of the Nominating and Corporate Governance Committee; and
•$5,000 per year additionally for service as a Nominating and Corporate Governance Committee member.
All cash payments to non-executive directors, or the retainer cash payments, are paid quarterly in arrears on a pro-rated basis.
Equity Compensation. For fiscal year 2024, our non-executive directors were eligible for nondiscretionary, automatic grants of restricted stock units, except for any non-employee director who either (i) beneficially owns more than 2% of the outstanding and issued share capital of the Company, or (ii) is a partner or a member of any venture capital firm that owns securities of the Company representing more than 2% of the outstanding and issued share capital of the Company.
•Initial award. Any eligible non-executive director is granted an initial award of restricted stock units covering a number of shares having a grant date fair value equal to $200,000 pro-rated for the amount of time that remains in the 12-month period prior to the next scheduled annual general meeting of the Company’s shareholders (and if the date of such annual general meeting of the Company’s shareholders is not known, the one-year anniversary of the most recent Annual Award referred to below granted to non-executive directors), rounded down to the nearest whole share (the “Initial Award”). The shares underlying the Initial Award will settle on the earlier of (i) the one-year anniversary of the date the Initial Award is granted or (ii) the day prior to the date of the annual general meeting of our shareholders next following the date the Initial Award is granted, subject to continued service through the applicable vesting date.
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement22
•Annual award. For fiscal year 2024, on the date of the general meeting of the Company’s shareholders, each eligible non-executive director was eligible to be granted an award of restricted stock units covering a number of shares having a grant date fair value equal to $200,000 (the “Annual Award”). The shares underlying the Annual Award will settle on the earlier of (i) the one-year anniversary of the date the Annual Award is granted or (ii) the day prior to the date of the annual general meeting of our shareholders next following the date the Annual Award is granted, subject to continued service through the applicable vesting date.
The grant date fair value is computed in accordance with GAAP.
Any award of restricted stock units granted under our non-executive director compensation policy will fully vest and become exercisable in the event of a change in control, as defined in our Amended and Restated 2012 Stock Option Plan (the “Stock Plan”), provided that the director remains a director through such change in control. Further, our Stock Plan provides that in the event of a merger or such change in control, each outstanding equity award granted under our Stock Plan that is held by a non-executive director will fully vest, all restrictions on the shares subject to such award will lapse, and with respect to awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels, and all of the shares subject to such award will become fully exercisable, if applicable, provided such director remains a director through such merger or change in control.
Limitation on Liability and Indemnification Matters
Our articles of association provide that we will indemnify our current and former directors against:
•the reasonable costs of conducting a defense against claims resulting from an act or omission in performing their duties or in performing other duties we have asked them to fulfil;
•any compensation or financial penalties they owe as a result of an act or omission as referred to above;
•any amounts they owe under settlements they have reasonably entered into in connection with an act or omission as referred to above;
•the reasonable costs of other proceedings in which they are involved as a current or former director, except for proceedings in which they are primarily asserting their own claims; and
•tax damage due to reimbursements in accordance with the above, to the extent this relates to the indemnified person’s current or former position with us and/or a group company and in each case to the extent permitted by applicable law.
No indemnification shall be given to an indemnified person insofar as:
•it has been established in a final and non-appealable decision of the competent court or, in the event of arbitration, of an arbitrator, that the act or omission of the indemnified person can be described as deliberate (opzettelijk), willfully reckless (bewust roekeloos), or seriously culpable. In that case, the indemnified person must immediately repay the sums reimbursed by the Company, unless Dutch law provides otherwise or this would, in the given circumstances, be unacceptable according to standards of reasonableness and fairness;
•the costs or the capital losses of the indemnified person are covered by an insurance policy and the insurer has paid out these costs or capital losses; or
•the indemnified person failed to notify the Company as soon as possible of the costs or the capital losses or of the circumstances that could lead to the costs or capital losses.
Our articles of association will not eliminate a director’s duty of care, and in appropriate circumstances, equitable remedies, such as injunctive or other forms of non-monetary relief, will remain
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement23
available under Dutch law. This provision also will not affect a director’s responsibilities under any other laws, such as the U.S. federal securities laws or other U.S. state or federal laws.
In addition to the indemnification included in our articles of association, we have entered into and expect to continue to enter into agreements to indemnify each of our current directors. With specified exceptions, these agreements provide indemnification for certain expenses and liabilities incurred in connection with any action, suit, proceeding or alternative dispute resolution mechanism, hearing, inquiry or investigation that may lead to the foregoing, to which they are a party, or are threatened to be made a party, by reason of the fact that they are or were a director of our Company, by reason of any action or inaction by them while serving as a director. In the case of an action or proceeding by, or in the right of, our Company or any of our subsidiaries, no indemnification will be provided for any claim where a court determines that the indemnified party is prohibited from receiving indemnification. Our directors who are affiliated with venture capital funds also have certain rights of indemnification provided by their venture capital funds and the affiliates of those funds. We believe that these provisions and indemnification agreements are necessary to attract and retain qualified persons as directors. We also maintain directors’ liability insurance.
A shareholder’s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors pursuant to these indemnification provisions in our articles of association. Insofar as we may provide indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”), to our directors pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
There is no pending litigation or proceeding naming any of our directors as to which indemnification is being sought.
Fiscal 2024 Non-Executive Director Compensation Table
The table below shows the total compensation awarded to those serving as non-executive directors for fiscal year 2024. Totals may not sum due to rounding.
Name
Fees Earned or Paid in Cash ($)
Stock Awards ($)(1)
Total ($)
Sohaib Abbasi (2)
42,657
199,994
(3)
242,651
Paul Auvil (2)
35,718
199,994
(3)
235,712
Jonathan Chadwick (4)
26,939
—
26,939
Alison Gleeson (2)
50,000
199,994
(3)
249,994
Shelley Leibowitz (2)
49,900
199,994
(3)
249,894
Caryn Marooney (2)
39,900
199,994
(3)
239,893
Chetan Puttagunta (2)
75,800
199,994
(3)
275,793
Steven Schuurman (5)
35,000
—
35,000
(1)The amounts shown represent the grant date fair value of restricted stock unit (“RSU”) awards granted in fiscal year 2024 for financial reporting purposes pursuant to the provisions of the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC 718”). Such amounts do not represent amounts paid to or realized by the non-executive director. See Note 11, “Equity Incentive Plans,” of the Notes to our Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for fiscal year 2024 regarding assumptions underlying valuation of equity awards. Additional information regarding the RSUs awarded to each non-executive director for fiscal year 2024 is set forth in the footnotes below.
(2)As of April 30, 2024, the non-executive director held 2,627 RSUs and no options to purchase ordinary shares.
(3)Represents the aggregate grant date fair value of RSUs granted to the incumbent non-executive directors on October 5, 2023, under the terms of our non-executive director compensation policy for
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement24
fiscal year 2024 and the Stock Plan, and calculated in accordance with ASC 718 based on the closing market price of our ordinary shares on the grant date as reported on the NYSE.
(4)Mr. Chadwick’s term as a member of our board of directors expired at our 2023 annual general meeting of shareholders. As of April 30, 2024, Mr. Chadwick held no RSUs or options to purchase ordinary shares.
(5)Mr. Schuurman did not receive any grants of RSUs or options to purchase ordinary shares for fiscal year 2024 in accordance with our non-executive director compensation policy, which provides that a non-employee director who, at the time of appointment or the date of the annual general meeting, either (i) beneficially owned more than 2% of the outstanding and issued share capital of the Company, or (ii) was a partner or a member of any venture capital firm that owns securities of the Company representing more than 2% of the outstanding and issued share capital of the Company, is not eligible to receive equity awards. As of April 30, 2024, Mr. Schuurman held no RSUs or options to purchase ordinary shares.
Board of Directors and Corporate Governance | Elastic 2024 Proxy Statement25
At the Annual Meeting, our shareholders will be asked to appoint nominee Shay Banon as an executive director and each of nominees Chetan Puttagunta and Shelley Leibowitz as non-executive directors to a term of service on the board of directors that will expire at the annual general meeting of shareholders to be held in 2027. Each of Messrs. Banon and Puttagunta and Ms. Leibowitz currently serves on the board of directors.
The board of directors is currently composed of nine directors. We have a one-tier board of directors, consisting of two executive directors and seven non-executive directors.
Under the Company’s articles of association, all directors may be appointed for a maximum term of three years, provided that such term will lapse immediately after the close of the first annual general meeting held after three years have lapsed since the appointment, or until their earlier death, resignation, or removal. A director may be reappointed, and the three-year maximum term may be deviated from, by resolution of the general meeting of shareholders upon a proposal of the board of directors.
The terms of Messrs. Banon and Puttagunta and Ms. Leibowitz will expire at the Annual Meeting; the terms of Messrs. Kulkarni, Abbasi and Schuurman will expire at the annual general meeting of shareholders to be held in 2025; and the terms of Mr. Auvil and Ms. Gleeson and Ms. Marooney will expire at the annual general meeting of shareholders to be held in 2026.
Following the recommendation of the Nominating and Corporate Governance Committee, the board of directors has made a binding nomination to re-appoint Mr. Banon as an executive director and each of Mr. Puttagunta and Ms. Leibowitz as non-executive directors, in accordance with article 7.2 of the Company’s articles of association.
If shareholders appoint the nominees to the board of directors at the Annual Meeting, the terms of office for such directors will expire at the 2027 annual general meeting of shareholders.
Each nominee has consented to be named as a nominee in this proxy statement and to serve as director if appointed.
Other than as disclosed in this proxy statement regarding compensation for non-executive directors, which Mr. Puttagunta and Ms. Leibowitz would receive if appointed, there are no arrangements or understandings between the nominees, directors or executive officers and any other person pursuant to which our nominees, directors, or executive officers have been selected for their respective positions.
Required Vote
Messrs. Banon and Puttagunta and Ms. Leibowitz will each be appointed to the board of directors unless a two-thirds majority of the votes cast at the Annual Meeting, which votes must represent more than one-half of the issued and outstanding share capital, are cast against such nominee.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE NOMINEES FOR DIRECTOR.
VOTING PROPOSAL NO. 2 ADOPTION OF DUTCH STATUTORY ANNUAL ACCOUNTS
At the Annual Meeting, our shareholders will be asked to adopt the Dutch Statutory Annual Accounts for fiscal year 2024, which are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”). The report of PricewaterhouseCoopers Accountants N.V. for fiscal year 2024 is included in the Dutch Statutory Annual Accounts.
In accordance with article 10.1.4 of the Company’s articles of association, the board of directors of the Company has determined that the net income for fiscal year 2024 shall be deducted from accumulated losses.
As a public company with limited liability incorporated under the laws of the Netherlands, the Company is required by Dutch law to prepare the accounts and submit them to shareholders for adoption. The Company’s Dutch Statutory Annual Accounts are different from the consolidated financial statements contained in our Annual Report on Form 10-K for fiscal year 2024, which were prepared in accordance with GAAP and filed with the SEC.
A copy of the Dutch Statutory Annual Accounts will be available free of charge on our website at ir.elastic.co and at our offices in the Netherlands at Keizersgracht 281, 1016 ED Amsterdam.
A representative of PricewaterhouseCoopers Accountants N.V. will be present at the Annual Meeting and will be available to respond to appropriate questions from shareholders, and will be given an opportunity to make a statement if the representative desires to do so.
Required Vote
The adoption of the Company’s Dutch Statutory Annual Accounts for fiscal year 2024 requires an affirmative vote of a simple majority of votes cast in the Annual Meeting where at least one-third of the issued and outstanding shares are represented.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADOPTION OF OUR DUTCH STATUTORY ANNUAL ACCOUNTS.
VOTING PROPOSAL NO. 3 APPOINTMENT OF PRICEWATERHOUSECOOPERS ACCOUNTANTS N.V. AS THE EXTERNAL AUDITOR OF DUTCH STATUTORY ANNUAL ACCOUNTS
In accordance with our articles of association, the Board has nominated PricewaterhouseCoopers Accountants N.V. for appointment to serve as the external auditor of our Dutch Statutory Annual Accounts to be prepared in accordance with IFRS for the fiscal year ending April 30, 2025. At the Annual Meeting, our shareholders will be asked to appoint PricewaterhouseCoopers Accountants N.V. as external auditor of such annual accounts. PricewaterhouseCoopers Accountants N.V. has acted as the auditor of our Dutch Statutory Annual Accounts since 2018.
Representatives of PricewaterhouseCoopers Accountants N.V. will be present at the meeting with the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
Required Vote
The appointment of PricewaterhouseCoopers Accountants N.V. requires an affirmative vote of a simple majority of votes cast in the Annual Meeting where at least one-third of the issued and outstanding shares are represented.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPOINTMENT OF PRICEWATERHOUSECOOPERS ACCOUNTANTS N.V. AS THE EXTERNAL AUDITOR OF OUR DUTCH STATUTORY ANNUAL ACCOUNTS FOR THE FISCAL YEAR ENDING APRIL 30, 2025.
VOTING PROPOSAL NO. 4 RATIFICATION OF SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected PricewaterhouseCoopers LLP, an independent registered public accounting firm, to audit the GAAP consolidated financial statements of the Company for the fiscal year ending April 30, 2025. In addition, the board of directors has directed that management submit the selection of PricewaterhouseCoopers LLP as the Company’s registered public accounting firm for ratification by our shareholders at the Annual Meeting. The board of directors recommends that shareholders vote “FOR” the ratification and selection of PricewaterhouseCoopers LLP. PricewaterhouseCoopers LLP has served as the Company’s independent registered public accounting firm since 2018.
Although action by shareholders is not required by law, the board of directors has determined that ratification of this selection affords shareholders an opportunity to provide their view to the Company on an important issue of corporate governance. Notwithstanding the ratification of this selection by the shareholders, the Audit Committee, in its discretion, may direct the selection of a new independent registered public accounting firm at any time during the year, if the Audit Committee feels that such a change would be in the best interest of the Company and its stakeholders. In the event of a negative vote on ratification, the Audit Committee will reconsider its selection.
