Edgar Filing: NetApp, Inc.

Definitive Proxy Statement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Amendment No. )

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þ	Definitive Proxy Statement

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¨	Soliciting Material Pursuant to §240.14a-12

NETAPP, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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LOGO

NETAPP, INC.

495 East Java Drive

Sunnyvale, California 94089

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held Friday, September 5, 2014

You are cordially invited to attend the Annual Meeting of Stockholders, and any adjournment, postponement or other delay thereof (the “Annual Meeting”), of NetApp, Inc., a Delaware corporation (“NetApp”), which will be held on Friday, September 5, 2014, at 3:30 p.m. local time, at NetApp’s headquarters, 495 East Java Drive, Sunnyvale, California 94089. We are holding the Annual Meeting for the following purposes:

To elect the following individuals to serve as members of the Board of Directors for the ensuing year or until their respective successors are duly elected and qualified: Thomas Georgens, T. Michael Nevens, Jeffry R. Allen, Tor R. Braham, Alan L. Earhart, Gerald Held, Kathryn M. Hill, George T. Shaheen, Robert T. Wall and Richard P. Wallace;

To approve an amendment to NetApp’s Amended and Restated 1999 Stock Option Plan to increase the share reserve by an additional 7,500,000 shares of common stock;

To approve an amendment to NetApp’s Employee Stock Purchase Plan to increase the share reserve by an additional 5,000,000 shares of common stock;

To approve NetApp’s Executive Compensation Plan;

To conduct an advisory vote to approve Named Executive Officer compensation;

To consider a stockholder proposal, if properly presented at the Annual Meeting;

To ratify the appointment of Deloitte & Touche LLP as NetApp’s independent registered public accounting firm for the fiscal year ending April 24, 2015; and

To transact such other business as may properly come before the Annual Meeting.

The foregoing items of business are more fully described in the Proxy Statement that accompanies this Notice of Annual Meeting of Stockholders. The Board of Directors has fixed the close of business on July 22, 2014 as the record date for determining the stockholders entitled to notice of and to vote at the Annual Meeting.

In accordance with the rules and regulations of the Securities and Exchange Commission, we have elected to provide access to our proxy materials over the Internet. Accordingly, NetApp will mail, on or about July 25, 2014, a Notice of Internet Availability of Proxy Materials to its stockholders of record and beneficial owners. The Notice of Internet Availability of Proxy Materials will identify: (1) the website where our proxy materials will be made available; (2) the date, time, and location of the Annual Meeting; (3) the matters to be acted upon at the Annual Meeting and the Board of Directors’ recommendation with regard to each matter; (4) a toll-free telephone number, an e-mail address, and a website where stockholders can request a paper or e-mail copy of the Proxy Statement, our Annual Report on Form 10-K or a form of proxy relating to the Annual Meeting; (5) instructions on how to vote your shares by proxy; and (6) information on how to obtain directions to attend the Annual Meeting and vote in person by ballot. These proxy materials will be available free of charge.

To assure your representation at the Annual Meeting, you are urged to cast your vote as instructed in the Notice of Internet Availability of Proxy Materials over the Internet or by telephone as promptly as possible. You may also request a paper proxy card to submit your vote by mail, if you prefer. Any stockholder of record attending the Annual Meeting may vote in person by ballot, even if such stockholder has previously voted over the Internet, voted by telephone or returned a signed proxy card. Any beneficial owner who is not a stockholder of record will be required to show a legal proxy from such stockholder’s bank, broker or other nominee in order to vote in person by ballot at the Annual Meeting.

Thank you for your interest in NetApp.

BY ORDER OF THE BOARD OF DIRECTORS,

LOGO

Thomas Georgens

Chairman of the Board and Chief Executive Officer

Sunnyvale, California

July 25, 2014

YOUR VOTE IS EXTREMELY IMPORTANT. TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE URGED TO VOTE BY TELEPHONE OR OVER THE INTERNET AS PROMPTLY AS POSSIBLE. ALTERNATIVELY, YOU MAY REQUEST A PAPER PROXY CARD, WHICH YOU SHOULD SIGN, DATE AND RETURN BY MAIL.

TABLE OF CONTENTS


	Page

PROXY STATEMENT		1
General		1
Notice of Internet Availability of Proxy Materials		1
Record Date and Shares Outstanding		1
Quorum Requirement		1
Votes Required for Proposals		2
Stockholders of Record versus Beneficial Owners		2
Abstentions and Broker Nonvotes		2
Methods of Voting		2
Revocability of Proxies		3
Solicitation of Proxies		3
Annual Report		3
Stockholder Proposals		3
Householding		4
If You Plan to Attend the Annual Meeting		4

PROPOSAL NO. 1 ELECTION OF DIRECTORS		5
Majority Voting		5
Information Regarding the Nominees		5
Information Regarding Departing Directors		9
Vote Required		9

CORPORATE GOVERNANCE		10
Board Leadership Structure		10
Corporate Governance Guidelines		10
Risk Oversight		11
Independent Directors		11
Corporate Governance and Nominating Committee		11
Compensation Committee		13
Audit Committee		13
Stockholder Meeting Attendance for Directors		13
Code of Conduct		13
Personal Loans to Executive Officers and Directors		14
Stockholder Communications Policy		14
Meetings and Committees of our Board of Directors		14

DIRECTOR COMPENSATION		16
Director Compensation Table		16
Summary of Director Compensation Policy		17

PROPOSAL NO. 2 AMENDMENT TO THE COMPANY’S AMENDED AND RESTATED 1999 STOCK OPTION PLAN		19
Introduction		19
Current Awards Outstanding		20
Description of the 1999 Plan		20
Administration of the 1999 Plan		21
Shares Subject to the 1999 Plan		21
Eligibility		22
Discretionary Option Grant Program		22

TABLE OF CONTENTS

(continued)


	Page

Stock Appreciation Rights Program		22
Stock Issuance Program		23
Performance Share and Performance Unit Program		23
Performance Goals		23
Automatic Award Program		23
Awards to be Granted to Certain Individuals and Groups		24
Limited Transferability of Awards		26
Federal Tax Aspects		26
Amendment and Termination of the Plan		27
Summary		27
Vote Required		27

PROPOSAL NO. 3 AMENDMENT TO THE COMPANY’S EMPLOYEE STOCK PURCHASE PLAN		28
Introduction		28
Description of the Purchase Plan		28
Share Reserve		28
Offering Period and Purchase Rights		29
Eligibility and Participation		29
Purchase Price		29
Payroll Deductions and Stock Purchases		30
Special Limitations		30
Withdrawal Rights and Termination of Employment		30
Stockholder Rights		30
Assignability		30
Change of Control		31
Share Proration		31
Amendment and Termination		31
Plan Benefits		31
Participation in the Purchase Plan		32
New Plan Benefits		32
Federal Tax Consequences		32
Summary		33
Vote Required		33

PROPOSAL NO. 4 APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION PLAN		34
Introduction		34
Eligibility		34
Purpose		34
Administration		34
Determination of Awards		35
Payment of Awards		35
Maximum Awards		35
Amendment and Termination		35
Federal Income Tax Consequences		35
Awards to be Granted to Certain Individuals and Groups		36
Summary		36
Vote Required		36

TABLE OF CONTENTS

(continued)


	Page

PROPOSAL NO. 5 ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION “SAY-ON-PAY”		37
Vote Required		38

PROPOSAL NO. 6 STOCKHOLDER PROPOSAL		39
Supporting Statement		39
The Company’s Response		39
Vote Required		40

PROPOSAL NO. 7 RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		41
General		41
Principal Accountant Fees and Services		41
Vote Required		42

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		43
Section 16(a) Beneficial Ownership Reporting Compliance		45

COMPENSATION DISCUSSION AND ANALYSIS		46
Executive Summary		46
Principles and Objectives of Compensation		51
Administration of Our Compensation Program		51
Factors in Determining Compensation		52
Components of Compensation		54
Policies Regarding Granting of Equity Awards		57
Stock Ownership Guidelines		57
Recovery of Incentive-Based Compensation		58
Anti-Hedging and Anti-Pledging Policies		58
Other Compensation for NEOs		58
Tax Deductibility of Compensation		59

COMPENSATION COMMITTEE REPORT		59

EXECUTIVE COMPENSATION AND RELATED INFORMATION		60
Summary Compensation Table		60
Grants of Plan-Based Awards		61
Outstanding Equity Awards at Fiscal Year End		62
Option Exercises and Stock Vested for Fiscal 2014		63
Nonqualified Deferred Compensation		63

TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS		65
Potential Payments upon Termination or Change of Control		65
Estimated Payments Pursuant to Change of Control Severance Agreements		69
Equity Compensation Plan Information		71

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION		71

CERTAIN TRANSACTIONS WITH RELATED PARTIES		72

AUDIT COMMITTEE REPORT		73

OTHER BUSINESS		74

FORM 10-K		74

Annex A		A-1

Appendix A		A-1

Appendix B		B-1

Appendix C		C-1

iii

TABLE OF CONTENTS

(continued)

Cautionary Statement Regarding Forward-Looking Statements

This Proxy Statement may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are all statements (and their underlying assumptions) included in this Proxy Statement that refer, directly or indirectly, to future events or outcomes and, as such, are inherently not factual, but rather reflect only our current projections for the future. Consequently, forward-looking statements usually include words such as “estimate,” “intend,” “plan,” “predict,” “seek,” “may,” “will,” “should,” “would,” “could,” “anticipate,” “expect,” “believe,” or similar words, in each case, intended to refer to future events or circumstances. Our future results may differ materially from our past results and from those projected in the forward-looking statements due to various uncertainties and risks, including, but not limited to, those described in Item 1A of Part I (Risk Factors) of our Annual Report on Form 10-K. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based upon information available to us at this time. These statements are not guarantees of future performance. We disclaim any obligation to update information in any forward-looking statement. Actual results could vary from our forward-looking statements due to the foregoing factors as well as other important factors.

LOGO

PROXY STATEMENT

FOR THE ANNUAL MEETING OF STOCKHOLDERS OF

NETAPP, INC.

To Be Held Friday, September 5, 2014

General

This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (“Board” or “Board of Directors”) of NetApp, Inc., a Delaware corporation (the “Company,” “NetApp,” “we” or “our”), of proxies to be voted at the Annual Meeting of Stockholders, and any adjournment, postponement or other delay thereof (the “Annual Meeting”), to be held on Friday, September 5, 2014 for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. Stockholders of record as of the close of business on July 22, 2014 (the “Record Date”) will be entitled to vote at the Annual Meeting. The Annual Meeting will be held at 3:30 p.m. local time at the Company’s headquarters at 495 East Java Drive, Sunnyvale, California 94089.

Notice of Internet Availability of Proxy Materials

In accordance with rules and regulations adopted by the Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials to each of our stockholders, we are now furnishing proxy materials to our stockholders over the Internet. If you received a Notice of Internet Availability of Proxy Materials (the “Notice”) by mail, you will not receive a printed copy of the proxy materials. Instead, the Notice instructs you as to how you may access and review all of the information contained in the proxy materials. The Notice also instructs you as to how you may submit your proxy over the Internet or by telephone. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice.

It is anticipated that the Notice will be mailed to stockholders on or about July 25, 2014.

Record Date and Shares Outstanding

On the Record Date, the Company had 325,439,002 shares of its common stock outstanding and entitled to vote at the Annual Meeting. No shares of the Company’s preferred stock were outstanding. At the Annual Meeting, each holder of common stock is entitled to one vote for each share of common stock held by such stockholder on the Record Date. There are no cumulative voting rights.

Quorum Requirement

A majority of the shares of common stock issued and outstanding and entitled to vote, in person or by proxy, constitutes a quorum for the transaction of business at the Annual Meeting.

Votes Required for Proposals

For Proposal No. 1, each of the 10 director nominees must receive the affirmative vote of shares representing a majority of the votes cast, meaning the number of votes “FOR” a director nominee must exceed the number of votes “AGAINST” that nominee. Approval of Proposal Nos. 2, 3, 4, 5, 6 and 7 each require the affirmative vote of a majority of the stock having voting power present in person or represented by proxy. The vote on Proposal Nos. 5 and 6 is advisory, and is therefore not binding on the Company or the Board. Voting results will be published in a Current Report on Form 8-K, which will be filed with the SEC within four business days of the Annual Meeting.

Stockholders of Record versus Beneficial Owners

You are a stockholder of record if, as of the close of business on the Record Date, your shares of common stock were registered directly in your name with Computershare Trust Company, N.A., our transfer agent. If your shares of common stock are held in a brokerage account or by a bank, broker or other nominee, you are considered the “beneficial owner” of those shares, which are held in “street name.” As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares by following the voting instructions that your bank, broker or other nominee provides to you. If you do not provide your bank, broker or other nominee with instructions on how to vote your shares, your bank, broker or other nominee may not vote your shares with respect to any non-routine matters, but may, in its discretion, vote your shares with respect to routine matters.

Abstentions and Broker Nonvotes

Although there is no definitive statutory or case law authority in Delaware as to the proper treatment of abstentions, the Company believes that abstentions should be counted for purposes of determining both (1) the presence or absence of a quorum for the transaction of business; and (2) the total number of shares entitled to vote in person or by proxy at the Annual Meeting with respect to a proposal. In the absence of controlling precedent to the contrary, the Company intends to treat abstentions in this manner. Accordingly, abstentions will have the same effect as a vote against a proposal, except with respect to Proposal No. 1 (election of directors), where they will have no effect.

A “broker nonvote” occurs when a bank, broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the bank, broker or other nominee does not have discretionary voting power with respect to such proposal and has not received voting instructions from the beneficial owner. Broker nonvotes will be counted for purposes of determining the presence or absence of a quorum for the transaction of business, but will not be counted for purposes of determining the number of votes cast on a proposal. Accordingly, a broker nonvote will make a quorum more readily attainable, but will not otherwise affect the outcome of the vote on a proposal.

If your shares are held in street name and you do not instruct your broker on how to vote your shares, your brokerage firm may, at its discretion, either leave your shares unvoted or vote your shares on routine matters, but not on non-routine matters. The proposal to ratify the appointment of our independent registered public accounting firm for fiscal 2015 (Proposal No. 7) will be treated as a routine matter. To the extent that your brokerage firm votes your shares on your behalf on this proposal, such votes will be counted as votes cast with respect to such proposal. Proposal Nos. 1, 2, 3, 4, 5 and 6 are considered non-routine matters. Consequently, your brokerage firm cannot vote your shares on such proposals without your voting instructions.

Methods of Voting

Stockholders may vote by proxy or by ballot at the Annual Meeting. The Company is offering stockholders of record four methods of voting: (1) you may vote by telephone; (2) you may vote over the Internet; (3) you may vote in person at the Annual Meeting; and (4) finally, you may request a proxy card from us and indicate your vote by signing and dating the card where indicated and by mailing or otherwise returning the card in the prepaid envelope provided.

If you vote but do not specify your choices, your shares of common stock will be voted (1) “FOR” the election of all of the nominees named in Proposal 1; (2) “FOR” Proposal Nos. 2, 3, 4, 5 and 7; (3) “AGAINST” Proposal No. 6; and (4) in the proxy holder’s discretion as to any other matters that may properly come before the Annual Meeting.

If you hold your shares of common stock through a bank, broker or other nominee, you will not be able to vote by ballot in person at the Annual Meeting unless you have previously obtained a legal proxy from your bank, broker or other nominee and present it with your ballot at the Annual Meeting.

Revocability of Proxies

Any stockholder of record voting by proxy has the power to revoke a proxy at any time before polls close at the Annual Meeting. You may revoke or change your proxy by filing with the Secretary of the Company an instrument of revocation or a duly executed proxy bearing a later date or by attending the Annual Meeting and voting in person by ballot. If you are the beneficial owner of your shares, you must contact the bank, broker or other nominee holding your shares and follow the instructions of such bank, broker or other nominee to revoke your proxy or change your vote.

Solicitation of Proxies

The Company will bear the cost of soliciting proxies. Copies of solicitation materials will be made available upon request to brokerage houses, fiduciaries, and custodians holding shares in their names that are beneficially owned by others to forward to such beneficial owners. The Company may reimburse such persons for their costs of forwarding the solicitation materials to such beneficial owners. The Company has retained AST Phoenix Advisors, a professional proxy solicitation firm, to assist in the solicitation of proxies from stockholders of the Company. AST Phoenix Advisors may solicit proxies by personal interview, mail, telephone, facsimile, email, or otherwise. The Company expects that it will pay AST Phoenix Advisors its customary fee, estimated to be approximately $10,000, plus reasonable out-of-pocket expenses incurred in the process of soliciting proxies. In addition, the original solicitation of proxies may be supplemented by solicitation by telephone, electronic communication or other means by directors, officers, employees, or agents of the Company. No additional compensation will be paid to these individuals for any such services.

Annual Report

The Notice, this Proxy Statement and the Company’s Annual Report on Form 10-K for fiscal 2014 (the “Annual Report”) have been made available to all stockholders entitled to vote at the Annual Meeting. The Annual Report is not incorporated into this Proxy Statement and is not considered proxy-soliciting material. The Annual Report is posted at the following website address: http://investors.netapp.com/annuals.cfm.

Stockholder Proposals

The Company’s stockholders may submit proposals that they believe should be voted upon at the Company’s 2015 Annual Meeting of Stockholders (the “2015 Annual Meeting”). Stockholders may also recommend candidates for election to our Board of Directors for such Annual Meeting (see “Corporate Governance — Corporate Governance and Nominating Committee”).

Pursuant to Rule 14a-8 under the Exchange Act, stockholder proposals may be included in our 2015 Proxy Statement. Any such stockholder proposals must be submitted in writing to the attention of the Corporate Secretary, NetApp, Inc., 495 East Java Drive, Sunnyvale, California 94089, no later than March 27, 2015, which is the date 120 calendar days prior to the first anniversary of the mailing date of this Proxy Statement.

Under the Company’s bylaws, a proposal that a stockholder intends to present for consideration at the 2015 Annual Meeting but does not seek to include in the Company’s proxy materials for the 2015 Annual Meeting

(including a nomination to the Board) must be received by the Corporate Secretary (at the address specified in the preceding paragraph) not less than 120 calendar days prior to the date of the 2015 Annual Meeting. The stockholder’s submission must include the information specified in the Company’s bylaws.

Stockholders interested in submitting such a proposal are advised to contact knowledgeable legal counsel with regard to the detailed requirements of applicable securities laws.

If a stockholder gives notice of a proposal or a nomination after the applicable deadline specified above, the notice will not be considered timely, and the stockholder will not be permitted to present the proposal or the nomination to the stockholders for a vote at the 2015 Annual Meeting.

Householding

The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy delivery requirements for proxy materials with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for the Company. The Company and some brokers household proxy materials unless contrary instructions have been received from one or more of the affected stockholders. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please (1) follow the instructions provided when you vote over the Internet; or (2) contact Broadridge Financial Solutions, Inc., either by calling toll free at (800) 542-1061 or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.

If You Plan to Attend the Annual Meeting

Attendance at the Annual Meeting will be limited to stockholders and the Company’s invited guests. Each stockholder may be asked to present valid picture identification, such as a driver’s license or passport. Stockholders holding shares of common stock in brokerage accounts through a bank, broker or other nominee may be required to show a brokerage or account statement reflecting their stock ownership. Cameras, recording devices and other electronic devices will not be permitted at the Annual Meeting. You may contact the Company at 1-408-542-2500 for directions to the Annual Meeting.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

At the Annual Meeting, 10 directors will be elected to serve until the 2015 Annual Meeting or until successors for such directors are elected and qualified, or until the death, resignation or removal of such directors. Proxies will be voted for the 10 nominees named below for election to our Board. Each person nominated for election has consented to being named in this Proxy Statement and has agreed to serve if elected, and our Board has no reason to believe that any nominee will be unavailable or will decline to serve. In the event, however, that any nominee is unable or declines to serve as a director, the proxies will be voted for any nominee who is designated by our Board to fill the vacancy. The proxies solicited by this Proxy Statement may not be voted for more than 10 nominees.

Majority Voting

In an uncontested election of directors, to be elected to our Board, each nominee must receive the affirmative vote of shares representing a majority of the votes cast, meaning that the number of votes “FOR” such nominee must exceed the number of votes “AGAINST” such nominee. Under our Corporate Governance Guidelines, each director is required to submit in advance an irrevocable, conditional resignation that will be effective only upon both (1) the failure to receive the required vote at the next stockholders’ meeting at which the director faces reelection; and (2) our Board’s acceptance of such resignation. If an incumbent director fails to receive the required vote for reelection, the Corporate Governance and Nominating Committee will act to determine whether to accept the director’s irrevocable, conditional resignation and will submit its recommendation to our Board for consideration. Our Board expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation. Our Board will act on the Corporate Governance and Nominating Committee’s recommendation and publicly disclose its decision and the rationale therefor within 90 days from the date of the certification of election results. The Corporate Governance and Nominating Committee and our Board may consider any factors they deem relevant in deciding whether to accept a director’s resignation. Our Board has the discretion to accept or reject the offer of resignation of any director.

Information Regarding the Nominees

The name, age and position of each nominee as of July 17, 2014 are set forth in the table below. Except as described below, each of the nominees has been engaged in his principal occupation during the past five years. There are no family relationships among any of our directors or executive officers.


Name of Nominee	Age	Position	Director Since
Thomas Georgens	54	Chairman of the Board and Chief Executive Officer		2008
T. Michael Nevens*	64	Lead Independent Director		2009
Jeffry R. Allen*	62	Director		2005
Tor R. Braham*	56	Director		2013
Alan L. Earhart*	70	Director		2004
Gerald Held*	66	Director		2009
Kathryn M. Hill*	57	Director		2013
George T. Shaheen*	70	Director		2004
Robert T. Wall*	69	Director		1993
Richard P. Wallace*	54	Director		2011

*	Denotes Independent Director.

THOMAS GEORGENS has been the Company’s Chief Executive Officer since August 2009 and a member of the Board since March 2008. Mr. Georgens was appointed as Chairman of the Board in April 2014. Mr. Georgens served as our President from January 2008 to April 2014 and was our Chief Operating Officer from January 2008 to August 2009, during which time he was responsible for all product operations and field operations worldwide. Mr. Georgens joined the Company in October 2005 as Executive Vice President and General Manager of Enterprise Storage Systems and served as our Executive Vice President of Product Operations from January 2007 to February 2008. Before joining the Company, Mr. Georgens spent nine years in various roles at LSI Corporation, an electronics design company, and its subsidiaries, including Chief Executive Officer of Engenio, President of LSI Logic Storage Systems and Executive Vice President of LSI Logic. Prior to LSI Corporation, Mr. Georgens spent 11 years at EMC Corporation, a computer storage and data management company, in a variety of engineering and marketing positions. Mr. Georgens is a member of the boards of Electronics for Imaging, Inc. and Autodesk, Inc. Mr. Georgens holds a B.S. degree and an M.E. degree in computer and systems engineering from Rensselaer Polytechnic Institute as well as an M.B.A. degree from Babson College.

As the Company’s Chief Executive Officer, Mr. Georgens has direct, day-to-day exposure to all aspects of our business. Additionally, as the Company’s Chairman of the Board, Mr. Georgens brings to our Board substantial management and executive experience, as well as extensive knowledge of the data storage industry. As a result of these and other factors, our Board believes that Mr. Georgens adds to our Board’s collective level of expertise, skills and qualifications.

T. MICHAEL NEVENS has been a member of the Board since December 2009 and Lead Independent Director since April 2014. Since May 2006, Mr. Nevens has been a senior advisor to Permira Funds, an international private equity fund. Prior to his position with Permira Funds, Mr. Nevens spent 23 years advising technology companies with McKinsey & Co., where he managed the firm’s Global High Technology Practice and chaired the firm’s IT vendor relations committee. Mr. Nevens currently serves on the boards of Altera Semiconductors, Inc., Ciena Corporation, and Active Video Networks, Inc., a private technology company. He also served on the board of Borland Software Corporation from 2004 to 2009, and Gehry Technologies, Inc. from December 2011 to January 2013. Mr. Nevens has a B.S. degree in physics from the University of Notre Dame and an M.S. degree in industrial administration from Purdue University.

Mr. Nevens’ experience in equity investments and advising various technology companies throughout the world led our Board to conclude that he would be a valuable member of our Board, particularly as the Company continues to grow internationally. His experience on the boards of both public and private technology companies also provides significant value and adds to his diverse perspective.

JEFFRY R. ALLEN has been a member of the Board since May 2005. Prior to joining the Board, Mr. Allen was the Executive Vice President of Business Operations of the Company. Mr. Allen joined the Company in 1996 as the Chief Financial Officer and Vice President of Finance and Operations. Prior to joining the Company, Mr. Allen served as Senior Vice President of Operations for Bay Networks, Inc., a networking company, where he was responsible for manufacturing and distribution functions. From 1990 to 1995, he held the position of Controller for SynOptics Communications, Inc., a computer communications company, and subsequently became Vice President and Controller for Bay Networks, the new company created via the merger of SynOptics and Wellfleet Communications, Inc. Previously, Mr. Allen had a 17-year career at Hewlett-Packard Company, where he served in a variety of financial, information systems, and financial management positions, including controller for the Information Networks Group. Mr. Allen is currently Lead Independent Director of Barracuda Networks, a public technology company, and a director of Metaswitch Networks, a private technology company. Mr. Allen holds a B.S. degree in accounting from San Diego State University.

Our Board nominated Mr. Allen to serve as a director because he brings to our Board extensive experience gained from working in the technology industry in a variety of positions at the senior management level, including almost 10 years at the Company. In addition, Mr. Allen qualifies as an “audit committee financial

expert” under the rules and regulations of the SEC. With a strong mix of operational and financial knowledge, both generally and specifically in regards to the Company, Mr. Allen adds to our Board’s collective level of expertise, skills and qualifications.

TOR R. BRAHAM joined the Board in September 2013. Mr. Braham served as Managing Director and Global Head, Technology, Mergers and Acquisitions for Deutsche Bank Securities, an international financial service group, from 2004 until 2012. Prior to that, he served as Managing Director and Co-head, West Coast U.S. Technology, Mergers and Acquisitions for Credit Suisse First Boston, an international financial services group, from October 2000 until 2004. Prior to that, Mr. Braham was an investment banker with UBS Securities and a lawyer at a prominent Silicon Valley law firm. Mr. Braham earned a B.A. degree in English from Columbia College and a J.D. degree from New York University School of Law.

Mr. Braham brings to our Board extensive financial expertise as well as knowledge of the technology industry. Our Board believes that as an investment banker and lawyer to technology companies, Mr. Braham has a strong understanding of the challenges facing technology companies. For these and other reasons, our Board believes that Mr. Braham adds to our Board’s collective level of expertise, skills and qualifications.

ALAN L. EARHART has been a member of the Board since December 2004. From 1970 until his retirement in 2001, Mr. Earhart held several positions with Coopers & Lybrand and its successor, PricewaterhouseCoopers LLP, including most recently as managing partner of PricewaterhouseCoopers’ Silicon Valley offices. Mr. Earhart currently serves on the board of directors of Brocade Communication Systems, Inc. and Rovi Corporation (formerly known as Macrovision Solutions Corporation), both public technology companies, and is an independent consultant and retired partner of PricewaterhouseCoopers. He previously served on the boards of directors of Monolithic Power Systems and Quantum Corporation. Mr. Earhart holds a B.S. degree in accounting from the University of Oregon.

Our Board selected Mr. Earhart to serve as a director because he brings to our Board a deep knowledge of financial and accounting issues. Through his work experience and service on the boards of several high technology public companies, Mr. Earhart has developed knowledge of the complex issues facing global companies today. In addition, Mr. Earhart qualifies as an “audit committee financial expert” under the rules and regulations of the SEC. Mr. Earhart is a skilled advisor who makes a strong contribution to the diversity of perspectives on our Board.

GERALD HELD has been a member of the Board since December 2009. Since 1999, Mr. Held has been the Chief Executive Officer of Held Consulting Group, LLC. From 2006 to 2010, he was the Executive Chairman of Vertica Systems, an analytic database company that was acquired by Hewlett-Packard Company. From 2002 to 2008, Mr. Held was on the board of Business Objects SA. He was also a founding director for Microplace, Inc., a microfinance marketplace that was acquired by eBay, Inc. and Chairman of Bella Pictures, Inc., which was acquired by CPI Corp. Mr. Held currently serves on the boards of Informatica Corporation, a public technology company, and Risk Management Solutions, a technology company that is a subsidiary of Daily Mail and General Trust Plc. Mr. Held also serves on the boards of several private companies, including Trickplay Inc. and Software Development Technologies Corp. Mr. Held previously served on the board of directors of Unwired Planet, Inc. (formerly known as Openwave Systems, Inc.) from 2005 to 2012. From 1976 to 1997, Mr. Held served in a variety of executive roles at Tandem Computers, Inc. and Oracle Corporation.

Our Board selected Mr. Held to serve as a director because he has over 40 years of experience in developing, managing and advising technology organizations. He also has experience leading organizations through periods of growth, including growing a startup company into a public company that generated several billion dollars in annual revenue. In addition to his professional experience, Mr. Held has a strong technical background, including an M.S. degree in systems engineering from the University of Pennsylvania and a Ph.D. degree in computer science specializing in relational database technology from University of California, Berkeley.

KATHRYN M. HILL joined the Board in September 2013. Ms. Hill served in a number of positions at Cisco Systems, Inc. from 1997 to 2013, including, among others, Executive Advisor from 2011 to 2013, Senior

Vice President, Development Strategy and Operations from 2009 to 2011, Senior Vice President, Access Networking and Services Group from 2008 to 2009 and Senior Vice President, Ethernet Systems and Wireless Technology Group from 2005 to 2008. Prior to Cisco, Ms. Hill had a number of engineering roles at various technology companies. Ms. Hill currently serves on the board of directors of Moody’s Corporation, a provider of credit ratings, research, tools and analysis for financial markets, and is a member of the Board of Trustees for the Anita Borg Institute for Women and Technology. Ms. Hill received a B.S. degree in Mathematics from Rochester Institute of Technology.

Ms. Hill brings to our Board extensive experience in business management and leadership of engineering and operations organizations. Ms. Hill also has experience leading global technology organizations. Our Board believes that this experience as well as Ms. Hill’s service on the board of another public company adds to our Board’s collective level of expertise, skills and qualifications.

