2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 272 S&P GLOBAL, INC. COMPENSATIONDISCUSSIONANDANALYSIS(continued) CEOTargetCompensation Inthegraphictotheright,wehave shownTargetTotalDirectCompensation (“TDC”),whichisequaltobasesalary, targetannualincentiveawardoppor- tunityandlong-termincentivegrants, assumingtargetperformance,forour CEO,Mr.Peterson,in2016,2017,and 2018.Asdiscussedinfurtherdetailinthe “SettingCompensation”sectionbegin- ningonpage44ofthisProxyStatement, inconsultationwiththeindependent compensationconsultant,the CompensationCommitteeconsidered severalfactorssuchasindividual performanceandmarketcompetitive- nessandapproveda15%increaseto Mr.Peterson’stargetTDCfor2018as comparedto2017. $0 $2M $4M $6M $8M $9M $11M $10M Base Salary TargetAnnual IncentiveAward Long-Term Incentives *Excludesa$2millionone-time, specialRSUgrant toMr.Peterson.Formore informationon thisgrant, seepage39. $1M $3M $5M $7M 2016 2017 2018 $1.0M $1.0M $1.0M $1.7M $1.8M $2.3M $6.0M $6.82M $4.8M $7.5M $8.8M $10.12M* Say-on-PayandEngagementwithShareholders TheCompanyvaluesshareholderperspectivesonourexecutivecompensationprogram.Atthe2017Annual Meeting,shareholdersvotedinfavorofcastinganadvisoryvoteontheexecutivecompensationprogramfor theCompany’sNEOs—the“say-on-pay”vote—onanannualbasis.AspartoftheCompensationCommittee’s annualreviewoftheprogram,itconsiderstheoutcomeoftheCompany’sannualshareholderadvisoryvoteon thecompensationoftheCompany’sNEOs.Approximately98%ofthe“say-on-pay”advisoryvotescastin2017 wereinfavorofourexecutivecompensationprogram. Althoughthisindicatedstrongsupportforourprogram,theCompanybelievesitisimportanttoengagewith ourshareholders,regardlessofourapprovalrating.Wedidsothisyearbycontinuingouractivedialoguewith investors,attending13investorconferences,visitinginvestorsin36citiesandintotalconductingapproximately 800investormeetings.Wealsoexpandedourshareholderoutreacheffortsbyinvitingourlargestlong-termin- stitutionalinvestors,collectivelyrepresentingapproximately22%ofouroutstandingshares,todiscusscorpo- rategovernancematters,includingexecutivecompensation.NosignificantconcernsrelatingtotheCompany’s compensationprogramwereraisedbyinvestorsthisyear. Examplesofpriorcompensationprogramchangesmadeinresponsetoshareholderfeedbackarehighlightedon page47ofthisProxyStatementandaffirmourresponsivenesstoandalignmentwithourshareholders. 38 2018ProxyStatement Total of 04 pages in section COMPENSATIONDISCUSSIONANDANALYSIS(continued) CompanyFinancialPerformance TheCompanydemonstratedstrongoperatingperformancein2017byshowingyear-over-year(“YOY”)growth acrossthreekeyfinancialmeasuresthattheCompensationCommitteeusestoassessexecutiveofficer performance:IncentiveCompensationProgram(“ICP”)AdjustedRevenue,ICPAdjustedEarningsbeforeInter- est,TaxesandAmortization(“ICPAdjustedEBITA”)andICPAdjustedEarningsPerShare(“ICPAdjustedEPS”): ICPAdjustedRevenuemetric isused todetermine25%of thepool fundingunder theSTIC. ICPAdjustedEBITAmetric isused todetermine75%of thepool funding under theSTIC. 2016 Baseline $5,661M $6,063M ICPAdjustedRevenue (2) (+7.1%YOYGrowth) STIC (1) METRICS: 2017 $2,857M ICPAdjustedEBITA (2) (+17.8%YOYGrowth) 2016 Baseline 2017 ICPAdjustedEPS is the solemetric forour3-yearLong-TermPerformance ShareUnitAward ("PSU"). Useof thismetric strengthens the importanceofgrowthand scale to theCompany. Useof thismetricdraws focus to productivitymeasuresand the creation ofgreaterefficiencies throughout the Company. Thismetric isaunifyingmeasure across theCompany thatdrives long-term value creation forour shareholdersbecause