Representatives of PricewaterhouseCoopers LLP will be present at the meeting with the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
Principal Accounting Fees and Services
The following table presents fees for professional audit services and other services rendered to the Company by its principal independent registered public accounting firm and its affiliates for fiscal years 2024 and 2023. The dollar amounts in the table are in thousands.
Fiscal Year 2024
Fiscal Year 2023
Audit Fees (1)
$
3,915
$
3,569
Audit-Related Fees
—
—
Tax Fees
—
—
All Other Fees (2)
7
11
Total
$
3,922
$
3,580
(1)Audit Fees consist of fees for professional services rendered in connection with the integrated audit of our annual financial statements, management’s report on internal control over financial reporting, the review of our quarterly consolidated financial statements, and audit services that are normally provided by independent registered public accounting firms in connection with statutory and regulatory filings or engagements for those fiscal years, such as statutory audits.
(2)All Other Fees consist of aggregate fees billed for products and services provided by the independent registered public accounting firm other than those disclosed above. These services include subscription fees paid for access to online accounting research software and regulatory applications.
All services provided by PricewaterhouseCoopers LLP and its affiliates for our fiscal years 2024 and 2023 were approved by our Audit Committee.
Pre-Approval of Audit and Non-Audit Services
The Audit Committee has established a policy governing the Company’s use of its principal independent registered public accounting firm for non-audit services. Under the policy, the Audit
Committee must pre-approve all audit and non-audit services performed by the Company’s independent registered public accounting firm, unless subsequent approval is permitted under the rules and regulations of the SEC, in order to ensure that the provision of such services does not impair the public accountants’ independence.
Required Vote
The ratification of the selection of PricewaterhouseCoopers LLP requires an affirmative vote of a simple majority of votes cast in the Annual Meeting where at least one-third of the issued and outstanding shares are represented.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING APRIL 30, 2025.
The Audit Committee is responsible for assisting our board of directors in fulfilling its oversight responsibilities regarding the Company’s financial accounting and reporting processes, system of internal control, audit process, and process for monitoring compliance with laws and regulations.
Management of the Company has the primary responsibility for preparing the Company’s consolidated financial statements, as well as establishing and maintaining the integrity of the Company’s financial reporting process, accounting principles, and internal controls. PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm, is responsible for performing an audit of the Company’s consolidated financial statements and internal control over financial reporting and expressing an opinion as to the conformity of such financial statements with U.S. generally accepted accounting principles and the effectiveness of the Company’s internal control over financial reporting.
In this context, the Audit Committee reviewed and discussed the audited financial statements of the Company as of and for the year ended April 30, 2024 with the Company’s management and PricewaterhouseCoopers LLP. The Audit Committee also discussed with PricewaterhouseCoopers LLP critical audit matters included in the firm’s audit opinion and discussed the firm’s opinion regarding the Company’s internal control over financial reporting. In addition, the Audit Committee discussed with PricewaterhouseCoopers LLP the overall scope, plans, and estimated costs of PricewaterhouseCoopers LLP’s audits. To address independence, the Audit Committee met separately with PricewaterhouseCoopers LLP and members of the Company’s management. These reviews included discussion with the independent registered public accounting firm of matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. In addition, the Audit Committee received the written disclosures and the letter from the independent registered public accounting firm required by the PCAOB requiring independent registered public accounting firms to annually disclose in writing all relationships that, in their professional opinion may reasonably be thought to bear on independence, to confirm their perceived independence and to engage in a discussion of independence, and it has discussed with PricewaterhouseCoopers LLP its independence from the Company. The Audit Committee also met with PricewaterhouseCoopers LLP periodically to discuss the results of their examinations, the overall quality of the Company’s financial reporting, and their reviews of the Company’s quarterly financial statements.
Based on the reviews and discussions described above, the Audit Committee recommended to the board of directors the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2024 for filing with the SEC.
Respectfully submitted by the members of the Audit Committee:
Paul Auvil (Chairperson)
Shelley Leibowitz
Chetan Puttagunta
Report of the Audit Committee| Elastic 2024 Proxy Statement31
VOTING PROPOSAL NO. 5 GRANT OF FULL DISCHARGE TO EXECUTIVE DIRECTORS
At the Annual Meeting, our shareholders will be asked to grant a discharge to the executive directors of the Company who were in office during fiscal year 2024 from their liability with respect to the performance of their duties as executive directors of the Company during fiscal year 2024. The scope of the discharge extends to the facts that are apparent from the Dutch Statutory Annual Accounts and facts that are otherwise known to the general meeting of shareholders.
Required Vote
The approval to grant the discharge to the executive directors of the Company requires an affirmative vote of a simple majority of votes cast in the Annual Meeting where at least one-third of the issued and outstanding shares are represented.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE GRANT OF FULL DISCHARGE FROM LIABILITY TO THE EXECUTIVE DIRECTORS.
Proposal 5- Discharge to Executive Directors| Elastic 2024 Proxy Statement32
VOTING PROPOSAL NO. 6 GRANT OF FULL DISCHARGE TO NON-EXECUTIVE DIRECTORS
At the Annual Meeting, our shareholders will be asked to grant a discharge to the non-executive directors of the Company who were in office during fiscal year 2024 from their liability with respect to the performance of their duties as non-executive directors of the Company during fiscal year 2024. The scope of the discharge extends to the facts that are apparent from the Dutch Statutory Annual Accounts and facts that are otherwise known to the general meeting of shareholders.
Required Vote
The approval to grant the discharge to the non-executive directors of the Company requires an affirmative vote of a simple majority of votes cast in the Annual Meeting where at least one-third of the issued and outstanding shares are represented.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE GRANT OF FULL DISCHARGE FROM LIABILITY TO THE NON-EXECUTIVE DIRECTORS.
Proposal 6- Discharge to Non-Executive Directors| Elastic 2024 Proxy Statement33
VOTING PROPOSAL NO. 7 AUTHORIZATION OF THE BOARD TO ISSUE ORDINARY SHARES AND GRANT RIGHTS TO ACQUIRE ORDINARY SHARES
At the Annual Meeting, our shareholders will be asked to authorize the board of directors, on the Company’s behalf, to issue the Company’s ordinary shares and grant rights to acquire the Company’s ordinary shares in an amount up to 20% of the issued share capital of the Company as of August 21, 2024 (the “2024 Share Authorization”). The 2024 Share Authorization, if approved, will be valid for a period of 18 months from the date of the Annual Meeting until April 1, 2026 and will supersede and replace the board of directors’ existing authority to issue ordinary shares or to grant rights to acquire the Company’s ordinary shares in an amount up to 20% of the issued share capital of the Company as of August 21, 2023 granted at the Company’s annual general meeting of shareholders held on October 5, 2023 (the “2023 Share Authorization”).
Reasons for the 2024Share Authorization
Pursuant to the 2023 Share Authorization, until April 5, 2025, our board of directors currently has the authority to issue ordinary shares or to grant rights to acquire the Company’s ordinary shares in an amount up to 20% of the issued share capital of the Company as of August 21, 2023.
We are requesting approval of the 2024 Share Authorization to comply with provisions of our articles of association under Dutch law that govern the power of our board of directors to authorize the issuance of our ordinary shares and grants of rights to acquire our ordinary shares, such as warrants, options and other securities convertible into or exercisable or exchangeable for, or restricted stock units or other rights to purchase or otherwise acquire, ordinary shares.
Boards of directors of U.S.-incorporated companies generally have the power, subject to exceptions specified in their corporate law, to issue shares of their capital stock and to grants rights to acquire their capital stock without approval of their shareholders. As a company incorporated under Dutch law, we are subject to different legal requirements with regard to the authority of our board of directors. Our articles of association provide that ordinary shares may be issued, or rights to subscribe for our ordinary shares may be granted, either pursuant to a resolution of the general meeting of shareholders or, alternatively, by our board of directors only if so authorized by the general meeting of shareholders.
Approval of this voting proposal would preserve the ability of our board of directors, to the extent of the 2024 Share Authorization, to authorize share issuances and grants of rights consistent with the authority it has possessed since the Company’s initial public offering. If our shareholders grant the 2024 Share Authorization, the authorization will expire 18 months from the date of the Annual Meeting. If our shareholders do not grant the 2024 Share Authorization, the 2023 Share Authorization will remain in effect until April 5, 2025.
At the Annual Meeting, our shareholders will therefore be asked to approve the 2024 Share Authorization to preserve the ability of the board of directors to issue the Company’s ordinary shares and grant rights to acquire the Company’s ordinary shares. Our shareholders will also be asked at the Annual Meeting, in voting proposal no. 8, to authorize the board of directors to restrict or exclude pre-emptive rights on the issuance of ordinary shares or grant of rights covered by the 2024 Share Authorization up to a number of shares equal to 10% of the issued share capital of the Company as of August 21, 2024.
Authorization of boards of directors to issue ordinary shares with certain limitations is market standard, and is generally a recurring agenda item at annual shareholders meetings of U.S.-listed companies incorporated under Dutch law.
The 2024 Share Authorization will allow us to pursue certain transactions requiring future issuances of the Company’s ordinary shares or future grants of rights to acquire the Company’s shares, including securities convertible into or exercisable or exchangeable for, or restricted stock units or other rights to purchase or otherwise acquire, the Company’s ordinary shares, which we refer to as convertible securities. Those transactions may include, among others:
•the issuance of ordinary shares and convertible securities in connection with the Stock Plan and the 2022 employee stock purchase plan;
•the issuance of ordinary shares and convertible securities in connection with acquisitions of other companies and other business combinations, and otherwise in connection with the growth and expansion of our business;
•the issuance of ordinary shares or convertible securities in connection with capital-raising and other financing transactions, strategic transactions and recapitalization transactions, or the declaration of stock dividends; and
•the issuance of ordinary shares or convertible securities in connection with other corporate transactions that implement proper business purposes determined by our board of directors to be advisable and in the best interest of the Company and our stakeholders.
As of the date of this proxy statement, we have no plans to issue ordinary shares or convertible securities other than where necessary to implement the Stock Plan and the 2022 employee stock purchase plan. Many of the above types of transactions arise under circumstances requiring prompt action and do not allow the necessary time to seek shareholder approval to authorize the issuance of additional ordinary shares or convertible securities. The board of directors believes that it is advisable and in the best interest of the Company and our stakeholders to provide the 2024 Share Authorization for general purposes in order to avoid the delay and expense of obtaining shareholder approval at a later date, and to provide us with greater flexibility to pursue financing opportunities or acquisitions when market conditions are favorable. The terms of any future issuance of ordinary shares, including any issuance pursuant to convertible securities, will depend largely upon market and financial conditions, the nature and terms of any prospective transaction, and other factors existing at the time of issuance.
If our shareholders approve the 2024 Share Authorization, the additional ordinary shares and convertible securities would be available for future issuance without future action by our shareholders, unless such an action would be required by applicable laws or regulations, including requirements of Dutch law or the rules of the NYSE, on which our ordinary shares currently are listed, or of any other national securities exchange on which the ordinary shares may be listed in the future.
The issuance of a large number of ordinary shares could dilute the Company’s shareholders and reduce the trading price of the Company’s ordinary shares on the NYSE.
Currently Authorized Share Capital
Our articles of association provide that up to 330,000,000 shares in the Company’s share capital may be issued, each with a nominal value of €0.01, consisting of:
•165,000,000 ordinary shares, of which a total of 102,745,499 shares were issued and outstanding as of August 21, 2024; and
•165,000,000 preference shares, of which no shares were issued and outstanding as of August 21, 2024.
The ordinary shares are registered under the Exchange Act and listed on the NYSE. We have no other class of share capital that is registered under the Exchange Act or listed on any securities exchange.
If our shareholders approve the 2024 Share Authorization, the ordinary shares that may be issued pursuant to the 2024 Share Authorization will be part of the existing class of ordinary shares and will have no effect on the terms of the ordinary shares or the rights of the holders of ordinary shares. If and when issued, ordinary shares will have the same rights and privileges as the ordinary shares that are currently outstanding.
The resolution to grant the 2024 Share Authorization requires an affirmative vote of a simple majority of votes cast in the Annual Meeting where at least one-third of the issued and outstanding shares are represented.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE AUTHORIZATION OF THE BOARD OF DIRECTORS TO ISSUE ORDINARY SHARES AND GRANT RIGHTS TO ACQUIRE ORDINARY SHARES.
VOTING PROPOSAL NO. 8 AUTHORIZATION OF THE BOARD TO RESTRICT OR EXCLUDE PRE-EMPTIVE RIGHTS FOR ISSUANCES OF SHARES AND GRANTS OF RIGHTS
At the Annual Meeting, our shareholders will be asked to authorize the board of directors to restrict or exclude pre-emptive rights for issuances of ordinary shares and grants of rights to acquire ordinary shares under the 2024 Share Authorization described in voting proposal no. 7, if such authorization is approved by our shareholders, provided that the authorization to exclude pre-emptive rights will be limited to a number of shares equal to 10% of the issued share capital of the Company as of August 21, 2024 (the “2024 Pre-emptive Rights Authorization”). The 2024 Pre-emptive Rights Authorization, if approved, will be valid for a period of 18 months from the date of the Annual Meeting until April 1, 2026 and will supersede and replace the board of directors’ existing authority to restrict or exclude pre-emptive rights for issuances of ordinary shares and grants of rights to acquire ordinary shares (limited to a number of shares equal to 10% of the issued share capital of the Company as of August 21, 2023) that may be granted under the 2023 Share Authorization that was authorized at the Company’s annual general meeting of shareholders held on October 5, 2023 (the “2023 Pre-emptive Rights Authorization”).