GEORGE T. SHAHEEN has been a member of the Board since June 2004. From December 2006 until July 2009, he was the Chief Executive Officer and Chairman of the board of directors of Entity Labs, Ltd., a technology company in the data collection, storage and analytics space. Mr. Shaheen was the Chief Executive Officer of Siebel Systems, Inc., a CRM (customer relationship management) software company, from April 2005 until the sale of the company in January 2006. From October 1999 to April 2001, he served as the Chief Executive Officer and Chairman of the Board of Webvan Group, Inc. Prior to joining Webvan Group, Inc., Mr. Shaheen was the Chief Executive Officer and Global Managing Partner of Andersen Consulting, which later became Accenture. Mr. Shaheen currently serves as Chairman of the Board of Korn/Ferry International. He also serves on the boards of Green Dot Corporation, Marcus & Millichap Inc. and 24/7 Customer, Inc. He is a member of the Strategic Advisory Board of Genstar Capital. He has served as an IT Governor of the World Economic Forum and as a member of the Board of Advisors for the Northwestern University Kellogg Graduate School of Management. He has also served on the Board of Trustees of Bradley University. Mr. Shaheen received a B.S. degree in business and an M.B.A. degree from Bradley University.

Our Board selected Mr. Shaheen to serve as a director because he has significant experience leading, managing and advising companies. Mr. Shaheen’s consulting background gives him keen insight into sales and the customer-based, service aspect of the Company’s operations. In addition, Mr. Shaheen has expertise on compliance matters as a result of his service on the boards of several private and public technology companies, including service as a chairman and member of the audit and compensation committees of those boards.

ROBERT T. WALL has been a member of the Board since January 1993. Since August 1984, Mr. Wall has been the Founder and President of On Point Developments, LLC, a venture management and investment company. Mr. Wall was a founder and, from November 2000 to December 2006, the Chairman of the Board of Directors of Airgo Networks, Inc., a Wi-Fi wireless networking systems company that was acquired by Qualcomm, Inc. in December 2006. From June 1997 to November 1998, he was Chief Executive Officer and a member of the board of directors of Clarity Wireless, Inc., a broadband wireless data communications company that was acquired by Cisco Systems, Inc. in November 1998. Mr. Wall was Chairman of the Board, President, and Chief Executive Officer of Theatrix Interactive, Inc., a consumer educational software publisher, from April 1994 to August 1997, and was a member of the board of directors of Complete Genomics, Inc., a human genome sequencing and informatics company, from September 2010 to March 2013. Mr. Wall has been a member of the Board of Trustees of the Fine Arts Museums of San Francisco since June 2007 and a member of the Visiting Committee, Arts of Africa, Oceania, and the Americas at the Metropolitan Museum of Art in New York since March 2007. He received an A.B. degree in economics from DePauw University and an M.B.A. degree from Harvard Business School.

Our Board selected Mr. Wall to serve as a director because he brings to our Board over 30 years of experience leading and founding several technology companies, including companies in the data storage, computer systems, and wireless networking areas. As the Company’s first outside director, he brings a long-term perspective of the evolution of the Company to its present position and the development of its management team. In addition to having served on the boards of other public companies, he has also had a varied strategic M&A experience, both as an industry executive and as head of technology investment banking.

RICHARD P. WALLACE joined the Board in March 2011. Mr. Wallace currently serves as the President and Chief Executive Officer of KLA-Tencor Corporation, a supplier of process control and yield management solutions for semiconductor and related microelectronics industries. He began his career at KLA Instruments in 1988 as an applications engineer and has held various general management positions throughout his tenure with the company. Mr. Wallace became the CEO and member of the board of KLA-Tencor in January 2006. Mr. Wallace also previously served as a member of the board of directors for Semiconductor Equipment and Materials International (SEMI), an industry trade association and previously served as a member of the board of directors for Beckman Coulter from 2009 to 2011. Mr. Wallace earned his B.S. degree in electrical engineering from the University of Michigan and an M.S. degree in engineering management from Santa Clara University.

Our Board selected Mr. Wallace to serve as a director because of his experience as chief executive officer of a publicly traded high-technology company. He brings to our Board more than two decades of experience gained while working at a technology company that has experienced growth. Mr. Wallace offers a unique perspective and expertise that is relevant to leading and advising a growth company. His experience as a board member of another publicly traded company also provides important value and adds to his unique perspective.

Information Regarding Departing Directors

At the Annual Meeting, two of the Company’s current directors, Daniel J. Warmenhoven and Nicholas G. Moore, will conclude their service on our Board. We thank them for their years of distinguished service and many contributions to the Company.

DANIEL J. WARMENHOVEN has been a member of the Board of Directors since October 1994 and was Executive Chairman of the Company from August 2009 to April 2014. Mr. Warmenhoven was Chief Executive Officer of the Company from October 1994 to August 2009. Prior to joining the Company, Mr. Warmenhoven served in various capacities, including President, Chief Executive Officer, and chairman of the board of directors of Network Equipment Technologies, Inc., a telecommunications equipment company, from November 1989 to January 1994. Prior to Network Equipment Technologies, Mr. Warmenhoven held executive and managerial positions at Hewlett-Packard Company, a global computer and information technology company, from 1985 to 1989, and IBM Corporation, a global computer and information technology company, from 1972 to 1985. Mr. Warmenhoven is lead independent director at Palo Alto Networks, lead independent director of Aruba Networks, Inc., a director of Bechtel, Inc., vice chairman of the board of the Tech Museum of Innovation in San Jose, California and a trustee of Bellarmine College Preparatory in San Jose, California. Mr. Warmenhoven holds a B.S. degree in electrical engineering from Princeton University.

NICHOLAS G. MOORE has been a member of the Board since April 2002 and was Lead Independent Director from August 2009 to April 2014. Mr. Moore served as Global Chairman of PricewaterhouseCoopers LLP, an accounting firm, from July 1998 until June 2001, and Chief Executive Officer of PricewaterhouseCoopers LLP from July 1998 until June 2000. Prior to that, he served as Chairman and Chief Executive Officer of Coopers & Lybrand LLP from October 1994 until June 1998, when it merged with Price Waterhouse LLP. Mr. Moore is a member of the boards of Gilead Sciences, Bechtel Corporation, and E2open, Inc. Mr. Moore received a B.S. degree in accounting from St. Mary’s College and a J.D. degree from Hastings College of Law, University of California.

Vote Required

To be elected to our Board, each director nominee must receive the affirmative vote of shares representing a majority of the votes cast, meaning that the number of votes “FOR” a director nominee must exceed the number of votes “AGAINST” that nominee. Unless you indicate otherwise, your proxy will be voted “FOR” the election of each nominee.

Our Board of Directors Unanimously Recommends That Stockholders

Vote FOR the Election of All of the Nominees Named Above

CORPORATE GOVERNANCE

Our Board has adopted policies and procedures that our Board believes are in the best interests of the Company and its stockholders while being compliant with the Sarbanes-Oxley Act of 2002 and the rules and regulations of the SEC and The NASDAQ Stock Market, LLC (“NASDAQ”).

Board Leadership Structure

Our Board does not currently have a policy on whether the roles of Chief Executive Officer and Chairman of the Board may be filled by one individual. This allows our Board flexibility to better address the leadership needs of the Company as it deems appropriate. Our Board does not view any particular leadership structure as preferred and routinely considers the appropriate leadership structure. This consideration includes the pros and cons of alternative leadership structures in light of the Company’s operating and governance environment at the time, with the goal of achieving the optimal model for Board leadership and effective oversight of management by our Board.

On April 4, 2014, Mr. Warmenhoven announced his decision to retire as Executive Chairman of the Board, and our Board elected Mr. Georgens as Chairman of the Board. As a result, the roles of Chief Executive Officer and Chairman of the Board are now held by Mr. Georgens. Our Board currently believes that our Chief Executive Officer is best situated to serve as our Chairman of the Board because he is the director most familiar with our business and most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy. In addition, he is most able to effectively communicate Board strategy to the other members of management and implement Board directives. Our Board also believes that this unified structure provides the Company with strong and consistent leadership and that, given the dynamic and competitive environment in which we operate, having one clear leader in both roles, with deep industry expertise and Company knowledge, ensures decisive and effective leadership internally and externally.

We have designated one of our directors as “Lead Independent Director,” and believe that this position is integral to our Board structure. The Lead Independent Director chairs Board meetings when the Chairman of the Board is not present; schedules, sets the agenda for and chairs executive sessions; and chairs matters that are within the purview of the independent directors. The Lead Independent Director also chairs meetings of the Corporate Governance and Nominating Committee; serves as a liaison between the Chairman of the Board and the independent directors; calls special meetings of the individual directors serving on the Board, when appropriate; discusses issues raised by the independent directors with the full Board or members of management; previews materials sent to the Board prior to board meetings; recommends to the Board the retention of consultants who report directly to the full Board, when asked to do so; and performs such other functions and responsibilities as requested by the Board from time to time. Prior to April 4, 2014, Mr. Moore served as our Lead Independent Director. On April 4, 2014, our Board elected Mr. Nevens as our Lead Independent Director.

As described in more detail below, our Board of Directors has three standing committees, each of which is comprised of only independent directors and chaired by an independent director. Our Board of Directors delegates substantial responsibility to each Board committee, which regularly reports its activities and actions back to the Board. We believe that our independent Board committees and their respective chairs are an important aspect of our Board leadership structure.

Corporate Governance Guidelines

Our Board has adopted a formal set of Corporate Governance Guidelines concerning various issues related to Board membership, structure, function and processes; Board committees; leadership development, including succession planning; oversight of risk management; and our ethics helpline. A copy of the Corporate Governance Guidelines is available on our website at http://investors.netapp.com/governance.cfm.

Risk Oversight

Our Board, as a whole and through its committees, has responsibility for the oversight of risk management. With the oversight of our Board, our executive officers are responsible for the day-to-day management of the material risks the Company faces. In its oversight role, our Board has the responsibility to satisfy itself that the risk management processes designed and implemented by our executive officers are adequate and functioning as designed. The involvement of our Board in setting our business strategy at least annually is a key part of our Board’s oversight of risk management and allows our Board to assess and determine what constitutes an appropriate level of risk for the Company and review and consider management’s role in risk management. Our Board regularly receives updates from management and outside advisors regarding certain risks the Company faces.

Each committee of our Board oversees specific aspects of risk management. For example, our Audit Committee oversees the management of risks associated with our financial reporting, accounting and auditing matters; our Compensation Committee oversees the management risks associated with succession planning and the relationship between our compensation policies and programs; and our Corporate Governance and Nominating Committee oversees the management of risks associated with director independence, conflicts of interest, board composition and organization, and director succession planning. Our committees regularly report their findings to our Board.

Other than when our Board or a committee of our Board meets in executive session, senior management attends all meetings of our Board and its committees and is available to address questions raised by directors with respect to risk management and other matters.

Independent Directors

•

A majority of our Board is comprised of “independent directors,” as defined in the applicable NASDAQ rules.

•

The independent directors regularly meet in executive session, without management, as part of the normal agenda of our Board meetings.

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The Lead Independent Director is a nonemployee director and is independent (as defined by the NASDAQ rules).

Corporate Governance and Nominating Committee

•

Our Board has adopted guidelines for the identification, evaluation and nomination of candidates for director.

•

To assist with director nominations, our Board has assigned the Corporate Governance and Nominating Committee responsibility for reviewing and recommending nominees to our Board. Although there are no specific minimum qualifications for director nominees, the ideal candidate should exhibit qualifications that will increase overall Board effectiveness, including independence, previous experience as an executive or director with other successful companies, and ability to meet other requirements under applicable rules, such as the requirement that Audit Committee members have an appropriate level of financial literacy and expertise. In evaluating the suitability of a particular director nominee, our Board considers a broad range of factors, including, without limitation, the nominee’s character, integrity, judgment, independence, age, skills, education, expertise, length of service, understanding of the Company’s business, and willingness and ability to make the necessary time commitment to perform diligently the duties of a director. In addition, our Board considers any agreements or arrangements between a director nominee and any third party that provides compensation to the director nominee in connection with his or her service on our Board, and believes that such agreements or arrangements create a conflict between the director nominee and the Company’s stockholders, thereby potentially disqualifying such nominee from serving as a director.

•

The Corporate Governance and Nominating Committee makes an effort to ensure that our Board’s composition reflects a broad diversity of experience, professions, skills, viewpoints, geographic representation, personal traits and backgrounds. Additionally, although we have no formal policy with respect to diversity, due to the global and complex nature of our business, our Board believes it is important to identify otherwise qualified candidates who would increase our Board’s racial, ethnic, gender and/or cultural diversity. No specific weights are assigned to particular criteria, and the Corporate Governance and Nominating Committee does not believe that any specific criterion is necessarily applicable to all prospective nominees. When the Corporate Governance and Nominating Committee reviews a potential new candidate, it looks specifically at the candidate’s qualifications in light of the needs of our Board at that time, given the then-current mix of director attributes. With respect to the nomination of continuing directors for re-election, each continuing director’s past contributions to our Board are also considered.

•

In the case of new director candidates, the Corporate Governance and Nominating Committee also determines whether the nominee must be independent for NASDAQ purposes, which determination is based upon applicable NASDAQ listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Corporate Governance and Nominating Committee generally relies on a variety of resources to compile a list of potential candidates, including, among other things and depending upon the circumstances, its network of contacts, searches of corporate, academic and government environments and resources, and, when appropriate, a professional search firm. The Corporate Governance and Nominating Committee believes utilizing such a broad variety of resources furthers our Board’s goal of ensuring the identification and consideration of a diverse range of qualified candidates, including, without limitation, women and minority candidates. The Corporate Governance and Nominating Committee conducts appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of our Board. The Corporate Governance and Nominating Committee meets to discuss and consider such candidates’ qualifications and then selects a nominee for recommendation to our Board by majority vote.

•

If the Corporate Governance and Nominating Committee determines that it wants to identify new independent director candidates for Board membership, it is authorized to retain, and to approve the fees of third-party executive search firms to help determine the skills and qualifications that would best complement our Board and identify prospective director nominees.

•

The Corporate Governance and Nominating Committee uses the same process for evaluating all nominees, regardless of the source of the nomination, except that it is the Company’s policy not to consider individuals recommended by stockholders unless the recommending stockholders have continuously held at least 3% of the outstanding shares of the Company’s voting securities for at least three years prior to the date on which the recommendation is submitted.

•

A stockholder who desires to recommend a candidate for election to our Board must direct the recommendation in writing to NetApp, Inc., 495 East Java Drive, Sunnyvale, California 94089, Attention: Corporate Secretary and must include the same information required by the Company’s bylaws in connection with the nomination of a director of our Board, including, without limitation, the candidate’s name; home and business contact information; detailed biographical data and qualifications; information regarding any relationships between the candidate and the Company within the last three years; evidence of the nominating person’s ownership of Company stock; and a written statement that, if nominated, such candidate will tender an irrevocable advance resignation in accordance with the Company’s Corporate Governance Guidelines.

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All of the members of the Corporate Governance and Nominating Committee meet the applicable requirements for independence from Company management.

•

Our Board has adopted a charter for the Corporate Governance and Nominating Committee that meets applicable NASDAQ standards and is available at http://investors.netapp.com/governance.cfm. The Corporate Governance and Nominating Committee charter is reviewed by the Corporate Governance and Nominating Committee on an annual basis.

Compensation Committee

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All of the members of the Compensation Committee meet the applicable requirements for independence as defined by applicable NASDAQ and Internal Revenue Service rules.

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The Compensation Committee evaluates and approves the compensation policies, plans and programs for our Chief Executive Officer, other executive officers and non-employee board members and sets compensation in accordance with the Compensation Committee charter.

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The Compensation Committee reviews and approves our incentive compensation plans in accordance with the Compensation Committee charter.

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In accordance with NASDAQ rules, the Compensation Committee reviews and assesses the independence of any compensation consultant, legal counsel or other advisor that provides advice to the Compensation Committee.

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Our Board has adopted a charter for the Compensation Committee that meets applicable NASDAQ standards and is available at: http://investors.netapp.com/governance.cfm. The Compensation Committee charter is reviewed by the Compensation Committee on an annual basis.

Audit Committee

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The Audit Committee has established policies and procedures that are consistent with the SEC and NASDAQ requirements for auditor independence.

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All of the members of the Audit Committee meet the applicable requirements for independence from Company management and requirements for financial literacy.

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Each member of the Audit Committee has the requisite financial management expertise.

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The Audit Committee is responsible for the appointment, compensation, retention, termination and oversight of the work of the Company’s independent registered public accounting firm, Deloitte & Touche LLP.

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Deloitte & Touche LLP reports directly to the Audit Committee.

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The internal audit function of the Company reports directly to the Audit Committee.

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Our Board has adopted a charter for the Audit Committee that meets applicable NASDAQ standards and is available at http://investors.netapp.com/governance.cfm. The Audit Committee charter is reviewed by the Audit Committee on an annual basis.

Stockholder Meeting Attendance for Directors

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While we do not have a formal policy for director attendance at our Annual Meetings of Stockholders, historically they have been scheduled on the same day as a Board of Directors meeting and were attended by at least a majority of the directors. In 2013, 11 directors attended the Annual Meeting of Stockholders.

Code of Conduct

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The Company has adopted a Code of Conduct that includes a conflict of interest policy that applies to all directors, officers and employees.

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All employees are required to affirm in writing their understanding and acceptance of the Code of Conduct.

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The Code of Conduct is posted on the Company’s website at: http://investors.netapp.com/governance.cfm. The Company will post any amendments to or waivers of the provisions of the Code of Conduct on its website.

Personal Loans to Executive Officers and Directors

The Company does not provide personal loans or extend credit to any executive officer or director.

Stockholder Communications Policy

Stockholders may contact any of the Company’s directors by writing to them c/o NetApp, Inc., 495 East Java Drive, Sunnyvale, California 94089, Attn: Corporate Secretary. Employees and others who wish to contact our Board or any member of the Audit Committee to report questionable practices may do so anonymously by using this address and designating the communication as “confidential.”

Meetings and Committees of our Board of Directors

Our Board held nine regular meetings during fiscal 2014. During fiscal 2014, each member of our Board attended at least 75% of the aggregate of (1) the total number of meetings of our Board held during fiscal 2014; and (2) the total number of meetings held by all Board committees on which such director served, in each case covering the periods of fiscal 2014 during which such director served on our Board or such committees, as applicable.

There are no family relationships among executive officers, directors or nominees of the Company. Our Board currently has three standing committees, each of which operates under a charter approved by our Board: the Audit Committee, the Corporate Governance and Nominating Committee, and the Compensation Committee.

The members of the committees as of the date of this Proxy Statement are identified in the following table:


Director	Audit	Compensation	Corporate Governance and Nominating
Thomas Georgens
T. Michael Nevens	X		Chair
Jeffry R. Allen	X
Tor R. Braham	X
Alan L. Earhart	Chair		X
Gerald Held		X
Kathryn M. Hill		X
Nicholas G. Moore
George T. Shaheen		X
Robert T. Wall		Chair	X
Richard P. Wallace		X
Daniel J. Warmenhoven

The Audit Committee is composed of directors Earhart, Allen, Braham and Nevens, all of whom are independent in accordance with the requirements of applicable SEC and NASDAQ rules and regulations. Mr. Braham joined the Audit Committee in July 2014. Our Board has determined that Messrs. Earhart and Allen each qualify as an “audit committee financial expert” under the rules and regulations of the SEC. The Audit Committee reviews, acts on and reports to our Board with respect to various auditing and accounting matters, including the selection of the Company’s auditors, the scope of the annual audits, fees to be paid to the auditors, the performance of the Company’s auditors, the accounting practices of the Company and other such functions as detailed in the Audit Committee Charter, which can be found on the Company’s website at http://investors.netapp.com/governance.cfm. The Audit Committee of our Board held nine regular meetings during fiscal 2014.

The Compensation Committee is composed of directors Wall, Held, Hill, Shaheen and Wallace, all of whom are independent in accordance with applicable NASDAQ rules and qualify as an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code, as amended. Ms. Hill joined the Compensation Committee in July 2014. The Compensation Committee establishes salaries, incentive compensation programs, and other forms of compensation for our officers; creates the compensation guidelines under which management establishes salaries for non-officers and other employees of the Company; and administers the incentive compensation and benefit plans of the Company. In carrying out its responsibilities, the Compensation Committee reviews, at least annually, compensation for the Chief Executive Officer and other officers, corporate goals relevant to compensation, and executive and leadership development policies. The Compensation Committee meets regularly with its outside advisors independently of management. The Compensation Committee held seven regular meetings during fiscal 2014.

The Corporate Governance and Nominating Committee is composed of directors Nevens, Earhart and Wall, all of whom are independent in accordance with applicable NASDAQ rules. The Corporate Governance and Nominating Committee evaluates and recommends to our Board candidates for Board membership and considers nominees recommended by stockholders who satisfy the conditions described above under “Corporate Governance — Corporate Governance and Nominating Committee.” The Corporate Governance and Nominating Committee also develops and recommends corporate governance policies and other governance guidelines and procedures to our Board. The Corporate Governance and Nominating Committee held six meetings during fiscal 2014. Mr. Moore who is also independent in accordance with applicable NASDAQ rules, served as Chairman of the Corporate Governance and Nominating Committee from the beginning of fiscal 2014 until April 4, 2014, when he announced his decision to resign from our Board, effective as of the date of the Annual Meeting. Mr. Nevens joined the Corporate Governance and Nominating Committee as chair in April 2014 in connection with his appointment as Lead Independent Director.

Prior to May 2014, our Board had a Strategy Committee composed of directors Nevens, Allen, Georgens, Held, Warmenhoven and Wall, a majority of whom are independent. The Strategy Committee assisted in the development, articulation and execution of the Company’s long-term strategic planning and reviewed, evaluated, and approved certain acquisitions, divestitures, and other strategic transactions for the Company. The Strategy Committee held two meetings during fiscal 2014. The Strategy Committee was disbanded in May 2014 in connection with Board structural changes, and the full Board has assumed those responsibilities formerly assigned to the Strategy Committee.

DIRECTOR COMPENSATION

The Compensation Committee evaluates the compensation and form of compensation for nonemployee directors annually. The nonemployee directors receive annual retainers as well as equity awards for their service on our Board. Details of the compensation are discussed in the narrative below. Employee directors do not receive any compensation for their services as members of our Board.

Director Compensation Table

The table below summarizes the total compensation paid by the Company to the nonemployee directors and Mr. Warmenhoven for fiscal 2014.


Name	Fees Earned or Paid in Cash ($)(1)		Restricted Stock Units ($)(2)(4)		Option Awards ($)(2)(4)		Nonequity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
T. Michael Nevens		97,500		—		251,538		—		—		—		349,038
Jeffry R. Allen		85,000		123,294		125,775		—		—		—		334,069
Tor R. Braham		45,000		246,587		—		—		—		—		291,587
Alan L. Earhart		111,250		123,294		125,775		—		—		—		360,319
Gerald Held		79,500		123,294		125,775		—		—		—		328,569
Kathryn M. Hill		45,000		246,587		—		—		—		—		291,587
Nicholas G. Moore		108,750		123,294		125,775		—		—		—		357,819
George T. Shaheen		70,750		123,294		125,775		—		—		—		319,819
Robert T. Wall		107,125		123,294		125,775		—		—		—		356,194
Richard P. Wallace		70,750		—		251,538		—		—		—		322,288
Daniel J. Warmenhoven(3)		—		—		—		—		—		—		—

(1)

The amounts in this column represent compensation that was earned in fiscal 2014. Our Board year does not correspond with our fiscal year and the Board fees are paid at the beginning of each quarter of the Board year. A portion of the fees earned during the first quarter of fiscal 2014 were paid in the last quarter of fiscal 2013 and are included in this table. A portion of the fees earned during the first quarter of fiscal 2015 were paid in the last quarter of fiscal 2014 and are not included in this table.

(2)

The amounts reported represent the grant date fair value of restricted stock unit (“RSU”) and option awards to the director under the Company’s Amended and Restated 1999 Stock Option Plan and are computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (FASB ASC 718). Assumptions used in the valuations of these awards are included in Note 10 of the Annual Report. These amounts do not necessarily represent the actual value that may be realized by the nonemployee director.

(3)

During fiscal 2014, Mr. Warmenhoven did not receive compensation as a director but did receive compensation as an employee of the Company in his role as Executive Chairman. In fiscal 2014, Mr. Warmenhoven received $375,000 in salary, $723,000 in RSUs, $586,434 in option awards, $363,000 in nonequity incentive plan compensation and $5,681 in all other compensation for a total of $2,053,115. The amounts for RSUs and Option Awards were calculated in accordance with footnote 2 above. As of April 25, 2014, Mr. Warmenhoven held options to purchase an aggregate of 1,371,404 shares of common stock and RSUs covering an aggregate of 46,175 shares of common stock.

(4)	The table below sets forth the number of shares of common stock subject to outstanding options and RSUs held by the nonemployee directors as of April 25, 2014:


Name	# of Outstanding Options (in Shares)		# of RSUs (in Shares)		Total Equity Awards Outstanding
T. Michael Nevens		134,831		—		134,831
Jeffry R. Allen		121,416		2,856		124,272
Tor R. Braham		—		5,712		5,712
Alan L. Earhart		64,416		2,856		67,272
Gerald Held		74,416		18,188		92,604
Kathryn M. Hill		—		5,712		5,712
Nicholas G. Moore(1)		85,416		15,188		100,604
George T. Shaheen		141,916		2,856		144,772
Robert T. Wall		181,416		2,856		184,272
Richard P. Wallace		84,331		9,166		93,497
(1) Includes 25,000 options held by Moore Family Ventures L.P.

Summary of Director Compensation Policy

The following table sets forth a summary of our total compensation policy for our nonemployee directors as of the end of fiscal 2014:


Position	Annual Cash Retainer ($)		Equity Grants ($)
Board of Directors
Lead Independent Director		90,000		250,000
Board Member (other than Lead Independent Director)		60,000		250,000
Audit Committee
Chairperson		50,000		—
Member		20,000		—
Compensation Committee
Chairperson		37,500		—
Member		15,000		—
Corporate Governance and Nominating Committee
Chairperson		25,000		—
Member		10,000		—
Strategy Committee(1)
Chairperson		25,000		—
Member		10,000		—

(1)	The Strategy Committee was disbanded in May 2014.

In May 2014, the Compensation Committee evaluated the compensation for nonemployee directors and determined to make no changes to the terms of the compensation arrangement for nonemployee directors.

Our nonemployee directors are eligible to receive automatic annual equity awards under the Automatic Award Program of the 1999 Plan pursuant to an outside director compensation policy adopted by our Board and the Compensation Committee, which may be revised from time to time as our Board or the Compensation Committee deems appropriate. A nonemployee director may elect to receive his or her automatic equity grants either in the form of all stock options or all RSUs or in a combination of 50% stock options and 50% RSUs, at the nonemployee director’s discretion.

A newly elected or appointed director receives a pro-rated grant upon his or her first election or appointment to the Board with a value of $250,000 (if such election or appointment occurs before February of the applicable year) or with a value of $125,000 (if such election or appointment occurs after February of the applicable year).

Equity awards for nonemployee directors are represented as a dollar value rather than a fixed number of shares. For these purposes, the value of any awards of RSUs will equal the product of the fair market value of one share of common stock on the grant date of such award, and the aggregate number of RSUs. With respect to stock options, the value is determined by using the Black-Scholes option valuation methodology, or such other methodology our Board or the Compensation Committee may determine, on the grant date of the option.

Each nonemployee director is also eligible to receive an annual cash retainer for his or her Board and committee service, pursuant to the terms of the outside director compensation policy. The Compensation Committee has approved a deferral program for our nonemployee directors, which allows each nonemployee director to elect to defer the receipt of his or her annual cash retainer until a later date in accordance with applicable tax laws. If the nonemployee director does not elect to defer his or her cash compensation, he or she will continue to receive his or her cash compensation as set forth above. Additionally, to the extent that a nonemployee director elects to receive a portion of his or her automatic equity grant in the form of RSUs, the director may be permitted to elect in accordance with federal tax laws when he or she will receive the payout from his or her vested RSUs and defer income taxation until the award is paid. An election to defer the payout of the vested RSUs is not intended to increase the value of the payout to the nonemployee director, but rather to give the nonemployee director the flexibility to decide when he or she will be subject to taxation with respect to the award. Any election to defer payment of any vested RSUs will not alter the other terms of the award, including the vesting requirements.

In May 2012, the Company adopted stock ownership guidelines applicable to the Company’s nonemployee directors to ensure the directors remain meaningfully invested in Company stock. Under the terms of the guidelines, each nonemployee director must hold a minimum number of shares of the Company’s common stock equal in value to at least three times the amount of such director’s annual cash retainer amount. The Company’s nonemployee directors have five years from the adoption date of the stock ownership guidelines to meet these guidelines.

At the 2013 Annual Meeting of Stockholders (the “2013 Annual Meeting”), each of the individuals re-elected as a nonemployee Board member received a number of RSUs and/or an option grant for a number of shares as indicated in the table below. In addition, Mr. Braham and Ms. Hill, who joined our Board at that time, received the number of RSUs as indicated in the table below.


Name(1)	RSUs			Stock Option Grants (in Shares)		Stock Option Exercise Price ($)(2)		Grant Date
T. Michael Nevens		—			22,831		43.77		September 13, 2013
Jeffry R. Allen		2,856			11,416		43.77		September 13, 2013
Tor R. Braham		5,712			—		—		September 13, 2013
Alan L. Earhart		2,856			11,416		43.77		September 13, 2013
Gerald Held		2,856			11,416		43.77		September 13, 2013
Kathryn M. Hill		5,712			—		—		September 13, 2013
Nicholas G. Moore		2,856	(3)		11,416		43.77		September 13, 2013
George T. Shaheen		2,856			11,416		43.77		September 13, 2013
Robert T. Wall		2,856			11,416		43.77		September 13, 2013
Richard P. Wallace		—			22,831		43.77		September 13, 2013

(1)	Mr. Warmenhoven does not receive compensation as a director but does receive compensation as an employee of the Company. Please see footnote 3 to the Director Compensation Table.

(2)	Represents the fair market value per share of common stock on the grant date.

