JUNIPER NETWORKS INC - JNPR Proxy Statement (definitive) (DEF 14A) EXECUTIVE COMPENSATION

The following is an excerpt from a DEF 14A SEC Filing, filed by JUNIPER NETWORKS INC on 4/13/2005.

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JUNIPER NETWORKS INC - DEF 14A - 20050413 - EXECUTIVE_COMPENSATION

EXECUTIVE COMPENSATION

The following table discloses compensation received by Juniper Networks’ Chief Executive Officer during fiscal 2004 and Juniper Networks’ four other most highly paid executive officers (together with the CEO, the “named executive officers”) during fiscal 2004 as well as their compensation received from Juniper Networks for each of the fiscal years ending December 31, 2003 and December 31, 2002.

Summary Compensation Table


											Long-Term Compensation
				Annual Compensation							Restricted	Securities
Name and									Other Annual		Stock	Underlying			All Other
Principal Position	Year			Salary		Bonus ⁽¹⁾			Compensation ⁽¹⁴⁾		Award(s)	Options			Compensation ⁽²⁾
Scott Kriens		2004		$	412,500	$	539,077		$	2000	NA		750,000	⁽³⁾	$	540
Chairman and Chief		2003			275,000		161,350			2000	NA		800,000	⁽⁴⁾		510
Executive Officer		2002			275,000		0			2000	NA		2,750,000	⁽⁵⁾		462

Pradeep Sindhu		2004		$	198,750	$	253,683		$	2000	NA		200,000	⁽³⁾	$	828
Vice Chairman and		2003			185,000		70,554			2000	NA		300,000	⁽⁴⁾		377
Chief Technical Officer		2002			185,000		10,000			2000	NA		400,000	⁽⁶⁾		462

Marcel Gani		2004		$	245,833	$	315,851		$	2000	NA		300,000	⁽³⁾	$	828
Executive Vice		2003			200,000		117,345			2000	NA		500,000	⁽⁴⁾		408
President, Chief		2002			200,000		0			2000	NA		1,080,000	⁽⁷⁾		462
Financial Officer

James A. Dolce, Jr.		2004		$	249,167	$	319,611		$	0	NA		300,000	⁽³⁾	$	40,978	⁽⁹⁾
Executive Vice		2003			254,581		70,407			0	NA		500,000	⁽⁴⁾		125,922	⁽⁹⁾
President, Field		2002	⁽⁸⁾		120,000		0			0	NA		0			26,922	⁽⁹⁾
Operations

Krishna “Kittu” Kolluri.		2004	⁽¹⁰⁾	$	249,167	$	486,288	⁽¹¹⁾	$	2000	NA		0	⁽¹²⁾	$	91,421	⁽¹³⁾
General Manager,		2003			NA		NA			NA	NA
Security Products		2002			NA		NA			NA	NA

(1)		Amounts in this column reflect bonuses earned in 2004, although such amounts were paid in 2005.

(2)		Consists of the standard employee benefit portion paid by the Company for all employees for premiums for term life insurance and, in the case of Mr. Dolce and Mr. Kolluri, the additional amounts described in footnotes 9 and 12, respectively.

(3)		Mr. Kriens was granted an option for 750,000 shares, Dr. Sindhu was granted an option for 200,000 shares, Mr. Gani was granted an option for 300,000 shares and Mr. Dolce was granted an option for 300,000 shares on January 29, 2004 at an exercise price of $28.17.

(4)		Mr. Kriens was granted an option for 800,000 shares, Dr. Sindhu was granted an option for 300,000 shares, Mr. Gani was granted an option for 500,000 shares and Mr. Dolce was granted an option for 500,000 shares on September 26, 2003 at an exercise price of $15.00 per share.

(5)		Mr. Kriens was granted an exchange option on May 28, 2002 for 2,200,000 shares at an exercise price of $10.31 per share. In connection with the acquisition of Unisphere Networks and in recognition of the additional responsibility associated therewith, on July 1, 2002 an additional option for 550,000 shares was granted at an exercise price of $5.69 per share.

(6)		Dr. Sindhu was granted an exchange option on May 28, 2002 for 100,000 shares at an exercise price of $10.31 per share. In connection with the acquisition of Unisphere Networks and in recognition of the additional responsibility associated therewith, on July 1, 2002 an additional option for 300,000 shares was granted at an exercise price of $5.69 per share.