Approval of the 2024 Pre-emptive Rights Authorization would permit the board of directors to issue shares in an amount of up to 10% of the issued share capital of the Company as of August 21, 2024 pursuant to its authority under the 2024 Share Authorization, if approved at the Annual Meeting, without requiring that holders of our ordinary shares be given rights to subscribe on a pro rata basis for any issue of new ordinary shares, or to subscribe for ordinary shares upon a grant of rights, such as warrants, options and other securities convertible into or exercisable or exchangeable for, or restricted stock units or other rights to purchase or otherwise acquire, ordinary shares, where this would otherwise have been required as a matter of Dutch law. Pre-emptive rights are granted by provisions of our articles of association in accordance with Dutch law, but are generally not a feature of share issuances by U.S.-incorporated public companies.
Pre-emptive Rights
Dutch law and our articles of association give holders of ordinary shares pre-emptive rights to subscribe on a pro rata basis for certain issues of new ordinary shares or, upon a grant of rights, to subscribe for ordinary shares. Holders of ordinary shares have no pre-emptive rights upon (i) the issue of ordinary shares against a payment in kind (being a contribution other than in cash); (ii) the issue of ordinary shares to our employees or the employees of a member of our group; and (iii) the issue of ordinary shares to persons exercising a previously granted right to subscribe for ordinary shares.
Pursuant to our articles of association, a general meeting of shareholders may restrict or exclude the pre-emptive rights of shareholders or designate our board of directors to do so. A resolution of the general meeting to restrict or exclude pre-emptive rights may be adopted only if and insofar as the board of directors is not authorized to restrict or exclude pre-emptive rights, on the proposal of our board of directors.
The designation of our board of directors as the body competent to restrict or exclude the pre-emptive rights may be extended by a resolution of a general meeting for a period not exceeding five years in each case. Designation by resolution of the shareholders at a general meeting may not be withdrawn unless determined otherwise at the time of designation.
Reasons for the 2024Pre-emptive Rights Authorization
If the 2024 Share Authorization is approved in accordance with voting proposal no. 7, approval of the 2024 Pre-emptive Rights Authorization at the Annual Meeting would preserve the ability of our board of directors, to the extent of the 2024 Pre-emptive Rights Authorization, to authorize share issuances and grant rights free of pre-emptive rights consistent with the authority it has possessed since the Company’s initial public offering. If our shareholders grant the 2024 Pre-emptive Rights Authorization, the authorization will expire 18 months from the date of the Annual Meeting. If our shareholders do not grant
the 2024 Pre-emptive Rights Authorization, the 2023 Pre-emptive Rights Authorization will remain in effect until April 5, 2025.
Authorization of boards of directors to restrict or exclude pre-emptive rights on ordinary shares with certain limitations is market standard, and is generally a recurring agenda item at annual shareholders meetings of U.S.-listed companies incorporated under Dutch law.
The 2024 Pre-emptive Rights Authorization will allow us to pursue certain transactions requiring future issuances of ordinary shares or future grants of rights to acquire ordinary shares, as more fully described in voting proposal no. 7. Many such transactions arise under circumstances requiring prompt action and do not allow the necessary time to seek shareholder approval to restrict or exclude pre-emptive rights on ordinary shares or grants of rights. The board of directors believes that it is advisable and in the best interest of the Company and our stakeholders to provide the 2024 Pre-emptive Rights Authorization for general purposes in order to avoid the delay and expense of obtaining shareholder approval at a later date, and to provide us with greater flexibility to pursue certain potential transactions described in voting proposal no. 7.
Required Vote
The resolution to grant the 2024 Pre-emptive Rights Authorization requires an affirmative vote of a two-thirds majority of the votes cast at the Annual Meeting where at least one-third of the issued and outstanding ordinary shares of the Company are represented, provided that the affirmative vote of a simple majority of the votes cast will be sufficient for approval if at least half of the issued and outstanding ordinary shares of the Company are represented.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE AUTHORIZATION OF THE BOARD OF DIRECTORS TO RESTRICT OR EXCLUDE PRE-EMPTIVE RIGHTS FOR ISSUANCES OF ORDINARY SHARES AND GRANTS OF RIGHTS AUTHORIZED.
VOTING PROPOSAL NO. 9 AUTHORIZATION OF THE BOARD OF DIRECTORS TO REPURCHASE ORDINARY SHARES IN THE CAPITAL OF THE COMPANY
At the Annual Meeting, our shareholders will be asked to authorize the board of directors, on the Company’s behalf, for a period of 18 months after the Annual Meeting date, to repurchase the Company’s ordinary shares up to a maximum of 10% of the issued share capital at the date of acquisition on a stock exchange or otherwise, at a price per share between (i) an amount equal to the nominal value of the ordinary shares and (ii) an amount equal to 110% of the market price of an ordinary share on such stock exchange, the market price being the average of the highest price on each of the five days of trading prior to the day of the acquisition. This authorization, if approved by our shareholders, will supersede and replace the board of directors’ existing repurchase authorization approved by shareholders at the 2023 annual general meeting of shareholders on October 5, 2023.
Pursuant to Dutch law and our articles of association, our board of directors requires, subject to certain exemptions, an authorization by our shareholders to be able to repurchase shares in the Company's capital. The purpose of this proposal to renew the board’s existing authority is to give the board flexibility to repurchase ordinary shares for, among other purposes, effecting the return of capital to the Company’s shareholders and/or, to the extent such authorization is required, fulfilling the Company’s obligations under its Stock Plan and the 2022 employee stock purchase plan.
Required Vote
The resolution to authorize the board of directors to repurchase ordinary shares in the capital of the Company requires an affirmative vote of a simple majority of votes cast in the Annual Meeting where at least one-third of the issued and outstanding shares are represented.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE AUTHORIZATION OF THE BOARD OF DIRECTORS TO REPURCHASE ORDINARY SHARES IN THE CAPITAL OF THE COMPANY.
VOTING PROPOSAL NO. 10 NON-BINDING ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
At the Annual Meeting, our shareholders will be asked to approve, on a non-binding and advisory basis, the compensation of our named executive officers as described in this proxy statement. You are encouraged to review the section titled “Executive Compensation” and, in particular, the section titled “Executive Compensation—Compensation Discussion and Analysis” in this proxy statement, which provides a comprehensive review of our executive compensation program and its elements, objectives and rationale that emphasize performance-dependent pay to motivate and reward long-term value creation for the Company.
The vote on this resolution is not intended to address any specific element of compensation, but rather relates to the compensation of our named executive officers in its totality, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC.
In accordance with Section 14A of the Exchange Act and the SEC’s rules thereunder, our shareholders are asked to approve the following non-binding resolution:
“RESOLVED, that the Company’s shareholders hereby approve, on a non-binding advisory basis, the compensation of the Company’s named executive officers, as disclosed in the Company’s proxy statement for the 2024 annual meeting of shareholders, pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables, and the accompanying narrative.”
A vote on this resolution, which is advisory, is not binding on the board of directors or the Compensation Committee. Nevertheless, our board of directors appreciates your input as it considers the compensation of our named executive officers, and our board of directors and the Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions. The next advisory shareholder vote on the compensation of our named executive officers will occur at our 2025 annual general meeting of shareholders.
Required Vote
The approval, on an advisory basis, of the compensation of our named executive officers requires the affirmative vote of a simple majority of votes cast in the Annual Meeting where at least one-third of the issued and outstanding shares are represented.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE NON-BINDING RESOLUTION ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
Proposal 10- Say on Pay | Elastic 2024 Proxy Statement40
The following table provides information regarding our current and appointed executive officers as of August 21, 2024. Executive officers are appointed by our board of directors to hold office until their successors are appointed and qualified. There are no family relationships among any of our directors or executive officers.
Name
Age
Position(s)
Ashutosh Kulkarni
49
Executive Director and Chief Executive Officer
Janesh Moorjani
51
Chief Financial Officer and Chief Operating Officer
Shay Banon
46
Executive Director and Chief Technology Officer
Ken Exner
51
Chief Product Officer
Mark Dodds
58
Chief Revenue Officer
Carolyn Herzog
57
Chief Legal Officer
For biographical information about each of Messrs. Kulkarni and Banon, see “Board of Directors and Corporate Governance—Continuing Directors” and “Board of Directors and Corporate Governance—Nominees for Director.”
Janesh Moorjani has served as our COO since May 2022 and our CFO since August 2017. Prior to joining us, he served in various senior leadership, finance and sales positions at Infoblox, VMware, Cisco, PTC, a global product development software company, and Goldman Sachs. Mr. Moorjani currently also serves on the board of directors of PTC. Mr. Moorjani holds a Bachelor of Commerce degree from the University of Mumbai and an M.B.A. from the Wharton School of the University of Pennsylvania.
Ken Exner has served as our Chief Product Officer (“CPO”) since August 2022. Prior to his appointment, he was the head of Developer Tools at Amazon from April 2013 to Aug 2022. Prior to that service, Mr. Exner served in other senior leadership, developer and product management roles at Amazon Web Services from 2006 to 2013. Mr. Exner previously founded and managed various startup companies focused on software tools for a broad range of industries. Mr. Exner holds a bachelor of science degree from the Haas School of Business at the University of California, Berkeley.
Mark Dodds has served as our Chief Revenue Officer (“CRO”) since December 2023. Prior to joining us, he served in multiple leadership positions spanning 23 years at Cisco, a global digital communications company, most recently as Senior Vice President, Global Services & Software Sales from August 2020 to December 2022 and before that as Senior Vice President, Global Enterprise Segment from July 2018 to August 2020. Mr. Dodds holds a B.S. in marketing from Clemson University.
Carolyn Herzog has served as our Chief Legal Officer since May 2022. Prior to joining us, she served as Executive Vice President and General Counsel of Arm, a semiconductor and software design company, from January 2017 to February 2022. From December 2000 to January 2017, Ms. Herzog served with Symantec, a cybersecurity software and services company, in various roles, most recently as Chief Compliance Officer and Deputy General Counsel. Ms. Herzog holds a B.A. in French language and literature and music from Washington University and a J.D. from the University of Wisconsin-Madison.
This Compensation Discussion and Analysis describes in detail our executive compensation program for fiscal year 2024 and provides an overview of our executive compensation philosophy and our principal compensation policies and practices. It discusses the key factors that the Compensation Committee (or the board of directors in the case of our executive directors) considered in determining (or recommending) the compensation decisions for our named executive officers (“NEOs”) for fiscal year 2024.
The Compensation Committee reviews the compensation of our named executive officers. The compensation of our CEO and CTO, who are our executive directors, is determined by the board of directors upon the recommendation of the Compensation Committee. The CEO and the CTO may not take part in the deliberations and decision-making of the board of directors concerning executive director compensation. The compensation of our other named executive officers is determined by the Compensation Committee.
Named Executive Officers
For fiscal year 2024, our NEOs were:
•Ashutosh Kulkarni, our CEO
•Janesh Moorjani, our CFO and COO
•Shay Banon, our CTO
•Mark Dodds, our CRO
•Ken Exner, our CPO
Executive Summary
Elastic, the Search AI Company, enables our customers to find the answers they need in real time, using all of their data, at scale. The Elastic Search AI Platform, which we refer to as our “platform,” combines the power of search with AI to help companies solve real-time business problems, unlock potential value, and achieve better outcomes. Our platform, available as both a hosted, managed service across public clouds as well as self-managed software, allows our customers to find insights and drive AI and machine learning use cases from large amounts of data.
We offer three search-powered solutions – Search, Observability, and Security – that are built on the platform. We help organizations, their employees, and their customers find what they need faster, while keeping mission-critical applications running smoothly, and protecting against cyber threats. As digital transformation drives mission-critical business functions to the cloud, we believe that every company must incorporate search AI capabilities across IT and line-of-business organizations to find the answers that matter from all of its data in real-time and at scale.
Our business model is based primarily on a combination of a paid Elastic-managed hosted service offering and paid and free proprietary self-managed software. Our paid offerings for our platform are sold via subscription through resource-based pricing, and all customers and users have access to varying levels of features across all solutions. In Elastic Cloud, our family of cloud-based offerings, we offer various subscription tiers tied to different features. For users who download our software, we make some of the features of our software available free of charge, allowing us to engage with a broad community of developers and practitioners and introduce them to the value of the Elastic Stack. We believe in the importance of an open software development model, and we develop the majority of our software in public repositories as open code under a proprietary license. Unlike some companies, we do not build an enterprise version that is separate from our free distribution. We maintain a single code base across both
our self-managed software and Elastic-hosted services. All of these actions help us build a powerful commercial business model that we believe is optimized for product-driven growth.
Fiscal Year 2024 Financial Highlights
Fiscal year 2024 was a strong year for us marked by significant growth in our business. Our fiscal year 2024 financial highlights included the following:
•Total revenue was $1.267 billion, an increase of 19% over fiscal year 2023.
•Elastic Cloud revenue was $548 million, an increase of 29% over fiscal year 2023.
•GAAP operating loss was $130 million, while GAAP operating margin was -10%.
•Non-GAAP operating profit was $142 million, while non-GAAP operating margin was 11%.
•GAAP net earnings per share was $0.62, while non-GAAP net earnings per share was $1.24.
•Operating cash flow was $148.8 million with adjusted free cash flow of $169 million.
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we provide investors with certain non-GAAP financial measures, including non-GAAP operating profit, non-GAAP operating margin, non-GAAP net earnings per share, and adjusted free cash flow. For additional information and a reconciliation of each non-GAAP financial measure above to the most directly comparable financial measure stated in accordance with GAAP, see Appendix A.
Fiscal Year 2024 Executive Compensation Highlights
Consistent with our compensation objectives and following a review of data summarizing the competitive market environment and the other factors described below, the Compensation Committee (and, in the case of our CEO and CTO, the board of directors upon the recommendation of the Compensation Committee) took the following key actions with respect to the compensation of our named executive officers during fiscal year 2024:
•Pay For Performance - Maintained emphasis on variable and long-term equity compensation elements as the most significant component of compensation for each named executive officer. In aggregate, fixed salary made up 7.3% of target total direct compensation for named executive officers for fiscal year 2024.