(3)	Prior to the date of grant, Mr. Moore elected to defer the vesting and release of his RSUs to January 15, 2017. Because he is not standing for re-election, these RSUs will vest upon the conclusion of his service on our Board at the Annual Meeting.

PROPOSAL NO. 2

AMENDMENT TO THE COMPANY’S

AMENDED AND RESTATED 1999 STOCK OPTION PLAN

Introduction

We are asking our stockholders to approve an amendment to the Company’s Amended and Restated 1999 Stock Option Plan (the “1999 Plan”) to increase the number of shares that may be issued thereunder by 7,500,000. The Board has approved the increase in the number of shares reserved for issuance under the 1999 Plan, subject to approval from stockholders at the Annual Meeting. The Company’s named executive officers and directors have an interest in this Proposal No. 2.

The 1999 Plan is intended to increase incentives and to encourage stock ownership on the part of eligible employees, nonemployee directors and consultants who provide significant services to the Company and its affiliates. The Company believes strongly that the approval of the amendment to the 1999 Plan to enable the Company to continue to use the 1999 Plan to achieve our goals in attracting and retaining our most valuable asset, our employees. Offering a broad-based equity compensation program is vital to attracting and retaining highly skilled people in our industry. The Company believes that employees who have a stake in the future success of our business become highly motivated to achieve our long-term business goals and increase stockholder value. Our employees’ innovation and productivity are critical to our success in a highly competitive and fast-paced industry. The 1999 Plan is designed to assist in recruiting, motivating and retaining talented employees who help us achieve our business goals, including creating long-term value for stockholders.

Our Board approved the increase to the number of shares reserved for issuance under the 1999 Plan following substantial review and deliberation. In determining the number of shares reserved for issuance under the 1999 Plan, our Board considered a number of factors, including:

•

Historical Grant Practices. Our Board considered the historical numbers of equity awards that the Company has granted in the past three years. Our three-year burn rate, which we define as the number of options plus adjusted RSUs (adjusted consistent with the ISS volatility multiplier) subject to equity awards granted in a year divided by the weighted average shares of common stock outstanding for that fiscal year is below industry guidelines recommended by Institutional Shareholder Services.

•

Forecasted Grant Practices. For fiscal 2015, we currently forecast granting options and full value awards (in the form of RSUs) covering 14,571,000 shares, which is equal to 4.48% of our common stock outstanding as of July 17, 2014. We also forecast cancellation of options and forfeitures of RSUs of approximately 1,531,250 shares over this period, based on our historic rates. If our expectation for cancellations is accurate, our net grants (grants less cancellations) for fiscal 2015 would be approximately 13,039,750 shares, or approximately 4.0% of our common stock outstanding as of July 17, 2014. If approved, the amendment to the 1999 Plan would increase the number of shares issuable under the 1999 Plan by an additional 7,500,000 shares, bringing the total number of shares available for future grants to 13,523,410 shares as of July 17, 2014, assuming that the additional 7,500,000 shares were available for grant on that date. We believe, and the Board considered, that this expected forecast will provide us with a share reserve that will allow us to make equity awards for expected new hires, focal awards, any special retention needs and employee growth through any opportunistic acquisitions or hiring for fiscal 2015. On behalf of our Board, the Compensation Committee expects that the total available shares for issuance under the 1999 Plan (as proposed to be amended) should be sufficient to cover the Company’s projected equity awards for the current, as well as into the following, fiscal year. Consistent with its practice in prior years, the Company anticipates making future requests for additional increases in the share reserve on an annual basis so that stockholders can routinely evaluate the 1999 Plan’s continued effectiveness. However, circumstances, such as a change in business conditions, our compensation programs or our strategy, could alter this projection and our expectations.

•

Awards Outstanding Under Existing Grants and Dilutive Impact. As of July 17, 2014, we have outstanding stock options covering approximately 15,803,035 shares and approximately 14,961,090 unvested RSUs. On behalf of our Board, the Compensation Committee evaluated the value of available awards (adjusted for the relative dilutive cost of stock options vs. full value shares), based on outstanding awards under the 1999 Plan as a percentage of the Company’s market capitalization, and determined that authorizing 7,500,000 additional shares for issuance under the 1999 Plan, in addition to shares remaining available for issuance under the 1999 Plan, was reasonable relative to accepted technology industry norms of value transfer. Accordingly, the approximately 30,764,125 shares subject to outstanding awards (commonly referred to as the “overhang”) represent approximately 9.5% of our outstanding shares as of July 17, 2014, and the total of approximately 13,523,410 shares that would be available for issuance if Proposal No. 2 is approved would represent an additional 4.2% of our outstanding shares. Based on this analysis, the Compensation Committee concluded that the total overhang percentage was within the 50th and 75th percentile of its peer group (modified to exclude Microsoft, IBM, Oracle, Hewlett-Packard and CommVault due to them being substantially different in size than NetApp) and would not result in excessive overhang for stockholders.

Current Awards Outstanding

Set forth below is information regarding shares currently outstanding under all of the Company’s equity compensation plans, including the 1999 Plan and equity compensation plans assumed by the Company in connection with mergers and acquisitions.


Selected Data as of July 17, 2014
Number of shares subject to outstanding awards under all of the Company’s equity compensation plans, including equity compensation plans assumed by the Company in connection with mergers and acquisitions(1)		30,764,125
Number of shares subject to outstanding options		15,803,035
Weighted average exercise price of outstanding options	$	34.66
Weighted average remaining term of outstanding options (in years)		3.77
Number of shares subject to outstanding full value awards		14,961,090
Shares remaining for grant under the 1999 Plan (assuming this Proposal No. 2 is approved)		13,523,410
Shares remaining for grant under all other equity compensation plans		0

(1)	Does not include shares of common stock reserved for issuance under the Company’s Employee Stock Purchase Plan. See Proposal No. 3 for additional information regarding these shares.

Under the 1999 Plan, shares subject to full value awards granted on or after the 2013 Annual Meeting will count against the share reserve as two shares for every one share subject to such an award. To the extent that a share that was subject to an award that counted as two shares against the 1999 Plan reserve is returned to the 1999 Plan, then the 1999 Plan reserve will be credited with two shares that will thereafter be available for issuance under the 1999 Plan.

Description of the 1999 Plan

The following paragraphs provide a summary of the principal features of the 1999 Plan and its operation. The 1999 Plan is set forth in its entirety and is attached as Appendix A to this Proxy Statement with the SEC. The following summary is qualified in its entirety by reference to the complete text of the 1999 Plan.

The 1999 Plan is divided into five separate equity programs:

1. Discretionary Option Grant Program. Under the Discretionary Option Grant Program, the Plan Administrator (as defined below) is able to grant options to purchase shares of stock at an exercise price not less than the fair market value of those shares on the grant date.

2. Stock Appreciation Rights Program. Under the Stock Appreciation Rights Program, the Plan Administrator is able to grant stock appreciation rights that will allow individuals to receive the appreciation in the shares subject to the award between the date of grant and the exercise date.

3. Stock Issuance Program. Under the Stock Issuance Program, the Plan Administrator is able to make direct issuances of shares of stock either through the issuance (or promise to issue) or immediate purchase of such shares or as a bonus for services rendered by participants on such terms as the Plan Administrator deems appropriate. In addition, the Plan Administrator is able to make grants of RSUs on such terms as the Plan Administrator deems appropriate.

4. Performance Share and Performance Unit Program. Under the Performance Share and Performance Unit Program, the Plan Administrator is able to grant performance shares and performance units, which are awards that will result in a payment to a participant only if the performance goals or other vesting criteria established by the Plan Administrator are achieved or the awards otherwise vest.

5. Automatic Award Program. Under the Automatic Award Program, nonemployee directors automatically receive award grants at periodic intervals to purchase or receive shares of stock.

Administration of the 1999 Plan

The Compensation Committee of the Board administers the 1999 Plan (“Plan Administrator”). The members of the Compensation Committee qualify as nonemployee directors under Rule 16b-3 of the Exchange Act and as outside directors under Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”), such that the Company can receive a federal tax deduction for certain compensation paid under the 1999 Plan.

Subject to the terms of the 1999 Plan, the Plan Administrator has the sole discretion to select the employees, consultants, nonemployee directors and other independent advisors who will receive awards, determine the terms and conditions of awards (for example, the exercise price and vesting schedule), and interpret the provisions of the 1999 Plan and outstanding awards; provided, however, that the Company is unable (without the approval of stockholders) to reduce the exercise price of any outstanding stock options or stock appreciation rights granted under the 1999 Plan or cancel any outstanding stock options or stock appreciation rights and immediately replace them with new stock options or stock appreciation rights with a lower exercise price, awards of a different type, and/or cash. Administration of the Automatic Award Program is self-executing in accordance with the terms of the program, but the Plan Administrator has discretion to revise the amount or type of award made under the program on a prospective basis. Subject to the terms of our Compensation Committee charter, the Compensation Committee may delegate any part of its authority and powers under the 1999 Plan to a subcommittee consisting of at least two members, at least one of whom must be a member of the Board and the other of whom may be an officer or the Company’s Executive Vice President of Human Resources, subject to Section 16(b) of the Exchange Act (such officers are referred to herein as “executive officers”), but only the Compensation Committee itself can make awards to participants who are executive officers of the Company.

Shares Subject to the 1999 Plan

If Proposal No. 2 is approved, a total of 128,880,429 shares will be reserved for issuance under the 1999 Plan. As of July 17, 2014, (1) 30,153,118 shares were subject to outstanding awards granted under the 1999 Plan, of which 15,344,503 shares were subject to option awards and 14,808,615 shares were subject to full value awards; and (2) 6,023,410 shares remained available for any new awards to be granted in the future. Shares subject to full value awards granted on or after the 2013 Annual Meeting will count against the share reserve as two shares for every one share subject to such an award. To the extent that a share that was subject to an award that counted as two shares against the 1999 Plan reserve pursuant to the preceding sentence is returned to the 1999 Plan, the 1999 Plan reserve will be credited with two shares that will thereafter be available for issuance under the 1999 Plan. As of July 17, 2014, the outstanding option awards have a weighted-average exercise price of $35.07 per share and a weighted-average remaining term of 3.83 years. The closing price of our common stock was $36.70 on July 17, 2014.

If an award expires or is cancelled without having been fully exercised or vested, the unvested or cancelled shares generally will be returned to the available pool of shares reserved for issuance under the 1999 Plan. Also, in the event any change is made to our common stock issuable under the 1999 Plan by reason of any stock split, stock dividend, recapitalization, combination of shares, merger, reorganization, consolidation, recapitalization, exchange of shares, or other change in capitalization of the Company affecting the common stock as a class without the Company’s receipt of consideration, appropriate adjustments will be made to (1) the maximum number and/or class of securities issuable under the 1999 Plan; (2) the maximum number and/or class of securities for which any one individual may be granted stock options, stock appreciation rights, stock issuances, RSUs, or performance shares or performance units under the 1999 Plan per calendar year; (3) the class and/or number of securities and the purchase price per share in effect under each outstanding award; and (4) the class and/or number of securities for which automatic awards are to be subsequently made under the Automatic Award Program. The Plan Administrator will make adjustments to outstanding awards to prevent the dilution or enlargement of benefits intended to be provided thereunder.

Eligibility

All of our employees (including employees of any parent or subsidiary, our Chief Executive Officer and the three most highly compensated officers), our non-employee members of the Board and any consultants and other independent advisors who provide services to the Company (or any parent or subsidiary of the Company) are eligible to receive awards under the 1999 Plan. However, the Company does not currently grant equity awards to its consultants or other independent advisors who provide services to the Company.

As of July 17, 2014, approximately 12,240 employees and 10 non-employee Board members, were eligible to participate in the 1999 Plan.

Discretionary Option Grant Program

A stock option is the right to acquire shares at a fixed exercise price for a fixed period of time. Under the Discretionary Option Grant Program, the Plan Administrator may grant nonstatutory stock options and/or incentive stock options (which entitle the recipients, but not the Company, to more favorable tax treatment). The Plan Administrator will determine the number of shares covered by each option, but during any calendar year, no participant may be granted options and/or stock appreciation rights covering more than 3,000,000 shares.

The exercise price of each option is set by the Plan Administrator, but cannot be less than 100% of the fair market value of the shares covered by the option on the date of grant. The exercise price of an incentive stock option must be at least 110% of fair market value if on the grant date the participant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiaries.

An option granted under the Discretionary Option Grant Program cannot be exercised until it becomes vested. The Plan Administrator establishes the vesting schedule of each option at the time of grant. Options become exercisable at the times and on the terms established by the Plan Administrator. To the extent that the aggregate fair market value of the shares (determined on the grant date) covered by incentive stock options that first become exercisable by any participant during any calendar year is greater than $100,000, the excess above $100,000 will be treated as a nonstatutory stock option. Options granted under the 1999 Plan expire at the times established by the Plan Administrator, but not later than seven years after the grant date.

Stock Appreciation Rights Program

A stock appreciation right is the right to receive the appreciation in fair market value of the shares subject to the award between the exercise date and the date of grant. We can pay the appreciation in either cash or shares. Stock appreciation rights will become exercisable at the times and on the terms established by the Plan Administrator, subject to the terms of the 1999 Plan. No participant will be granted stock appreciation rights and/or options covering more than 3,000,000 shares during any calendar year. The exercise price of each stock appreciation right is set by the Plan Administrator, but cannot be less than 100% of the fair market value of the shares covered by the award on the date of grant. A stock appreciation right granted under the 1999 Plan cannot

be exercised until it becomes vested. The Plan Administrator establishes the vesting schedule of each stock appreciation right at the time of grant. Stock appreciation rights granted under the 1999 Plan expire at the times established by the Plan Administrator, but not later than seven years after the grant date.

Stock Issuance Program

Stock issuances are awards where shares are or will be issued to a participant and the participant’s right to retain or receive such shares will vest in accordance with the terms and conditions established by the Plan Administrator. RSUs are awards that will result in a payment to a participant only if the performance goals or other vesting criteria established by the Plan Administrator are achieved or the awards otherwise vest. The number of shares covered by a stock issuance award or restricted stock unit awards will be determined by the Plan Administrator. During any calendar year, no participant is able to receive awards granted under the Stock Issuance Program covering more than 1,000,000 shares.

In determining whether an award should be made and/or the vesting schedule for any such award, the Plan Administrator may impose whatever conditions to vesting as it determines to be appropriate. For example, the Plan Administrator may determine to make an award only if the participant satisfies performance goals established by the Plan Administrator.

Performance Share and Performance Unit Program

Performance shares and performance units are awards that will result in a payment to a participant only if the performance goals or other vesting criteria established by the Plan Administrator are achieved or the awards otherwise vest. The Plan Administrator will establish organizational, individual performance goals or other vesting criteria at its discretion, which, depending on the extent to which they are met, will determine the number and/or the value of performance units and performance shares to be paid to participants. No participant is able to receive performance units with an initial value greater than $5,000,000, and no participant is able to receive more than 1,000,000 performance shares during any calendar year. Performance units will have an initial dollar value established by the Plan Administrator prior to the grant date. Performance shares have an initial value equal to the fair market value of a share on the grant date.

Performance Goals

The Plan Administrator (at its discretion) may make performance goals applicable to a participant with respect to an award intended to qualify as “performance-based compensation” under Section 162(m). At the Plan Administrator’s discretion, one or more of the following performance goals may apply: annual revenue, cash position, earnings per share, EBIT, EBITDA, free cash flow, individual objectives, net income, operating cash flow, operating income, operating profit, return on assets, return on capital, return on equity, return on sales, and total stockholder return, in each case as defined in the 1999 Plan. The Plan Administrator may utilize other performance criteria for awards not intended to qualify as “performance-based compensation” under Section 162(m).

Automatic Award Program

The terms of the 1999 Plan provide that our nonemployee directors will automatically receive equity grants pursuant to a compensation policy adopted by the Board or the Compensation Committee that may be revised from time to time as the Board or the Compensation Committee deems appropriate. The Board has instituted a compensation policy for nonemployee directors whereby a nonemployee director may elect to receive his or her automatic equity grants either in the form of all stock options or in a combination of stock options and RSUs, at the nonemployee director’s discretion. Nonemployee directors are also eligible to receive discretionary awards pursuant to the other equity programs under the 1999 Plan. The Board or the Compensation Committee, in their respective discretion, may change and otherwise revise the terms of awards granted pursuant to the compensation policy for awards granted on or after the date they make the change.

Pursuant to the terms of the outside director compensation policy adopted by the Board and the Compensation Committee, our nonemployee directors are eligible to receive an automatic annual equity award

equal in value to $250,000 under the Automatic Award Program of the 1999 Plan, which may be revised from time to time as our Board or the Compensation Committee deems appropriate. A nonemployee director may elect to receive his or her automatic equity grant either in the form of all stock options or in a combination of 50% stock options and 50% RSUs, at the nonemployee director’s discretion. A newly elected or appointed director receives a pro-rated grant upon his or her first election or appointment to the Board with a value of $250,000 (if such election or appointment occurs before February of the applicable year) or with a value of $125,000 (if such election or appointment occurs after February of the applicable year). Equity awards for nonemployee directors are represented as a dollar value rather than a fixed number of shares. For these purposes, the value of any awards of RSUs will equal the product of (1) the fair market value of one share of common stock on the grant date of such award; and (2) the aggregate number of RSUs. With respect to stock options, the value is determined by using the Black-Scholes option valuation methodology, or such other methodology our Board or the Compensation Committee may determine, on the grant date of the option.

The exercise price of each option granted to a nonemployee director is equal to 100% of the fair market value of the shares covered by the option on the date of grant. The shares subject to each nonstatutory stock option granted pursuant to an initial award is scheduled to vest over four years, with five-elevenths of such shares vesting upon the nonemployee director’s completion of one year of Board service measured from the option grant date and the remaining balance vesting in three equal annual installments over the three year period measured from the first anniversary of the option grant date (assuming that he or she remains a nonemployee director on each scheduled vesting date). The shares subject to each nonstatutory stock option granted pursuant to an annual award shall become 100% vested on the day preceding the next annual stockholders meeting following the grant date, subject to the nonemployee director’s continued service on such date. An option granted under the compensation policy is immediately exercisable. However, any shares purchased under the option program are subject to repurchase by the Company if the nonemployee director ceases service on the Board prior to vesting. If a nonemployee director terminates his or her service on the Board due to death or disability, his or her options would immediately vest.

Options granted to nonemployee directors generally expire no later than seven years after the date of grant. If a nonemployee director terminates his or her service on the Board prior to an option’s normal expiration date, the option will remain exercisable for 12 months to the extent it has vested. However, the option may not be exercised later than the original expiration date.

RSUs granted under the compensation policy shall have a value equal to the fair market value of the shares on the grant date. RSUs granted pursuant to an initial award vest over four years, with 5/11ths of the RSUs vesting upon the completion of the nonemployee director’s first year of service on the Board measured from the RSU grant date and the remaining balance of RSUs vesting in three equal annual installments over the three year period measured from the first anniversary of the RSU grant date (assuming that he or she remains a nonemployee director on each scheduled vesting date). All RSUs granted pursuant to an annual award become 100% vested on the day preceding the next annual stockholders meeting following the grant date, subject to the nonemployee director’s continued service on such date. If a nonemployee director terminates his or her service on the Board due to death or disability, 100% of his or her unvested RSUs would immediately vest. Additionally, the Board (or its authorized designee) may provide that holders of RSUs granted pursuant to the compensation policy be permitted to defer the delivery of the proceeds from vested RSUs to the extent that such deferral satisfies the requirements of the U.S. tax code.

Awards to be Granted to Certain Individuals and Groups

The number of awards that an employee, nonemployee director, or consultant may receive under the 1999 Plan is at the discretion of the Plan Administrator and therefore cannot be determined in advance. The following table sets forth (1) the aggregate number of shares subject to options granted under the 1999 Plan during fiscal 2014; (2) the average per share exercise price of such options; (3) the aggregate number of shares subject to awards of RSUs granted under the 1999 Plan during fiscal 2014; and (4) the dollar value of such shares based on $36.70 per share, the fair market value of our common stock, on July 17, 2014.

AMENDED PLAN BENEFITS

1999 Plan


Name of Individual or Group and Position	Number of Options Granted		Average per Share Exercise Price ($)		Number of Restricted Stock Units Granted		Dollar Value of Restricted Stock Units Granted ($)
Thomas Georgens		400,000		37.64		68,500		2,513,950
Chairman of the Board and Chief Executive Officer
Nicholas R. Noviello		100,000		37.64		33,300		1,222,110
Executive Vice President Finance and Operations; Chief Financial Officer
Robert E. Salmon		110,000		37.64		36,700		1,346,890
President and Head of Go-to-Market Operations
Manish Goel(1)		110,000		37.64		36,700		1,346,890
Executive Vice President Product Operations
George Kurian(2)		71,100		39.19		33,700		1,236,790
Executive Vice President Product Operations
Matthew K. Fawcett		75,000		37.64		25,000		917,500
Senior Vice President, General Counsel and Secretary
Daniel J. Warmenhoven		60,000		37.64		20,000		734,000
Director
Nicholas Moore		11,416		43.77		2,856		104,815
Director
Jeffry R. Allen		11,416		43.77		2,856		104,815
Director
Tor R. Braham		—		—		5,712		209,630
Director
Alan L. Earhart		11,416		43.77		2,856		104,815
Director
Kathryn M. Hill		—		—		5,712		209,630
Director
Gerald Held		11,416		43.77		2,856		104,815
Director
T. Michael Nevens		22,831		43.77		—		—
Lead Independent Director
George T. Shaheen		11,416		43.77		2,856		104,815
Director
Robert T. Wall		11,416		43.77		2,856		104,815
Director
Richard P. Wallace		22,831		43.77		—		—
Director
All current executive officers, as a group (5 persons)		756,100		37.79		197,200		7,237,240
All current directors who are not executive officers, as a group (11 persons)		174,158		43.77		48,560		1,782,152
All employees, including current officers who are not executive officers, as a group (6,743 persons)		2,880,673		38.26		6,535,789		239,863,456

(1)	Mr. Goel served as Executive Vice President Product Operations until September 20, 2013.

(2)	Mr. Kurian served as Executive Vice President Product Operations from September 20, 2013.

Limited Transferability of Awards

Options granted under the 1999 Plan generally may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the applicable laws of descent and distribution. However, participants may, in a manner specified by the Plan Administrator, transfer nonstatutory stock options (1) to a member of the participant’s family; (2) to a trust or other entity for the sole benefit of the participant and/or a member of his or her family; or (3) to a former spouse pursuant to a domestic relations order.

Federal Tax Aspects

The following paragraphs are a summary of the general federal income tax consequences to U.S. taxpayers and the Company of awards granted under the 1999 Plan. Tax consequences for any particular individual may be different.

Nonstatutory Stock Options

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

As a result of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury regulations promulgated thereunder (“Section 409A”), nonstatutory stock options granted with an exercise price below the fair market value of the underlying stock or with a deferral feature may be taxable to the recipient in the year of vesting in an amount equal to the difference between the then fair market value of the underlying stock and the exercise price of such awards and may be subject to an additional 20% tax plus penalties and interest. In addition, certain states, such as California, have adopted similar tax provisions.

Incentive Stock Options

No taxable income is reportable when an incentive stock option is granted or exercised (except for purposes of the alternative minimum tax, in which case taxation is the same as for nonstatutory stock options). If the participant exercises the option and then later sells or otherwise disposes of the shares more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss. If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of the two year or one year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option.

Stock Appreciation Rights

No taxable income is reportable when a stock appreciation right is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received and the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.

As a result of Section 409A, however, stock appreciation rights granted with an exercise price below the fair market value of the underlying stock or with a deferral feature may be taxable to the recipient in the year of vesting in an amount equal to the difference between the then fair market value of the underlying stock and the exercise price of such options and may be subject to an additional 20% tax plus penalties and interest. In addition, certain states, such as California, have adopted similar tax provisions.

Stock Issuance, Restricted Stock Units, Performance Units and Performance Shares

A participant generally will not have taxable income at the time an award of stock, RSUs, performance shares or performance units is granted. Instead, he or she will recognize ordinary income in the first taxable year in which his or her interest in the shares underlying the award becomes either (1) freely transferable; or (2) no longer subject to substantial risk of forfeiture. However, the recipient of an award of restricted stock may elect to recognize income at the time he or she receives the award in an amount equal to the fair market value of the shares underlying the award (less any cash paid for the shares) on the date the award is granted and the recipient of an RSU granted pursuant to the Annual Award Program may be permitted to elect in accordance with federal tax laws when he or she will receive the payout from his or her earned RSUs and defer income taxation until the award is paid.

Tax Effect for the Company

The Company generally will be entitled to a tax deduction in connection with an award under the 1999 Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option). Special rules limit the deductibility of compensation paid to our Chief Executive Officer and to certain other of our most highly compensated executive officers. Under Section 162(m) of the Code, the annual compensation paid to any of these specified executive officers will be deductible only to the extent that it does not exceed $1,000,000. However, the Company can preserve the deductibility of certain compensation in excess of $1,000,000 if the conditions of Section 162(m) are met. These conditions include stockholder approval of the 1999 Plan, setting limits on the number of awards that any individual may receive and for awards other than stock options, establishing performance criteria that must be met before the award actually will vest or be paid. The 1999 Plan has been designed to permit the Plan Administrator to grant awards that qualify as performance-based compensation for purposes of satisfying the conditions of Section 162(m), thereby permitting the Company to continue to receive a federal income tax deduction in connection with such awards. However, the Plan Administrator may determine that it is in the best interest of the Company and its stockholders to structure awards under the 1999 Plan that do not satisfy the conditions of Section 162(m), which could cause the Company to forgo a potential federal income tax deduction.

Amendment and Termination of the Plan

The Board or the Primary Committee (as defined in the 1999 Plan) generally may amend or terminate the 1999 Plan at any time and for any reason, subject to stockholder approval, if applicable.

Summary

The 1999 Plan is designed to assist us in recruiting, motivating and retaining talented employees who help us achieve our business goals, including creating long-term value for stockholders. We strongly believe that the amendment to the 1999 Plan to increase the number of shares we can use to grant awards is essential for us to compete for talent in the very competitive labor markets in which we operate.

Vote Required

The affirmative vote of a majority of the stock having voting power present in person or represented by proxy is required to approve the amendment of the 1999 Plan described in this Proposal No. 2. Unless you indicate otherwise, your proxy will be voted “FOR” the proposal.

The Board of Directors Unanimously Recommends That Stockholders

Vote FOR Proposal No. 2

PROPOSAL NO. 3

AMENDMENT TO THE COMPANY’S EMPLOYEE STOCK PURCHASE PLAN

Introduction

The Company is asking the stockholders to approve an amendment to the Company’s Employee Stock Purchase Plan (the “Purchase Plan”), to increase the number of shares authorized for issuance under the Purchase Plan by an additional 5,000,000 shares. The requested increase of 5,000,000 shares represents approximately 1.5% of the outstanding shares of Company’s common stock as of July 17, 2014. The Company’s named executive officers have an interest in this Proposal No. 3.

We are asking our stockholders to increase the number of shares authorized for issuance under the Purchase Plan to ensure that the Company will continue to have a sufficient reserve of shares of the Company’s common stock available under the Purchase Plan to provide eligible employees of the Company and its participating affiliates (whether now existing or subsequently established) with the opportunity to purchase shares at semiannual intervals through their accumulated periodic payroll deductions.

The Purchase Plan was adopted by our Board on September 26, 1995 and became effective on November 20, 1995, in connection with the Company’s initial public offering of its common stock.

The terms and provisions of the Purchase Plan, as most recently amended, are summarized below. This summary, however, does not purport to be a complete description of the Purchase Plan. The Purchase Plan is set forth in its entirety and has been filed with the SEC as Appendix B to this Proxy Statement. The following summary is qualified in its entirety by reference to the complete text of the Purchase Plan. Any stockholder who wants to obtain a copy of the actual plan document may do so by written request to the Corporate Secretary at the Company’s principal offices in Sunnyvale, California.

In considering its recommendation to amend the Purchase Plan to reserve an additional 5,000,000 shares for issuance, our Board considered the historical number of shares purchased under the Purchase Plan in the past three years. In fiscal 2012, fiscal 2013 and fiscal 2014, the number of shares purchased under the Purchase Plan was 2,593,823 shares, 3,776,066 shares and 3,773,732 shares, respectively. Although our Board considered the historical number of purchased shares when considering its recommendation, the actual number of shares that will be purchased under the Purchase Plan in any given year will depend on a number of factors, including the number of participants, the participant’s participation rates and our stock price. Based on usage in fiscal 2014, an additional 5,000,000 shares would meet our needs for two and a half years, but the actual number of shares that will be purchased under the Purchase Plan will depend on a variety of factors.

In considering its recommendation to amend the Purchase Plan to reserve an additional 5,000,000 shares for issuance, our Board also considered (1) management’s recommendation as to the amount of the increase; and (2) the number of employees who are expected to participate in the Purchase Plan.

Description of the Purchase Plan

The Purchase Plan is administered by the Compensation Committee of our Board, serving as the plan administrator (the “Plan Administrator”). As Plan Administrator, such committee has full authority to adopt administrative rules and procedures and to interpret the provisions of the Purchase Plan.

Share Reserve

If Proposal No. 3 is approved, the maximum number of shares reserved for issuance over the term of the Purchase Plan will be 48,213,068 shares. As of July 17, 2014, 37,747,627 shares had been issued under the Purchase Plan, and 5,465,441 shares were available for future issuance. The closing price of our common stock was $36.70 on July 17, 2014.

The shares issuable under the Purchase Plan may be made available from authorized but unissued shares or from shares of common stock reacquired by the Company, including shares purchased on the open market.

In the event that any change is made to the outstanding common stock (whether by reason of any stock split, stock dividend, recapitalization, exchange or combination of shares or other change affecting the outstanding common stock as a class without the Company’s receipt of consideration), appropriate adjustments will be made to (1) the maximum number and class of securities issuable under the Purchase Plan; (2) the maximum number and class of securities purchasable per participant on any one semiannual purchase date; (3) the maximum number and class of shares purchasable in total by all participants on any one purchase date (if applicable); and (4) the number and class of securities subject to each outstanding purchase right and the purchase price per share in effect thereunder. Such adjustments will be designed to preclude any dilution or enlargement of benefits under the Purchase Plan or the outstanding purchase rights thereunder.