it considers capitalallocationdecisionsaswellas the importanceof continualdiscipline inoperatingperformance. PSUMETRIC: $6.89 ICPAdjustedEPS (2) (3) (+29.0%YOYGrowth) 2016 Baseline 2017 $2,427M $5.34 (1) KeyExecutiveShort-TermIncentiveCompensationPlan(“STIC”). (2) ForareconciliationoftheadjustmentstocomparablefinancialmeasurescalculatedinaccordancewithU.S.GAAP,pleaseseeExhibitA. (3) TheEPSperformancedisplayedhereprovidescontextontheyear-over-yearperformanceoftheCompanyandisnotequaltothethree- year,cumulativecompoundICPAdjustedEPSperformanceusedtoassessperformanceagainsttargetforPSUawards.Forcumulative compoundICPAdjustedEPSresultsachievedforthe2015-2017PSUawardcycle,pleaseseepage61ofthisProxyStatement. SignificantBusinessMilestones Inadditiontotheabovestrongfinancials,other2017highlightsinclude: • RolledoutseveralkeyCompanyinitiativesincludingestablishinganewintegratedoperatingmodelde- signedtostimulateinnovationanddrivedigitaltransformation. • GrewS&PGlobalRatingsbeyondthecoreproductsthroughexpansionofadditionalcredittoolsinclud- ingESG,GreenEvaluationsandRatings360. • DeliveredonproductenhancementssuchasthelaunchofthenewMarketIntelligenceplatform. • Continuedinvestmentinprogramsthatpromotearobustrisk,controlandcomplianceculture,ensur- ingourbusinessesarereadyfortheevolvingregulatorylandscape. Pay-for-PerformanceOverview 2017STICFundingand2015-2017Long-TermIncentivePayouts S&PGlobalhadstrongstockpriceandfinancialperformancein2017andstrategicallypositioneditselfto achievecontinuedperformanceinthefuture.TheCompany’sachievementsin2017resultedinabovetarget fundingfortheKeyExecutiveShort-TermIncentiveCompensationPlan(“STIC”),andtheCompany’ssustained performanceduringthe2015-2017performancecycleresultedinLong-TermIncentiveawardsearningandpay- ingoutabovetarget.Enterprise-levelSTICfundingfor2017was180%oftarget(whichreflectsareductionof20 percentagepointsmadebytheCompensationandLeadershipDevelopmentCommitteepursuanttoManage- ment’srecommendation)(seepage56),the2015Long-TermPSUAwardearnedandpaidoutat200%oftarget (seepage61),andthe2015DowJonesIndicesLong-TermCashAwardearnedandpaidoutat140%oftarget (seepage61). 2018ProxyStatement 37 STIC(1)METRICS:ICPAdjustedRevenue(2)(+7.1%YOYGrowth)ICPAdjustedRevenuemetricisusedtodetermine25%ofthepoolfundingundertheSTICUseofthismetricstrengthenstheimportanceofgrowthandscaletotheCompany. ICPAdjustedEBITA(2)(+17.8%YOYGrowth)ICPAdjustedEBITAmetricisusedtodetermine75%ofthepoolfundingundertheSTICUseofthismericdrawsfocustoproductivitymeasuresandthecreatinofgreaterefficinciesthroughouttheCompany . PSUMETRIC:IPdjustedEPS(2)(3)(+29.0%YOYGrowth)ICPAdjusedEPSisthesol etricforur3-yearLong-TermPerformanceShareUnitAwad(“PSU”)ThismetricisaunifyingmeasureacrossthCompanythatdrvslong-tervlecratinforourshareholdersbecauseitconsiderscapitalallocationdecisionsaswellastheimportanceofcontinualdisciplineinoperatingperformance. COMPENSATIONDISCUSSIONANDANALYSIS(continued) I.EXECUTIVESUMMARY AND2017FINANCIALPERFORMANCE 2017NamedExecutiveOfficers Thenamedexecutiveofficers(“NEOs”)oftheCompanyfor2017areasfollows: Executive Position DouglasL.Peterson PresidentandChiefExecutiveOfficer(“CEO”) EwoutL.Steenbergen EVP,ChiefFinancialOfficer(“CFO”) JohnL.Berisford President,S&PGlobalRatings MichaelA.Chinn President,S&PGlobalMarketIntelligenceandEVP,DataandTechnology Innovation,S&PGlobal AlexanderJ.Matturri ChiefExecutiveOfficer,S&PDowJonesIndices CompensationPhilosophy Ourcompensationphilosophyistorewardourexecutivesforcreatingshareholdervaluebylinkingasignificant portionofpaytooneormoreperformancemetricstiedtovaluecreation.Weimplementourcompensation