•Introduced Performance Share Units - Implemented a performance share unit (“PSU”) plan under which PSU grants represented 24.6% of fiscal year 2024 annual equity awards issued to named executive officers in aggregate, subject to a three-year vesting period. Attainment under the plan is based on achievement of a fiscal year 2024 total revenue target to further align NEO pay outcomes with Company growth that drives long-term shareholder value.
•Amended Executive Bonus Plan Design to Align with Annual Performance Period - Strengthened the tie between fiscal year objectives and short-term incentive payout by moving our executive bonus plan from a semi-annual performance period to an annual performance period.
•Adjusted Weighting of Executive Bonus Plan Metrics - The bonus plan metrics of Cloud Revenue, total revenue, and non-GAAP operating margin remained the same, but the weighting of the metrics was adjusted to reflect our focus on growing our revenue while expanding margin, with the weighting of non-GAAP operating margin increased from 20% to 35%.
•Adopted Share Ownership Policy - To further align the long-term interests of named executive officers and non-executive directors with those of the Company’s stakeholders, adopted a share ownership policy that establishes the minimum value of Company ordinary shares that NEOs must hold relative to their annual base salary and that non-executive directors must hold relative to their annual cash retainer.
•Adopted Clawback Policy - Building on the clawback provisions of our remuneration policy, adopted a clawback policy in November 2023 that extends to named executive officers and further enables the Company to recover erroneously awarded compensation in the event of an accounting restatement in compliance with SEC rules.
Fiscal Year 2024 Executive Officer Appointment
On December 7, 2023, Mr. Dodds joined the Company as CRO. In connection with this appointment, we entered into an employment letter dated December 1, 2023 (the “Dodds Employment Letter”) with Mr. Dodds. Pursuant to the Dodds Employment Letter, our initial compensation arrangement with Mr. Dodds provided for an initial base salary of $500,000; a one-time sign-on bonus of $200,000; a target annual cash incentive award opportunity equal to 60% of his annual base salary, subject to the terms and conditions of the Company’s Executive Incentive Compensation Plan; and a new-hire equity award with an aggregate approximate value of $10 million in the form of an RSU award that may be settled for ordinary shares upon vesting over a four-year period as described in “Long-Term Incentive Compensation
– New Hire Equity Award for Mr. Dodds.” Additionally, Mr. Dodds entered into our standard form of Change in Control and Severance Agreement.
In establishing the initial compensation arrangement with Mr. Dodds, management engaged our compensation consultant to design an offer that took into account the requisite experience and skills necessary to manage a growing business in our industry with an eye toward the competitive market for similar positions at comparable companies. For a summary of the key terms and conditions of Mr. Dodds’ employment offer letter, see “Executive Compensation Tables – Named Executive Officer Employment Letters” below.
Shareholder Engagement in Fiscal Year 2024
At the 2023 annual general meeting of shareholders, our advisory vote on the compensation of our named executive officers (the “Say-on-Pay” vote) received approximately 83% support from our shareholders. We value our shareholders’ opinions and feedback and are committed to maintaining an active dialogue to understand their priorities and concerns. We believe that ongoing engagement builds mutual trust and alignment and is essential to our long-term success.
In fiscal year 2024, we continued to engage in discussions with shareholders aimed at understanding their views on executive compensation, corporate governance and other matters. Our management team regularly updates our board of directors on these engagement efforts. The regular feedback we receive from our shareholders has helped to shape the executive compensation programs and practices adopted by management and our Compensation Committee.
Feedback that we heard from shareholders was well-aligned with changes that were implemented in fiscal year 2024, including the adoption of a PSU program, amending the executive bonus plan to incorporate an annual performance period, the alignment of the metrics and weightings used in performance-based compensation plans to drivers of shareholder value, and the introduction of new clawback and share ownership policies for named executive officers.
Taking into account a variety of considerations, including shareholder feedback, the Compensation Committee adopted a PSU program effective with the fiscal year 2024 annual grants. In our shareholder engagements, we discussed the intent to increase the percentage of PSUs within the total equity award value over time. For fiscal year 2024, approximately 25% of named executive officer annual equity compensation was in the form of PSUs. For fiscal year 2025, PSUs account for approximately 35% of the expected annual equity compensation of named executive officers. We intend to continue increasing the proportion of PSUs granted in the future until PSUs represent 50% of the annual equity award mix.
Executive Compensation Policies and Practices
Philosophy and Objectives
Our executive compensation program is guided by our overarching philosophy of paying for demonstrable performance. We endeavor to structure compensation in a manner that is competitive, rewards achievement of our business objectives, and aligns our named executive officers’ interests with those of our shareholders. Consistent with this philosophy, we have designed our executive compensation program to achieve the following primary objectives:
•provide market competitive compensation and benefits that will attract, motivate, reward, and retain a highly talented team of executives within the context of responsible cost management;
•establish a strong link between our financial and operational results, strategic objectives, and executive compensation to deliver pay for performance; and
•align the interests and objectives of our executives with those of our shareholders by tying long-term incentive compensation opportunities to shareholder value creation and linking short-term cash incentives to our annual financial performance metrics.
The annual compensation of our named executive officers consists of base salary, long-term incentive compensation in the form of equity awards, and short-term incentive compensation in the form of an
annual cash bonus plan. The pay mix for each named executive officer is established annually taking into consideration a number of factors such as our compensation philosophy, the market for executive talent, and the value of unvested equity held by our executives. The Committee and management are committed to a design in which the majority of compensation delivered to our executives is in the form of variable (or “at risk”) compensation, and performance-based compensation is a significant portion of total compensation for named executive officers.
Executive Compensation Governance Practices and Policies
We maintain sound governance standards consistent with our executive compensation policies and practices. The Compensation Committee reviews our executive compensation program on an annual basis to ensure consistency with our short-term and long-term objectives in light of the dynamic nature of our business and the markets in which we compete for executive talent. Below is a summary of our executive compensation-related policies and practices in effect during fiscal year 2024:
What We Do
What We Don’t Do
✔ Emphasize a pay for performance philosophy with a majority of executive pay variable (or “at-risk”) to align the interests of our named executive officers and shareholders
✔ Establish rigorous performance targets with caps on payout of short-term cash incentives and performance-based equity compensation
✔ Maintain a comprehensive clawback policy with provisions covering short-term and long-term incentive compensation
✔ Require minimum share ownership by all named executive officers and non-executive directors
✔ Ensure the Compensation Committee is composed entirely of independent directors
✔ Engage an independent compensation consultant as an advisor to the Compensation Committee
✔ Conduct regular evaluation of our executive compensation practices that includes market compensation analysis and peer group review
✔ Uphold a “double trigger” provision for all change-in-control payments and benefits
✘ No guaranteed payout of performance-based compensation
✘ No supplemental benefits provided to named executive officers above the broad-based programs available to all employees
✘ No tax payments or gross-ups on benefits
✘ No “Golden Parachute” tax payments on change-in-control arrangements
✘ No hedging or pledging of our securities
✘ No stock option repricing or exchanges
Compensation-Setting Process
Role of the Compensation Committee
The Compensation Committee is responsible for overseeing and evaluating the compensation plans, policies and practices applicable to our named executive officers. The Committee also maintains oversight of our company-wide compensation and benefits policies. Our board of directors has delegated express authority to the Compensation Committee to serve as the administrator of the Company’s Stock Plan.
The Compensation Committee has authority to make decisions regarding the compensation of our named executive officers, other than our CEO and CTO, for whom it makes recommendations to the board of directors. In 2018, we proposed, and our shareholders adopted, a Remuneration Policy (as
required by Dutch corporate law) under which the board of directors is empowered to make all final decisions regarding the compensation for our CEO and CTO within the framework of the policy. The CEO and the CTO may not take part in the deliberations and decision-making of the board of directors concerning executive director compensation.
In carrying out its responsibilities, the Compensation Committee evaluates our compensation policies and practices with a focus on the degree to which each embodies our executive compensation philosophy, develops strategies and makes decisions aligned with best compensation practices, and reviews the performance of our named executive officers when making decisions and recommendations with respect to their compensation.
The Compensation Committee’s authority, duties and responsibilities are further described in its charter, which is reviewed annually and updated as appropriate. The charter is available in the “Investor Relations” section of our website, which is located at ir.elastic.co, under “Governance—Corporate Governance.”
The Compensation Committee has the sole authority to retain an external compensation consultant to assist the committee in fulfilling its responsibilities. The Compensation Committee, however, exercises its own judgment in making decisions and recommendations with respect to the compensation of our named executive officers.
Role of the Compensation Consultant
The compensation consultant reports directly to the Compensation Committee and its chair, and serves at the discretion of the Compensation Committee, which reviews the engagement annually.
In fiscal year 2024, the Compensation Committee retained Compensia, Inc. (“Compensia”) as its compensation consultant. Compensia attended meetings of the Compensation Committee as requested and advised on executive compensation matters, including competitive market pay practices for our named executive officers and the composition of our compensation peer group.
The Compensation Committee annually reviews the independence of the compensation consultant and conducts a conflict of interest assessment. In its fiscal year 2024 review, the Compensation Committee determined that Compensia is independent from Elastic’s management and that no conflict of interest exists between Elastic and Compensia.
Role of Management
In fulfilling its responsibilities, the Compensation Committee works with members of our management team, including our CEO. Management assists the Compensation Committee by providing perspective on compensation matters as well as information on corporate and individual performance. Management also provides Compensia with compensation data pertaining to our executive officers. The Compensation Committee solicits, reviews, and discusses with the CEO his proposals with respect to compensatory program structures, as well as his recommendations for adjustments to annual cash compensation, long-term incentive compensation and other compensation-related matters for our named executive officers (except with respect to compensation of our CEO and CTO), as one factor in determining and approving their compensation.
Competitive Positioning
The Compensation Committee believes that peer group comparisons are useful guides in measuring the competitiveness of our executive compensation program and related policies and practices. For purposes of assessing our executive compensation against the market, the Compensation Committee reviews and considers the compensation levels and practices of a select group of peer companies. Our compensation peer group consists of technology companies that are similar to us in terms of revenue, market capitalization, and industry focus. The competitive data drawn from this compensation peer group is one of several factors the Compensation Committee considers in making its decisions and recommendations with respect to the compensation of our named executive officers.
After consultation with Compensia, the Compensation Committee approved the following compensation peer group as part of its decision-making process for fiscal year 2024 executive compensation actions. In identifying and selecting the companies for the compensation peer group, the following primary criteria were considered:
•similar sector – publicly traded companies in the software and internet services sectors identified on a national basis;
•similar revenue – within a range of approximately 0.5 to approximately 2 times our trailing four fiscal quarters’ revenue; and
•similar market capitalization – within a range of approximately 0.33 to approximately 3.0 times our market capitalization as of the measurement date.
Peer Group for Fiscal Year 2024
•Alarm.com
•Five9
•Nutanix
•Sprinklr
•Alteryx
•HubSpot
•Okta
•Tenable
•Box
•Informatica
•Rapid7
•UiPath
•Cloudflare
•MongoDB
•Smartsheet
•Unity Software
•Dynatrace
•New Relic
•Splunk
•Zscaler
The Compensation Committee reviews our compensation peer group annually and makes adjustments to its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group. The fiscal year 2024 peer group reflects the removal of Avalara, Coupa Software, Paylocity Holding, The Trade Desk, and Zendesk and the addition of Box, Dynatrace, Informatica, Nutanix, Sprinklr, UiPath, and Unity Software.
Pay for Performance Philosophy
We strive to design our executive compensation program to balance the goals of attracting, motivating, rewarding, and retaining our named executive officers with those of promoting the interests of our shareholders and other stakeholders, such as our users, customers, employees, and creditors. To this end, we seek to ensure our program is designed so that a meaningful portion of our named executive officers’ annual target total direct compensation is variable in nature. We do not determine “variable” or “fixed” pay for any named executive officer with reference to a specific percentage of target total direct compensation since the mix may change from year to year to address current corporate objectives.
Our pay for performance philosophy is reflected in the target total direct compensation opportunities established for our named executive officers. In fiscal year 2024, the majority of the target total direct compensation granted to our named executive officers consisted of variable pay in the form of a performance-driven annual cash incentive plan and long-term equity compensation. We increased the performance-based portion of our executive compensation by granting PSUs as part of our fiscal year 2024 long-term incentive awards. With respect to Mr. Kulkarni, fixed pay, in the form of base salary, made up 4.8% of his target total direct compensation, while variable pay, consisting of the target annual cash incentive awards and long-term equity compensation in the form of RSU and PSU awards, accounted for 95.2% of his annualized target total direct compensation.
The target total direct compensation packages of our other named executive officers were structured similarly to that of Mr. Kulkarni. In aggregate, fixed pay made up 7.3% of our named executive officers’ target total direct compensation, while variable pay accounted for 92.7% of their annualized target total direct compensation.
Our executive compensation program consists principally of base salary, annual short-term cash incentive compensation, and long-term equity compensation.
Compensation Element
Description and Purpose
Aggregate % of NEO Target Total Direct Compensation (1)
Base Salary
Base salary represents the fixed portion of the compensation of our named executive officers and is an important element of compensation intended to attract and retain highly talented individuals. Generally, we use base salary to provide each named executive officer with a specified level of cash compensation during the year with the expectation that they will perform their responsibilities to the best of their ability and in our best interests.
7.3%
Annual Short-Term Cash Incentive Compensation
The executive bonus plan provides cash incentive awards to selected employees, including our named executive officers, based upon performance against predetermined annual financial metrics. We believe that the financial performance measures used in the executive bonus plan contribute to driving the creation of long-term stakeholder value, including shareholder value, and play an important role in influencing the performance of our named executive officers, who are most directly responsible for our overall success.