Offering Period and Purchase Rights

Shares are offered under the Purchase Plan through a series of overlapping offering periods, each not to exceed a duration of 24 months. Such offering periods will begin on the first business day of June and on the first business day of December each year over the term of the Purchase Plan. Accordingly, two separate offering periods will begin in each calendar year.

Each offering period will consist of a series of one or more successive purchase intervals. Purchase intervals will run from the first business day in June to the last business day in November each year and from the first business day in December each year to the last business day in May in the immediately succeeding year. Accordingly, shares will be purchased on the last business day in May and November each year with the payroll deductions collected from the participants for the purchase interval ending with each such semiannual purchase date.

If the fair market value per share of common stock on any semiannual purchase date within a particular offering period is less than the fair market value per share of common stock on the start date of that offering period, then the participants in that offering period will automatically be transferred from that offering period after the semiannual purchase of shares on their behalf and enrolled in the new offering period, which begins on the next business day following such purchase date.

Eligibility and Participation

Any individual who is employed on a basis under which he or she is regularly expected to work for more than 20 hours per week for more than five months per calendar year in the employ of the Company or any participating parent or subsidiary corporation (including any corporation which subsequently becomes such at any time during the term of the Purchase Plan) (or any lesser number of hours per week and/or number of months in any calendar year established by the Plan Administrator in accordance with applicable law and the provisions of the Purchase Plan) is eligible to participate in the Purchase Plan.

An individual who is an eligible employee on the start date of any offering period may join that offering period, subject to certain enrollment timing restrictions contained in the Purchase Plan, by properly electing to participate in the offering period pursuant to procedures established by the Plan Administrator in accordance with the terms of the Purchase Plan. However, no employee may participate in more than one offering period at a time.

As of July 17, 2014, approximately 12,200 employees, including all five of our named executive officers, were eligible to participate in the Purchase Plan.

Purchase Price

The purchase price of the shares purchased on behalf of each participant on each semiannual purchase date will be equal to 85% of the lower of (1) the fair market value per share on the start date of the offering period in which the participant is enrolled; or (2) the fair market value on the semiannual purchase date.

The fair market value per share on any particular date under the Purchase Plan will be deemed to be equal to the closing selling price per share on such date reported on the NASDAQ Global Select Market. On July 17, 2014, the closing selling price per share of the Company’s common stock on the NASDAQ Global Select Market was $36.70.

Payroll Deductions and Stock Purchases

Each participant may authorize periodic payroll deductions in any multiple of 1% up to a maximum of 10% of his or her total cash earnings (generally base salary, bonuses, overtime pay and commissions) to be applied to the acquisition of shares at semiannual intervals. Accordingly, on each semiannual purchase date (the last business day in May and November each year), the accumulated payroll deductions of each participant will automatically be applied to the purchase of whole shares at the purchase price in effect for the participant for that purchase date. Any payroll deductions not applied to the purchase of shares on the purchase date shall be promptly refunded to the participant after the purchase date.

Special Limitations

The Purchase Plan imposes certain limitations upon a participant’s rights to acquire common stock, including the following limitations:

•

Purchase rights granted to a participant may not permit such individual to purchase more than $25,000 worth of shares (valued at the time each purchase right is granted) for each calendar year those purchase rights are outstanding.

•

Purchase rights may not be granted to any individual if such individual would, immediately after the grant, own or hold outstanding options or other rights to purchase stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or any of its affiliates.

•

No participant may purchase more than 1,500 shares on any one purchase date.

The Plan Administrator will have the discretionary authority to increase, decrease, or implement the per participant and any total participant limitations prior to the start date of any new offering period under the Purchase Plan.

Withdrawal Rights and Termination of Employment

The participant may withdraw from the Purchase Plan at any time on or before the seventh business day prior to the next scheduled purchase date (subject to the Plan Administrator’s authority to designate a different withdrawal date in accordance with the provisions of the Purchase Plan, subject to any laws of the applicable jurisdiction), and upon such timely withdrawal, his or her accumulated payroll deductions will be refunded.

Upon the participant’s cessation of employment or loss of eligible employee status, payroll deductions will automatically cease. Any payroll deductions which the participant may have made for the semiannual period in which such cessation of employment or loss of eligibility occurs will be immediately refunded.

Stockholder Rights

No participant will have any stockholder rights with respect to the shares covered by his or her purchase rights until the shares are actually purchased on the participant’s behalf. No adjustment will be made for dividends, distributions or other rights for which the record date is prior to the date of such purchase.

Assignability

Purchase rights are not assignable or transferable by the participant and may be exercised only by the participant.

Change of Control

In the event a change of control occurs, all outstanding purchase rights will automatically be exercised immediately prior to the effective date of such change of control. The purchase price in effect for each participant will be equal to 85% of the lower of (1) the fair market value per share on the start date of the offering period in which the participant is enrolled at the time the change of control occurs; or (2) the fair market value per share immediately prior to the effective date of such change of control.

A change of control will be deemed to occur if (1) the Company is acquired through a merger or consolidation in which more than 50% of the Company’s outstanding voting stock is transferred to a person or persons different from those who held stock immediately prior to such transaction; (2) the Company sells, transfers or disposes of all or substantially all of its assets; or (3) any person or related group of persons acquires ownership of securities representing more than 50% of the total combined voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s stockholders.

Share Proration

Should the total number of shares to be purchased pursuant to outstanding purchase rights on any particular date exceed either (1) the maximum number of shares purchasable in total by all participants on any one purchase date (if applicable); or (2) the number of shares then available for issuance under the Purchase Plan, then the Plan Administrator will make a pro-rata allocation of the available shares on a uniform and nondiscriminatory basis. In such an event, the Plan Administrator will refund the accumulated payroll deductions of each participant, to the extent such deductions are in excess of the purchase price payable for the shares prorated to such individual.

Amendment and Termination

The Purchase Plan will terminate upon the earliest of (1) the date on which all shares available for issuance thereunder are sold pursuant to exercised purchase rights; or (2) the date on which all purchase rights are exercised in connection with a change of control.

Our Board may at any time alter, amend, suspend or discontinue the Purchase Plan and will seek stockholder approval of any changes to the extent necessary to comply with the Internal Revenue Code or other applicable law, regulation or stock exchange rule.

Plan Benefits

The table below shows, as to the named executive officers (“NEOs”) and specified groups, the number of shares purchased under the Purchase Plan during fiscal 2014, together with the value of those shares as of the date of purchase.

Participation in the Purchase Plan

Participation in the Purchase Plan is voluntary and dependent on each eligible employee’s election to participate and his or her determination as to the level of payroll deductions. Accordingly, future purchases under the Purchase Plan are not determinable. Nonemployee directors are not eligible to participate in the Purchase Plan. The following table sets forth certain information regarding shares purchased under the Purchase Plan during the last fiscal year for each of the NEOs, for all current executive officers as a group and for all other employees who participated in the Purchase Plan as a group:

AMENDED PLAN BENEFITS

Employee Stock Purchase Plan


Name and Position	Number of Purchased Shares		Dollar Value of Purchased Shares ($)(1)
Thomas Georgens		849		10,618
Chairman of the Board and Chief Executive Officer
Nicholas R. Noviello		291		4,368
Executive Vice President Finance and Operations; Chief Financial Officer
Robert E. Salmon		849		10,618
President and Head of Go-to-Market Operations
Manish Goel		849		10,618
Executive Vice President Product Operations(2)
George Kurian		—		—
Executive Vice President Product Operations(3)
Matthew K. Fawcett		819		10,242
Senior Vice President, General Counsel and Secretary
All current executive officers as a group (5 persons)		3,657		46,464
All employees, including current officers who are not executive officers, as a group (9,250 persons)		3,773,732		52,770,563

(1)	Determined based on the fair market value of the shares on date of purchase, minus the purchase price under the Purchase Plan.

(2)	Mr. Goel served as Executive Vice President Product Operations until September 20, 2013.

(3)	Mr. Kurian served as Executive Vice President Product Operations from September 20, 2013.

New Plan Benefits

No purchase rights have been granted, and no shares have been issued, on the basis of the 5,000,000 share increase that is the subject of this Proposal No. 3.

Federal Tax Consequences

The Purchase Plan is intended to be an employee stock purchase plan within the meaning of Section 423 of the Code. Under an employee stock purchase plan, which so qualifies, no taxable income will be recognized by a participant, and no deductions will be allowable to the Company, upon either the grant or the exercise of the purchase rights. Taxable income will not be recognized until there is a sale or other disposition of the shares acquired under the Purchase Plan or in the event that the participant should die while still owning the purchased shares.

If the participant sells or otherwise disposes of the purchased shares within two years after the start date of the offering period in which such shares were acquired or within one year after the actual semiannual purchase

date of those shares, then the participant will recognize ordinary income in the year of sale or disposition equal to the amount by which the fair market value of the shares on the purchase date exceeded the purchase price paid for those shares, and the Company will be entitled to an income tax deduction, for the taxable year in which such disposition occurs, equal in amount to such excess. The participant will also recognize capital gain equal to the amount by which the amount realized upon the sale or disposition exceeds the sum of the aggregate purchase price paid for the shares and the ordinary income recognized in connection with their acquisition.

If the participant sells or disposes of the purchased shares more than two years after the start date of the offering period in which the shares were acquired and more than one year after the actual semiannual purchase date of those shares, then the participant will recognize ordinary income in the year of sale or disposition equal to the lesser of (1) the amount by which the fair market value of the shares on the sale or disposition date exceeded the purchase price paid for those shares; or (2) 15% of the fair market value of the shares on the start date of that offering period. Any additional gain upon the disposition will be taxed as a long-term capital gain. The Company will not be entitled to an income tax deduction with respect to such disposition.

If the participant still owns the purchased shares at the time of death, the lesser of (1) the amount by which the fair market value of the shares on the date of death exceeds the purchase price; or (2) 15% of the fair market value of the shares on the start date of the offering period in which those shares were acquired will constitute ordinary income in the year of death.

Summary

Our Board believes that it is in the best interests of the Company and its stockholders to continue to provide employees with the opportunity to acquire an ownership interest in the Company through their participation in the Purchase Plan and thereby encourage them to remain in the Company’s employ and more closely align their interests with those of the stockholders.

Vote Required

The affirmative vote of a majority of the stock having voting power present in person or represented by proxy is required for approval of the amendment to the Purchase Plan described in this Proposal No. 3. Unless you indicate otherwise, your proxy will be voted “FOR” the proposal.

Our Board of Directors Unanimously Recommends That Stockholders

Vote FOR Proposal No. 3

PROPOSAL NO. 4

APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION PLAN

Introduction

The Company is asking the stockholders to re-approve the Executive Compensation Plan (the “Compensation Plan”). In particular, we are seeking stockholder approval of the material terms of the Compensation Plan for purposes of complying with Section 162(m). The Compensation Plan was last approved by our stockholders at the 2009 Annual Meeting of Stockholders. The Compensation Plan has not changed in any material way since stockholders last approved the Compensation Plan.

If our stockholders re-approve the Compensation Plan, we would continue to have the ability to deduct in full for federal income tax purposes the compensation recognized by our executive officers in connection with performance-based cash incentives paid under the Compensation Plan. Section 162(m) generally denies a corporate tax deduction for annual compensation exceeding $1 million paid to the chief executive officer and other “covered employees” as determined under Section 162(m) and applicable guidance. However, certain types of compensation, including performance-based compensation, are excluded from this deductibility limit. To enable performance-based cash incentives paid under the Compensation Plan to continue to qualify as performance-based compensation within the meaning of Section 162(m), the material terms of the Compensation Plan must be re-approved by our stockholders at the Annual Meeting.

The terms and provisions of the Compensation Plan are summarized below. This summary, however, does not purport to be a complete description of the Compensation Plan. The Compensation Plan is set forth in its entirety and has been filed with the SEC as Appendix C to this Proxy Statement.

Eligibility

Persons who are eligible to participate in the Compensation Plan are our key executives, including our Chairman, Chief Executive Officer, President, Chief Financial Officer and all of our Executive Vice Presidents and Senior Vice Presidents. The participants in the Compensation Plan are chosen solely at the discretion of the Compensation Committee. However, it is expected that between one and twenty-three individuals will participate in the Compensation Plan in any year. Because our executive officers are eligible to receive awards under the Compensation Plan, our executive officers have an interest in this Proposal No. 4. No person is automatically entitled to participate in the Compensation Plan in any performance period. We may also pay discretionary bonuses, or other types of compensation, outside of the Compensation Plan.

Purpose

The purpose of the Compensation Plan is to provide a means and guidelines under which the Company can share its success with its key executives by providing those executives with awards based on the achievement of goals relating to the performance of the Company and its subsidiaries. If certain requirements are satisfied, incentive compensation payouts issued under the Compensation Plan may qualify as deductible “performance-based compensation” within the meaning of Section 162(m).

Administration

The Compensation Plan is administered by the Compensation Committee, consisting of no fewer than two members of the Board. With respect to incentive compensation that is intended to qualify as “performance-based compensation” within the meaning of Section 162(m), each member of the Compensation Committee shall qualify as an “outside director” within the meaning of Section 162(m).

Determination of Awards

Under the Compensation Plan, participants will be eligible to receive awards based upon the attainment and certification of certain performance goals established by the Compensation Committee. The performance goals the Compensation Committee may choose from may include one or more of the following:

•

earnings per share,

•

operating cash flow,

•

operating income,

•

operating profit,

•

profit after tax,

•

profit before tax,

•

return on assets,

•

return on equity,

•

return on sales,

•

revenue, and

•

total stockholder return.

The performance criteria may differ for each participant and for each award and will be set forth in writing. The performance period during which the performance criteria must be attained will be determined by the Compensation Committee in its sole discretion. The Compensation Committee retains the discretion to reduce or eliminate any award that would otherwise be payable pursuant to the Compensation Plan.

Payment of Awards

All awards will be paid in cash as soon as practicable following determination of the award.

Maximum Award

The amounts that will be paid pursuant to the Compensation Plan are not currently determinable. The maximum incentive compensation payment that any participant may receive under the Compensation Plan in any fiscal year is $5,000,000.

Amendment and Termination

The Board or the Compensation Committee may amend or terminate the Compensation Plan, in whole or in part, at any time and for any reason. The amendment, suspension or termination of the Compensation Plan will not, without the consent of the participants, alter or impair any rights or obligations under any awards granted under the Compensation Plan.

Federal Income Tax Consequences

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

Awards to Be Granted to Certain Individuals and Groups

Awards under the Compensation Plan are determined based on actual future performance, so future actual awards cannot now be determined. The following table sets forth certain information regarding bonuses paid under the Compensation Plan during the last fiscal year for each of the named executive officers, for all current executive officers as a group and for all other employees who participated in the Compensation Plan for fiscal 2014 as a group:

PLAN BENEFITS

Executive Compensation Plan


Name of Individual or Group and Position	Dollar Value of Bonuses Earned in Fiscal 2014 ($)
Thomas Georgens		1,244,100
Chairman of the Board and Chief Executive Officer
Nicholas R. Noviello		488,188
Executive Vice President Finance and Operations; Chief Financial Officer
Robert E. Salmon		594,296
President and Head of Go-to-Market Operations
Manish Goel(1)		—
Executive Vice President Product Operations
George Kurian(2)		414,304
Executive Vice President Product Operations
Matthew K. Fawcett		302,720
Senior Vice President, General Counsel and Secretary
All current executive officers, as a group (5 persons)		3,043,608
All employees who participated in the Compensation Plan for fiscal 2014, as a group (23 persons)		8,509,342

(1)	Mr. Goel served as Executive Vice President Product Operations until September 20, 2013.

(2)	Mr. Kurian served as Executive Vice President Product Operations from September 20, 2013.

Summary

We believe strongly that the approval of the Compensation Plan is essential to our continued success and will establish an important incentive for executives of the Company, help us to attract, retain and motivate people whose skills and performance are critical to our success and preserve the Company’s ability to incent and reward its executives consistently with the Company’s performance during an uncertain and rapidly changing economic environment. We strongly believe that the Compensation Plan is essential for us to compete for executive talent in the very difficult labor markets in which we operate.

Vote Required

The affirmative vote of a majority of the stock having voting power present in person or represented by proxy is required for approval of the Compensation Plan described in this Proposal No. 4. Unless you indicate otherwise, your proxy will vote “FOR” the proposal.

Our Board of Directors Unanimously Recommends That Stockholders

Vote FOR Proposal No. 4

PROPOSAL NO. 5

ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

“SAY-ON-PAY”

In accordance with Section 14A of the Exchange Act, we are asking stockholders to approve an advisory resolution on the compensation of our Named Executive Officers (“NEOs”) as reported in this Proxy Statement. As described below in the “Compensation Discussion and Analysis” section of this Proxy Statement, the Compensation Committee has designed the compensation of our NEOs to align each NEO’s compensation with our short-term and long-term performance and to provide the compensation and incentives needed to attract, motivate and retain our NEOs, who are crucial to our long-term success. You are urged to read the disclosure below under “Compensation Discussion and Analysis,” which describes in more detail our executive compensation policies, as well as the Summary Compensation Table and other related compensation tables and narrative disclosure, which provide detailed information on the compensation of our NEOs.

Our compensation programs reflect our continued commitment to pay-for-performance, with a substantial portion of each NEO’s compensation being at-risk and subject to important performance measures aligned with long-term stockholder value. During fiscal 2014, a significant percentage of each NEO’s total compensation (as reported in the Summary Compensation Table) was at-risk, being comprised of performance-based cash bonus opportunities, restricted stock units, and stock options which become valuable to the executive only upon realized share appreciation. The Compensation Committee sets a portion of the compensation of the NEOs based on their ability to achieve annual operational objectives that advance our long-term business objectives and that are designed to create sustainable long-term stockholder value in a cost-effective manner. Our performance-based compensation elements are guided by the Compensation Committee’s long-term objectives of maintaining the market competitiveness and retention value of our compensation packages. In addition, we continue to be committed to good compensation governance practices. The Compensation Committee believes that the compensation arrangements for our NEOs are consistent with market practice and provide for compensation that is reasonable in light of our and each individual NEO’s performance. Moreover, the Compensation Committee does not provide for egregious pay practices, such as excessive perquisites or tax “gross up” payments as elements of our NEOs’ compensation. The detailed ways in which we link pay with Company and individual performance and structure our NEO compensation arrangements consistent with good governance practices is described in the “Compensation Discussion and Analysis” section below.

The resolution to approve the compensation of our NEOs on an advisory basis, commonly known as a “say-on-pay” proposal, gives stockholders the opportunity to express their views on our NEOs’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. Accordingly, you are being asked to vote on the following resolution at the Annual Meeting:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the NEOs, as disclosed in the Company’s Proxy Statement for the 2014 Annual Meeting of Stockholders pursuant to the executive compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the fiscal 2014 Summary Compensation Table and the other related tables and disclosure.”

The say-on-pay vote is advisory, and is therefore not binding on us, the Compensation Committee or our Board. However, our Board and the Compensation Committee value the opinions of our stockholders, and the Compensation Committee will consider the results of this Proposal No. 5 in evaluating whether any actions are necessary to address those concerns. At the 2013 Annual Meeting, consistent with the recommendation of our Board, our stockholders voted in support of our advisory say-on-pay resolution, with 97.2% of the votes cast in favor. As such, the Compensation Committee made no significant changes in our compensation program for fiscal 2014. We currently conduct advisory votes on NEO compensation on an annual basis, and we expect to conduct our next advisory vote at the 2015 Annual Meeting.

Vote Required

The affirmative vote of a majority of the stock having voting power present in person or represented by proxy is required to approve this Proposal No. 5. Unless you indicate otherwise, your proxy will be voted “FOR” the proposal.

Our Board of Directors Unanimously Recommends That Stockholders

Vote, on an Advisory Basis, FOR Proposal No. 5

PROPOSAL NO. 6

STOCKHOLDER PROPOSAL

Jing Zhao, 262 Altadena Circle, Pittsburg, CA 94565, the beneficial owner of shares of the Company’s common stock valued at $2,000 or greater, has given notice that he intends to present a proposal at the Annual Meeting. In accordance with SEC rules, the following is the complete text of the proposal exactly as submitted. The stockholder proposal includes some assertions that we believe are misleading. We have not addressed all of these assertions, and we accept no responsibility for the stockholder proposal.

Shareholder Proposal on Establishing a Public Policy Committee

Resolved: shareholders recommend that NetApp, Inc. (the Company) establish a Public Policy Committee to assist the Board of Directors in overseeing the Company’s policies and practice that relate to public policy including human rights, corporate social responsibility, vendor chain management, charitable giving, political activities and expenditures, government relations activities, international relations, and other public issues that may affect the Company’s operations, performance or reputation, and shareholders’ value.

Supporting Statement

The Company currently has four committees: Corporate Governance and Nominating Committee mainly to “assist with director nominations’ (2013 Notice of Annual Meeting p.12), Compensation Committee, Audit Committee, and Strategy Committee which “assists the Board in fulfilling its responsibilities relating to the development, articulation, and execution of the Company’s long-term strategic plan, and the review, evaluation, and approval of certain strategic transactions” (2013 Notice of Annual Meeting p.14). There is no committee to deal with the increasingly complicated public policy issues. For example, in the dynamic Pacific Asia region where the Company has heavy business, the Japanese government has utilized the Tiananmen Tragedy of China in 1989 to abandon its own peace constitution, which is the cornerstone of Asia’s peace after WWII, towards rearmament, militarization and fascism to mislead the U.S. under the U.S.-Japan Security Treaties to crash with the rising power of a nationalistic China. Although the Japanese government signed the G-7 Summit declaration in 1989 to protect Chinese students, I, as a graduate student in Osaka University organizing Chinese democratic and human rights activities in Japan, was persecuted because I refused to collaborate with the Japanese government to betray my fellow Chinese students (refer to Japan’s second largest newspaper Asahi’s interviews with me on February 10, 1990, October 20, 1992 and June 8, 2009, and my article “The Betrayal of Democracy: Tiananmen’s Shadow over Japan,” Historia Actual Online. ISSN 1696-2060. 2004. Issue 4 Volume 2). On the other hand, the public is concerned of recent media coverage of many U.S. companies bribing Chinese high officials to obtain business deals in China. Without a public policy committee, it is very difficult for the Company to legitimately and ethically deal with today’s complicated international affairs affecting our business. For this reason, and partly to respond to my proposal, Microsoft established such a committee in 2012. Let’s follow the industrial leader to establish a Public Policy Committee too.

The Company’s Response

Our Board carefully considered this stockholder proposal and concluded that its adoption would not be in the best interests of the Company or its stockholders. In particular, our Board believes that our policies and practices already compare favorably to those requested by the proponent.

Our commitment to public policy is fundamental to our business. We are a global company with worldwide operations. We recognize and take seriously our responsibility to engage public policy matters that impact our business operations and stakeholders globally. Our policies, practices, procedures and public disclosures related to public policy are broadly structured to address a wide array of issues, including the following:

•

Human Rights: We are committed to human rights and have adopted a number of policies in furtherance of ensuring that human rights are respected, including policies regarding responsible sourcing, ethical labor practices and supply chain accountability.

•

Corporate Social Responsibility: Our operational philosophy and culture are based on our vision to deliver the best possible results for the communities we serve by living a set of shared core values. We have advanced our core corporate responsibility objectives and operational philosophy through several channels and mechanisms, including the following:

•

award-winning, global workplace satisfaction;

•

a philanthropic focus on contributing time, talent, products, services and money to nonprofit organizations and schools in the vicinity of our major employee population centers;

•

worldwide charitable giving, including disaster relief efforts;

•

volunteerism; and

•

environmental stewardship.

•

Vendor Chain Management: We believe in operational excellence and compliance with applicable laws and regulations in our global supply chain, which includes labor practices, integrity of materials, quality control, environmental compliance, export control and other trade laws.

•

Political Activities and Expenditures: We maintain procedures related to donations, whether monetary, product or otherwise.

•

Government Relations Activities: We are committed to compliance with rules and regulations that apply to government contracting and business communications with government officials, their prime contractors or their agents.

Our Management, Integrity and Compliance Office and Community Relations Team maintain oversight with respect to our public policy commitments around the world.

Given the broad, worldwide scope of our current policies and practices relating to public policy matters in the areas described by the proponent and our existing commitment to continuing engagement on these issues, our Board does not believe that the additional actions requested by the stockholder proposal are necessary.

Vote Required

This Proposal No. 6 is advisory in nature and would constitute a recommendation to our Board if it is approved by stockholders. The affirmative vote of a majority of the stock having voting power present in person or represented by proxy is required to approve this Proposal No. 6. Unless you indicate otherwise, your proxy will be voted “AGAINST” the proposal.

Our Board of Directors Unanimously Recommends That Stockholders

Vote AGAINST Proposal No. 6

PROPOSAL NO. 7

RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

General

The Company is asking the stockholders to ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending April 24, 2015.

In the event the stockholders fail to ratify the appointment, the Audit Committee of our Board of Directors will consider it as a direction to select other auditors for the subsequent fiscal year. Even if the selection is ratified, the Audit Committee at its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interest of the Company and its stockholders.

A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting, will have the opportunity to make a statement if he or she desires to do so, and will be available to respond to appropriate questions.

Principal Accountant Fees and Services

The Audit Committee preapproves services performed by its independent registered public accounting firm and reviews auditor billings in accordance with the Audit Committee charter. All requests for audit, audit-related, tax and other services must be submitted to the Audit Committee for specific preapproval and cannot commence until such approval has been granted. Normally, preapproval is provided at regularly scheduled meetings. However, the authority to grant specific preapproval between meetings, as necessary, has been delegated to the Chairman of the Audit Committee. The Chairman must update the Audit Committee at the next regularly scheduled meeting of any services that were granted specific preapproval.

Aggregate fees to the Company incurred in fiscal 2014 and fiscal 2013, respectively, represent fees billed or to be billed by the Company’s independent registered accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates (collectively, “Deloitte & Touche”). During fiscal 2014 and 2013, all of the services shown in the table below were preapproved by the Audit Committee in accordance with the preapproval policies discussed above.


	Fiscal Year
	2014		2013
Audit fees(1)	$	5,132,000	$	4,528,000
Audit-related fees	$	—	$	—

Total audit and audit-related fees	$	5,132,000	$	4,528,000
Tax fees(2)	$	1,400,000	$	1,282,000
All other fees(3)	$	122,000	$	154,000

Total fees	$	6,654,000	$	5,964,000

(1)

Includes fees for professional services incurred in fiscal 2014 and fiscal 2013 in connection with (1) the audit of the Company’s annual consolidated financial statements and its internal control over financial reporting; (2) reviews of the interim consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q; and (3) services related to statutory and regulatory filings or engagements.

(2)	Includes fees for tax compliance, tax advice, and tax planning services. These services include assistance regarding federal, state and international tax compliance, tax return review, tax audits, and miscellaneous consulting services.

(3)	Includes fees for professional services other than the services reported above. These services include permissible business advisory and consulting services, translations of foreign financial statements, and

subscriptions to an accounting regulatory database. On January 1, 2013, Deloitte & Touche LLP acquired Bersin & Associates, LLC (“Bersin”), a human resources and talent management consulting firm that the Company had been using prior to the acquisition. Fiscal 2013 fees include $92,000 of permissible services performed by Bersin after the acquisition. Fiscal 2014 fees include $19,000 of permissible services performed by Bersin.

The Audit Committee has considered whether the provision of the nonaudit services discussed above is compatible with maintaining the principal auditor’s independence and believes such services are compatible with maintaining the auditor’s independence.

Vote Required

The affirmative vote of a majority of the stock having voting power present in person or represented by proxy is required to approve this Proposal No. 7. Unless you indicate otherwise, your proxy will be voted “FOR” the proposal.

Our Board of Directors Unanimously Recommends That Stockholders Vote FOR Proposal No. 7

SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT

To the Company’s knowledge, the following table sets forth certain information regarding beneficial ownership of the Company’s common stock as of July 17, 2014 by (1) each person or entity who is known by the Company to own beneficially more than 5% of the Company’s common stock; (2) each of the Company’s directors and nominees for director; (3) each of the Company’s executive officers set forth in the Summary Compensation Table; and (4) all of the Company’s current directors and executive officers as a group.

Except as indicated, the address of the beneficial owners is c/o NetApp, Inc., 495 East Java Drive, Sunnyvale, California 94089. Information related to holders of more than 5% of the Company’s common stock was obtained from filings with the SEC pursuant to Sections 13(d) or 13(g) of the Exchange Act.


Name of Beneficial Owner+	Number of Shares Beneficially Owned		Percentage of Class(1)
BlackRock, Inc.(2) 40 East 52nd Street New York, NY 10022		28,902,237		8.9	%
Dodge & Cox(3) 555 California Street, 40th Floor San Francisco, CA 94104		24,703,903		7.6	%
Thomas Georgens(4)		1,125,444		*
Nicholas R. Noviello(5)		255,912		*
Robert F. Salmon(6)		314,137		*
Matthew K. Fawcett(7)		158,488		*
George Kurian(8)		120,928		*
Daniel J. Warmenhoven(9)		3,345,554		1.03	%
Jeffry R. Allen(10)		133,271		*
Tor R. Braham(11)		5,712		*
Alan L. Earhart(12)		76,271		*
Gerald Held(13)		74,675		*
Kathryn M. Hill(14)		5,712		*
Nicholas G. Moore(15)		100,604		*
T. Michael Nevens(16)		134,831		*
George T. Shaheen(17)		126,382		*
Robert T. Wall(18)		211,987		*
Richard P. Wallace(19)		79,331		*
All current directors and executive officers as a group (14 persons)(20)		6,269,239		1.93	%

*	Less than 1%

Pursuant to our outside director compensation policy, options to purchase shares of our common stock held by our non-employee directors are early exercisable. Shares issued upon early exercise of stock options remain subject to the same vesting schedule applicable to the exercised stock options. If a non-employee director ceases to provide services to us prior to the date on which all such shares have vested, we have a right to repurchase any unvested shares at the exercise price paid per share.

(1)

Percentage of Class is based on 325,422,057 shares of common stock outstanding on July 17, 2014. Shares of common stock subject to stock options and RSUs that are currently exercisable or will become exercisable or issuable within 60 days of July 17, 2014 are deemed outstanding for computing the percentage of the person or group holding such options and/or RSUs, but are not deemed outstanding for computing the percentage of any other person or group. Except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock.