practiceswithintheframeworkofpay-for-performanceandinamannerthatwebelievehelpsusattractthe highestqualitytalenttoourexecutiveranksandretaintheseindividualsbyrewardingexcellenceinleadership andsuccessintheimplementationofourbusinessstrategywhiledrivingshareholdervalue. FinancialPerformanceHighlights TotalShareholderReturn In2017,S&PGlobalincreaseditssharepricebyap- proximately58%,whichexceedsthe30%average sharepriceincreaseofourpeergroupandthe19% growthintheoverallmarket.Asindicatedinthe performancegraphtotheright,ourcumulativetotal shareholderreturnduringthepreviousfiveyearsis 25%higherthanourForm10-Kpeergroupand60% higherthantheperformanceindicatoroftheoverall market(i.e.,S&P500). TheForm10-Kpeergroupincludedinthisgraph consistsofthefollowingcompanies:ThomsonReu- tersCorporation,Moody’sCorporation,CMEGroup Inc.,MSCIInc.,FactSetResearchSystemsInc.and IHSMarkitLtd. Dec. 2012 Dec. 2013 Dec. 2014 Dec. 2015 Dec. 2016 Dec. 2017 $333 $266 $208 $0 $50 $100 $150 $200 $250 $350 $300 SPGI S&P500 PeerGroup Returnsassume$100investedonDecember31,2012andtotalreturnincludesreinvestmentofdividendsthroughDecember31,2017.Re- flectspeergroupusedintheCompany’sForm10-KfiledwiththeSEConFebruary9,2018. 36 2018ProxyStatement SALESFORCE.COM, INC. COMPENSATIONDISCUSSIONANDANALYSIS(CONTINUED) Return to Stockholders We have delivered significant long-term TSR as evidenced by the chart below, which shows how a $100 investment in Salesforce on January31,2013wouldhavegrownto$265onJanuary31,2018.ThechartalsocomparestheTSRonaninvestmentinourcommon stocktothesameinvestmentintheS&P500Index,theNasdaqComputer&DataProcessingIndexandtheNasdaq100Indexoverthe lastfivefiscalyears. 0 100 50 150 200 DOLLARS FY13 FY14 FY15 FY16 FY17 FY18 300 250 ComparisonofCumulativeTotalReturnof salesforce.com, inc. S&P500 Index salesforce.com NasdaqComputer Nasdaq100 Index 1/31/2013 1/31/2014 1/31/2015 1/31/2016 1/31/2017 1/31/2018 salesforce.com $100 $141 $131 $158 $184 $265 S&P500Index $100 $119 $133 $130 $152 $188 NasdaqComputer&DataProcessingIndex $100 $128 $152 $158 $196 $277 Nasdaq100Index $100 $129 $152 $157 $187 $254 Data for the Standard & Poor’s 500 Index, the Nasdaq Computer & Data Processing Index and the Nasdaq 100 Index assume reinvestmentofdividends.Thecomparisonsinthegraphabovearebaseduponhistoricaldataandarenotindicativeof,norintended toforecast,futureperformanceofourcommonstock. As shown above, the Company has shown consistently strong performance with a stock price that has appreciated substantially over the past five years. For example, our stock priceon February 1, 2013 was $43.76 (as adjusted for our April 2013 stock split), and our stockpriceonFebruary1,2018was$112.74,approximately2.576 x theFebruary2013stockprice. Fiscal 2018 CompensationProgram—Highlights Highlightsofourfiscal2018executivecompensationprogramwere: • Kept Named Executive Officers’ Base Salary and Target Cash Bonus at Prior Levels. In fiscal 2018, we kept the CEO’s base salary andtarget bonus thesameas infiscal2016andfiscal2017.Wekeptfiscal2018basesalaryandtargetbonusforour otherNEOsatthesamelevelsasforfiscal2017. • Changed Annual Equity Award Grant Cycle Timing to Align with Fiscal Year Results. The fiscal 2018 executive compensationprogramreflectsonesignificantchange,whichrelatestothetimingofourannualequityawardgrantcycle.Historically, we granted equity awards annually in November. The Committee determined to move our annual grants from November to March. This change allows the Compensation Committee to consider Company and individual