5.2%
Long-Term Incentive Compensation (Equity)
We view long-term incentive compensation in the form of equity awards as the most critical element of our executive compensation program. We use equity awards to reward our named executive officers for long-term corporate performance based on the value of our ordinary shares, thereby aligning their interests with the interests of our stakeholders. The realized value of these equity awards bears a direct relationship to our stock price, providing an incentive for our named executive officers to create value for our shareholders. Equity awards also help us retain our named executive officers in a highly competitive market, contributing to the long-term value creation for all our stakeholders.
PSUs were introduced as part of the award mix for named executive officers in fiscal year 2024 and represented approximately 25% of their overall grant value for that fiscal year.
87.5%
(1) Aggregate percentages exclude compensation elements for Mr. Dodds given that his fiscal year 2024 equity grant was a new-hire grant that is one-time in nature and not representative of our standard annual equity grants to named executive officers.
Each year, the Compensation Committee conducts a review of the compensation arrangements of our named executive officers. As part of this review, the Compensation Committee evaluates base salary, short-term cash incentive opportunity, and long-term equity compensation along with all related performance criteria.
In addition to the approach described under the “Compensation-Setting Process” section above, the members of the Compensation Committee apply their professional experience to consider the following factors:
•our executive compensation program objectives;
•the current business climate, including competitive opportunities and challenges, and our performance against the financial, operational and strategic objectives established by the Compensation Committee and our board of directors;
•the scope of each named executive officer’s role and responsibilities, along with their knowledge, skills, experience, qualifications, and tenure relative to other similarly situated executives at the companies in our compensation peer group; and
•the prior performance of each individual named executive officer, based on a subjective assessment of their contributions to our overall performance and the potential of each to contribute to our long-term financial, operational, and strategic objectives.
These factors provide the framework for compensation decision-making regarding the compensation opportunity for each named executive officer. No single factor is determinative in setting compensation levels, nor is the impact of any individual factor on the determination of pay levels quantifiable.
Base Salary and Target Short Term Cash Incentive
The following base salary and short-term cash incentive targets were determined for our named executive officers for fiscal year 2024:
Named Executive Officer
Fiscal Year 2023 Base Salary
Fiscal Year 2024 Base Salary (1)
Fiscal Year 2024 Incentive Target (% of Base Salary)
Ash Kulkarni
$600,000
$600,000
100%
Janesh Moorjani
$500,000
$525,000
60%
Shay Banon
$500,000
$500,000
60%
Mark Dodds (2)
—
$500,000
60%
Ken Exner
$450,000
$480,000
60%
(1) Change to base salary, if applicable, effective November 1, 2023. (2) Compensation effective as of December 7, 2023 hire date.
There were no changes to incentive target percentages for named executive officers for fiscal year 2024.
Executive Bonus Plan
Our named executive officers participate in the Company’s executive bonus plan (“Bonus Plan”). The Bonus Plan is administered by the Compensation Committee and serves as the mechanism to provide short-term cash incentives to our named executive officers based upon our achievement against predetermined performance metrics. The Compensation Committee believes that the financial performance measures used in the Bonus Plan contribute to driving the creation of long-term stakeholder value, including shareholder value, and play an important role in influencing the performance of our named executive officers.
Under the Bonus Plan, in each fiscal year (generally during the first fiscal quarter), the Compensation Committee approves the terms and conditions that will serve as the basis for determining the eligibility for, and amount of, cash incentive awards to be paid under the Bonus Plan. Effective for fiscal year 2024, the Compensation Committee amended the terms of the Bonus Plan to eliminate semi-annual performance periods previously applied to assess performance and to incorporate an annual performance period standard aligned with full fiscal year metrics.
Performance under the Bonus Plan is measured annually as of April 30 of each fiscal year. A prorated mid-year payment is made based on year-to-date performance as of October 31, the end of the first half of the fiscal year. The mid-year payment is capped at 100% and is offset against full year attainment when determining the final fiscal year payout. In determining payout, the Compensation Committee reviews our achievement against the predetermined target levels for the established corporate performance measures and formally determines that achievement. Awards are paid out following the approval by the Compensation Committee and, in the case of our CEO and CTO, the approval by the board of directors.
The Compensation Committee maintains sole discretion to adjust or eliminate a participant’s actual award on the basis of factors it deems relevant. The actual award payout for each named executive officer may be below, at, or above calculated attainment as determined at the Compensation Committee’s discretion or, in the case of our CEO and CTO, as recommended by the Compensation Committee to our board of directors. For fiscal year 2024, there was no discretionary action exercised with respect to any of the actual cash incentive award payments made under the Bonus Plan.
Corporate Performance Metrics
The annual operating plan for fiscal year 2024 was based on demanding but achievable business objectives. The corresponding corporate financial performance metrics established under the Bonus Plan for fiscal year 2024 (the “Fiscal Year 2024 Bonus Plan”) were set above actual performance for fiscal year 2023 to align short-term cash incentive compensation with strong growth objectives.
The following corporate performance metrics were approved by the Compensation Committee in May 2023 and subsequently approved by the board of directors in June 2023:
Metric
FY23 Weight
FY24 Weight
Performance metrics under the Fiscal Year 2023 Bonus Plan were retained for fiscal year 2024 with adjustments in weighting aligned with our growth strategy and creation of sustainable long-term shareholder value.
Cloud Revenue
50%
30%
Total Revenue
30%
35%
Non-GAAP Operating Margin %
20%
35%
Total
100%
100%
For purposes of the Fiscal Year 2024 Bonus Plan:
•“Cloud Revenue” means the portion of total revenue from Elastic Cloud, our family of cloud-based offerings.
•“Non-GAAP Operating Margin %” means operating margin as calculated in accordance with GAAP, as adjusted to exclude stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses, and restructuring and other related charges.
In establishing the performance levels for each metric, the Compensation Committee emphasized an aggressive level of growth and profitability.
If performance for any metric was below the threshold performance level, there would be no payout with respect to that metric. In addition, the potential payment for any metric was capped at the maximum performance level. For all three performance metrics, for achievement between threshold and target, and between target and maximum, the payout was to be determined on a linear interpolation basis.
Fiscal Year 2024 Bonus Plan Metrics and Performance Levels
Cloud Revenue
Total Revenue
Non-GAAP Operating Margin % (NGOM)
Attainment vs. Plan
Amount $M
Payout %
Attainment vs. Plan
Amount $M
Payout %
NGOM
Payout %
<80%
<$450
0%
<80%
<$1,028
0%
<5.4%
0%
80%
$450
50%
80%
$1,028
50%
5.4%
50%
100%
$563
100%
100%
$1,285
100%
10.4%
100%
>120%
>$675
150%
>120%
>$1,542
150%
>15.4%
150%
Annual Cash Incentive Payouts
Metric
Target
Achievement
Attainment %
Payout %
Weight
Total
Cloud Revenue
$563M
$548M
97.3%
93.3%
30%
28.0%
Total Revenue
$1,285M
$1,267M
98.6%
96.6%
35%
33.8%
Non-GAAP Operating Margin %
10.4%
11.2%
107.9%
108.3%
35%
37.9%
Total
100%
99.7%
Based on these determinations of actual fiscal year 2024 achievement against performance metrics, the following annual cash incentive awards were paid under the Fiscal Year 2024 Bonus Plan:
Named Executive Officer
Total Annual Cash Incentive Award for Fiscal Year 2024 (1)
Ash Kulkarni
$598,175
Janesh Moorjani
$306,565
Shay Banon
$301,314 (2)
Mark Dodds
$119,308
Ken Exner
$278,151
(1) Annual cash incentive award amounts are inclusive of a prorated portion paid at mid-year. Final payment reflects full year results against full year plan metrics. (2) A portion of this amount has been reported on an as-converted basis from ILS to U.S. dollars as well as on an as-converted basis from GBP to U.S. dollars based on spot currency exchange rates of 1 ILS=0.2670 and 1 GBP=USD 1.25442, in each case as of fiscal year ended April 30, 2024.
Long-Term Incentive Compensation
We view long-term equity compensation in the form of RSUs and PSUs as a critical element of our executive compensation program. We use equity awards to incentivize and reward our named executive officers for long-term corporate performance based on the value of our ordinary shares to align their interests with the interests of our stakeholders. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our named executive officers to create value for our shareholders. Equity awards also help us retain our named executive officers in a highly competitive market, contributing to the long-term value creation for all our stakeholders.
In addition to the initial equity award that each named executive officer receives upon hire, the Compensation Committee also grants some or all of our named executive officers additional equity awards each year as part of our annual review of our executive compensation program. The Compensation Committee does not apply a rigid formula in determining the size or type of the equity awards granted as part of our annual assessment. Instead, in making these decisions and
recommendations, the Compensation Committee exercises its judgment as to the amount and type of the awards after considering the performance of each named executive officer, the compensation consultant’s recommendations based on its review of compensation practices from our peers, and the retention aspect of the unvested equity held by each. Additionally, in granting broad-based equity awards across our global employee population, the Compensation Committee considers the proportion of our total ordinary shares outstanding used for annual employee long-term equity compensation awards (our “burn rate”) in relation to companies in our compensation peer group, the potential economic and voting power dilution to our shareholders in relation to companies in our compensation peer group, and the other factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above.
Addition of Performance Share Unit (PSU) Awards for Fiscal Year 2024
During fiscal year 2023, the Compensation Committee determined that we would introduce PSUs for fiscal year 2024 compensation as a component of our long-term incentive program to further emphasize performance-based compensation. PSU grants for fiscal year 2024 represented approximately 25% of the total equity award value, and for fiscal year 2025 represented approximately 35% of the expected total equity award value. The Compensation Committee intends to continue increasing the proportion of PSUs granted in the future until PSUs represent 50% of the annual equity award mix.
In May 2023, the Compensation Committee recommended, and in June 2023 the board of directors approved, the fiscal year 2024 PSU Plan with the following key terms:
•One-year performance period
•Vesting over three years in total, with one-third of the award vesting at the conclusion of the one-year performance period
•Performance based solely on the total revenue metric
•Achievement of minimum threshold required for payout
•Payout determined on a linear interpolation basis for achievement between threshold and target, and between target and maximum
•Compensation Committee discretion in approving payout
Fiscal Year 2024 PSU Plan Metric and Performance Levels
Total Revenue
The Compensation Committee selected total revenue as the performance metric under the PSU Plan because it aligns NEO pay outcomes with our ability to capture market share within our current competitive space and further capitalize on growth opportunities with the Elastic Search AI Platform.
Attainment vs. Plan
Amount $M
Payout %
<80%
<$1,028
0%
80%
$1,028
50%
100%
$1,285
100%
>120%
>$1,542
200%
Based on total revenue of $1.267 billion, 97% of target PSUs were earned in fiscal year 2024. One-third vested at the conclusion of the one-year performance period, with the remaining shares vesting over the subsequent two years.
Fiscal Year 2024 Equity Awards
Fiscal year 2024 PSU awards were granted to our named executive officers in June 2023 with the intent that PSU awards constitute approximately 25% of the total equity award value granted to named executive officers for fiscal year 2024. RSU awards were granted to our named executive officers in December 2023. In determining the value of each award, the Compensation Committee considered the competitive market analysis prepared by its compensation consultant, the recommendations of Mr. Kulkarni where applicable, and the long-term incentive factors described above.
PSU awards granted in fiscal year 2024 vest over three years, with one-third vesting at the end of the fiscal year performance period after adjustment for actual performance relative to the pre-established targets, and the remainder of the awards vesting on a quarterly basis over eight quarters. RSU awards granted in fiscal year 2024 vest over four years in equal quarterly installments. All vesting is subject to continued service through the applicable vesting date. For more details regarding our annual equity awards, see the section below titled “Executive Compensation Tables—Fiscal 2024 Outstanding Equity Awards as of Fiscal Year End.”
The aggregate equity awards granted to our named executive officers for fiscal year 2024 were as follows:
Named Executive Officer
FY24 PSUs (value)
FY24 RSUs (value)
Total FY24 Equity Award (value) (1)
PSU % of Grant Total
Ash Kulkarni
$
2,875,000
$
8,375,000
$
11,250,000
25.6
%
Janesh Moorjani
$
1,450,000
$
4,550,000
$
6,000,000
24.2
%
Shay Banon
$
750,000
$
2,450,000
$
3,200,000
23.4
%
Mark Dodds (2)
—
$
10,000,000
$
10,000,000
—
Ken Exner
$
1,075,000
$
3,425,000
$
4,500,000
23.9
%
(1) For purposes of this Compensation Discussion and Analysis, “award value” generally means an economic target value, as distinct from the grant date fair value under the Financial Accounting Standard Board’s Accounting Standards Codification Topic 718. The actual number of our ordinary shares subject to an equity award was determined by dividing the applicable award value by one of the following per share values, as applicable: (i) with respect to the RSUs granted to Mr. Dodds, the value per share was equal to the average trading price of our ordinary shares for the month in which he commenced service; and (ii) with respect to all other equity grants shown in this table, the value per share was equal to the fair market value of any ordinary share of the Company on the date of grant, as measured by the closing price of our ordinary shares on that date as reported on the NYSE.
(2) Given the fiscal year performance period associated with the PSU plan and Mr. Dodds’ mid-year hire date, his new-hire equity award was issued entirely in the form of RSUs. Future equity awards issued to Mr. Dodds are expected to be composed of PSUs and RSUs in the same mix as other named executive officers.
We remain committed to the goal of increasing PSUs to represent 50% of the total equity award value for our named executive officers over time. For fiscal year 2025, PSU awards have been determined at approximately 35% of the expected total equity award value for our named executive officers in aggregate.
Health, Welfare and Retirement Benefits
Our named executive officers are eligible to participate in the same employee benefit plans, and on the same terms and conditions, as all other full-time, salaried employees in the jurisdiction where the named executive officer is located. These benefits include medical, dental, and vision insurance, business travel insurance, an employee assistance program, health and dependent care flexible spending accounts, basic life insurance, accidental death and dismemberment insurance, short-term and long-term disability insurance, and commuter benefits. Named executive officers are also able to participate in our employee stock purchase plan on the same terms and conditions as other employees.