(2)	Information concerning stock ownership was obtained from Amendment No. 2 to the Schedule 13G filed with the SEC on February 10, 2014 by BlackRock Inc. BlackRock reported sole voting and dispositive power with respect to all such shares.

(3)

Information concerning stock ownership was obtained from Amendment No. 1 to the Schedule 13G filed with the SEC on February 13, 2014. Dodge & Cox reported sole voting power with respect to 23,249,303 of such shares of common stock and sole dispositive power with respect to all 24,703,903 shares of common stock.

(4)	Consists of (i) 10,329 shares of common stock held of record by Mr. Georgens; (ii) 532 shares held by Mr. Georgen’s wife; and (iii) 1,114,583 shares of common stock issuable upon exercise of outstanding stock options exercisable within 60 days of July 17, 2014.

(5)	Consists of (i) 21,437 shares of common stock held of record by Mr. Noviello; and (ii) 234,475 shares of common stock issuable upon exercise of outstanding stock options exercisable within 60 days of July 17, 2014.

(6)

Consists of (i) 42,424 shares of common stock held of record by Mr. Salmon; (ii) 20,531 shares of common stock held of record by Robert Salmon and Patricia Mertens-Salmon, trustees to the Salmon Trust; (iii) 480 shares held of record by Patricia Mertens-Salmon, Custodian under UTMA CA; and (iv) 250,642 shares of common stock issuable upon exercise of outstanding options exercisable within 60 days of July 17, 2014. Mr. Salmon has shared voting and investment power with respect to the shares held of record by Robert Salmon and Patricia Mertens-Salmon, trustees to the Salmon Trust.

(7)

Consists of (i) 18,828 shares of common stock held of record by Mr. Fawcett; (ii) 133,410 shares of common stock issuable upon exercise of outstanding options exercisable within 60 days of July 17, 2014; and (iii) 6,250 shares of common stock issuable upon the vesting of restricted stock units within 60 days of July 17, 2014 (a portion of such shares may be withheld by the Company for the payment of taxes due).

(8)	Consists of (i) 17,567 shares of common stock held of record by Mr. Kurian; and (ii) 103,361 shares of common stock issuable upon exercise of outstanding options exercisable within 60 days of July 17, 2014.

(9)

Consists of (i) 2,127,774 shares of common stock held of record by Daniel J. Warmenhoven and Charmaine A. Warmenhoven, trustees to The Warmenhoven 1987 Revocable Trust; and (ii) 1,217,780 shares of common stock issuable upon the exercise of outstanding options exercisable with 60 days of July 17, 2014. Mr. Warmenhoven has shared voting and investment power with respect to the shares held of record by Daniel J. Warmenhoven and Charmaine A. Warmenhoven, trustees to The Warmenhoven 1987 Revocable Trust. Excludes 38,032 shares held of record by Richard A. Andre, trustee to the Daniel J. Warmenhoven 1991 Children’s Trust, as Mr. Warmenhoven disclaims beneficial ownership of the shares held by the Daniel J. Warmenhoven 1991 Children’s Trust.

(10)

Consists of (i) 2,833 shares of common stock held of record by Mr. Allen; (ii) 6,166 shares of common stock held of record by Jeffry R. Allen and Teri Allen, as Trustees of the Jeffry and Teri Allen Revocable Trust dated 1/29/2002; (iii) 121,416 shares of common stock issuable upon exercise of outstanding options exercisable within 60 days of July 17, 2014, of which 110,000 were fully vested as of such date; and (iv) 2,856 shares of common stock issuable upon the vesting of restricted stock units within 60 days of July 17, 2014. Mr. Allen has shared voting and investment power with respect to the shares held of record by Jeffry R. Allen and Teri Allen, as Trustees of the Jeffry and Teri Allen Revocable Trust dated 1/29/2002.

(11)	Represents shares of common stock issuable to Mr. Braham upon the vesting of restricted stock units within 60 days of July 17, 2014.

(12)

Consists of (i) 8,999 shares of common stock held of record by Mr. Earhart; (ii) 64,416 shares of common stock issuable upon exercise of outstanding options exercisable within 60 days of July 17, 2014, of which 53,000 were fully vested as of such date; and (iii) 2,856 shares of common stock issuable upon the vesting of restricted stock units within 60 days of July 17, 2014.

(13)	Consists of (i) 259 shares of common stock held of record by Mr. Held; and (ii) 74,416 shares of common stock issuable upon exercise of outstanding options exercisable within 60 days of July 17, 2014, of which 63,000 were fully vested as of such date.

(14)	Represents shares of common stock issuable to Ms. Hill upon the vesting of restricted stock units within 60 days of July 17, 2014.

(15)

Consists of (i) 60,416 shares of common stock issuable to Mr. Moore upon exercise of outstanding options exercisable within 60 days of July 17, 2014, of which 49,000 were fully vested as of such date; (ii) 25,000 shares of common stock issuable to The Moore Family Ventures LP, of which Mr. Moore is General Partner, upon exercise of outstanding options exercisable within 60 days of July 17, 2014, all of which were fully vested as of such date; and (iii) 15,188 shares of common stock issuable upon the vesting of restricted stock units within 60 days of July 17, 2014.

(16)	Consists of 134,831 shares of common stock issuable to Mr. Nevens upon exercise of outstanding options exercisable within 60 days of July 17, 2014, of which 112,000 were fully vested as of such date.

(17)

Consists of (i) 4,466 shares of common stock held of record by George T. Shaheen and Darlene F. Shaheen, as Trustees to the Shaheen Revocable Trust U/A DTD 12/15/88; and (ii) 121,916 shares of common stock issuable upon exercise of outstanding options exercisable within 60 days of July 17, 2014, of which 110,500 were fully vested as of such date. Mr. Shaheen has shared voting and investment power with respect to the shares held of record by George T. Shaheen and Darlene F. Shaheen, as Trustees to the Shaheen Revocable Trust U/A DTD 12/15/88.

(18)	Consists of (i) 90,571 shares of common stock held of record by Mr. Wall; and (ii) 121,416 shares of common stock issuable upon exercise of outstanding options exercisable within 60 days of July 17, 2014, of which 110,000 were fully vested as of such date.

(19)	Consists of 79,331 shares of common stock issuable to Mr. Wallace upon exercise of outstanding options exercisable within 60 days of July 17, 2014, of which 56,500 were fully vested as of such date.

(20)

Consists of (i) 2,373,196 shares of common stock held of record by our current directors and executive officers; (ii) 3,857,409 shares of common stock issuable upon the exercise of outstanding options exercisable within 60 days of July 17, 2014, of which 3,630,717 were fully vested as of such date; and (iii) 38,574 shares of common stock issuable upon the vesting of restricted stock units within 60 days of July 17, 2014.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and persons who own more than 10% of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in their ownership of common stock and other equity securities of the Company. Executive officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

Based solely on the review of the copies of such reports furnished to the Company and written representations that no other reports were required, the Company believes that during fiscal 2014, its executive officers, directors and greater than 10% stockholders complied with all Section 16 filing requirements with the exception of a late Form 4 for Mr. Shaheen filed on May 5, 2014 and a late Form 5 for Mr. Warmenhoven filed on June 6, 2014.

COMPENSATION DISCUSSION AND ANALYSIS

The Board has delegated to the Compensation Committee sole authority and responsibility for establishing and overseeing salaries, incentive compensation programs, and other forms of compensation for our executive officers, general remuneration policies for the balance of our employee population and for administering our equity incentive and benefits plans. As used in this Compensation Discussion and Analysis (“CD&A”), the term “executive” refers to an employee of the Company who holds a position at the Senior Vice President level or above, and the term “named executive officers” (“NEOs”) refers to the individuals included in the Summary Compensation Table below.

This CD&A explains the material elements of compensation for our NEOs and how our executive compensation program is designed and operates to help us achieve our corporate goals. The Compensation Committee believes strongly in a pay-for-performance philosophy and administered the executive compensation program during fiscal 2014 with this in mind.

The principal components of compensation that we pay to our NEOs consist of the following:

Base salary;

Cash incentive compensation tied to the achievement of short-term (generally annual) goals;

Equity compensation in the form of grants of stock options and restricted stock units; and

Standard employee benefits (including our 401(k) plan, health and life insurance plans, and nonqualified deferred compensation program) and the Executive Retirement Medical Plan (for certain qualifying NEOs).

Our stockholders will have the opportunity once again at this year’s Annual Meeting to endorse our executive compensation program through the stockholder advisory vote on executive compensation (commonly known as a “say-on-pay” vote) included as Proposal No. 4 in this Proxy Statement. Last year, 97.2% of the stockholder votes cast on this proposal were voted in favor of our executive compensation proposal. The Compensation Committee believes that this substantial majority of votes cast affirms our stockholders’ support for our approach to executive compensation. Last year’s stockholder vote on executive compensation occurred in September 2013, while the Compensation Committee’s consideration of fiscal 2014 executive compensation occurred earlier in 2013, with compensation for most elements established by May 2013. As a result of both of these factors, the Compensation Committee did not set or change fiscal 2014 executive compensation directly as a result of last year’s stockholder vote. The Compensation Committee expects to continue to consider input from stockholders and the outcome of our annual say-on-pay votes when making future executive compensation decisions. We encourage you to review this CD&A, together with the compensation tables that follow, prior to casting your advisory vote on the “say-on-pay” proposal.

Executive Summary

Our executive compensation program is designed to hold our NEOs accountable for results over the long term and reward them for consistently strong corporate performance.

Pay-for-Performance Philosophy

Our Compensation Committee is committed to a philosophy of pay-for-performance and designs our executive compensation program to ensure that the interests of our NEOs are aligned with the interests of our stockholders. The Compensation Committee links the compensation of NEOs to the attainment of challenging goals that will drive us to achieve profitability and revenue growth. The Compensation Committee emphasizes profitability and revenue metrics because it believes that solid performance in these areas will lead to long-term stockholder value.

Equity is a key component of our compensation program. We believe strongly that equity awards serve to align the interests of our NEOs with those of our stockholders, provide incentives for executives to focus on the long-term performance of the Company, and strengthen retention. The Compensation Committee considers Company and individual performance in determining the size and form of NEO equity grants.

As part of its diligence around scrutinizing pay and performance, the Compensation Committee, on behalf of the full Board, reviews analyses that are prepared by its independent consultant, Farient Advisors (“Farient”). These analyses are designed to test the award outcomes of our executive pay programs to ensure that they are aligned with our financial and stockholder performance. Following the end of fiscal 2014, Farient used its proprietary alignment methodology to test whether the Company’s Performance-Adjusted Compensation^TM (PAC^TM)¹ was: (1) reasonable in comparison to the Company’s revenue size and the Pay Practices Peers (excluding the five companies that are significantly different in size as described in the “Competitive Market Data” section below) and (2) sensitive to the Company’s total stockholder return (“TSR”) over time. Farient compared our CEO’s average annualized Performance Adjusted Compensation (including actual salary, actual short-term incentives, and the performance-adjusted value of long-term incentives) over successive three-year rolling periods to our compound annual TSR for the same three-year rolling periods (i.e., for three-year rolling periods ending in fiscal 2005 to 2014), and tested the results against the companies in our Pay Practices Peers (modified to exclude Microsoft, IBM, Oracle, Hewlett-Packard, and CommVault due to being substantially different in size than NetApp).

The chart below shows Farient’s Alignment Report^TM for the Company. The Peer Pay Line represents the regression line for the PAC data points of the Pay Practices Peers and the NetApp Pay Line represents the regression line for NetApp’s PAC data points.¹ The Alignment Zone indicates the range of reasonable pay outcomes, as determined by Farient, for the Company’s size, comparator group (i.e., the Pay Practices Peers) and the performance delivered. Farient’s Performance Alignment Report™ is designed to illustrate NetApp’s long-term relationship between pay and performance over time, such that PAC™ for any particular three-year period may not fall within the Alignment Zone, as not all pay elements and decisions are directly dependent on TSR performance in a given three-year period.

LOGO

Each data point reflects Performance-Adjusted Compensation (adjusted for size and inflation) for a three-year period (ending in the fiscal year noted on the chart for the Company) and TSR for the same period. As TSR is a market-based measure, stock price volatility can result in significant fluctuations from period to period. Farient uses rolling three-year periods which are sensitive enough to reflect changes in performance but long enough to smooth out short-term volatility.

Farient’s independent assessment of the Company’s pay-for-performance indicates that NetApp’s CEO pay has historically been and continues to be strongly aligned with the Company’s performance and stockholder interests. In addition, Farient conducted supplemental analyses commonly used by independent governance organizations to test whether our CEO’s pay and performance move in concert with one another. By requesting and reviewing these analyses, the Compensation Committee satisfied itself as to the coherence and integrity of our executive pay system and the relationship between pay and performance.

Company Performance

The constrained IT spending environment and the challenges facing our industry resulted in a difficult fiscal 2014. As a result, the Company did not fully achieve its fiscal 2014 annual target operating profit² and revenue goals. In keeping with its pay-for-performance philosophy, annual cash incentives in fiscal 2014 were paid below target.

Our below target performance impacted our total stockholder return as shown in the table below:


	Annualized Total Stockholder Return
	Year Over Year (%) Fiscal 2013 vs. Fiscal 2014	3-Year (%) Fiscal 2012 – Fiscal 2014
NetApp, Inc.	1.9%	-12.0%

S&P 500 Index	17.8%	11.0%

Despite the continuation of the constrained IT spending environment from fiscal 2013 into fiscal 2014, the Compensation Committee’s continued goal for fiscal 2014 was to incentivize our NEOs to drive stronger performance in fiscal 2014.

During fiscal 2014, the Company continued to progress on a number of financial and strategic fronts.

Financial Performance

We achieved net revenues of $6.3 billion, down $7.3 million, or less than 1%, compared to fiscal 2013, reflecting a decrease in product revenues, mostly offset by increases in hardware maintenance contract and software entitlements and maintenance revenues. Our branded revenues grew 4%, an indicator of our innovation leadership and competitiveness, as well as the value our products bring to IT environments. Non-GAAP gross margins³ of 63.2% for fiscal 2014 improved from fiscal 2013, primarily due to lower materials costs due to supply chain efficiencies and changes in our revenue mix. We achieved non-GAAP operating margin (computed as operating profit divided by revenue) of 18.3%, compared to 15.3% in fiscal 2013 and within our target range of 17 – 19%. Additionally, fiscal 2014 non-GAAP EPS was up 22% over fiscal 2013.

Our cash flows from operations for fiscal 2014 totaled $1.1 billion, allowing us to continue to fund our investments in future growth. Additionally, we continued our returns to stockholders through stock repurchases and a quarterly cash dividend in fiscal 2014. We returned an aggregate of $2.1 billion to shareholders through a combination of share repurchases and dividends.

In May 2013 and March 2014, we initiated realignment plans designed to focus our resources on key strategic initiatives that we expect will provide the highest long-term returns, and streamline our business in light of the constrained IT spending environment.

All references to operating profit in this CD&A refer to non-GAAP measures of operating profit, the calculation and use of which is discussed in greater detail below under “Components of Compensation — Incentive Compensation Plan.” A reconciliation of non-GAAP to GAAP results can be found in Annex A.

³	A reconciliation of non-GAAP to GAAP results can be found in Annex A.

Strategic Performance

In fiscal 2014, we made a number of strategic achievements, including:

•

Our operating system, Data ONTAP^® was again recognized as the #1 storage operating system by IDC and, continued to strengthen our position as the platform of choice for the next-generation IT infrastructure. Adoption of Clustered Data ONTAP has accelerated. cDOT units shipped in fiscal 2014 grew 242% from fiscal 2013 and the cDOT attach rate grew from 28% in fiscal 2013 to 49% in fiscal 2014 for high-end units and from 15% to 40% for mid-range systems.

•

We continued to advance our innovation agenda with the delivery of Data ONTAP 8.2 and FlexArray software, the introduction of our FAS8000 product line, and enhancements to our E-series and EF products. The latest version of Data ONTAP, Data ONTAP 8.2 provides organizations and cloud service providers the capability to rapidly and cost effectively deliver new services and capacity with maximum application uptime. This innovation helped increase our market share in the open networked storage market from 14.4% in 2012 to 15.0% in 2013⁴.

•

Our channel diversification and channel relationships remained strong in fiscal 2014, as did our alliance partnerships. Our indirect channel revenues were consistent with fiscal 2014 levels. We continued to strengthen our alliance partnerships, adding, for example, new solutions with Microsoft, Citrix, VMware, and Cisco, among others. Gaining market leverage through partnerships is a key element of our strategy.

•

We were honored to be named on Fortune Magazine’s 2013 list of the 100 Best Companies to Work For list for the twelfth consecutive year. Our unique culture is a differentiator that helps us drive innovation and enables us to deliver high value products and services to our customers.

The Compensation Committee believes that our financial performance is best expressed through our operating profit and revenue results for the year. The focus on operating profit encourages our NEOs to deliver strong product offerings for customers that are priced competitively, while effectively managing resources that directly impact the Company’s underlying operations and, therefore, impact operating profit. By utilizing metrics relating to revenue growth, we encourage investments in our product and services portfolio and channel partners to drive top line growth. Additionally, we believe this metric will keep our NEOs from focusing solely on improvements in our cost structure to drive operating income growth.

Alignment of Performance and Compensation

In fiscal 2014, our executive compensation program aligned compensation with our business objectives and performance as follows:

•

Incentive Compensation Plan — Our cash incentive plan aligns executive compensation with our annual performance and motivates our NEOs to enhance the value of the Company. Our NEOs only earn an incentive if we achieve threshold levels of performance for operating profit and revenue. When the annual performance target goals are exceeded, accelerators are triggered (up to capped limits) in order to reward the higher than expected performance, while decelerators are applied (down to the threshold levels) if the actual results are lower than the performance targets. For fiscal 2014, the Company achieved 99.8% of our annual target operating profit goal and 92.8% of our annual target revenue goal, which resulted in payment of cash incentives to our NEOs equal to 88% of their target amounts.

•

Equity Awards — We grant our NEOs awards of both stock options and restricted stock units (“RSUs”) to align their incentives with the long-term interests of our stockholders, reward them for their contributions, and provide them an opportunity to share in our positive performance. In fiscal 2014, the size of the awards was based in part on our fiscal 2013 performance and our NEOs’ expected future contributions to our long-term success. The value of these awards ultimately depends on the performance of our stock.

⁴	Source: IDC Worldwide Disk Storage Systems Tracker, March 2014

•

Base Salary — Our base salary compensation is designed to promote excellence in the day-to-day management and operation of our business. Adjustments to base salary are impacted by Company performance and market forces. This is a fixed element of compensation, but represents less than 20% of our NEOs’ total target compensation.

The link between Company performance, the performance of our stock, and compensation for our NEOs is illustrated by the following charts, which show the portion of fiscal 2014 compensation for our CEO and the other NEOs disclosed in the Summary Compensation Table below.

LOGO

As these charts illustrate, most of our CEO’s and other NEOs’ total compensation is performance-based, meaning that the actual value realized is subject to short-term financial performance or long-term stock price performance. By linking more of our NEOs’ total compensation to performance, the Company emphasizes variable pay, which is consistent with the Company’s pay-for-performance philosophy.

Other Compensation Considerations

As noted above, the Compensation Committee seeks to ensure that total compensation is weighted to variable, performance-based compensation and that non-performance-based compensation is limited. In addition, we adhere to the following best practices for our executive compensation programs and policies:

•

No Pension or SERPs. We do not provide our NEOs with a defined benefit pension plan or any supplemental executive retirement plans. Our employees, including NEOs, are able to participate in our 401(k) plan.

•

No Individual Executive Contracts. We do not have separate employment contracts with our executive officers.

•

Double Trigger Change of Control Severance Agreements. Our change of control severance agreements provide severance payments and accelerated vesting of equity awards only on a “double trigger” basis; that is, the change of control severance agreements provide for severance payments and accelerated vesting of equity awards only if the Company terminates the individual’s employment without “Cause” or if the individual resigns for “Good Reason” (as such terms are defined in the agreements), and such termination or resignation occurs on or within 12 months after a change of control of the Company.

•

No Tax Gross-Ups. Tax gross-ups are not provided to our NEOs on change of control severance payments or any other compensation.

•

Ownership Guidelines. Equity compensation encourages our directors and executives to have an owner’s perspective in managing the Company. To extend and maintain that ownership perspective over time, the Company has established stock ownership guidelines for the Company’s directors, Chief Executive Officer, and all Executive Vice Presidents (discussed further below in Policies Regarding Granting of Equity Awards).

•

Risk Oversight. The Compensation Committee oversees and evaluates the design and implementation of the incentives and risks associated with our compensation policies and practices.

•

Independent Compensation Consultant. The Compensation Committee’s compensation consultant provides services only for the Compensation Committee and does not provide any other services to the Company.

The Compensation Committee believes that the programs and policies described above demonstrate our commitment to an effective pay-for-performance executive compensation program in 2014. For more information, please see the discussion below.

Principles and Objectives of Compensation

The Compensation Committee has designed our executive compensation program with respect to our NEOs in order to:

•

drive long-term positive stock performance by linking a meaningful portion of NEO compensation to the creation of stockholder value;

•

reward our NEOs when the Company experiences high levels of Company financial performance;

•

recruit and retain experienced and highly qualified executives despite the competitive labor environment in which the Company competes for such talent; and

•

motivate our NEOs to perform to the best of their abilities while conducting themselves ethically.

The Compensation Committee believes in a pay-for-performance philosophy. Total compensation generally is higher for our NEOs compared to other executives and employees in recognition of their greater responsibility and ability to influence the Company’s performance. As an NEO’s position and responsibility increase, we believe that a greater portion of his or her total compensation should be performance-based pay that is contingent on the achievement of specific corporate goals or the increase in Company value for our stockholders. As an NEO’s performance-based pay increases with higher levels of responsibility, we also believe that equity-based compensation should comprise a higher portion of total compensation. Therefore, our executive compensation program is structured such that a significant portion of our NEOs’ total target compensation is tied to the long-term appreciation of our stock price.

We offer each component of compensation outlined below to our NEOs because we believe that in combination they meet the goals that we have set for our Company. Our base salary compensation is designed to promote excellence in the day-to-day management and operation of our business. Our cash incentive compensation program rewards behaviors that support the Company’s short-term (typically annual) goals. Our equity award program targets longer term value creation and rewards behavior that leads to a sustained increase in our stock price and is also a key tool for retaining our NEOs.

Administration of Our Compensation Program

The Compensation Committee determines and approves the principal components of compensation for our NEOs on an annual basis, typically prior to or shortly after the beginning of the applicable fiscal year. At the outset of each fiscal year, the Compensation Committee establishes a formal planning calendar to ensure a consistent and deliberative approach to its executive compensation decisions, including scheduling its process for evaluating competitive market data, reviewing compensation strategy and ensuring that its pay programs support the business strategy, approving executive pay actions, administering executive incentive plans, and reporting outcomes to stockholders.

In making its decisions regarding compensation, the Compensation Committee obtains the advice and counsel of Farient. In fiscal 2014, Farient provided information and guidance on our compensation strategy, our peer group, competitive pay levels and pay practices, including dilution, the regulatory environment and investor

trends, the alignment between our executive pay and performance, the design of our incentive plans, including the performance measures and goals used in our Incentive Compensation Plan, our pay mix, including the mix of long-term incentive vehicles, disclosures to our stockholders, our annual compensation risk assessment, and Board compensation. Farient also provided advice on key talent development processes, including top management evaluation and succession planning. Farient did not provide any services to the Company other than those requested and approved by the Compensation Committee. The Compensation Committee has assessed the independence of Farient pursuant to SEC rules and concluded that no conflict of interest exists that would prevent Farient from independently representing the Compensation Committee.

The Compensation Committee also solicits the input of our CEO regarding the salary, incentive compensation and equity-based compensation to be paid to those executives reporting to him, including all of the NEOs other than himself. As part of the annual review process, our CEO provides recommendations for the executives consistent with our pay-for-performance philosophy, and therefore his recommendations are based on his assessment of the Company’s performance and each NEO’s contributions to overall Company performance. With respect to compensation for our CEO, the Chair of the Compensation Committee solicits input from our CEO and the Board of Directors as to their perspectives of the CEO’s and the Company’s performance, and from Farient regarding CEO compensation relative to the market and Company performance. The Compensation Committee deliberates and makes decisions on our CEO’s compensation outside of the presence of our CEO.

Factors in Determining Compensation

The primary factors that the Compensation Committee takes into consideration in establishing the principal components of compensation for our NEOs are discussed below. While these are typically the considerations upon which the Compensation Committee bases its compensation decisions for our NEOs, the Compensation Committee may, at its discretion, apply entirely different factors, such as different measures of financial performance, for future fiscal years.

Self-Assessment

After each fiscal year, executives in senior vice president positions and above perform an evaluation of their performance for the prior year. As part of this assessment, each executive is requested to analyze the Company’s performance as a whole and such executive’s own performance, as well as his or her respective team’s performance, in helping to achieve and support that performance. Our CEO uses this self-assessment as one of the factors, along with the others described below, in making his recommendations to the Compensation Committee regarding their compensation. Likewise, our CEO performs a similar self-assessment and communicates this to the Chairman of our Compensation Committee near the end of the fiscal year.

Competitive Market Data

In order to establish the market rate of pay for NEOs, the Compensation Committee reviews data from a targeted peer group of similarly situated technology companies. To determine the appropriate peer group, the Compensation Committee considers companies that are similar in one or more of the following criteria: revenue, number of employees, market capitalization and other comparable business considerations. In addition to focusing on our direct product line competitors, we consider other companies with whom we compete for talent in our various markets and for which data is available.

For fiscal 2014, the Compensation Committee reviewed the Company’s compensation peer group used to benchmark compensation of our NEOs as well as our broader executive population with assistance and guidance from Farient. In particular, the Company focused on a set of technology companies where the median revenue of the group approximates NetApp’s revenue. For fiscal 2014, the Compensation Committee did not make any revisions to the Compensation Peer Group, which consisted of:

Adobe Systems Inc.

Apple Inc.

Applied Materials Inc.

BMC Software, Inc.⁵

Broadcom Corporation

Brocade Communications Systems, Inc.

CA Technologies

Cisco Systems, Inc.

Citrix Systems, Inc.

Dell Inc.⁶

eBay Inc.

EMC Corporation

Google Inc.

Hewlett-Packard Company

Hitachi Data Systems

Intel Corporation

International Business Machines Corp. Intuit Inc.

Juniper Networks, Inc.

KLA-Tencor Corp.

Lexmark International Inc.

Logitech

LSI Corporation

Microsoft Corporation

NVIDIA Corporation

Oracle Corp.

QLogic Corp.

QUALCOMM Incorporated

Pillar Data Systems

Red Hat, Inc.

Riverbed Technology, Inc.

Salesforce.com

SanDisk Corp.

SAP AG

Seagate Technology

Silicon Graphics International

Symantec Corporation

Teradata Corporation

VMware, Inc.

Western Digital Corp.

Yahoo! Inc.

Xilinx, Inc.

In addition, with Farient’s assistance and guidance, the Compensation Committee identified a more targeted list of fifteen companies in the storage and enterprise solutions markets in order to assess pay practices (for example, the use of equity incentives, performance measures, and goal setting) and to supplement our compensation benchmarking of specific NEO compensation. For fiscal 2014, no revisions were made to these “Compensation Practices Peers” which consisted of the following companies:

BMC Software, Inc.

Brocade Communications Systems, Inc.

CA Technologies

Citrix Systems, Inc.

CommVault Systems, Inc.*

EMC Corporation

Hewlett-Packard Company*

International Business Machines Corp.*

Juniper Networks, Inc.

Microsoft Corporation*

Oracle Corp.*

QUALCOMM Incorporated

Symantec Corporation

Teradata Corporation

VMware, Inc.

*	These companies are substantially different in size from us and were therefore excluded from our pay level benchmarking analysis. However, the Compensation Committee includes the programs and policies of these companies in its review of market practices.

Pay Positioning

The Compensation Committee has established a pay positioning philosophy for NEOs that examines the compensation practices of the Compensation Peer Group. The Compensation Committee established this pay positioning considering the highly competitive market for talent in which we participate and the relatively aggressive incentive goals for our organization. For fiscal 2014, we targeted between the 50^th and 65^th percentile for total compensation relative to the Compensation Peer Group. As a starting point, the Compensation Committee looked at the ranges of base salary, target annual cash incentive and equity compensation between the 50^th and 75^th percentile within the Compensation Peer Group and used its judgment in determining proper levels of each component of compensation for NEOs. The result is intended to be a total compensation package which is on average for NEOs at approximately the 60^thpercentile relative to the Compensation Peer Group for target levels of performance.

⁵	BMC Software, Inc. was acquired in calendar year 2013 and as a result will not be included in the fiscal 2015 peer group.

⁶	Dell became private in calendar year 2013 and as a result will not be included in the fiscal 2015 peer group.

For our NEOs, a majority of their total compensation is performance-based, meaning that the actual value realized is subject to short-term financial performance or long-term stock price performance. Target pay positioning may vary by individual based on a wide range of considerations, including each executive’s role, skills, and overall impact on the management and strategic development of the Company. By linking the majority of our NEOs’ total compensation to performance, the Company emphasizes variable pay, which is consistent with the Company’s pay-for-performance philosophy.

Components of Compensation

Base Salary

Base salaries are intended to compensate our NEOs on a day-to-day basis for their services to the Company. Base salaries for NEOs are set within the competitive percentile range discussed above. Using this range ensures that the Company’s base salaries are competitive with the companies for which we compete for talent, but also permits the Compensation Committee to use its own judgment to ultimately determine NEO salaries. In setting the base salary for each NEO, the Compensation Committee considers the NEO’s qualifications and experience, scope of responsibilities, future potential contributions to the Company, the NEO’s past performance relative to the goals and objectives of the NEO and the length of the NEO’s tenure with the Company. The relative weight given to each factor varies by individual.

In fiscal 2014, modest salary increases were implemented for NEOs generally in line with salary increases considered for the general employee population and consistent with the practices of our Pay Practice Peers. In addition, in April 2014, Mr. Salmon and Mr. Noviello each received a salary increase in connection with the expansion of the scope of their respective responsibilities. The Compensation Committee primarily focused on the market range of the Compensation Peer Group in adjusting base salaries for NEOs with the result that base salaries for NEOs were positioned at approximately the 60^th percentile relative to the Compensation Peer Group.