(7)		Mr. Gani was granted an exchange option on May 28, 2002 for 580,000 shares at an exercise price of $10.31 per share. In connection with the acquisition of Unisphere Networks and in recognition of the additional responsibility associated therewith, on July 1, 2002 an additional option for 500,000 shares was granted at an exercise price of $5.69 per share.

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(8)		Mr. Dolce was elected a named executive officer upon the closing of the acquisition of Unisphere Networks on July 1, 2002. The data shown in the Summary Compensation Table only reflects the amounts he received while an executive officer of Juniper Networks.

(9)		Amounts paid in 2004 reflect $40,618 in commissions paid. Amounts in 2003 reflect $125,414 in commissions paid. Amounts in 2002 reflect $26,634 in commissions paid on or after July 1, 2002 as the data shown in the Summary Compensation Table only reflects the amounts he received while an executive officer of Juniper Networks.

(10)		Mr. Kolluri was elected a named executive officer upon the closing of the acquisition of NetScreen Technologies, Inc. on April 16, 2004. The data shown in the Summary Compensation Table only reflects the amounts he received while an executive officer of Juniper Networks.

(11)		Includes a bonus of $200,000 paid in 2005 relating to the acquisition of Neoteris Inc. by NetScreen Technologies Inc. Also includes a $50,000 sales bonus committed to Mr. Kolluri prior to the acquisition of NetScreen Technologies, Inc. by the Company.

(12)		No options were granted in 2004.

(13)		Amounts paid in 2004 reflect $91,331 in escrowed merger consideration relating to the acquisition by NetScreen Technologies Inc. of Neoteris Inc.

(14)		In all cases, consists of matching contributions paid under the Company’s 401(k) plan.

Option Grants In Last Fiscal Year

The following tables set forth the stock options granted to the Named Executive Officers under the Company’s stock option plans and the options exercised by such Named Executive Officers during the fiscal year ended December 31, 2004.

The Option/SAR Grant Table below sets forth hypothetical gains or “option spreads” for the options at the end of their respective ten-year terms, as calculated in accordance with the rules of the Securities and Exchange Commission.


	No. of		Percent of
	Securities		Total Options						Potential Realizable Value at
	Underlying		Granted to		Exercise				Assumed Annual Rates of Stock
	Options		Employees		Price Per		Expiration		Appreciation for Option Terms ($)
Name	Granted		During Period		Share		Date		5%		10%
Scott Kriens		750,000		3.36	$	28.17		1/29/2014	$	13,286,971	$	33,671,794
Pradeep Sindhu		200,000		0.90	$	28.17		1/29/2014		3,543,192		8,979,145
Marcel Gani		300,000		1.35	$	28.17		1/29/2014		5,314,788		13,468,718
James A. Dolce, Jr.		300,000		1.35	$	28.17		1/29/2014		5,314,788		13,468,718
Krishna “Kittu” Kolluri		—		—		—		—		—		—

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Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

The following table shows stock option exercises and the value of unexercised stock options held by the Named Executive Officers during the last fiscal year.


					Number of Securities
					Underlying					Value of Unexercised
	Shares				Unexercised Options at					In-the-Money Options at
	Acquired on		Value		December 31, 2004					December 31, 2004 ⁽¹⁾
Name	Exercise		Realized		Exercisable		Unexercisable			Exercisable		Unexercisable
Scott Kriens		0	$	0		2,782,291		1,517,709			47,327,757		11,385,244
Pradeep Sindhu		0		0		1,452,656		527,344			6,688,121		5,106,879
Marcel Gani		500,000		8,433,333		288,333		774,395			4,374,872		8,445,528
James A. Dolce, Jr.		1,000,000		19,353,938		2,103,181		774,395			43,841,581		7,004,406
Krishna “Kittu” Kolluri		70,000		1,634,324		99,192		365,637	(2)		1,305,715		6,154,221

(1)		The value of in-the-money options is based on the closing price on December 31, 2004 of $27.19 per share, minus the per share exercise price, multiplied by the number of shares underlying the option.

(2)		Includes 50,806 shares that are subject to repurchase.