We maintain a Section 401(k) plan for our employees, including our named executive officers. The Section 401(k) plan is intended to qualify under Section 401(k) of the Code, so that contributions to the plan by employees or by the Company, and the investment earnings thereon, are not taxable to the employees until withdrawn, and so that contributions made by the Company, if any, will be deductible by us when made. Employees may elect to reduce their current compensation by up to the statutorily prescribed annual limits (including “catch-up” contributions for those age 50 and older) and to have the amount of such reduction contributed to their accounts under the Section 401(k) plan. The Section 401(k) plan permits us to make contributions up to the limits allowed by law on behalf of all eligible employees. Typically, we make matching contributions to the plan up to 6% of a participating employee’s eligible
compensation, to a maximum match of $20,700 for calendar year 2024 and $19,800 for calendar year 2023. All participating employees’ interests in our matching contributions, if any, vest immediately at the time of contribution. The Section 401(k) plan also contains a Roth component. We also maintain defined-contribution plans for employees in certain other countries.
Effective January 1, 2024, we implemented a non-qualified deferred compensation plan that enables select employees, including our named executive officers, in the United States to defer a portion of their base salary and commission or annual bonus payouts (as applicable), along with associated federal and state income taxes, which provides additional tax and financial planning flexibility and helps us to attract and retain top talent. The Company makes no matching contributions to this plan.
For a portion of fiscal year 2024, Mr. Banon resided in Israel. During that time period, we did not offer any retirement benefits to Mr. Banon, except to the extent certain social benefits are required pursuant to Israeli labor laws or are common practice in Israel, and such social benefits are applicable to all Israeli employees. Under Israeli labor laws, an Israeli employee is entitled to severance pay upon termination of employment for any reason, including retirement, equal to the most recent monthly salary of such employee multiplied by the number of years of employment of such employee. The amounts of such social benefits contributed by us to Mr. Banon for fiscal year 2024 are specified in the Fiscal 2024 Summary Compensation Table of this proxy statement.
We design our employee benefits programs to be affordable and competitive in relation to the market as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market.
Perquisites and Other Personal Benefits
We do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide significant perquisites or other personal benefits to our named executive officers except as generally made available to our employees or in situations where we believe it is appropriate to assist an employee in the performance of the employee’s duties, to make the employee more effective, or for recruitment and retention purposes. For fiscal year 2024, none of our named executive officers received perquisites or other personal benefits that were, in the aggregate, $10,000 or more.
In the future, we may provide perquisites or other personal benefits in limited circumstances, such as those described in the preceding paragraph. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the Compensation Committee. In the case of our CEO and CTO, the board of directors will approve all perquisites or other personal benefits and subject them to periodic review upon the recommendation of the Compensation Committee.
Other Compensation Policies
Equity Award Grant Policy
Our equity award grant policy governs our grant of equity awards under our Stock Plan and such other equity compensation plans as we may adopt from time to time. Pursuant to our equity award grant policy, duly authorized equity awards are granted to employees on predetermined quarterly grant dates in a manner that is consistent with the terms set forth in the policy. Consistent with our policy:
•We do not grant long-term incentive awards in anticipation of the release of material non-public information and have never had a practice of doing so.
•We have never timed and do not plan to time the release of material non-public information for the purpose of affecting the value of executive compensation.
We believe that such practices eliminate potential manipulation regarding the timing of stock option and other equity grants.
Under the share ownership policy, the CEO, other senior officers designated by the board of directors, and the Company’s non-executive directors (collectively “Covered Persons”) are required to own shares with a fair market value at least equal to:
•For the CEO: Five times the CEO’s annual base salary
•For senior officers: Two times the senior officer’s annual base salary
•For non-executive directors: Three times the non-executive director’s annual cash retainer
As of the date of this proxy statement, senior officers subject to the policy included all of our named executive officers and four additional officers of the Company.
The Company expects each Covered Person to (i) own shares with a fair market value at least equal to that specified above within five years after becoming subject to the policy, and (ii) continue to own shares with at least such a fair market value for as long as such person qualifies as a Covered Person under the policy.
For purposes of the policy, owned shares include shares acquired:
•through open market purchases;
•through the Company’s employee stock purchase plan; and
•upon exercise of options or settlement of other equity awards held by the Covered Person and issued pursuant to the Company’s compensation plans.
Unexercised stock options and Company equity awards subject to vesting are not included in the ownership calculation.
Compliance with the policy is measured by the Compensation Committee annually as of the last day of each fiscal year, and management monitors ongoing compliance in conjunction with this policy and its insider trading preclearance administration.
Pursuant to Dutch corporate law, our Remuneration Policy provides that the short-term and long-term variable remuneration of the executive and non-executive directors of the Company, whether payable in cash or equity, may be adjusted or partly or fully clawed back to the extent it was paid on the basis of incorrect information (i) underlying the targets to be achieved or (ii) regarding the circumstances on which the variable remuneration was made conditional.
NYSE Clawback Policy and Clawback under Sarbanes-Oxley Act of 2002
In 2023, we adopted a clawback policy that complies with NYSE listing rules under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”). Under this policy the Company is entitled to recover, in full or in part, any incentive-based compensation erroneously awarded to any person who served as an executive officer after an accounting restatement. To date, there has been no accounting restatement that required recovery pursuant to this policy.
As a public company listed on the NYSE, if we are required to restate our financial results due to our material noncompliance with any financial reporting requirements under the U.S. federal securities laws as a result of misconduct, named executive officers may be legally required to reimburse Elastic for any bonus or other incentive-based or equity-based compensation they receive in accordance with the provisions of Section 304 of the Sarbanes-Oxley Act of 2002.
Under our insider trading policy adopted by our board of directors, our employees, including officers, and the members of our board of directors are prohibited from engaging in transactions in publicly-traded options, such as put options and call options, other derivative securities with respect to our securities (other than share options, share appreciation rights and other securities issued pursuant to Company benefit plans or other compensatory arrangements with the Company), and debt securities (such as debentures, bonds and notes). The covered transactions include any hedging or similar transaction designed to decrease the risks associated with holding our securities. In addition, our employees, including officers, and the members of our board of directors may not engage in short sales (that is, the sale of a security that must be borrowed to make delivery) or “sell short against the box” (that is, a sale with a delayed delivery) involving our securities.
Further, under our insider trading policy, our employees, including officers, and the members of our board of directors may not pledge our securities as collateral for a loan or hold our securities in a margin account.
Employment Arrangements
We have entered into a written employment agreement with Mr. Banon (the “Banon Employment Agreement”) and an employment letter with Mr. Kulkarni. We have entered into employment letters with Mr. Moorjani, Mr. Exner and Mr. Dodds. The arrangements with Mr. Kulkarni and Mr. Banon, our executive directors, were approved by the board of directors upon recommendation of the Compensation Committee. Each of our named executive officers has also executed our standard form of invention assignment, confidentiality and arbitration agreement. The arrangements with each of our other named executive officers have been approved by the Compensation Committee. We believe that these arrangements were necessary to secure the service of these individuals in a highly competitive job market.
Each of our written employment agreements and employment letters does not have a specific term, provides for “at will” employment (meaning that either we or the named executive officer may terminate the employment relationship at any time without cause) and generally sets forth the named executive officer’s initial base salary, target annual cash incentive opportunity, if applicable, and eligibility to participate in our standard employee benefit plans and programs.
The Banon Employment Agreement also provides that he may be eligible to receive certain severance payments and benefits in connection with certain terminations of employment with the Company, including a termination of employment in connection with a change in control of the Company, provided that such severance payments and benefits will be reduced by any statutory severance benefits required to be provided to Mr. Banon under applicable law. The amount and type of the severance payments and benefits provided under the Banon Employment Agreement, as well as the terms and conditions under which such severance payments and benefits may be provided, are identical in all material respects to the provisions regarding severance payments and benefits provided for in our change in control and severance agreements, as described under “Post-Employment Compensation” below.
For detailed descriptions of the employment arrangements with our named executive officers, see “Executive Compensation Tables— Potential Payments upon Termination or Change in Control” below.
Post-Employment Compensation
In addition to the severance provisions contained in the Banon Employment Agreement, we have entered into change in control and severance agreements with our other named executive officers (the severance provisions in the Banon Employment Agreement and the change in control and severance agreements are collectively referred to as the “Severance Arrangements”). The Severance Arrangements provide for certain protections in the event of specified involuntary terminations of employment, including an involuntary termination of employment in connection with a change in control of the Company, in exchange the named executive officer’s execution of a separation agreement and release of claims in our favor that becomes effective and irrevocable and resignation from all positions the named executive officer may hold as an officer or director.
The Severance Arrangements provide reasonable compensation in the form of severance pay and certain limited benefits to a named executive officer if the officer leaves our employ under certain circumstances to facilitate the officer’s transition to new employment. Further, in some instances we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing named executive officer to sign a separation agreement and release of claims in a form and with terms acceptable to us providing for a general release of all claims as a condition to receiving post-employment compensation payments or benefits. We believe that the Severance Arrangements help maintain our named executive officers’ continued focus and dedication to their assigned duties to maximize stakeholder value if there is a potential transaction that could involve a change in control of the Company.
Under the Severance Arrangements, all payments and benefits in the event of a change in control of the Company are payable only if there is a connected involuntary loss of employment by a named executive officer (a so-called “double-trigger” arrangement). In the case of the acceleration of vesting of outstanding equity awards, we use this double-trigger arrangement to protect against the loss of retention value following a change in control of the Company and to avoid windfalls, both of which could occur if vesting of either equity or cash-based awards accelerated automatically as a result of the transaction.
In the event of a change in control of the Company, to the extent that any of the amounts provided for under the Severance Arrangements would constitute a “parachute payment” within the meaning of Section 280G of the Code and could be subject to the related excise tax under Section 4999 of the Code, a named executive officer will receive such payment as would entitle the officer to receive the greatest after-tax benefit, even if it means that we pay the named executive officer a lower aggregate payment so as to minimize or eliminate the potential excise tax imposed by Section 4999 of the Code.
We do not provide any tax reimbursement payments (or “gross-ups”) on excise taxes relating to a change in control of the Company and have no such obligations in place with respect to any of our executive officers, including our named executive officers.
We believe that having in place reasonable and competitive post-employment compensation arrangements, including in the event of a change in control of the Company, are essential to attracting and retaining highly qualified executive officers. The Compensation Committee does not consider the specific amounts payable under the post-employment compensation arrangements when determining the annual compensation for our named executive officers. We do believe, however, that these arrangements are necessary to offer compensation packages that are competitive.
For detailed descriptions of the post-employment compensation arrangements with our named executive officers, as well as an estimate of the potential payments and benefits payable under these arrangements, see “Executive Compensation Tables—Potential Payments upon Termination or Change in Control” below.
Tax and Accounting Considerations
The Compensation Committee takes the applicable tax and accounting requirements into consideration in designing and overseeing our executive compensation program.
Deductibility of Executive Compensation
Section 162(m) of the Code generally limits the amount we may deduct from our U.S. federal income taxes for compensation paid to our CEO and certain other current and former executive officers that are “covered employees” within the meaning of Section 162(m) to $1 million per individual per year, subject to certain exceptions.
Accounting for Stock-Based Compensation
The Compensation Committee takes into consideration accounting impacts in designing compensation plans and arrangements for our executive officers and other employees. Chief among these is the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”), the standard which governs the accounting treatment of certain stock-based compensation. Among other things, ASC Topic 718 requires us to record a compensation expense in our income
statement for all equity awards granted to our executive officers and other employees. This compensation expense is based on the grant date “fair value” of the equity award and is recognized over the requisite service period. For RSUs the expense is recognized on a straight-line basis while the expense for PSUs is recognized using the accelerated attribution method. This compensation expense is also reported in the compensation tables below, even though recipients may never realize any value from their equity awards.
The following table provides information concerning compensation awarded to, earned by, or paid to each of our named executive officers for all services rendered in all capacities for the last three fiscal years during which such individuals were named executive officers. The amounts reported reflect rounding, which may result in slight variations between amounts shown in the Total column and the sum of its components as reflected in the table.
Name and Principal Position
Fiscal Year
Salary ($)
Bonus ($)
Stock Awards ($)(1)
Option Awards ($)(1)
Non-Equity Incentive Plan Compensation ($)(2)
All Other Compensation ($)
Total ($)
Ashutosh Kulkarni
2024
600,000
—
11,249,875
—
598,175
19,800
(3)
12,467,850
Chief Executive Officer
2023
600,000
—
12,599,999
—
529,078
11,794
(3)
13,740,871
2022
530,834
—
7,122,290
9,838,736
376,635
19,575
(3)
17,888,070
Janesh Moorjani
2024
512,500
—
5,999,913
—
306,565
11,900
(3)
6,830,878
Chief Financial Officer and Chief Operating Officer
2023
500,000
—
5,499,948
—
264,539
15,000
(3)
6,279,487
2022
432,500
—
3,961,090
4,359,393
251,252
20,100
(3)
9,024,335
Shay Banon
2024
475,235
(4)(5)
—
3,199,926
—
301,314
(4)(5)
31,021
(4)(5)(6)
4,007,497
Chief Technology Officer
2023
428,891
(4)
—
2,999,977
—
226,917
(4)(5)
95,771
(4)(7)
3,751,556
2022
(8)
426,286
(4)
—
3,406,374
3,724,552
248,728
(4)
77,971
(4)(9)
7,883,912
Mark Dodds
2024
200,758
200,000
9,564,394
—
119,308
10,000
(3)
10,094,460
Chief Revenue Officer
Ken Exner
2024
465,000
—
4,499,952
—
278,151
20,400
(3)
5,263,503
Chief Product Officer
2023
304,688
—
9,609,326
2,822,318
155,360
19,522
(3)
12,911,214
(1)The amounts shown represent the grant date fair value of RSU awards and options, as applicable, to settle or purchase ordinary shares granted to the named executive officers for financial reporting purposes pursuant to ASC Topic 718. Such amounts do not represent the amounts paid to or realized by the named executive officers. See Note 11, “Equity Incentive Plans” of the Notes to our Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for fiscal year 2024 regarding assumptions underlying valuation of equity awards.