Incentive Compensation Plan

The Compensation Committee believes that a cash incentive compensation plan that is tied to operational performance metrics motivates our NEOs to achieve short-term performance goals that are important factors in achieving business results and ultimately stock price performance. The Compensation Committee annually develops an incentive compensation plan under our Executive Compensation Plan with payment of incentives, if any, shortly following the end of a particular fiscal year.

Similar to the establishment of base salary amounts, short-term incentive compensation for NEOs is set within the 50th to 65th percentile relative to the Compensation Peer Group. For fiscal 2014, our NEOs’ target short-term incentive cash compensation was positioned at approximately the 55^th percentile relative to the Compensation Peer Group.

For fiscal 2014, the Compensation Committee maintained the framework for evaluating short-term incentives for our NEOs such that the incentive compensation plan established for fiscal 2014 under our Executive Compensation Plan included a combination of revenue and operating profit targets (as described in more detail below), with revenue weighted 1/3rd and operating profit weighted 2/3rds. The Compensation Committee believes that the continued use of revenue as a performance measure for fiscal 2014 encouraged our NEOs to expand market share in the highly competitive markets within which we compete and mitigated the inherent volatility of relying solely on operating profit as the performance measure. The continued use of operating profit encouraged the NEOs to effectively manage resources that directly impact the Company’s underlying operations and therefore positively or negatively impact operating profit. These measures are intended to reflect the Company’s business strategy, which includes making tradeoffs between operating profit margins and revenue growth. Additionally, the use of two corporate metrics encouraged executives to make balanced decisions that were intended to benefit the Company as a whole, while mitigating potential risks that might exist were executives to be focused on achieving a single metric, which could lead them to take actions that could be contrary to the Company’s overall interests.

Prior to or shortly after the beginning of each fiscal year, including fiscal 2014, the Company develops an annual operating plan (or “AOP”) that includes a measure of non-GAAP income from operations (or “operating profit”) (as described below) and revenue. The AOP is derived from results of the prior year as well as the Company’s expectations for its performance relative to the Company’s competitors and the overall market for the upcoming year and is reviewed and approved by the Board of Directors each year. The target operating profit and revenue goals for the incentive compensation plan for fiscal 2014 were set at the expected level of achievement of the AOP, which the Compensation Committee believed was an aggressive target that reflected the Company’s growth strategy.

The measure of non-GAAP operating profit is derived from the revenues of our products, software entitlement and maintenance, and services and the costs related to the generation of those revenues, such as cost of revenue and sales and marketing, research and development, and general and administrative expenses. Non-GAAP operating profit, both on an actual and target basis, excludes items that we believe are not reflective of our short-term operating performance, such as amortization of intangible assets, stock-based compensation expenses, acquisition related income and expenses, restructuring and other charges and significant asset impairments. We publicly disclose a detailed reconciliation of actual GAAP to non-GAAP net income and operating profit, along with other statement of operations items, on a regular basis with the Company’s quarterly earnings announcements.

In establishing our operating income and revenue goals, we set challenging growth targets that we believe exceed growth rates relative to our peers.

The accelerators and decelerators for fiscal 2014 were maintained at the same level as in fiscal 2013. The specific performance range and payouts for each measure are as follows^(†):


Percent of Operating Profit Target	Percent of Incentive Compensation Payout for Factor	Percent of Revenue Target	Percent of Incentive Compensation Payout for Factor
110% or higher	200%	110% or higher	200%
105%	150%	105%	150%
100%	100%	100%	100%
95%	80%	95%	75%
90%	60%	90%	50%
85%	40%	85%	25%
80%	20%	80% and lower	0%
75% and lower	0%

(†)	Amount of awards determined by interpolating for performance between established points.

For fiscal 2014, the Company achieved 99.8% of our annual target operating profit goal and 92.8% of our annual target revenue goal, which resulted in actual cash incentives paid to our NEOs equaling 88% of their target amounts.

LOGO

Long-Term Stock-Based Incentive Compensation

The grant of equity awards to our NEOs is designed to align their interests with those of the stockholders and provide them with a significant incentive to manage the Company from the perspective of an owner with an equity stake in the business.

Equity award guidelines for our NEOs are set within the 50^th and 65^th percentile relative to the Compensation Peer Group. The size of the actual equity grant to each NEO is designed to create a meaningful opportunity for stock ownership and is based on a number of factors, which include the NEO’s current position with the Company, external comparability with equity grants made to executive officers of the Compensation Peer Group, internal comparability with equity grants made to other executives within the Company, the number of vested and unvested options and RSUs held by the NEO, the NEO’s current level of performance, the NEO’s potential for future responsibility and promotion over time, and the remaining share reserve under the Company’s equity plan. The Compensation Committee, however, does not place any particular weight on any one individual factor and does not adhere to any specific guidelines in making its determinations.

In fiscal 2014, the Compensation Committee granted both stock options and RSUs to our NEOs. Stock options allow each NEO to acquire shares of the Company’s common stock at a fixed price per share (the market price on the grant date) over a specified period of time (up to seven years), thus providing value to the NEO only if the market price of the shares appreciates over the option term. Accordingly, stock options better align the NEOs’ interests with those of stockholders and drive long-term performance. RSUs are full-value grants settled in the Company’s stock, which reward NEOs for changes in our stock price, but also provide retention incentive even when our stock price does not increase. We use RSUs to include a retention element in our overall compensation package in addition to performance incentives.

For fiscal 2014, the mix of options versus RSUs for NEOs other than our CEO was 50%-50% based on the fair value on the date of grant. The mix for our CEO was 75% options and 25% RSUs. The Compensation Committee weighted our CEO’s grant more heavily toward stock options because it believes that he has the

greatest ability to influence the Company’s performance and therefore he should have a greater portion of his award at risk by requiring an increase in the Company’s stock price for him to benefit from it. The mix of options versus RSUs is reviewed by the Compensation Committee annually and may fluctuate from year to year.

Policies Regarding Granting of Equity Awards

The Compensation Committee has established an equity subcommittee to award equity to employees who are (1) Vice Presidents who do not report to the CEO; or (2) hold positions below the level of Vice President. This subcommittee is currently comprised of our CEO and the Executive Vice President of Human Resources. The exception to this delegation is that the subcommittee may not grant awards in excess of the pool authorized by the Compensation Committee. The Compensation Committee establishes equity grant guidelines each year for the equity subcommittee’s consideration in approving such grants, and the Compensation Committee is informed on a regular basis of all grants made by the equity subcommittee.

Except in extraordinary circumstances as approved by the Compensation Committee, we grant RSUs to all of our employees and a combination of RSUs and options to employees at the Vice President level and above. Grants to new hires in connection with their commencement of employment become effective on the 15th (or the first business day following the 15th in the event that the 15th falls on a weekend or holiday) of the month that immediately follows the month in which the individual first commences employment with us. RSUs commence vesting on the date of grant and stock options commence vesting from the first day of the person’s employment. Promotion grants generally become effective on the 15th (or the first business day following the 15th in the event that the 15th falls on a weekend or holiday) of the month that immediately follows the month in which the promotion becomes effective, except that we sometimes grant retention awards to become effective prior to the close of our fiscal year. Vesting for promotion RSUs commences from the date of grant and for stock option grants on the effective date of the promotion. Annual retention and refresh stock option and RSU grants for employees who are Vice President level and above generally become effective on June 1st (or the first business day following June 1st in the event that June 1st falls on a weekend or holiday) and on July 15th (or the first business day following July 15th in the event that July 15th falls on a weekend or holiday) for employees who are below the Vice President level. Annual RSU and stock option grants commence vesting from the date of grant.

We do not have either a policy or practice in place to grant equity awards that are timed to precede or follow the release or withholding of material nonpublic information.

Stock Ownership Guidelines

The Board believes that stock ownership by the Company’s directors and executives helps to align the interest of the Company’s directors and executives with the interests of the Company’s stockholders. To extend and maintain that ownership perspective over time, the Company has established the following minimum share ownership guidelines for Company’s directors, Chairman and Chief Executive Officer, and Executive Vice Presidents:


Position		Guideline as a Multiple of Salary/Cash Board Retainer

Independent Directors		3x

Chairman and CEO		5x

EVPs		2x

The Company’s directors and executives have five years from the adoption date of these stock ownership guidelines adopted in fiscal year 2013 to meet these guidelines. Newly appointed directors and executives have five years from the time they are elected, appointed, hired, or promoted, as the case may be, to meet these guidelines. Once achieved, ownership of the guideline amount must be maintained.

Recovery of Incentive-Based Compensation

The Company and the Compensation Committee each recognize that the compensation program will be subject to the forthcoming rules and regulations to be promulgated by the SEC as a result of Section 954 of the Dodd-Frank Act, which directs the SEC to issue rules prohibiting the listing on any national securities exchange of companies that do not adopt a policy providing for the recovery from any current or former executive officer of any incentive-based compensation (including stock options) awarded during the three-year period prior to an accounting restatement resulting from material noncompliance of the issuer with financial reporting requirements. We intend to adopt such a “clawback” policy which complies with all applicable standards when such rules become available.

Anti-Hedging and Anti-Pledging Policies

Our Board has adopted a policy prohibiting all employees, including the NEOs, and members of the Board from engaging in any hedging transactions with respect to any equity securities of the Company held by them, which includes the purchase of any financial instrument (including prepaid variable forward contracts, equity swaps, collars, and exchange funds) designed to hedge or offset any decrease in the market value of such equity securities. In addition, under the Company’s Insider Trading Policy, employees of the Company, including the NEOs, and members of the Board are prohibited from pledging the Company’s securities as collateral for a loan.

Other Compensation for NEOs

Severance and Change of Control Arrangements

The Compensation Committee has developed change of control severance agreements, which we have entered into with our key senior executives so that we can mitigate the risk of not being able to retain key senior executives in the event of an acquisition of the Company. When deciding on the terms of such agreements, the Compensation Committee consulted with its advisor, who provided various suggestions regarding the potential terms of a change of control severance agreement based on competitive market data from our peer group in effect at the time. In considering these potential terms, the Compensation Committee’s objectives were to: (1) assure we would have the continued dedication and objectivity of our senior executives, notwithstanding the possibility of a change of control of the Company, thereby aligning the interests of these key senior executives with those of the stockholders in connection with potentially advantageous offers to acquire the Company; and (2) create a total executive compensation plan that was competitive with our peer group. The Compensation Committee from time to time determines which key senior executives will receive a change of control severance agreement. Individuals are selected as needed to support the above outlined objectives.

The terms of the individual Change of Control Severance Agreements are described in further detail in the section below titled “Potential Payments upon Termination or Change in Control.” The Compensation Committee believes that these change of control severance agreements satisfy the objectives above and ensure that key executives are focused on the Company’s goals and objectives, as well as the interests of our stockholders, rather than any negative personal consequences that may arise as a result of a change of control.

Perquisites

Certain of our NEOs are eligible to participate in the Company’s Executive Retirement Medical Plan, which upon retirement provides medical coverage beyond the COBRA maximum benefit period to a defined group of senior executives based on minimum age, service and level of responsibility (that is, Executive Vice President or above) as a fully-insured plan. The plan was adopted by the Company as a method to retain the defined group of executives. Our NEOs are also entitled to a preventative care medical benefit of up to $2,500 per calendar year not available to nonexecutives.

Other Benefits and Reimbursements

NEOs are eligible to participate in all of our employee benefit plans, such as medical, dental, vision, group life and accidental death and dismemberment insurance, our 401(k) plan and our nonqualified deferred compensation program. We offer up to $3,000 in a matching contribution under our 401(k) plan to each employee. Under the Company’s nonqualified deferred compensation program (discussed in further detail below), participating employees (including the NEOs) may defer a percentage of their compensation. The program permits contributions on a tax deferred basis in excess of IRS limits imposed on 401(k) plans as permitted and in compliance with Internal Revenue Code Section 409A. The only additional retirement benefits (other than the 401(k) plan) that we offer to certain of our NEOs are those under the Executive Retirement Medical Plan discussed above.

Tax Deductibility of Compensation

Section 162(m) of the Code generally disallows a tax deduction to publicly held companies for compensation paid to certain executive officers to the extent that compensation exceeds $1 million per officer in any year. The Company generally seeks to maximize the deductibility for tax purposes of all elements of compensation. Our 1999 Plan is structured so that any compensation recognized by an executive officer in connection with the exercise of his or her outstanding options under the plan will qualify as performance-based compensation and will not be subject to the $1 million limitation. In addition, our 1999 Plan allows our Compensation Committee to structure equity awards other than stock options as performance based compensation under Section 162(m), and our Executive Compensation Plan allows us to structure our cash incentives that are paid thereunder to qualify for a deduction under Section 162(m). The Compensation Committee, however, periodically reviews applicable tax provisions, such as Section 162(m), and may revise compensation plans from time to time to comply with their rules and to maximize deductibility.

The information contained in the following Compensation Committee Report shall not be deemed to be soliciting material or to be filed with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference in such filing.

COMPENSATION COMMITTEE REPORT

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 upon such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by the Compensation Committee of the

Board of Directors:

Robert T. Wall, Chairman

Gerald Held

George T. Shaheen

Richard P. Wallace

EXECUTIVE COMPENSATION AND RELATED INFORMATION

Summary Compensation Table

The table below summarizes the compensation information for the NEOs for fiscal 2014, fiscal 2013, and fiscal 2012.


Name and Principal Position	Year		Salary ($)		Bonus ($)		RSUs ($)(1)		Option Awards ($)(1)		Non-Equity Incentive Plan Compensation ($)(2)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)(3)		Total ($)
Thomas Georgens		2014		942,500		—		2,476,275		3,909,560		1,244,100		—		5,140		8,577,575
Chairman of the Board and Chief Executive Officer(4)		2013 2012		926,250 893,750		— —		1,030,400 1,330,500		3,728,305 4,762,863		622,440 610,521		— —		4,002 750		6,311,397 7,598,384

Nicholas R. Noviello		2014		504,327		—		1,203,795		977,390		488,188		—		1,575		3,175,275
Executive Vice President Finance and Operations; Chief Financial Officer(5)(6)		2013 2012		468,750 387,144		— —		786,048 833,786		532,615 819,558		247,500 215,484		— —		1,064 625		2,035,977 2,256,597
		2013 2012		468,750 387,144		— —		786,048 833,786		532,615 819,558		247,500 215,484		— —		1,064 625		2,035,977 2,256,597

Robert E. Salmon		2014		613,942		—		1,326,705		1,075,129		594,296		—		3,248		3,613,320
President and Head of Go-to-Market Operations(7)		2013		595,000		—		1,324,800		798,923		314,160		—		3,144		3,036,027
President and Head of Go-to-Market Operations(7)		2012		575,000		—		1,069,722		1,108,448		320,045		—		679		3,073,894

Manish Goel		2014		222,115		—		—		67,196		—		—		763		290,074
Executive Vice President Product Operations(8)(9)		2013 2012		543,750 512,500		— —		1,324,800 1,165,518		798,923 1,212,365		287,100 285,258		— —		1,866 656		2,956,439 3,176,297

George Kurian		2014		428,000		—		1,254,975		704,579		414,304		—		1,450		2,803,308
Executive Vice President Product Operations(10)(11)

Matthew K. Fawcett		2014		430,000		—		903,750		733,043		302,720		—		1,455		2,370,968
Senior Vice President, General Counsel and Secretary(12)		2013 2012		406,250 391,250		— —		465,152 361,896		266,308 372,369		156,000 158,378		— —		1,372 602		1,295,082 1,284,495
Senior Vice President, General Counsel and Secretary(12)		2013 2012		406,250 391,250		— —		465,152 361,896		266,308 372,369		156,000 158,378		— —		1,372 602		1,295,082 1,284,495

(1)

The amounts shown represent the aggregate grant date fair value as calculated for financial statement reporting purposes in accordance with FASB ASC 718 for RSUs and stock option awards, as applicable, granted in fiscal 2014, fiscal 2013, and fiscal 2012. These amounts do not necessarily represent actual value that may be realized by the NEOs. Assumptions used in the valuations of these awards are included in Note 11 of the Annual Report.

(2)

Amounts shown consist of payouts under the Company’s Executive Compensation Plan paid based upon the Company achieving 93% of its targeted revenue and 99% of its targeted operating profit under its fiscal 2014 plan, 92% of its targeted revenue and 86% of its targeted operating profit under its fiscal 2013 plan, and 92% of its targeted revenue and 86% of its targeted operating profit under its fiscal 2012 plan. This resulted in each NEO receiving 88%, 48%, and 51% of his non-equity compensation target for fiscal 2014, fiscal 2013, and fiscal 2012, respectively.

(3)	The amounts shown represent the imputed income of term life insurance coverage in excess of $50,000.

(4)	Mr. Georgens received 132% of his eligible earnings for fiscal 2014, 68.3% of his eligible earnings for fiscal 2013, and 257% of his eligible earnings for fiscal 2012.

(5)	Mr. Noviello became an NEO effective January 1, 2012.

(6)	Mr. Noviello received 96.8% of his eligible earnings for fiscal 2014 and 55.7% of his eligible earnings for fiscal 2013.

(7)	Mr. Salmon received 96.8% of his eligible earnings for fiscal 2014, 55.7% of his eligible earnings for fiscal 2013, and 218% of his eligible earnings for fiscal 2012.

(8)	Mr. Goel served as Executive Vice President Product Operations until September 20, 2013.

(9)	Mr. Goel received 0% of his eligible earnings for fiscal 2014, 55.7% of his eligible earnings for fiscal 2013, and 218% of his eligible earnings for fiscal 2012.

(10)	Mr. Kurian became an NEO effective September 20, 2013.

(11)	Mr. Kurian received 96.8% of his eligible earnings for fiscal 2014.

(12)	Mr. Fawcett received 70.4% of his eligible earnings for fiscal 2014, 40.5% of his eligible earnings for fiscal 2013, and 158% of his eligible earnings for fiscal 2012.

Grants of Plan-Based Awards

The table below summarizes information concerning all plan-based awards granted to the NEOs during fiscal 2014, which ended on April 25, 2014.


			Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)						Estimated Future Payouts Under Equity Incentive Plan Awards						All Other Stock Awards: Number of Shares of Stock or Units (#)(5)		All Other Option Awards: Number of Securities Underlying Options (#)(6)		Exercise or Base Price of Option Awards ($/Sh)(7)		Grant Date Fair Value of Stock and Option Awards ($)(8)
Name	Grant Date		Threshold ($)(2)		Target ($)(3)		Maximum ($)(4)		Threshold (#)		Target (#)		Maximum (#)						Exercise or Base Price of Option Awards ($/Sh)(7)		Grant Date Fair Value of Stock and Option Awards ($)(8)
Thomas Georgens		06/03/2013		377,047		1,413,750		2,827,500		—		—		—		68,500		—		—		2,476,275
		06/03/2013		—		—		—		—		—		—		—		400,000		37.64		3,909,560

Nicholas R. Noviello		06/03/2013		147,954		554,760		1,109,519		—		—		—		33,300		—		—		1,203,795
		06/03/2013		—		—		—		—		—		—		—		100,000		37.64		977,390

Robert E. Salmon		06/03/2013		180,112		736,731		1,473,461		—		—		—		36,700		—		—		1,326,705
		06/03/2013		—		—		—		—		—		—		—		110,000		37.64		1,075,129

Manish Goel(9)		06/03/2013		—		—		—		—		—		—		36,700		—		—		1,326,705
		06/03/2013		—		—		—		—		—		—		—		110,000		37.64		1,075,129

George Kurian(10)		06/03/2013		125,562		470,800		941,600		—		—		—		21,700		—		—		784,455
		06/03/2013		—		—		—		—		—		—		—		35,100		37.64		343,064
		10/15/2013		—		—		—		—		—		—		12,000		—		—		470,520
		10/15/2013		—		—		—		—		—		—		—		36,000		40.70		361,516

Matthew K. Fawcett		06/03/2013		91,745		344,000		688,000		—		—		—		25,000		—		—		903,750
		06/03/2013		—		—		—		—		—		—		—		75,000		37.64		733,043

(1)	Amounts shown in these columns represent the range of possible cash payouts for each NEO under the Company’s Executive Compensation Plan, as determined by the Compensation Committee in May 2013.

(2)

This column sets forth the annual threshold amount payout based on 80% of the Executive Compensation Plan for each executive for fiscal 2014. If the Company fails to achieve at least 80% of its targeted operating profit and 80% of its targeted revenue for fiscal 2014, no amounts under the Executive Compensation Plan are paid.

(3)	The estimated payouts are based upon the Company achieving 100% of its targeted operating profit and 100% of its targeted revenue for fiscal 2014.

(4)	The Executive Compensation Plan is capped at a maximum of 200% of the target cash payouts for the applicable fiscal year.

(5)

The RSUs were granted under the Stock Issuance Program of the 1999 Plan. Each award vests as to 25% of the shares beginning on the first anniversary of the grant date and 25% on each of the next three anniversaries of the grant date, subject to the NEO’s continuous service with the Company on each such date.

(6)

The stock options were granted under the Discretionary Option Grant Program of the 1999 Plan. Each option has a maximum term of seven years measured from the grant date, subject to earlier termination upon the individual’s cessation of service with the Company. Each option vests in a series of equal monthly installments over 48 months of service beginning the month following the grant date.

(7)

The exercise price for all options granted to the NEOs is 100% of the fair market value of the shares on the grant date. The actual value of the option will depend on the market value of the Company’s common stock on the date in the future when the option is exercised. The exercise price may be paid in cash or in shares of common stock valued at fair market value on the exercise date.

(8)

The amounts shown represent the total fair market value of the award calculated as of the grant date in accordance with FASB ASC 718. These amounts do not necessarily represent the actual value that may be realized by the NEOs. Assumptions used in the valuations of these awards are included in Note 11 of the Annual Report.

(9)	Mr. Goel served as Executive Vice President Product Operations until September 20, 2013.

(10)	Mr. Kurian served as Executive Vice President Product Operations from September 20, 2013. The equity grants made on October 15, 2013 were made to recognize Mr. Kurian’s promotion.

Outstanding Equity Awards at Fiscal Year End

The following table sets forth information regarding stock options and stock awards held by the NEOs as of April 25, 2014.


				Option Awards										Stock Awards
	Grant Date			Number of Securities Underlying Unexercised Options (#)				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)(4)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
	Grant Date			Exercisable		Unexercisable				Option Exercise Price ($)		Option Expiration Date
Thomas Georgens		09/15/2009	(1)		245,834		—		—		24.72		09/14/2016		—		—		—		—
		06/01/2010	(2)		287,500		12,500		—		37.62		05/31/2017		8,333		291,655		—		—
		06/01/2011	(2)		194,791		80,209		—		53.22		05/31/2018		12,500		437,500		—		—
		06/01/2012	(2)		160,416		189,584		—		29.44		05/31/2019		26,250		918,750		—		—
		06/03/2013	(2)		83,333		316,667		—		37.64		06/02/2020		68,500		2,397,500		—		—

Nicholas R. Noviello		02/15/2008	(1)		45,000		—		—		21.40		02/14/2015		—		—		—		—
		06/02/2008	(1)		11,000		—		—		23.79		06/01/2015		—		—		—		—
		06/01/2009	(1)		45,000		—		—		20.69		05/31/2016		—		—		—		—
		06/01/2010	(2)		21,562		938		—		37.62		05/31/2017		1,875		65,625		—		—
		06/01/2011	(2)		14,166		5,834		—		53.22		05/31/2018		3,150		110,250		—		—
		02/15/2012	(3)		21,093		16,407		—		39.88		02/14/2019		6,250		218,750		—		—
		06/01/2012	(2)		22,916		27,084		—		29.44		05/31/2019		20,025		700,875		—		—
		06/03/2013	(2)		20,833		79,167		—		37.64		06/02/2020		33,300		1,165,500		—		—

Robert E. Salmon		03/15/2006	(1)		70,517		—		—		34.24		03/14/2016		—		—		—		—
		06/01/2010	(2)		71,875		3,125		—		37.62		05/31/2017		6,250		218,750		—		—
		06/01/2011	(2)		45,333		18,667		—		53.22		05/31/2018		10,050		351,750		—		—
		06/01/2012	(2)		10,938		40,625		—		29.44		05/31/2019		33,750		1,181,250		—		—
		06/03/2013	(2)		22,916		87,084		—		37.64		06/02/2020		36,700		1,284,500		—		—

George Kurian		04/15/2011	(3)		56,250		18,750		—		48.56		04/14/2018		6,250		218,750		—		—
		12/15/2011			—		—		—		—		—		12,500		437,500		—		—
		04/16/2012			—		—		—		—		—		5,000		175,000		—		—
		06/01/2012	(2)		14,895		17,605		—		29.44		05/31/2019		8,100		283,500		—		—
		10/15/2012			—		—		—		—		—		15,000		525,000		—		—
		06/03/2013	(2)		7,312		27,788		—		37.64		06/02/2020		21,700		759,500		—		—
		10/15/2013			—		36,000		—		40.70		10/14/2020		12,000		420,000		—		—

Matthew K. Fawcett		09/15/2010	(3)		67,187		7,813		—		49.30		09/15/2017		6,250		218,750		—		—
		06/01/2011	(2)		15,229		6,271		—		53.22		06/01/2018		3,400		119,000		—		—
		06/01/2012	(2)		11,458		13,542		—		29.44		06/01/2019		11,850		414,750		—		—
		06/03/2013	(2)		15,625		59,375		—		37.64		06/03/2020		25,000		875,000		—		—

(1)	All shares subject to the option are fully vested.

(2)	For this option, 1/48^th of the shares subject to the option vest monthly in equal installments over four years measured from the grant date, subject to continued service through each applicable vesting date.

(3)

For this option, 1/4^th of the shares subject to the option vested on the one-year anniversary of the vesting commencement date. Thereafter, 1/48^th of the shares subject to the option vest monthly in equal installments over 36 months, subject to continued service through each applicable vesting date.

(4)	For this option, 1/4^th of the RSU shares vest over four years on each anniversary of the grant date, subject to continued service on each applicable vesting date.

Option Exercises and Stock Vested for Fiscal 2014

The following table provides information regarding options and stock awards exercised and vested, respectively, and the value realized for each of the NEOs during fiscal 2014.


	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)
Thomas Georgens(3)		350,000		5,581,149		44,166	(3)		1,657,550
Nicholas R. Noviello(4)		—		—		17,000	(4)		647,979
Robert E. Salmon(5)		75,522		1,225,485		32,941	(5)		1,236,276
Manish Goel(6)(9)		76,666		720,756		43,663	(6)		1,644,504
George Kurian(7)(10)		—		—		22,700	(8)		875,212
Matthew K. Fawcett(8)		—		—		11,900	(7)		485,607

(1)

Represents the product obtained by multiplying (1) the number of shares of the Company’s common stock issued upon the exercise of stock options; by (2) the excess of the closing price of the Company’s common stock on the NASDAQ Global Select Market on the exercise date over the exercise price per share.

(2)	Represents the product obtained by multiplying (1) the number of shares of the Company’s common stock issued upon the vesting of RSUs; by (2) the closing price of the Company’s common stock on the NASDAQ Global Select Market on the vesting date.

(3)	Of this amount, 23,044 shares were withheld by the Company to satisfy tax withholding requirements.

(4)	Of this amount, 6,455 shares were withheld by the Company to satisfy tax withholding requirements.

(5)	Of this amount, 15,220 shares were withheld by the Company to satisfy tax withholding requirements.

(6)	Of this amount, 20,569 shares were withheld by the Company to satisfy tax withholding requirements.

(7)	Of this amount, 8,520 shares were withheld by the Company to satisfy tax withholding requirements.

(8)	Of this amount, 4,463 shares were withheld by the Company to satisfy tax withholding requirements.

(9)	Mr. Goel served as Executive Vice President Product Operations until September 20, 2013.

(10)	Mr. Kurian served as Executive Vice President Product Operations from September 20, 2013.

Nonqualified Deferred Compensation

Under the Company’s Deferred Compensation Plan, key employees, including the NEOs, may defer from 1% to 100% of the compensation they receive. The Deferred Compensation Plan allows contributions on a tax deferred basis in excess of IRS limits imposed on 401(k) plans as permitted and in compliance with Internal Revenue Code Section 409A. Eligible employees may defer an elected percentage of eligible earnings that include base salary, sales incentive compensation, and Company incentive compensation. Eligible employees are director level and higher employees who are on the U.S. payroll. Elections made under the Deferred Compensation Plan are irrevocable for the period (plan year) to which they apply, and cannot be changed or terminated. If no new election is made for a subsequent plan year, the election will be 0%. Previous elections do not carry forward.

Interest (earnings) is not calculated by the Company or related to the Company’s earnings in the last fiscal year. Instead, deferrals are placed (at the participant’s direction) into a variety of publicly traded mutual funds administered through Fidelity Investments. The mutual funds available mirror those in our 401(k) plan. Available mutual funds are selected and monitored by the 401(k) Committee, which is comprised of a group of executives (none of whom are NEOs), with input from an outside investment advisor as well as Fidelity Investment Advisors. Participants are permitted to make changes to their investment choices (but not their deferral percentages) at any time, but always within the family of publicly traded mutual funds. Neither common stock of the Company nor securities of any other issuers are included among the investment choices. However, it is possible that common stock of the Company may compose a portion of the portfolio of investments held by these mutual funds.

At the time of initial election, the participant must also elect a distribution option. Distribution options include a Separation Account (paid six months after termination of employment) or an In-Service Account (paid at a specified fixed future date). Participants are not permitted to change the timing of a Separation Account. In-Service Account distributions begin on January 15 of the specified year, and deferrals must be at least two years old before distribution can begin. Participants are permitted to delay the timing of an In-Service Account, but any such modification to timing must delay the distribution for at least five years.

The following table represents the executive contributions, earnings and account balances for the NEOs in the Deferred Compensation Plan.

NONQUALIFIED DEFERRED COMPENSATION


Name	Executive Contributions in Last Fiscal Year ($)(2)		Company Contributions in Last Fiscal Year ($)(3)		Aggregate Earnings in Last Fiscal Year ($)(4)		Aggregate Withdrawals/ Distributions ($)		Aggregate Balance at Last Fiscal Year End ($)
Thomas Georgens		—		—		—		—		—
Nicholas R. Noviello(1)		33,317		—		650		—		43,417
Robert E. Salmon		—		—		—		—		—
Manish Goel(1)(5)		—		—		68,455		83,562		1,686,458
George Kurian(6)
Matthew K. Fawcett		—		—		—		—		—

(1)	Mr. Noviello was the only NEO who participated in the Nonqualified Deferred Compensation Plan during fiscal 2014.