performance for the full, recently completed fiscal year when making annual equity award decisions. The transition to this new grant cycle resulted in a one-time delay to our annual equity award program, with no annual grants occurring for a 16-month period, including all of fiscal 2018. This significantly impactedthetotalfiscal2018compensationreportedforallofourNEOsinourSummaryCompensationTable.Thereductionisnot a reflection on individual or Company performance. The fiscal 2019 equity awards, summarized on page 30, reflect outstanding Company and individual performance during fiscal 2018. The delay in the equity grant cycle was also taken into account by the CompensationCommitteewhensettingequityawardamountsforfiscal2019. ComparisonofCumulativeTotalReturnofsalesforce.co,inc. 22 2018ProxyStatement Total of 02 pages in section COMPENSATIONDISCUSSIONANDANALYSIS COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis describes the material elements of our executive compensation program, providing an overview of our executive compensation philosophy, policies, practices and the corresponding pay decisions for our “Named Executive Officers”(“NEOs”).Specifically,itdescribeshowandwhytheCompensationCommitteeoftheBoard(the“CompensationCommittee”or “Committee”)arrivedatthespecificexecutivecompensationdecisionsforandduringfiscal2018(February1,2017–January31,2018) andthekeyfactorstheCommitteeconsideredinmakingthosedecisions. Named Executive Officers For fiscal 2018, our NEOs included our principal executive officer, our principal financial officer and the three next most highly- compensatedexecutiveofficers,whowere: • MarcBenioff,ourChairmanoftheBoardandChiefExecutiveOfficer(“CEO”); • MarkHawkins,ourPresidentandChiefFinancialOfficer(“CFO”); • KeithBlock,ourViceChairman,PresidentandChiefOperatingOfficer; • ParkerHarris,ourCo-FounderandChiefTechnologyOfficer;and • AlexandreDayon,ourPresidentandChiefStrategyOfficer. Executive Summary Business Overview and Fiscal 2018 Performance Highlights Salesforceis a leadingproviderof enterprisesoftware, deliveredthrough thecloud,with a focuson customerrelationshipmanagement, orCRM.WeintroducedourfirstCRMsolutionin2000,andwehavesinceexpandedourserviceofferingsintonewareasandindustries with new editions, features and platform capabilities. Our core mission is to empower our customers to connect with their customers in entirelynewwaysthroughcloud,mobile,social,InternetofThings(“IoT”)andartificialintelligencetechnologies. Salesforce is the fastest growing top-five enterprise software company in the world. In fiscal 2018, Salesforce surpassed $10 billion in annual revenue, reaching that milestone faster than any other enterprise software company. Salesforce has earned recognition as #1 in Fortune’s “100 Best Companies to Work For,” #15 in Fortune’s “World’s Most Admired Companies,” #2 in Barron’s “100 Most SustainableCompanies”and#1in Forbes’ “World’sMostInnovativeCompanies.” Infiscal2018,theCompanydeliveredsignificantgrowthandstrongfinancialperformance,including: • Revenue. Fiscal2018revenuegrewby25%year-over-year. • OperatingCashFlow. Fiscal2018operatingcashflowgrewby27%year-over-year. • Deferred and Unbilled Deferred Revenue. Fiscal 2018 deferred revenue grew by 28% year-over-year, and unbilled deferred revenue(representingbusinessthatiscontractedbutunbilledandoffthebalancesheet)grewby48%year-overyear. Revenue $5,374M $6,667M FY15 FY16 FY17 FY18 $8,392M $10,480M OperatingCashFlow FY15 FY16 FY17 FY18 $1,181M $1,672M $2,162M $2,738M RevenueOperatingCashFlow 2018 Proxy Statement 21