(2)Except as otherwise indicated, the amounts reported represent the amounts earned based upon achievement of certain performance goals under our Bonus Plan. The terms of the Bonus Plan are summarized under “Compensation Discussion and Analysis—Setting Target Total Direct Compensation—Executive Bonus Plan.”
(3)The amount disclosed represents Elastic’s contributions made under our Section 401(k) plan.
(4)Amounts for fiscal years 2022 and 2023 (and a portion of the amounts for fiscal year 2024) have been reported on an as-converted basis from Israeli new shekels (“ILS”) to U.S. dollars (“USD”) based on spot currency exchange rates of 1 ILS=USD 0.2670, 0.2748, and 0.2991 as of our fiscal year end April 30, 2024, 2023, and 2022, respectively.
(5)A portion of the amounts for fiscal year 2024 has been reported on an as-converted basis from British pound sterling (“GBP”) to USD based on spot currency exchange rates of 1 GBP=USD 1.25442 as of fiscal year end April 30, 2024.
(6)The listed amount is the sum of the following amounts: contributions by Elastic of $11,572 in ILS to a severance fund under a Section 14 Arrangement pursuant to Israeli Severance Pay Law; contributions by Elastic of $9,030 in ILS to a pension and manager’s insurance fund pursuant to Israeli labor laws; and contributions by Elastic of $10,419 in ILS to an education savings fund.
(7)The listed amount is the sum of the following amounts: contributions by Elastic of $35,727 in ILS to a severance fund under a Section 14 Arrangement pursuant to Israeli Severance Pay Law; contributions by Elastic of $27,878 in ILS to a pension and manager’s insurance fund pursuant to Israeli labor laws; and contributions by Elastic of $32,167 in ILS to an education savings fund.
(8)Mr. Banon served as our Chief Executive Officer for all of fiscal year 2021 and a portion of fiscal year 2022, and as such, his compensation for fiscal year 2022 reflects a higher compensation package.
(9)The listed amount is the sum of the following amounts: contributions by Elastic of $35,510 in ILS to a severance fund under a Section 14 Arrangement pursuant to Israeli Severance Pay Law; contributions by Elastic of $27,973 in ILS to a pension and manager’s insurance fund pursuant to Israeli labor laws; and contributions by Elastic of $14,488 in ILS to an education savings fund.
The following table provides information concerning each grant of an award made during fiscal year 2024 for each of our named executive officers under any plan. See “Compensation Discussion and Analysis—Setting Target Total Direct Compensation—Executive Bonus Plan” and “Compensation Discussion and Analysis—Setting Target Total Direct Compensation—Long-Term Incentive Compensation.” This information supplements the information about these awards set forth in the Fiscal 2024 Summary Compensation Table above.
Estimated possible payouts under non-equity incentive plan awards(1)
Estimated possible payouts under non-equity incentive plan awards(1)
All Other Stock Awards: Number of Shares of Stock or Units (#)(2)
Grant Date Fair Value of Stock Awards ($)(3)
Name
Approval Date
Grant Date
Award Type
Threshold ($)
Target ($)
Maximum ($)
Threshold (#)
Target (#)
Maximum (#)
Ashutosh Kulkarni
Annual Cash
300,000
600,000
900,000
6/6/2023
6/8/2023
PSUs
21,004
42,007
84,014
2,874,959
11/28/2023
12/8/2023
RSUs
72,316
8,374,916
Janesh Moorjani
Annual Cash
151,245
302,491
453,736
6/6/2023
6/8/2023
PSUs
10,593
21,186
42,372
1,449,970
11/21/2023
12/8/2023
RSUs
39,288
4,549,943
Shay Banon
Annual Cash
151,245
302,491
435,331
6/6/2023
6/8/2023
PSUs
5,479
10,958
21,916
749,966
11/28/2023
12/8/2023
RSUs
21,155
2,449,961
Mark Dodds
Annual Cash
60,227
120,455
180,682
1/3/2024
1/8/2024
RSUs
87,997
9,564,394
Ken Exner
Annual Cash
139,500
279,000
418,500
6/6/2023
6/8/2023
PSUs
7,854
15,707
31,414
1,074,987
11/21/2023
12/8/2023
RSUs
29,574
3,424,965
(1)Reflects threshold, target and maximum potential payments for awards under the Fiscal Year 2024 Bonus Plan described in the section above entitled “Compensation Discussion and Analysis—Compensation Elements—Annual Cash Incentives.” Under these awards, the named executive officers were eligible to receive a cash payout subject to the achievement of pre-established corporate performance metrics.
(2)All RSU and PSU awards were granted pursuant to the Stock Plan.
(3)The amounts shown represent the grant date fair value of the RSU awards and options to purchase shares of ordinary shares granted to the named executive officers for financial reporting purposes pursuant to ASC Topic 718. Such amounts do not represent the amounts paid to or realized by the named executive officers. See Note 11, “Equity Incentive Plans” of the Notes to our Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for fiscal year 2024 regarding assumptions underlying valuation of equity awards.
Fiscal 2024 Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information regarding outstanding equity awards held by our named executive officers as of April 30, 2024:
Option Awards
Stock Awards
Name
Grant Date
Award Type (*)
Number of Securities Underlying Unexercised Options (#) Exercisable
Number of Securities Underlying Unexercised Options (#) Unexercisable
Option Exercise Price ($)
Option Expiration Date
Number of Shares or Units of Stock That Have Not Vested (#)
Market Value of Shares or Units of Stock That Have Not Vested ($)(1)
Ashutosh Kulkarni
3/8/2022
(2)
NQ
105,010
81,676
75.85
03/07/2032
12/8/2021
(3)
NQ
15,271
10,908
128.31
12/07/2031
3/8/2021
(4)
NQ
5,058
1,504
111.20
03/07/2031
2/9/2021
(5)
ISO/NQ
25,524
5,891
166.43
02/08/2031
12/8/2023
(6)
RSU
67,797
6,930,209
6/8/2023
(7)
PSU
42,007
4,293,956
12/8/2022
(8)
RSU
159,943
16,349,373
3/8/2022
(9)
RSU
23,815
2,434,369
12/8/2021
(10)
RSU
5,808
593,694
3/8/2021
(11)
RSU
14,605
1,492,923
Janesh Moorjani
3/8/2022
(12)
NQ
60,474
—
75.85
03/07/2032
12/8/2021
(3)
NQ
15,271
10,908
128.31
12/07/2031
12/8/2020
(13)
ISO/NQ
20,806
4,162
145.83
12/07/2030
6/8/2019
(14)
NQ
33,416
23,869
81.39
06/07/2029
4/2/2018
(15)
ISO/NQ
12,464
—
13.07
04/01/2028
9/7/2017
(16)
ISO/NQ
58,931
—
10.15
09/06/2027
12/8/2023
(6)
RSU
36,833
3,765,069
6/8/2023
(7)
PSU
21,186
2,165,633
12/8/2022
(8)
RSU
69,816
7,136,592
12/8/2021
(10)
RSU
5,808
593,694
12/8/2020
(17)
RSU
3,151
322,095
6/8/2019
(18)
RSU
5,304
542,175
Shay Banon
12/8/2021
(3)
NQ
30,542
21,817
128.31
12/07/2031
12/8/2020
(13)
NQ
52,017
10,404
145.83
12/07/2030
4/2/2018
(19)
NQ
108,334
—
13.07
04/02/2028
9/7/2017
(20)
NQ
18,007
—
10.15
09/06/2027
12/8/2023
(6)
RSU
19,833
2,027,329
6/8/2023
(7)
PSU
10,958
1,120,127
12/8/2022
(8)
RSU
38,082
3,892,742
12/8/2021
(10)
RSU
11,615
1,187,285
12/8/2020
(17)
RSU
7,877
805,187
Mark Dodds
1/8/2024
(6)
RSU
82,498
8,432,946
Ken Exner
9/8/2022
(21)
NQ
22,358
34,127
84.87
09/07/2032
12/8/2023
(6)
RSU
27,726
2,834,152
6/8/2023
(7)
PSU
15,707
1,605,570
12/8/2022
(8)
RSU
25,388
2,595,161
9/8/2022
(22)
RSU
56,037
5,728,102
For purposes of this table, “NQ” refers to non-qualified stock options, “ISO/NQ” refers to stock option grants that are part incentive stock options and part non-qualified stock options, “RSU” refers to restricted stock units, and “PSU” refers to performance share units.
(1)The market value of unvested RSUs and PSUs is calculated by multiplying the number of unvested RSUs held by the applicable named executive officer by the market price of our ordinary shares on April 30, 2024 as reported on the NYSE, which was $102.22.
(2)The ordinary shares subject to the option vest in 48 equal monthly installments beginning on February 11, 2022, subject to continued service to us through the applicable vesting date.
(3)The ordinary shares subject to the option vest in 48 equal monthly installments beginning on January 8, 2022, subject to continued service to us through the applicable vesting date.
(4)One-fourth of the ordinary shares subject to the option vest on March 8, 2022, and 1/48th of the ordinary shares subject to the option vest monthly thereafter, subject to continued service to us through the applicable vesting date.
(5)One-fourth of the ordinary shares subject to the option vested on January 4, 2022, and 1/48th of the ordinary shares subject to the option vest monthly thereafter, subject to continued service to us through the applicable vesting date.
(6)The ordinary shares subject to the award of RSUs vest in 16 quarterly installments beginning on March 8, 2024, subject to continued service to us through the applicable vesting date.
(7)The ordinary shares are subject to a PSU award based on achievement of specified performance metrics. The number of ordinary shares shown represent achievement of the performance metric at the target level. Based on actual achievement for fiscal year 2024, 97% of the target PSUs were earned. One-third of the actual amounts received based on achievement vested on the determination date of June 8, 2024; thereafter, one-eighth of the remaining shares will vest quarterly, beginning on September 8, 2024, subject to continued service to us through the applicable vesting date.
(8)The ordinary shares subject to the award of RSUs vest in 16 quarterly installments beginning on March 8, 2023, subject to continued service to us through the applicable vesting date.
(9)The ordinary shares subject to the award of RSUs vest in 16 equal quarterly installments beginning on June 8, 2022, subject to continued service to us through the applicable vesting date.
(10)The ordinary shares subject to the award of RSUs vest in 16 quarterly installments beginning on March 8, 2022, subject to continued service to us through the applicable vesting date.
(11)One-fourth of the ordinary shares subject to the award of RSUs vest on March 8, 2021, and one-eighth of the ordinary shares subject to the award vest in six equal semiannual installments thereafter, subject to continued service to us through the applicable vesting date.
(12)The ordinary shares subject to the option vest in 24 equal monthly installments beginning on April 8, 2022, subject to continued service to us through the applicable vesting date.
(13)The ordinary shares subject to the option vest in 48 equal monthly installments beginning on January 8, 2021, subject to continued service to us through the applicable vesting date.
(14)The ordinary shares subject to the option vest in 48 equal monthly installments beginning on January 8, 2022, subject to continued service to us through the applicable vesting date.
(15)The ordinary shares subject to the option vested in 48 equal monthly installments beginning on November 1, 2019, subject to continued service to us through the applicable vesting date. The option became fully vested on October 1, 2023
(16)The option was subject to an early option exercise provision and was immediately exercisable. One-fourth of the ordinary shares subject to the option vested on August 28, 2018, and 1/48th of the ordinary shares subject to the option vested monthly thereafter. The option became fully vested on August 28, 2021.
(17)The ordinary shares subject to the award of RSUs vest in eight equal semiannual installments beginning on June 8, 2021, subject to continued service to us through the applicable vesting date.
(18)The ordinary shares subject to the award of RSUs vest in eight equal semiannual installments beginning on June 8, 2022, subject to continued service to us through the applicable vesting date.
(19)The ordinary shares subject to the option vested in 48 equal monthly installments beginning on May 2, 2018, subject to continued service to us through the applicable vesting date. The option became fully vested on April 2, 2022.
(20)The ordinary shares subject to the option vested in 48 equal monthly installments beginning on May 1, 2017, subject to continued service to us through the applicable vesting date. The option became fully vested on April 1, 2021.
(21)The ordinary shares subject to the option vest in 48 equal monthly installments beginning on October 8, 2022, subject to continued service to us through the applicable vesting date.
(22)The ordinary shares subject to the award of RSUs vest in 16 quarterly installments beginning on December 8, 2022, subject to continued service to us through the applicable vesting date.
The following table presents, for each of our named executive officers, the number of ordinary shares acquired and the related value realized upon the exercise of stock options and the vesting of RSUs during fiscal year 2024.
Option Awards
Stock Awards
Name
Number of Shares Acquired on Exercise (#)
Value Realized on Exercise ($)(1)
Number of Shares Acquired on Vesting (#)
Value Realized on Vesting ($)(2)
Ashutosh Kulkarni
—
—
104,418
9,662,961
Janesh Moorjani
7,651
400,034
51,847
4,802,949
Shay Banon
—
—
29,684
2,749,445
Mark Dodds
—
—
5,499
581,409
Ken Exner
—
—
33,495
3,105,899
(1)The value realized on exercise is calculated as the difference between the market value of our ordinary shares underlying the options on the date of exercise, which is the closing price of the shares on that date as reported on the NYSE, and the applicable exercise price of those options.
(2)The value realized upon vesting is calculated by multiplying the number of ordinary shares released upon vesting of the RSUs by the market value of such ordinary shares on the vesting date.