Employment Agreements

The Company entered into a change of control agreement with Mr. Kriens on October 1, 1996, which provides that he will be entitled to base compensation and benefit payments for a period of three months in the event that his employment is terminated in connection with a change of control of Juniper Networks. Further, Mr. Kriens’ restricted stock would be released from any repurchase option and his stock options would become vested and exercisable as to an additional amount equal to that amount which would have vested and become exercisable had Mr. Kriens remained employed for a period of 18 months following the change of control. If his employment continues following a change of control, his stock options will be vested and exercisable at a rate 1.5 times the rate otherwise set forth in the stock option agreement for a period of twelve months following the change of control. Under the employment agreement, Mr. Kriens is entitled to receive three months’ base compensation and benefits, regardless of whether there is a change of control, in the event that his employment is involuntarily terminated. Upon involuntary termination, and regardless of whether there has been a change of control, Mr. Kriens’ restricted stock and stock options would become immediately vested and exercisable as to an additional amount equal to the number of stock options which would have become vested and exercisable during the three-month period following the involuntary termination had Mr. Kriens remained employed by the Company.

The Company entered into an Amendment and Assumption Agreement with Krishna “Kittu” Kolluri on April 15, 2004 in connection with the Company’s acquisition of NetScreen Technologies, Inc. Pursuant to the Amendment and Assumption Agreement, Mr. Kolluri agreed that the commencement of his employment with the Company upon the closing of the NetScreen acquisition did not constitute (i) “Good Reason,” as defined in Section 5.5b of Mr. Kolluri’s Employment Agreement with NetScreen, for a voluntary termination of Employee’s employment, (ii) any other type of “constructive termination” or (iii) grounds for termination without cause under Mr. Kolluri’s employment agreement. Pursuant to Mr. Kolluri’s employment agreement, as amended, Mr. Kolluri is eligible for a bonus of up to 100% of his base salary pursuant to Juniper Networks’ Executive Officer Incentive Plan. The employment agreement, as amended, in connection with Net Screen’s acquisition of Neoteris, Inc., also provides for a grant of options to purchase 200,000 shares of Net Screen’s

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common stock and makes Mr. Kolluri eligible to receive a bonus of up to $200,000, partially payable upon on the completion of performance objectives. If Mr. Kolluri is terminated without cause or terminates his employment for good reason (in each case, as defined in the amended employment agreement) within 24 months of the effectiveness of Net Screen’s acquisition of Neoteris, he will be entitled to the continuation of his base salary (payable in accordance with usual payroll practice) and health insurance coverage for a period of six months.

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

Compensation Committee

The Compensation Committee is comprised of three independent, non-employee members of the Board of Directors, as defined by the Nasdaq rules. None of the members have interlocking compensation committee relationships as defined by the Securities and Exchange Commission. The Compensation Committee is responsible for reviewing and approving the annual base salary, the annual incentive bonus, including the specific goals and amounts, equity compensation and other benefits or compensation arrangements of the Company’s Chief Executive Officer and its other executive officers.

Compensation Philosophy

The Compensation Committee recognizes that in order for the Company to successfully develop, introduce, market and sell products, the Company must be able to attract, retain and reward qualified executive officers who will be able to operate effectively in a high growth, complex environment. In that regard, the Company must offer compensation that (a) is competitive in the industry; (b) motivates executive officers to achieve the Company’s strategic business objectives; and (c) aligns the interests of executive officers with the long-term interests of stockholders.

The Company provides its executive officers with a compensation package consisting of base salary, performance-based incentive pay, stock options and participation in benefit plans generally available to other employees. The Compensation Committee’s intention is to adopt compensation programs that encourage creation of long-term value for stockholders, employee retention, and equity ownership through stock option grants. The Compensation Committee’s approach is predicated upon the philosophy that a substantial portion of aggregate annual compensation for executive officers should be contingent upon the Company’s overall performance and an individual’s contribution to the Company’s success in meeting certain critical objectives. In this regard, the Compensation Committee has tended to target base salary at approximately the 50 ^th percentile relative to peer companies. Incentive compensation and long term equity awards are intended to target overall compensation at between the 50 ^th and 75 ^th percentile, although changes in the market price of the Company’s common stock can result in total compensation outside the target range. As the Compensation Committee applies these compensation philosophies in determining appropriate executive compensation levels and other compensation factors, the Compensation Committee reaches its decisions with a view towards maximizing the Company’s overall performance.

The Compensation Committee considers market information about its peer companies from published survey data provided to the Compensation Committee by the Company’s human resources staff. The market data consists primarily of base salary and total cash compensation rates, as well as incentive bonus and stock programs of other companies considered by the Compensation Committee to be peers in the Company’s

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