(2)	Represents deferred amounts that are also reported as compensation in the Summary Compensation Table for fiscal 2014.

(3)	The Company does not make contributions to the Deferred Compensation Plan.

(4)	The amounts in this column have not been included in the Summary Compensation Table because they do not represent above-market or preferential earnings on deferred compensation.

(5)	Mr. Goel served as Executive Vice President Product Operations until September 20, 2013.

(6)	Mr. Kurian served as Executive Vice President Product Operations from September 20, 2013.

Pension Benefits

The Company does not provide pension benefits or a defined contribution plan to the NEOs other than the tax-qualified 401(k) plan.

TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS

Potential Payments upon Termination or Change of Control

Change of Control Severance Agreements

In June 2008, the Compensation Committee approved the terms of a change of control severance arrangement. Thereafter, we entered into a Change of Control Severance Agreement with certain senior executives, including each of the NEOs on various occasions. In August 2009, the Compensation Committee approved the terms of, and we entered into, an Amended and Restated Change of Control Severance Agreement with Mr. Georgens. In July 2012, the Compensation Committee approved the extension of the current Change of Control Severance Agreements with each of the senior executives, including each of the NEOs. Mr. Kurian entered into a Change of Control Severance Agreement on September 20, 2013, in connection with his appointment as Executive Vice President Product Operations.

The Compensation Committee believes these agreements are necessary for us to retain key senior executives in the event of an acquisition of the Company. In approving the agreements, the Compensation Committee’s objectives were to (1) assure we would have the continued dedication and objectivity of our senior executives, notwithstanding the possibility of a change of control of the Company, thereby aligning the interests of these key senior executives with those of the stockholders in connection with potentially advantageous offers to acquire the Company; and (2) create a total executive compensation plan that is competitive with our Compensation Peer Group.

Term of Change of Control Severance Agreement

Each Change of Control Severance Agreement has an initial term of three years. In July 2012, the Compensation Committee amended the Change of Control Severance Agreements to extend the term until June 15, 2015. Thereafter, the Change of Control Severance Agreement will renew automatically for an additional one-year term unless either party provides the other with a notice of nonrenewal at least 60 days prior to the date of automatic renewal. If a Change of Control (as defined below) occurs at any time during the term of the agreement, the term of the Change of Control Severance Agreement will extend automatically for 12 months following the effective date of the Change of Control. If a senior executive becomes entitled to severance benefits pursuant to his or her Change of Control Severance Agreement, the Change of Control Severance Agreement will not terminate until all of obligations of the Change of Control Severance Agreement have been satisfied.

Circumstances Triggering Payment under Change of Control Severance Agreement

Each Change of Control Severance Agreement provides that if the Company terminates a senior executive’s employment without Cause (as defined below) or if the senior executive resigns for Good Reason (as defined below), and such termination or resignation occurs on or within 12 months after a Change of Control, the senior executive will receive certain benefits (as described below). The senior executive will not be entitled to any benefits, compensation or other payments or rights upon his or her termination following a Change of Control other than as set forth in his or her Change of Control Severance Agreement.

If the senior executive voluntarily terminates his or her employment with the Company (other than for Good Reason during the period that is on or within 12 months after a Change of Control), or if the Company terminates the senior executive’s employment for Cause, then the senior executive will not be entitled to receive severance or benefits except for those (if any) provided in the Company’s existing severance and benefits plans and practices or pursuant to other written agreements with the Company.

If the Company terminates the senior executive’s employment as a result of the senior executive’s disability, or if the senior executive’s employment terminates due to his or her death, then the senior executive will not be entitled to receive severance or benefits, except for those (if any) provided in the Company’s existing severance and benefits plans and practices or pursuant to other written agreements with the Company.

If the senior executive voluntarily terminates his or her employment and such termination is for Good Reason, or if the Company terminates the senior executive’s employment without Cause, and in either event such termination does not occur on or within 12 months after a Change of Control, then the senior executive will not be entitled to receive severance or benefits except for those (if any) as provided in the Company’s existing severance and benefits plans and practices or pursuant to other written agreements with the Company.

The Company has a general severance policy applicable to all employees, including the NEOs, providing for additional weeks of pay based on years of service, plus periods of access to a career center and office resources, one-on-one coaching, and access to an online database. However, if the senior executive is eligible to receive any payments under his or her Change of Control Severance Agreement, the senior executive will not be eligible to receive any payments or benefits pursuant to any Company severance plan, policy, or other arrangement.

Timing and Form of Severance Payments under Change of Control Severance Agreement

Unless otherwise required by Section 409A of the Internal Revenue Code, any severance payments to be made pursuant to the Change of Control Severance Agreement will be paid in a lump sum as soon as practicable following the senior executive’s termination date. No severance or other benefits will be paid or provided until a separation agreement and release of claims between the senior executive and the Company becomes effective. If the senior executive should die before all of the severance has been paid, any unpaid amounts will be paid in a lump-sum payment to the senior executive’s designated beneficiary.

Severance Payments Under Change of Control Severance Agreement

If the Company terminates a senior executive’s employment without Cause or if the senior executive resigns for Good Reason and such termination occurs on or within 12 months after a Change of Control, the senior executive will receive the following benefits:

•

The sum of (1) 200% (250% in the case of Mr. Georgens) of the senior executive’s annual base salary as in effect immediately prior to the senior executive’s termination date or (if greater) at the level in effect immediately prior to the Change of Control; and (2) 100% of the senior executive’s target annual bonus in effect immediately prior to the senior executive’s termination date or (if greater) at the level in effect immediately prior to the Change of Control;

•

All accrued but unpaid vacation, expense reimbursements, wages, and other benefits due to the senior executive under any Company plan or policy (except that a senior executive will not be eligible to receive any benefits under any Company severance plan, policy or other arrangement);

•

Accelerated vesting of the senior executive’s outstanding equity awards as follows:

•

The Amended and Restated Change of Control Severance Agreement entered into with Mr. Georgens provides that equity awards will vest in full as to 100% of the unvested portion of the award;

•

The Change of Control Severance Agreements entered into with the remaining senior executives provide that equity awards subject to time-based vesting will vest as to that portion of the award that would have vested through the 24 month period following the senior executive’s termination date had the senior executive remained employed through such period. Additionally, the senior executive will be entitled to accelerated vesting as to an additional 50% of the then unvested portion of all of his or her outstanding equity awards that are scheduled to vest pursuant to performance-based criteria, if any.

•

Each senior executive will have one year following the date of his or her termination in which to exercise any outstanding stock options or other similar rights to acquire Company stock (but such post termination exercise period will not extend beyond the original maximum term of the award);

•

If the senior executive elects continuation coverage pursuant to COBRA for himself or herself and his or her eligible dependents, the Company will reimburse the senior executive for the COBRA premiums for such coverage until the earlier of (1) 18 months (or 24 months in the case of Mr. Georgens); or (2) the date upon which the senior executive and/or the senior executive’s eligible dependents are covered under similar plans.

Conditions to Receipt of Severance under Change of Control Severance Agreement

The senior executive’s receipt of any payments or benefits under the Change of Control Severance Agreement will be subject to the senior executive continuing to comply with the terms of any confidential information agreement entered into between the senior executive and the Company and complying with the provisions of the Change of Control Severance Agreement. Additionally, the receipt of any severance payment under the Change of Control Severance Agreement is conditioned on the senior executive signing and not revoking a separation agreement and release of claims with the Company, with such release to be effective no later than March 15 of the year following the year in which the termination occurs.

Excise Tax under Change of Control Severance Agreement

In the event that the severance payments and other benefits payable to the senior executive pursuant to his or her Change of Control Severance Agreement constitute “parachute payments” under Section 280G of the U.S. tax code and would be subject to the applicable excise tax, then the senior executive’s severance benefits will be either (1) delivered in full; or (2) delivered to such lesser extent which would result in no portion of such benefits being subject to the excise tax, whichever results in the receipt by the senior executive on an after-tax basis of the greatest amount of benefits. To the extent the senior executive’s severance benefits are delivered in full, the Company will not provide the senior executive any tax gross-up to cover the cost of any excise tax.

Definitions Contained in Change of Control Severance Agreement

Each Change of Control Severance Agreement defines “Cause” as: (1) the senior executive’s continued intentional and demonstrable failure to perform his or her duties customarily associated with his or her position (other than any such failure resulting from the senior executive’s mental or physical disability) after the senior executive has received a written demand of performance from the Company and the senior executive has failed to cure such nonperformance within 30 days after receiving such notice; (2) the senior executive’s conviction of, or plea of nolo contendere to, a felony that the Board of Directors reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business; or (3) the senior executive’s commission of an act of fraud, embezzlement, misappropriation, willful misconduct, or breach of fiduciary duty against, and causing material harm to, the Company.

Each Change of Control Severance Agreement defines “Change of Control” as any of the following events: (1) a change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company, except that any change in the ownership of the stock of the Company as a result of a private financing of the Company that is approved by the Board of Directors will not be considered a Change of Control; (2) a change in the effective control of the Company which occurs on the date that a majority of the members of the Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or (3) a change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the 12 month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions. Notwithstanding the foregoing provisions of this definition, a transaction will not be deemed a Change of Control unless the transaction qualifies as a change of control event within the meaning of Section 409A of the Internal Revenue Code.

Mr. Georgens’ Amended and Restated Change of Control Severance Agreement defines “Good Reason” as his termination of employment within 90 days following the expiration of any cure period following the occurrence of any of the following, without his consent: (1) a material reduction of his authority or responsibilities, provided that a reduction of authority or responsibilities that occurs as a direct consequence of a Change of Control and the Company becoming part of larger entity will not be considered a material reduction of Mr. Georgens’ authority or responsibilities; and any change which results in Mr. Georgens ceasing to have the same functional supervisory authority and responsibility following a Change of Control or a change in Mr. Georgens’ reporting position so that he no longer reports to the Chief Executive Officer or Board of Directors of the parent entity following a Change of Control will constitute a material reduction of his authority or responsibilities; (2) a material reduction in his base salary or target annual incentive (“Base Compensation”), unless the Company also similarly reduces the Base Compensation of all other employees of the Company; (3) a material change in the geographic location at which the senior executive must perform services; (4) any purported termination of the senior executive’s employment for “Cause” without first satisfying the procedural protections set forth in his agreement; or (5) the failure of the Company to obtain the assumption of the agreement by a successor and/or acquirer and an agreement that the senior executive will retain substantially similar responsibilities in the acquirer or the merged or surviving company as he had prior to the transaction.

The Change of Control Severance Agreement for each of the remaining senior executives defines “Good Reason” as the termination of employment within 90 days following the occurrence of any of the following, without the senior executive’s consent: (1) a material reduction of the senior executive’s authority or responsibilities, or a change in the senior executive’s reporting position such that the senior executive no longer reports directly to the officer position or its functional equivalent to which the senior executive was reporting immediately prior to such change in reporting position (unless the senior executive is reporting to the comparable officer position of the parent corporation in a group of controlled corporations following a Change of Control); (2) a material reduction in the senior executive’s base salary or target annual incentive (“Base Compensation”), unless the Company also similarly reduces the Base Compensation of all other employees of the Company with positions, duties and responsibilities comparable to the senior executive’s; (3) a material change in the geographic location at which the senior executive must perform services; (4) any purported termination of the senior executive’s employment for “Cause” without first satisfying the procedural protections set forth in his or her agreement; or (5) the failure of the Company to obtain the assumption of the agreement by a successor and/or acquirer and an agreement that the senior executive will retain substantially similar responsibilities in the acquirer or the merged or surviving company as he or she had prior to the transaction.

Executive Medical Retirement Plan

The Company adopted the Executive Medical Retirement Plan (the “Medical Plan”) as a method to retain its senior executives. The Medical Plan provides continued medical benefits for the lifetime of individuals (and their eligible dependents) who retire from the Company and satisfy certain age and service requirements and are otherwise eligible. Currently, in order to be eligible to participate in the Medical Plan, individuals must hold the title of Executive Vice President or above at the time of retirement, must be at least 50 years of age, and must satisfy certain service requirements such that the sum of their age and two times their number of years of service to the Company equals or exceeds 65. The medical benefits are fully insured and are coordinated with Medicare for retirees age 65 and above. Assuming our NEOs retired from their employment on April 25, 2014, the last day of our fiscal year, satisfied the age and service requirements, and were otherwise eligible to receive benefits under the Medical Plan, the present value of the benefits the NEOs would have been entitled to receive are $1,412,000 for Mr. Georgens and $1,488,000 for Mr. Salmon. Messrs. Noviello, Kurian and Fawcett would not have satisfied the eligibility requirements to participate in the Medical Plan and therefore would not have received benefits thereunder. Note that these amounts represent the present value of benefits to be received based on certain actuarial assumptions and it is likely that actual costs will differ from the assumptions utilized and scenarios presented.

Estimated Payments Pursuant to Change of Control Severance Agreements

The following table provides information concerning the estimated payments and benefits that would be provided in the circumstances described above for each of the named executive officers serving as of the end of fiscal 2014 pursuant to the Change of Control Severance Agreements. Payments and benefits are estimated assuming that the triggering event took place on the last business day of fiscal 2014 (April 25, 2014), and the price per share of the Company’s common stock is the closing price of the NASDAQ Global Select Market as of that date of $35.00. There can be no assurance that a triggering event would produce the same or similar results as those estimated below if such event occurs on any other date or at any other price, or if any other assumption used to estimate potential payments and benefits is not correct. Due to the number of factors that affect the nature and amount of any potential payments of benefits, any actual payments and benefits may be different.

Change of Control Severance Agreements


		Potential Payments Upon
		Involuntary Termination Other Than For Cause					Voluntary Termination For Good Reason
Name	Type of Benefit(1)	Prior to Change of Control ($)(2)		On or Within 12 Months Following Change of Control ($)			Prior to Change of Control ($)(2)		On or Within 12 Months Following Change of Control ($)
Thomas Georgens	Cash severance payments		—		3,800,000	(3)		—		3,800,000	(3)
	Vesting acceleration(4)		—		3,513,405	(5)		—		3,513,405	(5)
	Continued coverage of employee benefits(6)(7)		—		47,730			—		47,730
	Total termination benefits		—		7,361,135			—		7,361,135
	Total previously vested equity value		3,419,086		3,419,086			3,419,086		3,419,086
	Full “walk away” value				10,780,221					10,780,221

Nicholas R. Noviello	Cash severance payments		—		1,860,000	(9)		—		1,860,000	(9)
	Vesting acceleration(4)		—		1,583,625	(10)		—		1,583,625	(10)
	Continued coverage of employee benefits(6)		—		35,797			—		35,797
	Total termination benefits		—		3,479,422			—		3,479,422
	Total previously vested equity value		1,506,673		1,506,673			1,506,673		1,506,673
	Full “walk away” value				4,986,095					4,986,095

Robert E. Salmon	Cash severance payments		—		2,015,000	(9)		—		2,015,000	(9)
	Vesting acceleration(4)		—		2,208,750	(10)		—		2,208,750	(10)
	Continued coverage of employee benefits(6)(8)		—		36,365			—		36,365
	Total termination benefits		—		4,260,115			—		4,260,115
	Total previously vested equity value		114,408		114,408			114,408		114,408
	Full “walk away” value				4,374,523					4,374,523

George Kurian	Cash severance payments		—		1,426,000	(9)		—		1,426,000	(9)
	Vesting acceleration(4)		—		2,050,350	(10)		—		2,050,350	(10)
	Continued coverage of employee benefits(6)		—		35,418			—		35,418
	Total termination benefits		—		3,511,768			—		3,511,768
	Total previously vested equity value		82,816		82,816			82,816		82,816
	Full “walk away” value				3,594,584					3,594,584

Matthew K. Fawcett	Cash severance payments		—		1,260,000	(9)		—		1,260,000	(9)
	Vesting acceleration(4)		—		1,121,250	(10)		—		1,121,250	(10)
	Continued coverage of employee benefits(6)		—		36,365			—		36,365
	Total termination benefits		—		2,417,615			—		2,417,615
	Total previously vested equity value		63,706		63,706			63,706		63,706
	Full “walk away” value				2,481,321					2,481,321

(1)	Reflects the terms of the senior executive’s applicable Change of Control Severance Agreement in effect on April 25, 2014.

(2)	The senior executive may be entitled to receive benefits pursuant to the Medical Plan. Please see the section entitled “Executive Medical Retirement Plan” for further information on the value of benefits provided under the Medical Plan.

(3)	Pursuant to Mr. Georgens’ Amended and Restated Change of Control Severance Agreement in effect on April 25, 2014, this amount represents the sum of 250% of Mr. Georgens’ annual base salary and 100% of Mr. Georgens’ target annual bonus.

(4)

Reflects the aggregate value of unvested option grants with exercise prices less than or equal to $35.00, the closing price of our common stock on the NASDAQ Global Select Market on April 25, 2014, and other equity awards. For unvested option grants with exercise prices less than or equal to $35.00, aggregate market value is determined by multiplying (1) the number of shares subject to such options as of April 25, 2014; by (2) the difference between $35.00 and the exercise price of such options. Does not reflect any dollar value associated with the acceleration of options with exercise prices in excess of $35.00. For unvested restricted stock and/or RSUs, aggregate market value is determined by multiplying (1) the number of shares subject to such awards as of April 25, 2014; by (2) $35.00. If there is no amount listed in this row, all of the senior executive’s unvested outstanding options have an exercise price in excess of $35.00 and the individual does not hold any unvested restricted stock and/or RSUs.

(5)	Pursuant to the terms of Mr. Georgens’ Amended and Restated Change of Control Severance Agreement in effect on April 25, 2014, equity awards that are subject to time-based vesting will vest as to 100% of the unvested portion of the award.

(6)

Pursuant to the applicable terms of the Change of Control Severance Agreement in effect on April 25, 2014, if the senior executive elects continuation coverage pursuant to COBRA for the senior executive and his or her eligible dependents, the Company will reimburse the senior executive for the COBRA premiums for such coverage until the earlier of (1) 18 months; or (2) the date upon which the senior executive and/or his or her eligible dependents are covered under similar plans. Under the terms of Mr. Georgens’ Amended and Restated Change of Control Severance Agreement, reimbursement for COBRA continuation coverage premiums was extended until the earlier of (1) 24 months; or (2) the date upon which Mr. Georgens and/or his eligible dependents are covered under similar plans.

(7)	Assumes Mr. Georgens does not elect to continue coverage of employee benefits under COBRA, but continues coverage under the Medical Plan. Please see the section entitled “Executive Medical Retirement Plan” for further information on the value of benefits provided through the Medical Plan.

(8)	Assumes Mr. Salmon does not elect to continue coverage of employee benefits under COBRA, but continues coverage under the Medical Plan. Please see the section entitled “Executive Medical Retirement Plan” for further information on the value of benefits provided through the Medical Plan.

(9)	Pursuant to the applicable terms of the Change of Control Severance Agreement in effect on April 25, 2014, this amount represents the sum of 200% of the senior executive’s annual base salary and 100% of the senior executive’s target annual bonus.

(10)

Pursuant to the applicable terms of the Change of Control Severance Agreement in effect on April 25, 2014, equity awards that are subject to time-based vesting will vest as to that portion of the award that would have vested through the 24-month period following the senior executive’s termination date had the senior executive remained employed through such period. Additionally, the senior executive will be entitled to accelerated vesting as to an additional 50% of the then-unvested portion of all of his outstanding equity awards that are scheduled to vest pursuant to performance-based criteria.

Equity Compensation Plan Information

The following table provides information as of April 25, 2014, with respect to the shares of the Company’s common stock that may be issued under the Company’s existing equity compensation plans. The table does not include information with respect to shares subject to outstanding options and awards granted under equity compensation plans assumed by the Company in connection with mergers and acquisitions of the companies that originally granted those options and awards. Footnote 5 to the table sets forth the total number of shares of common stock issuable upon the exercise of those assumed options and awards as of April 25, 2014, and the weighted-average exercise price.


	A		B		C
	Number of Securities to be Issued upon Exercise of Outstanding Options and RSU Awards (#)(2)		Weighted-Average Exercise Price of Outstanding Options ($)(3)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (#) (Excluding Securities Reflected in Column A)(4)
Equity compensation plans approved by stockholders(1)		27,149,916	$	34.44		25,123,113
Equity compensation plans not approved by stockholders(5)		—		—		—
Total		27,149,916	$	34.44		25,123,113

(1)	The category consists of the Company’s Amended and Restated 1995 Stock Incentive Plan, the 1999 Plan and the Purchase Plan.

(2)

Includes 14,188,986 shares of common stock issuable upon exercise of outstanding options and 12,960,930 shares of common stock issuable upon vesting and release of shares subject to outstanding RSU awards. Excludes purchase rights accruing under the Company’s Purchase Plan. The Purchase Plan was approved by the stockholders in connection with the initial public offering of the Company’s common stock. Under the Purchase Plan, each eligible employee may purchase up to 1,500 shares of common stock at semiannual intervals on the last business day of May and November of each year at a purchase price per share equal to 85% of the lower of (1) the closing selling price per share of common stock on the employee’s entry date into the two-year offering period in which that semiannual purchase date occurs; or (2) the closing selling price per share on the semiannual purchase date.

(3)	Column B does not take into account shares issuable upon the vesting of outstanding RSUs, which have no exercise price.

(4)

Includes (1) 17,765,708 shares of common stock available for issuance under the 1999 Plan; and (2) 7,357,405 shares available for issuance under the Purchase Plan. As of July 17, 2014, 6,023,410 shares were available for issuance under the 1999 Plan. As of July 17, 2014, 5,465,441 shares were available for issuance under the Purchase Plan.

(5)

The table does not include information for equity compensation plans assumed by the Company in connection with mergers and acquisitions of the companies that originally established those plans. As of April 25, 2014, there were a total of 522,421 shares subject to outstanding awards under all equity compensation plans assumed by the Company in connection with mergers and acquisitions, of which 302,349 shares were subject to outstanding option awards and 220,072 shares were subject to outstanding full value awards. The outstanding stock options had a weighted-average exercise price of $18.25 per share and a weighted-average remaining term of 2.28 years as of such date. No additional awards may be made under those assumed plans.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal 2014, Messrs. Wall, Held, Shaheen and Wallace served on the Compensation Committee. None of these individuals was at any time during fiscal 2014, or at any other time, an officer or employee of the Company. No executive officer of the Company serves as a member of our board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or Compensation Committee.

CERTAIN TRANSACTIONS WITH RELATED PARTIES

Our Corporate Governance and Nominating Committee is responsible for the review, approval, and ratification of transactions with related persons. Specifically, the Corporate Governance and Nominating Committee has the authority to:

•

Consider questions of possible conflicts of interest of members of our Board and corporate officers;

•

Review actual and potential conflicts of interest of members of our Board and corporate officers, and clear any involvement of such persons in matters that may involve a conflict of interest;

•

Establish policies and procedures for the review and approval of “related person transactions,” as defined in applicable SEC rules;

•

Conduct ongoing reviews of potential related person transactions; and

•

Review and approve all related person transactions.

Pursuant to the SEC’s rules and regulations, “related persons” include, but are not limited to, the Company’s directors, executive officers and beneficial owners of more than 5% of the Company’s outstanding common stock. If the determination is made that a related person has a material interest in any Company transaction, then the Corporate Governance and Nominating Committee, consisting of all independent directors, is responsible for reviewing, approving or ratifying it, and the transaction would be disclosed in accordance with the SEC rules if required. If the related person at issue is a director of the Company, or a family member of a director, then that director would not participate in those discussions.

Our Board of Directors has adopted a travel reimbursement policy whereby the Company’s former Executive Chairman, Mr. Warmenhoven, is permitted to utilize a private airplane for business travel within certain limitations. Subject to an annual cap of $400,000, Mr. Warmenhoven is reimbursed for expenses incurred in the operation of a private plane when used for Company business. The cost reimbursement shall occur on a quarterly basis. During fiscal 2014, the Company recognized a total of $400,000 in expenses pursuant to this reimbursement policy.

The foregoing transactions were negotiated by the Company on an arms-length basis, and were made on terms no less favorable to the Company than could be obtained from an unaffiliated third party.

AUDIT COMMITTEE REPORT

The information contained in the following Audit Committee Report shall not be deemed to be soliciting material or to be filed with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference in such filing.

The Audit Committee has reviewed and discussed the Company’s consolidated financial statements with management and Deloitte & Touche LLP, the Company’s independent registered public accounting firm (“Deloitte & Touche”). The Audit Committee has discussed with Deloitte & Touche the matters required by Public Company Accounting Oversight Board Auditing Standard (“PCAOB”) No. 16, Communications with Audit Committees, and Rule 2-07 of SEC Regulation S-X.

The Audit Committee has received and reviewed the written disclosures and the letter from Deloitte & Touche required by the applicable requirements of the PCAOB regarding the independent auditor’s communications with the Audit Committee concerning independence, and has discussed with Deloitte & Touche its independence.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 25, 2014, as filed with the SEC on June 17, 2014.

Submitted by the Audit Committee

of the Board of Directors

Alan L. Earhart, Chairman

Jeffry R. Allen

T. Michael Nevens

OTHER BUSINESS

Our Board of Directors knows of no other business that will be presented for consideration at the Annual Meeting. If other matters are properly brought before the Annual Meeting, however, it is the intention of the persons named in the accompanying proxy to vote the shares represented thereby on such matters in accordance with their best judgment.

FORM 10-K

The Company filed an Annual Report on Form 10-K with the SEC on June 17, 2014. Our Internet address is www.netapp.com. Information on our website is not incorporated by reference into this Proxy Statement. We make available through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Stockholders may also obtain a copy of this report, without charge, by writing to Kris Newton, Senior Director, Investor Relations at the Company’s principal executive offices located at 495 East Java Drive, Sunnyvale, California 94089.

By Order of the Board of Directors

LOGO

Thomas Georgens

Chairman of the Board and Chief Executive Officer

July 25, 2014

^© 2014 NetApp, Inc. All rights reserved. Specifications are subject to change without notice. NetApp, the NetApp logo, ONTAP, and Go further, faster are trademarks or registered trademarks of NetApp, Inc. All other marks are the property of their respective owners and should be treated as such.

Annex A

NETAPP, INC.

RECONCILIATION OF NON-GAAP TO GAAP

FINANCIAL STATEMENT INFORMATION

(In millions, except net income per share amounts)

(Unaudited)


	Year Ended
	April 25, 2014			April 26, 2013
NET INCOME	$	637.5		$	505.3
Adjustments:
Amortization of intangible assets		59.1			85.8
Stock-based compensation		273.0			276.6
Restructuring and other charges		88.3			—
Acquisition-related expense		—			1.7
Non-cash interest expense		8.2			60.2
Gain on investments		—			(0.7	)
Income tax effect of Non-GAAP adjustments		(97.9	)		(88.3	)

NON-GAAP NET INCOME	$	968.2		$	840.6


GROSS PROFIT	$	3,919.1		$	3,761.1
Adjustments:
Amortization of intangible assets		57.1			55.9
Stock-based compensation		22.3			25.5

NON-GAAP GROSS PROFIT	$	3,998.5		$	3,842.5


INCOME FROM OPERATIONS	$	734.3		$	607.8
Adjustments:
Amortization of intangible assets		59.1			85.8
Stock-based compensation		273.0			276.6
Restructuring and other charges		88.3			—
Acquisition-related expense		—			1.7

NON-GAAP INCOME FROM OPERATIONS	$	1,154.7		$	971.9


NET INCOME PER SHARE	$	1.83		$	1.37
Adjustments:
Amortization of intangible assets		0.17			0.23
Stock-based compensation		0.79			0.75
Restructuring and other charges		0.25			—
Acquisition-related expense		—			—
Non-cash interest expense		0.02			0.16
Gain on investments		—			—
Income tax effect of Non-GAAP adjustments		(0.28	)		(0.24	)

NON-GAAP NET INCOME PER SHARE	$	2.78		$	2.28

A-1

Non-GAAP Financial Measures

To supplement the Company’s condensed consolidated financial statement information presented on a GAAP basis, the Company provides investors with certain non-GAAP measures, including, but not limited to, historical non-GAAP operating results, net income and net income per diluted share. For purposes of internal planning, performance measurement and resource allocation, the Company’s management uses non-GAAP measures of net income that exclude: (a) amortization of intangible assets; (b) stock-based compensation expenses; (c) acquisition-related income and expenses; (d) restructuring and other charges; (e) asset impairments; (f) non-cash interest expense associated with our debt; (g) net losses or gains on investments; and (h) our GAAP tax provision, but includes a non-GAAP tax provision based upon our projected annual non-GAAP effective tax rate for the first three quarters of the fiscal year and an actual non-GAAP tax provision for the fourth quarter of the fiscal year. The Company’s management uses these non-GAAP measures in making operating decisions because it believes the measurements provide meaningful supplemental information regarding the Company’s ongoing operational performance. These non-GAAP financial measures are used to: (1) measure company performance against historical results; (2) facilitate comparisons to our competitors’ operating results; and (3) allow greater transparency with respect to information used by management in financial and operational decision making. In addition, these non-GAAP financial measures are used to measure company performance for the purposes of determining employee incentive plan compensation.

As described above, the Company excludes the following items from its non-GAAP measures:

A. Amortization of intangible assets. The Company records amortization of intangible assets that were acquired in connection with its business combinations. The amortization of intangible assets varies depending on the level of acquisition activity. Management finds it useful to exclude these charges to assess the appropriate level of various operating expenses to assist in budgeting, planning and forecasting future periods and in measuring operational performance.

B. Stock-based compensation expenses. The Company excludes stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses. While management views stock-based compensation as a key element of our employee retention and long-term incentives, we do not view it as an expense to be used in evaluating operational performance in any given period. In addition, the valuation of stock-based awards and associated expense are based on factors and assumptions that management believes are, in large part, outside of management’s control.

C. Acquisition-related income and expenses. The Company excludes acquisition-related income and expenses, including (a) merger termination proceeds; (b) due diligence, legal and other one-time integration charges; (c) the impact of inventory step-ups; and (d) write down of assets acquired that the Company does not intend to use in its ongoing business, from its non-GAAP measures primarily because they are not related to our on-going business or cost base and, therefore, cannot be relied upon for future planning and forecasting.