Fiscal 2024 Non-Qualified Deferred Compensation
Effective January 1, 2024, we offer a non-qualified deferred compensation plan (“Deferred Compensation Plan”) which provides eligible U.S. employees with the opportunity to defer up to 80% of their eligible base salary and variable sales-based compensation and up to 100% of their eligible fiscal year bonus (beginning with bonuses for our fiscal year 2024) in excess of the limits imposed on the 401(k) plan by the Internal Revenue Code. Account balances under the Deferred Compensation Plan are credited with income, gains, and losses based on the performance of investment funds selected by the participant from a list of funds designated by our company. We do not make matching contributions under the Deferred Compensation Plan, but are permitted to make discretionary contributions. We did not make any contributions to the Deferred Compensation Plan in fiscal year 2024.
The following table sets forth information with respect to deferrals made by our named executive officers during fiscal year 2024.
Name
Executive contributions in last fiscal year
($)(1)
Registrant contribution in last fiscal year
($)
Aggregate earnings in last fiscal year
($)(2)
Aggregate withdrawals/distributions
($)
Aggregate balance at last fiscal year end
($)(3)
Ashutosh Kulkarni
—
—
—
—
—
Janesh Moorjani
140,000
—
724
—
140,724
Shay Banon
—
—
—
—
—
Mark Dodds
—
—
—
—
—
Ken Exner
—
—
—
—
—
(1)Amounts disclosed in this column are reflected in the "Salary" column of the Fiscal 2024 Summary Compensation Table.
(2)None of the earnings set forth in this column are considered above-market or preferential as determined under SEC rules, and, therefore, none of such amounts are reflected in the Fiscal 2024 Summary Compensation Table.
(3)The balance shown represents compensation already reported in the Fiscal 2024 Summary Compensation Table, except for any earnings that were not above-market or preferential as determined under SEC rules.
We have entered into an employment agreement with Shay Banon, our CTO. Pursuant to Mr. Banon’s employment agreement, Mr. Banon will continue to serve as our at-will employee and as an executive director, with such membership on our board of directors subject to our articles of association, board rules, and any required shareholder approvals.
Mr. Banon’s employment agreement provides that his salary will be subject to review and may be increased (but not decreased) based upon the Company’s normal performance review practices, eligibility to receive an annual performance bonus, and eligibility to participate in employee benefit plans maintained from time to time for senior executives.
Pursuant to Mr. Banon’s employment agreement, he may be eligible to receive certain severance payments and benefits. The amount and type of the severance payments and benefits provided under Mr. Banon’s employment agreement, as well as the terms and conditions under which such severance payments and benefits may be provided, are identical in all material respects to the provisions regarding severance payments and benefits provided for in our change in control severance agreements, as described below under the heading “Executive Officer Change in Control and Severance Agreements.” Mr. Banon is also eligible to receive any statutory severance benefits required to be provided by applicable law, and the severance payments and benefits provided in his employment agreement will be offset by the amount of any such statutory severance benefits.
Employment Letters with Messrs. Kulkarni, Moorjani, Dodds and Exner
We have entered into an employment letter with each of Messrs. Kulkarni, Moorjani, Dodds, and Exner. The employment letters do not have a specific term and provide that employment is “at-will.” Each of those employment letters provides for annual base salary and the opportunity to earn annual bonus incentive compensation. In accordance with the employment letters, the Company may modify salaries and/or incentive compensation opportunities from time to time as it deems necessary.
Executive Officer Change in Control and Severance Agreements
We have entered into change in control and severance agreements with each of Messrs. Kulkarni, Moorjani, Dodds, and Exner. Additionally, as noted above, we have entered into an employment agreement with Mr. Banon that contains severance provisions that are identical in all material respects to those contained in the change in control and severance agreements (except that the severance payments and benefits Mr. Banon receives under his employment agreement will be offset by any statutory severance benefits required to be provided to Mr. Banon under applicable law).
Pursuant to each executive’s severance agreement, if we terminate the employment of the executive other than for “cause” (excluding by reason of the executive’s death or disability) or the executive resigns for “good reason” (as such terms are defined in the executive’s severance agreement), and, within 60 days following the executive’s termination, the executive executes a separation agreement and release of claims in our favor that becomes effective and irrevocable and resigns from all positions the executive may hold as an officer or director, the executive is entitled to receive (i) a lump sum payment equal to 6 months of the executive’s annual base salary and (ii) a lump sum payment equal to 50% of the executive’s annual target performance bonus as in effect for the fiscal year in which the termination occurs. In addition, we will pay the premiums for coverage under COBRA for the executive and the executive’s dependents, if any, for up to 12 months following the executive’s termination of employment.
Pursuant to each executive’s severance agreement, if, within the three-month period prior to or the 12-month period following a “change in control” (as defined in the executive’s severance agreement), the employment of the executive is terminated under the circumstances described in the above paragraph and, within 60 days following his termination, the executive executes a separation agreement and release of claims in our favor that becomes effective and irrevocable and resigns from all positions he may hold as an officer or director, the executive is entitled to receive (i) a lump sum payment equal to 12 months of the executive’s annual base salary, (ii) a lump sum payment equal to 100% of the executive’s annual target performance bonus as in effect for the fiscal year in which the termination occurs, and (iii) accelerated vesting of 100% of any outstanding equity awards held by the executive on the date of the
executive’s termination (in the case of an equity award with performance-based vesting, unless otherwise specified in the applicable equity award agreement governing such award, all performance goals and other vesting criteria will be deemed achieved at the greater of actual performance measured as of the date of termination or 100% of target levels). In addition, we will pay the premiums for coverage under COBRA for the executive and the executive’s dependents, if any, for up to 12 months following the executive’s termination of employment.
In the event any payment to an executive pursuant to the applicable severance agreement or otherwise would be subject to the excise tax imposed by Section 4999 of the Code (as a result of a payment being classified as a parachute payment under Section 280G of the Code), the executive would receive such payment as would entitle the executive to receive the greatest after-tax benefit, even if as a result we would pay the executive a lower aggregate payment so as to minimize or eliminate the potential excise tax imposed by Section 4999 of the Code.
Potential Payments Upon Termination or Change in Control
The table below provides information with respect to potential payments and benefits to which our named executive officers would be entitled under the arrangements set forth in their change in control and severance agreements or, in the case of Mr. Banon, employment agreement assuming their employment was terminated as of April 30, 2024, including in connection with a change in control assumed to occur as of April 30, 2024. The amounts reported reflect rounding, which may result in slight variations between amounts shown in the Total column and the sum of its components as reflected in the table.
Name
Termination Reason
Base Salary ($)
Bonus ($)
Accelerated Vesting of Equity Awards ($)(1)
Continuation of Insurance Coverage ($)(2)
Total ($)
Ashutosh Kulkarni
Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control
600,000
600,000
34,248,321
21,302
35,469,622
Termination Without Cause or Resignation for Good Reason
300,000
300,000
—
21,302
621,302
Janesh Moorjani
Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control
525,000
315,000
15,022,449
17,333
15,879,782
Termination Without Cause or Resignation for Good Reason
262,500
157,500
—
17,333
437,333
Shay Banon
Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control
107,316
64,390
9,032,670
5,174
9,209,550
Termination Without Cause or Resignation for Good Reason
53,658
32,195
—
5,174
91,027
Mark Dodds
Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control
500,000
300,000
8,432,946
21,302
9,254,247
Termination Without Cause or Resignation for Good Reason
250,000
150,000
—
21,302
421,302
Ken Exner
Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control
480,000
480,000
13,355,088
—
14,315,088
Termination Without Cause or Resignation for Good Reason
240,000
240,000
—
—
480,000
(1)The value of accelerated vesting of unvested RSUs is based upon the closing price of our ordinary shares on April 30, 2024 of $102.22 as reported on the NYSE, multiplied by the number of unvested RSUs. The value of accelerated vesting of unvested stock options is based on the difference between the closing price of our ordinary shares on April 30, 2024 of $102.22 as reported on the NYSE, and the exercise price per option multiplied by the number of unvested options.
(2)This amount is based on the payment of monthly COBRA premiums as of April 30, 2024 for a 12-month period.
Limitation on Liability and Indemnification Matters
In addition to our obligation pursuant to our articles of association to indemnify our officers against specified liabilities, we have entered into and expect to continue to enter into agreements to indemnify each of our current officers. With specified exceptions, these agreements provide indemnification for certain expenses and liabilities incurred in connection with any action, suit, proceeding or alternative dispute resolution mechanism, hearing, inquiry, or investigation that may lead to the foregoing, to which they are a party, or are threatened to be made a party, by reason of the fact that they are or were an officer, by reason of any action or inaction by them while serving as an officer. In the case of an action or proceeding by, or in the right of, our Company or any of our subsidiaries, no indemnification will be provided for any claim where a court determines that the indemnified party is prohibited from receiving indemnification. We believe that these provisions and indemnification agreements are necessary to attract and retain qualified persons as officers. We also maintain officers’ liability insurance.
A shareholder’s investment may be harmed to the extent we pay the costs of settlement and damage awards against officers pursuant to the indemnification provisions in our articles of association and such agreements. Insofar as we may provide indemnification for liabilities arising under the Securities Act to our officers pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. There is no pending litigation or proceeding naming any of our officers as to which indemnification is being sought.
The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” required by Item 402(b) of Regulation S-K with management and based on such review and discussions, the Compensation Committee recommended to our board of directors that the “Compensation Discussion and Analysis” be included in this proxy statement and the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2024.
Respectfully submitted by the members of the Compensation Committee:
Alison Gleeson (Chairperson)
Sohaib Abbasi
Paul Auvil
Report of Compensation Committee| Elastic 2024 Proxy Statement68
Pursuant to Item 402(u) of Regulation S-K and Section 953(b) of the Dodd-Frank Act, presented below is the ratio of annual total compensation of our median compensated employee to that of Ashutosh Kulkarni, our CEO, in fiscal year 2024.
The ratio presented below is a reasonable estimate calculated in a manner consistent with SEC rules and applicable guidelines. The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. The pay ratio reported by other companies may not be comparable to the pay ratio reported below, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. As a result, and as explained by the SEC when it adopted these rules, in considering the pay ratio disclosure, shareholders should keep in mind that the rule was not designed to facilitate comparisons of pay ratios among different companies, even companies within the same industry, but rather to allow shareholders to better understand and assess each particular company’s compensation practices and pay ratio disclosures.
We identified the median compensated employee using the following methodology:
For each member of the applicable employee population, we used the total of the employee’s target cash compensation and equity awards received during fiscal year 2024. For employees paid other than in U.S. dollars, we converted their compensation to U.S. dollars using our anticipated exchange rate for fiscal year 2024. With respect to equity awards, we determined the grant date fair value of restricted stock units awarded during fiscal year 2024 computed in accordance with FASB ASC Topic 718 using the closing price of our common stock as reported on the NYSE on the date of grant.
In determining our employee population, we considered the individuals other than our CEO who were employed by us on March 1, 2024, whether employed in a full-time, part-time or temporary capacity. We did not include any contractors, agency workers or other non-employees.
After identifying the median compensated employee, we then calculated the total fiscal year 2024 compensation for this individual using the same methodology we use to calculate the fiscal year 2024 amount reported for our CEO in the “Total” column of the Fiscal 2024 Summary Compensation Table as set forth in the “Executive Compensation” section of this proxy statement.
For our fiscal year 2024:
For fiscal year 2024, the total compensation for our CEO, Mr. Kulkarni, was $12,467,850 as reported in the “Total” column of the Fiscal 2024 Summary Compensation Table as set forth in the “Executive Compensation” section of this proxy statement.
The fiscal year 2024 annual total compensation for our median compensated employee was $211,543. Thus, the ratio of our CEO’s total fiscal year 2024 compensation to our median compensated employee’s total fiscal year 2024 compensation was 59:1.
Neither the Compensation Committee nor our management used this pay ratio in making compensation decisions.
In accordance with the Pay versus Performance rules (the “PvP rules”) adopted by the SEC pursuant to the Dodd-Frank, we provide the following disclosure regarding executive compensation for our CEO, who is our principal executive officer, and non-CEO named executive officers and Company performance for our four most recent fiscal years. The Compensation Committee and the board of directors did not consider the pay versus performance information below in making its pay decisions for any of the fiscal years presented. See the “Executive Compensation—Compensation Disclosure and Analysis” section of this proxy statement for information about the pay decisions made with respect to named executive officer compensation for the fiscal years discussed in that section.
Pursuant to the PvP rules, we provide the following information below:
•tabular compensation and performance disclosure for our fiscal years 2021, 2022, 2023, and 2024 (the “covered years”);
•additional disclosure regarding the relationship between the “compensation actually paid” (as calculated in accordance with the PvP rules) set forth in the pay versus performance table and each of the performance metrics set forth in the table and between the Company’s total shareholder return (“TSR”) and the TSR Peer Group (as set forth in the table below), in each case over the covered years; and
•a list of three financial performance measures that we consider to be our most important measures used to align compensation actually paid for fiscal year 2024 to the named executive officers (as used in this Pay Versus Performance section, the “NEOs”) to Company performance.
In the pay versus performance table below, we provide information about compensation of our NEOs for each of the covered years. Additionally, we provide information about the results for certain financial performance measures for the covered years. Although the PvP rules require us to disclose “compensation actually paid,” these amounts do not necessarily reflect compensation that our principal executive officer and other NEOs actually earned for the covered years. Instead, “compensation actually paid” reflects a calculation computed in accordance with the PvP rules, including adjusted values for unvested and vested equity awards during the covered years based on either year-end or vesting date stock prices and various accounting valuation assumptions. “Compensation actually paid” generally fluctuates due to stock price performance.
Pay Versus Performance
Value of Initial Fixed $100 Investment Based On:
Year
Summary Compensation Table Total for PEO
Compensation Actually Paid to PEO
Summary Compensation Table for Former PEO
Compensation Actually Paid to Former PEO
Average Summary Compensation Table Total for Non- PEO NEOs
Average Compensation Actually Paid to Non- PEO NEOs
Download