D. Restructuring and other charges. These charges include restructuring charges that are incurred based on the particular facts and circumstances of restructuring decisions, including employment and contractual settlement terms, and other related charges, and can vary in size and frequency. These items are not ordinarily included in our annual operating plan and related budget due to the unpredictability of the timing and size of these events. We therefore exclude them in our assessment of operational performance.

E. Asset impairments. These are non-cash charges to write down assets when there is an indication that the asset has become impaired. Management finds it useful to exclude these non-cash charges due to the unpredictability of these events in its assessment of operational performance.

F. Non-cash interest expense. These are non-cash charges from the amortization of debt discount and issuance costs. Management does not believe that these charges reflect the underlying performance of our business.

A-2

G. Net losses or gains. These include realized gains and losses on and other-than-temporary impairments of our investments related to significant investment impairments or liquidation events. Management believes that these gains and losses do not reflect the results of our underlying, on-going businesses and, therefore, finds it useful to exclude them in assessing our performance.

H. Income tax effects. The Company excludes its GAAP tax provision, including discrete items, from its non-GAAP measure of net income, but includes a non-GAAP tax provision based upon its projected annual non-GAAP effective tax rate for the first three quarters of the fiscal year and an actual non-GAAP tax provision for the fourth quarter of the fiscal year. Management believes the use of a non-GAAP tax provision provides a more meaningful measure of the Company’s operational performance in any given period.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, the non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. Management compensates for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis and also by providing GAAP measures in our earnings release and prepared remarks. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with generally accepted accounting principles in the United States. The non-GAAP financial measures are meant to supplement, and be viewed in conjunction with, GAAP financial measures. Investors should review the information regarding non-GAAP financial measures provided in our press release and prepared remarks.

A-3

Appendix A

NETAPP, INC.

1999 STOCK OPTION PLAN

AS AMENDED AND RESTATED THROUGH JULY 23, 2014

ARTICLE ONE

GENERAL PROVISIONS

I. PURPOSE OF THE PLAN

This 1999 Stock Option Plan is intended to promote the interests of NetApp, Inc., a Delaware corporation, by providing eligible persons with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to remain in the service of the Corporation.

Capitalized terms shall have the meanings assigned to such terms in the attached Appendix.

All share numbers in this document reflect (i) the 2-for-1 split of the Common Stock effected on December 20, 1999 and (ii) the 2-for-1 split of the Common Stock effected on March 22, 2000.

II. STRUCTURE OF THE PLAN

A. The Plan shall be divided into five separate equity programs:

(i) the Discretionary Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock,

(ii) the Stock Appreciation Rights Program under which eligible persons may, at the discretion of the Plan Administrator, be granted stock appreciation rights that will allow individuals to receive the appreciation in Fair Market Value of the Shares subject to the award between the exercise date and the date of grant,

(iii) the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the issuance or immediate purchase of such shares or as a bonus for services rendered the Corporation (or any Parent or Subsidiary) or pursuant to restricted stock units on such terms as the Plan Administrator deems appropriate,

(iv) the Performance Share and Performance Unit Program under which eligible persons may, at the discretion of the Plan Administrator, be granted performance shares and performance units, which are awards that will result in a payment to a Participant only if the performance goals or other vesting criteria the established by the Plan Administrator are achieved or the awards otherwise vest, or

(v) the Automatic Award Program (formerly known as the Automatic Option Grant Program) under which non-employee Board members automatically receive award grants pursuant to a compensation policy as in effect from time to time.

B. The provisions of Articles One and Seven shall apply to all equity programs under the Plan and shall accordingly govern the interests of all persons under the Plan.

III. ADMINISTRATION OF THE PLAN

A. The Primary Committee shall have sole and exclusive authority to administer the Discretionary Option Grant, the Stock Appreciation Rights Program, Stock Issuance Programs and the Performance Share and Performance Unit Program with respect to Section 16 Insiders. Administration of the Discretionary Option Grant, Stock Appreciation Rights, Stock Issuance and Performance Share and Performance Unit Programs with respect

A-1

to all other eligible persons may, at the Board’s discretion, be vested in the Primary Committee or a Secondary Committee, or the Board may retain the power to administer that program with respect to all such persons.

B. Members of the Primary Committee or any Secondary Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time. The Board may also at any time terminate the functions of any Secondary Committee and reassume all powers and authority previously delegated to such committee.

C. Each Plan Administrator shall, within the scope of its administrative functions under the Plan, have full power and authority to establish such rules and regulations as it may deem appropriate for proper administration of the Discretionary Option Grant, Stock Appreciation Rights, Stock Issuance and Performance Share and Performance Unit Programs and to make such determinations under, and issue such interpretations of, the provisions of such programs and any outstanding options thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Option Grant, Stock Appreciation Rights, Stock Issuance or Performance Share and Performance Unit Program under its jurisdiction or any award granted thereunder.

D. Service by Board members on the Primary Committee or the Secondary Committee shall constitute service as a Board member, and Board members of each such committee shall accordingly be entitled to full indemnification and reimbursement as Board members for their service on such committee. No member of the Primary Committee or the Secondary Committee shall be liable for any act or omission made in good faith with respect to the Plan or any option grants under the Plan.

E. Administration of the Automatic Award Program shall be self-executing in accordance with the terms of that program, and no Plan Administrator shall exercise any discretionary functions with respect to award grants made thereunder, except that the Plan Administrator, in its discretion, may change and otherwise revise the terms of any compensation policy relating to non-employee Board members.

IV. ELIGIBILITY

A. The persons eligible to participate in the Discretionary Option Grant, Stock Appreciation Rights, Stock Issuance and Performance Share and Performance Unit Programs are as follows:

(i) Employees,

(ii) non-employee Board members, and

(iii) consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

B. Each Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan, have full authority (subject to the provisions of the Plan) to determine (i) with respect to the Discretionary Option Grant and Stock Appreciation Rights Programs, which eligible persons are to receive awards under the Discretionary Option Grant and Stock Appreciation Rights Programs, the time or times when such awards are to be made, the number of shares to be covered by each such grant, the status of an option as either an Incentive Option or a Non-Statutory Option, the time or times when each award is to become exercisable, the vesting schedule (if any) applicable to the award, the maximum term for which the award is to remain outstanding, and whether to modify or amend each award, including the discretionary authority to extend the post-termination exercisability period of awards longer than is otherwise provided for in the Plan, and (ii) with respect to awards granted under the Stock Issuance and Performance Share and Performance Unit Programs, which eligible persons are to receive awards, the time or times when such awards are to be made, the number of shares subject to awards to be issued to each Participant, the vesting schedule (if any) applicable to the awards, the consideration, if any, to be paid for shares subject to such awards and the form (cash, shares of Common Stock, or a combination thereof) in which the award is to be settled.

C. Only non-employee Board members shall be eligible to participate in the Automatic Award Program.

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V. STOCK SUBJECT TO THE PLAN

A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Corporation on the open market. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 127,880,429 shares. Such authorized share reserve is comprised of (i) the 13,200,000 shares of Common Stock initially authorized for issuance under the Plan, (ii) an additional increase of 15,000,000 shares authorized by the Board on August 17, 2000 and approved by the stockholders at the 2000 Annual Meeting, (iii) an additional increase of 13,400,000 shares authorized by the Board on August 9, 2001 and approved by the stockholders at the 2001 Annual Meeting, (iv) an additional increase of 14,000,000 shares authorized by the Board on July 2, 2002 and approved by the stockholders at the 2002 Annual Meeting, (v) an additional increase of 10,200,000 shares authorized by the Board on July 7, 2004 and approved by the stockholders at the 2004 Annual Meeting, (vi) an additional increase of 10,600,000 shares authorized by the Board on July 1, 2005 and approved by the stockholders at the 2005 Annual Meeting, (vii) an additional increase of 10,900,000 shares authorized by the Board on July 10, 2006 and approved by the stockholders at the 2006 Annual Meeting, (viii) an additional increase of 7,200,000 shares authorized by the Board on July 13, 2007 and approved by the stockholders at the 2007 Annual Meeting, (ix) an additional increase of 6,600,000 shares authorized by the Board on July 11, 2008 and approved by the stockholders at the 2008 Annual Meeting, (x) an additional increase of 7,000,000 shares authorized by the Board on July 13, 2010 and approved by the stockholders at the 2010 Annual Meeting, (xi) an additional increase of 7,700,000 shares authorized by the Board on July 14, 2011 and approved by the stockholders at the 2011 Annual Meeting, (xii) an additional increase of 7,350,000 shares authorized by the Board on July 18, 2012 and approved by the stockholders at the 2012 Annual Meeting, (xiii) an additional increase of 10,000,000 shares authorized by the Compensation Committee of the Board (pursuant to authority delegated by the Board) on July 31, 2013 and approved by the stockholders at the 2013 Annual Meeting, plus (xiv) an additional increase of 7,500,000 shares authorized by the Compensation Committee of the Board (pursuant to authority delegated by the Board) on July 23, 2014, subject to the approval by the stockholders at the 2014 Annual Meeting. Pursuant to the one-time stock option exchange program, as described in the proxy statement pursuant to the Special Meeting of Stockholders held on April 21, 2009, all of the shares underlying options surrendered in the option exchange program were returned to the Plan and restricted stock unit grants made in connection with the stock option exchange program were made from such returned shares. After making the restricted stock unit grants in connection with the stock option exchange program, the Plan’s share reserve was reduced such that, in effect, only 3,500,000 of the shares underlying the surrendered options were retained as available for future grant under the Plan, thereby reducing the number of shares of Common Stock which may be issued over the term of the Plan from 101,100,000 shares to 89,330,429 shares. In addition, shares issued under the Corporation’s 1995 Stock Incentive Plan or the Special Non-Officer Stock Option Plan shall not reduce or otherwise affect the number of shares of Common Stock available for issuance under this Plan. Any shares subject to awards granted under the Plan other than options to purchase shares of Common Stock or stock appreciation rights and granted after the 2013 Annual Meeting, will be counted against the maximum number of shares of Common Stock which may be issued over the term of the Plan pursuant to this Article One Section V.A. as two (2) shares for every one (1) share subject thereto.

B. No one person participating in the Plan may receive stock options and/or stock appreciation rights under the Plan for more than 3,000,000 shares of Common Stock in the aggregate per calendar year.

C. Shares of Common Stock subject to outstanding options or stock appreciation rights shall be available for subsequent issuance under the Plan to the extent the options or stock appreciation rights expire or terminate for any reason prior to exercise in full. In addition, any unvested shares issued under the Plan and subsequently repurchased or reacquired by the Corporation pursuant to the Corporation’s repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent awards under the Plan. If shares subject to awards granted under the Plan were counted against the maximum number of shares of Common Stock which may be issued over the term of the Plan pursuant to Article One Section V.A. as two (2) shares for every one (1) share subject thereto and are forfeited or otherwise return to the Plan, two (2) times the number of shares so

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forfeited will return to the Plan and will again become available for issuance. For purposes of clarity, shares subject to awards granted under the Plan prior to the 2013 Annual Meeting that are forfeited or otherwise return to the Plan, will return to the Plan as one (1) share for every one (1) share subject thereto and will again become available for issuance. Should the exercise price of an award under the Plan be paid with shares of Common Stock or should shares of Common Stock otherwise issuable under the Plan be withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with the exercise of an award or the vesting or disposition of exercised shares or stock issuances under the Plan, then the number of shares of Common Stock available for issuance under the Plan shall be reduced by the gross number of shares for which the award is exercised or the gross number of exercised shares or stock issuances which vest, and not by the net number of shares of Common Stock issued to the holder of such award or exercised shares or stock issuances.

D. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities for which any one person may be granted stock options and/or stock appreciation rights or awards under the Stock Issuance and Performance Share and Performance Unit Programs per calendar year, (iii) the number and/or class of securities for which automatic award grants are to be made subsequently under the Automatic Award Program and (iv) the number and/or class of securities and the exercise price per share in effect under each outstanding award in order to prevent the dilution or enlargement of benefits thereunder. The adjustments determined by the Plan Administrator shall be final, binding and conclusive.

ARTICLE TWO

DISCRETIONARY OPTION GRANT PROGRAM

I. OPTION TERMS

Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options.

A. Exercise Price.

1. The exercise price per share shall be fixed by the Plan Administrator but shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

2. The exercise price shall become immediately due upon exercise of the option and shall be payable in one or more of the forms specified by the Plan Administrator, including without limitation, by one of the following forms of consideration:

(i) cash or check made payable to the Corporation,

(ii) shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or

(iii) to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions to (a) a brokerage firm reasonably satisfactory to the Corporation for purposes of administering such procedure to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction.

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Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

B. Exercise and Term of Options. Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option. However, no option shall have a term in excess of seven (7) years measured from the option grant date.

C. Effect of Termination of Service.

1. The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death:

(i) Any option outstanding at the time of the Optionee’s cessation of Service for any reason shall remain exercisable for such period of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option, but no such option shall be exercisable after the expiration of the option term.

(ii) Any option exercisable in whole or in part by the Optionee at the time of death may be exercised subsequently by the personal representative of the Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution.

(iii) During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested shares for which the option is exercisable on the date of the Optionee’s cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee’s cessation of Service, terminate and cease to be outstanding to the extent the option is not otherwise at that time exercisable for vested shares.

(iv) Should the Optionee’s Service be terminated for Misconduct, then all outstanding options held by the Optionee shall terminate immediately and cease to be outstanding.

2. The Plan Administrator shall have the discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to extend the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service from the period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term.

D. Stockholder Rights. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become a holder of record of the purchased shares.

E. Repurchase Rights. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid per share, any or all of those unvested shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right.

F. Limited Transferability of Options. During the lifetime of the Optionee, Incentive Options shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or by the laws of inheritance following the Optionee’s death. However, Non-Statutory Options may be assigned in whole or in part during the Optionee’s lifetime to one or more members of the Optionee’s family or to a trust established exclusively for one or more such family members or the Optionee’s former spouse, to the extent such assignment

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is in connection with the Optionee’s estate plan, or to the Optionee’s former spouse pursuant to a domestic relations order. The person or persons who acquire a proprietary interest in the option pursuant to the assignment may only exercise the assigned portion. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.

II. INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Seven shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options when issued under the Plan shall not be subject to the terms of this Section II.

A. Eligibility. Incentive Options may only be granted to Employees.

B. Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one (1) calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted.

C. 10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option term shall not exceed five (5) years measured from the option grant date.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL

A. Each option, to the extent outstanding under the Plan at the time of a Corporate Transaction but not otherwise exercisable for all the option shares, shall automatically accelerate so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become exercisable for all of the shares of Common Stock at the time subject to such option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. However, an outstanding option shall not become exercisable on such an accelerated basis if and to the extent: (i) such option is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or parent thereof) or replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof), (ii) such option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested option shares at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to those option shares or (iii) the acceleration of such option is subject to other limitations imposed by the Plan Administrator at the time of the option grant. The determination of option comparability under clause (i) above shall be made by the Plan Administrator, and its determination shall be final, binding and conclusive.

B. All outstanding repurchase rights shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent: (i) those repurchase rights are to be assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.

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C. Immediately following the consummation of the Corporate Transaction, all outstanding options shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof).

D. Each option which is assumed in connection with a Corporate Transaction shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction. Appropriate adjustments to reflect such Corporate Transaction shall also be made to (i) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same, (ii) the maximum number and/or class of securities available for issuance over the remaining term of the Plan and (iii) the maximum number and/or class of securities for which any one person may be granted stock options under the Plan per calendar year.

E. The Plan Administrator shall have the full power and authority to accelerate the vesting of options granted under the Discretionary Option Grant Program upon a Corporate Transaction or Change in Control or upon an event or events occurring in connection with such transactions. The portion of any Incentive Option accelerated in connection with a Corporate Transaction or Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Qualified Option under the Federal tax laws.

F. The outstanding options shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

IV. REPRICING OR CANCELLATION AND REGRANT OF AWARDS

The Plan Administrator may not modify or amend a stock option or stock appreciation right to reduce the exercise price of such stock option or stock appreciation right after it has been granted (except for adjustments made pursuant to Article One Section V.D.), unless approved by the Corporation’s stockholders and neither may the Plan Administrator, without the approval of the Corporation’s stockholders, cancel any outstanding stock option or stock appreciation right and immediately replace it with a new stock option or stock appreciation right with a lower exercise price, awards of a different type, and/or cash.

ARTICLE THREE

STOCK APPRECIATION RIGHTS PROGRAM

I. STOCK APPRECIATION RIGHT TERMS

Each stock appreciation right shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below.

A. Exercise Price.

B. Payment of SAR Amount. Upon exercise of a stock appreciation right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:

1. The difference between the Fair Market Value of a share of Common Stock on the date of exercise over the exercise price; times

2. The number of shares of Common Stock with respect to which the stock appreciation right is exercised.

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At the discretion of the Plan Administrator, the payment upon the exercise of a stock appreciation right may be in cash, in shares of Common Stock of equivalent value, or in some combination thereof.

C. Exercise and Term of Stock Appreciation Rights. Each stock appreciation right shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the stock appreciation right. However, no stock appreciation right shall have a term in excess of seven (7) years measured from the stock appreciation right grant date.

D. Effect of Termination of Service. A stock appreciation right granted under the Plan will expire upon the date determined by the Plan Administrator, in its sole discretion, and set forth in the agreement evidencing the award. Notwithstanding the foregoing, the rules of Article Two Section I.C. also will apply to stock appreciation rights.

E. Stockholder Rights. The holder of a stock appreciation right shall have no stockholder rights with respect to the shares subject to the stock appreciation right until such person shall have exercised the stock appreciation right and become a holder of record of shares, if any, issued thereunder.

II. CORPORATE TRANSACTION/CHANGE IN CONTROL

A. Each stock appreciation right, to the extent outstanding under the Plan at the time of a Corporate Transaction but not otherwise exercisable for all the shares subject thereto, shall automatically accelerate so that each such stock appreciation right shall, immediately prior to the effective date of the Corporate Transaction, become exercisable for all of the shares of Common Stock at the time subject to such stock appreciation right and may be exercised for any or all of those shares as fully-vested shares of Common Stock. However, an outstanding stock appreciation right shall not become exercisable on such an accelerated basis if and to the extent: (i) such stock appreciation right is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or parent thereof) or replaced with a comparable award, (ii) such stock appreciation right is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested shares subject to the award at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to the award or (iii) the acceleration of such stock appreciation right is subject to other limitations imposed by the Plan Administrator at the time of grant. The determination of stock appreciation right comparability under clause (i) above shall be made by the Plan Administrator, and its determination shall be final, binding and conclusive.

B. Immediately following the consummation of the Corporate Transaction, all outstanding stock appreciation rights shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof).

C. Each stock appreciation right which is assumed in connection with a Corporate Transaction shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Participant in consummation of such Corporate Transaction had the stock appreciation right been exercised immediately prior to such Corporate Transaction. Appropriate adjustments to reflect such Corporate Transaction shall also be made to (i) the exercise price payable per share under each outstanding stock appreciation right, provided the aggregate exercise price for such award shall remain the same, (ii) the maximum number and/or class of securities available for issuance over the remaining term of the Plan, and (iii) the maximum number and/or class of securities for which any one person may be granted stock appreciation rights under the Plan per calendar year.

D. The Plan Administrator shall have the full power and authority to accelerate the vesting of stock appreciation rights granted under the Stock Appreciation Rights Program upon a Corporate Transaction or Change in Control or upon an event or events occurring in connection with such transactions.

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E. The outstanding stock appreciation rights shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

III. REPRICING OR CANCELLATION AND REGRANT OF AWARDS

ARTICLE FOUR

STOCK ISSUANCE PROGRAM

I. STOCK ISSUANCE TERMS

Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to grants of restricted stock and restricted stock units which entitle the recipients to retain or receive, as applicable, the shares underlying the award upon the attainment of designated performance goals or the satisfaction of specified Service requirements. To the extent any shares issued pursuant to awards granted under the Stock Issuance Program are forfeited or otherwise return to the Plan, such shares will not count against the number of shares of Common Stock which may be issued under the Plan pursuant to Article One, Section V of the Plan and may once again be issued pursuant to awards under the Plan as if the original award were never granted. The Plan Administrator, in its sole discretion, shall determine the number of shares of Common Stock and/or restricted stock units to be granted to each Participant, provided that during any calendar year, no Participant shall receive an award under the Stock Issuance Program covering more than 1,000,000 shares of Common Stock.

A. Purchase Price.

1. The purchase price per share of Common Stock, if any, shall be fixed by the Plan Administrator.

2. Shares of Common Stock may be issued under the Stock Issuance Program for any item of consideration which the Plan Administrator may deem appropriate in each individual instance, including, without limitation, the following:

(i) cash or check made payable to the Corporation, or

(ii) past services rendered to the Corporation (or any Parent or Subsidiary).

B. Vesting/Issuance Provisions.

1. The Plan Administrator may issue shares of Common Stock under the Stock Issuance Program which are fully and immediately vested upon issuance or which are to vest in one or more installments over the Participant’s period of Service or upon attainment of specified performance objectives. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to restricted stock units which entitle the recipients to receive the shares underlying the restricted stock units and which vest in one or more installments

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over the Participant’s period of Service or upon attainment of specified performance objectives. The elements of the vesting schedule applicable to any awards granted under the Stock Issuance Program, namely:

(i) the Service period to be completed by the Participant or the performance objectives to be attained,

(ii) the number of installments in which the awards are to vest,

(iii) the interval or intervals (if any) which are to lapse between installments, and

(iv) the effect which death, Permanent Disability or other event designated by the Plan Administrator is to have upon the vesting schedule,

shall be determined by the Plan Administrator and incorporated into the Stock Issuance Agreement. For purposes of qualifying awards made under the Stock Issuance Program as “performance-based compensation” under Section 162(m) of the Code, the Plan Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals, which shall be set by the Plan Administrator on or before the Determination Date. In establishing Performance Goals, the Plan Administrator may provide that performance shall be appropriately adjusted as follows:

(i) to include or exclude restructuring charges;

(ii) to include or exclude exchange rate effects, as applicable, for non-U.S. dollar denominated Performance Goals;

(iii) to include or exclude the effects of changes to generally accepted accounting principles required by the Financial Accounting Standards Board;

(iv) to include or exclude the effects of any statutory adjustments to corporate tax rates;

(v) to include or exclude the effects of any “extraordinary items” as determined under generally accepted accounting principles;

(vi) to include or exclude the effect of payment of bonuses under any cash bonus plan of the Corporation;

(vii) to include or exclude the effect of stock based compensation and/or deferred compensation;

(viii) to include or exclude any other unusual gain or loss or other extraordinary item;

(ix) to respond to, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development;

(x) to respond to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or industry conditions;

(xi) to include or exclude the effects of divestitures, acquisitions or joint ventures;

(xii) to include or exclude the effects of discontinued operations that do not qualify as a segment of a business unit under generally accepted accounting principles;

(xiii) to assume that any business divested by the Corporation achieved performance objectives at targeted levels during the balance of a Performance Period following such divestiture;

(xiv) to include or exclude the effect of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common shareholders other than regular cash dividends;

(xv) to reflect a corporate transaction, such as a merger, consolidation, separation (including a spinoff or other distribution of stock or property by a corporation), or reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code);

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(xvi) to reflect any partial or complete corporate liquidation; and

(xvii) to include or exclude the amortization of purchased intangibles and technology license arrangements.

In this connection, the Plan Administrator shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of awards made under the Stock Issuance Program under Section 162(m) of the Code (e.g., in determining the Performance Goals). To the extent necessary to comply with the performance-based compensation provisions of Section 162(m) of the Code, with respect to any award granted subject to Performance Goals, within the first twenty-five percent (25%) of the Performance Period, but in no event more than ninety (90) days following the commencement of any Performance Period (or such other time as may be required or permitted by Section 162(m) of the Code), the Plan Administrator shall, in writing, (A) designate one or more Participants to whom awards made under the Stock Issuance Program shall be made, (B) select the Performance Goals applicable to the Performance Period, (C) establish the Performance Goals and amounts of such awards made under the Stock Issuance Program, as applicable, which may be earned for such Performance Period, and (D) specify the relationship between the Performance Goals and the amounts of such awards made under the Stock Issuance Program, as applicable, to be earned by each Participant for such Performance Period. Following the completion of each Performance Period, the Plan Administrator shall certify in writing whether the applicable Performance Goals have been achieved for such Performance Period. In determining the amounts earned by a Participant, the Plan Administrator shall have the right to reduce or eliminate (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Plan Administrator may deem relevant to the assessment of individual or corporate performance for the Performance Period. A Participant shall be eligible to receive payment pursuant to an award intended to qualify as performance-based compensation under Section 162(m) of the Code made under the Stock Issuance Program for a Performance Period only if the Performance Goals for such period are achieved. Notwithstanding any other provision of the Plan, any award which is granted to a Participant and is intended to constitute qualified performance-based compensation under Section 162(m) of the Code shall be subject to any additional limitations set forth in the Code (including any amendment to Section 162(m)) or any regulations and ruling issued thereunder that are requirements for qualification as qualified performance-based compensation as described in Section 162(m) of the Code, and the Plan shall be deemed amended to the extent necessary to conform to such requirements.

2. Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to his or her unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

3. The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program (for these purposes, shares to be issued upon settlement of a restricted stock unit award will not be issued until the award has actually been settled), whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.

4. Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for cash consideration, unless the Plan Administrator provides otherwise, the Corporation shall repay that consideration to the Participant at the time the shares are surrendered.

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5. The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur upon the cessation of the Participant’s Service or the non-attainment of the performance objectives applicable to those shares. Such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives.

6. Outstanding restricted stock units under the Stock Issuance Program shall automatically terminate, and no shares of Common Stock shall actually be issued in satisfaction of those awards, if the performance goals or Service requirements established for such awards are not attained or satisfied. The Plan Administrator, however, shall have the discretionary authority to issue shares of Common Stock under outstanding awards in satisfaction of one or more outstanding restricted stock unit awards as to which the designated performance goals are not attained or satisfied. On the date set forth in the Stock Issuance Agreement, all unearned restricted stock units shall be forfeited to the Company.

7. Upon meeting the applicable vesting criteria, the Participant shall be entitled to a payout of restricted stock units as specified in the Stock Issuance Agreement. Notwithstanding the foregoing, after the grant of restricted stock units, the Plan Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such restricted stock units. Payment of earned restricted stock units shall be made as soon as practicable after the date(s) set forth in the Stock Issuance Agreement or as otherwise provided in the applicable Stock Issuance Agreement or as required by applicable laws. The Plan Administrator, in its sole discretion, may pay earned restricted stock units in cash, in shares of Common Stock (which have an aggregate Fair Market Value equal to the value of the earned restricted stock units), or a combination thereof.

II. CORPORATE TRANSACTION/CHANGE IN CONTROL

A. All of the Corporation’s outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and all the shares of Common Stock subject to those terminated rights and the awards issued under the Stock Issuance Program shall immediately vest in full (with all performance goals or other vesting criteria deemed achieved at target levels), in the event of any Corporate Transaction, except to the extent (i) the awards as to which those repurchase rights or other vesting criteria pertain are to be assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement.

B. The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation’s repurchase rights remain outstanding under the Stock Issuance Program or while the awards under the Stock Issuance Program are unvested, to provide that those rights or awards shall automatically terminate in whole or in part, and the shares of Common Stock subject to those terminated rights or awards shall immediately vest upon a Corporate Transaction or Change in Control or upon an event or events associated with such transactions.

III. SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.

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ARTICLE FIVE

PERFORMANCE SHARE AND PERFORMANCE UNIT PROGRAM

I. PERFORMANCE UNITS AND PERFORMANCE SHARES

Shares of Common Stock or cash may be issued under the Performance Share or Performance Unit Program through awards of performance shares and performance units, which are awards that will result in a payment to a Participant only if the performance goals or other vesting criteria established by the Plan Administrator are achieved or the awards otherwise vest. Each award granted hereunder shall be evidenced by an agreement in such form as the Plan Administrator shall determine which complies with the terms specified below. To the extent any shares issued pursuant to awards granted under the Performance Share and Performance Unit Program are forfeited or otherwise return to the Plan, such shares will not count against the number of shares of Common Stock which may be issued under the Plan pursuant to Article One, Section V of the Plan and may once again be issued pursuant to awards under the Plan as if the original award were never granted.

A. Grant of Performance Units/Shares. The Plan Administrator will have complete discretion in determining the number of performance units and performance shares granted to each Participant provided that during any calendar year, (a) no Participant will receive performance units having an initial value greater than $5,000,000, and (b) no Participant will receive more than 1,000,000 performance shares.

B. Value of Performance Units/Shares. Each performance unit will have an initial value that is established by the Plan Administrator on or before the date of grant. Each performance share will have an initial value equal to the Fair Market Value of a share of Common Stock on the date of grant.

C. Performance Objectives and Other Terms. The Plan Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as an Employee) in its discretion which, depending on the extent to which they are met, will determine the number or value of performance units/shares that will be paid out to the Participant. Each Award of performance units/shares will be evidenced by an agreement that will specify the Performance Period, and such other terms and conditions as the Plan Administrator, in its sole discretion, will determine.

1. General Performance Objectives. The Plan Administrator may set performance objectives based upon the achievement of Company-wide, divisional, or individual goals, or any other basis determined by the Plan Administrator in its discretion.

2. Section 162(m) Performance Objectives. For purposes of qualifying grants of performance units/shares as “performance-based compensation” under Section 162(m) of the Code, the Plan Administrator, in its discretion, may determine that the performance objectives applicable to performance units/shares will be based on the achievement of Performance Goals. The Plan Administrator will set the Performance Goals on or before the Determination Date. In establishing Performance Goals, the Plan Administrator may provide that performance shall be appropriately adjusted as follows:

(i) to include or exclude restructuring charges;

(ii) to include or exclude exchange rate effects, as applicable, for non-U.S. dollar denominated Performance Goals;

(iii) to include or exclude the effects of changes to generally accepted accounting principles required by the Financial Accounting Standards Board;

(iv) to include or exclude the effects of any statutory adjustments to corporate tax rates;

(v) to include or exclude the effects of any “extraordinary items” as determined under generally accepted accounting principles;

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