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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

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

 

CyrusOne Inc.

(Name of Registrant as Specified In Its Charter)

 

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

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Notice of Annual Meeting of Stockholders


When

 

Where*

Monday
April 27, 2020
10:30 AM, local time

 

CyrusOne
2850 N. Harwood St., Suite 2200
Dallas, TX 75201

To our Stockholders:

You are cordially invited to attend the 2020 annual meeting of stockholders of CyrusOne Inc., a Maryland corporation (the "Company" or "CyrusOne"). The purposes of the meeting are as follows:

1.
To elect seven directors, each to hold office until our 2021 annual meeting of stockholders and until his or her respective successor is duly elected and qualified;
2.
To approve, on an advisory basis, the compensation of the Company's named executive officers as disclosed in this proxy statement;
3.
To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2020; and
4.
To transact such other business as may properly come before the annual meeting.

Only stockholders of record at the close of business on March 4, 2020—the record date for the 2020 annual meeting—will be entitled to notice of, and to vote at, the 2020 annual meeting and any postponement or adjournment thereof.

Your vote is important. Whether or not you plan to attend the meeting, we want to make sure your shares are represented at the meeting. You may cast your vote and submit your proxy in advance of the meeting by internet, telephone or mail.

  By Internet     By Phone     By Mail     In Person  
              (if you received a paper copy in the mail)        

 


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  Visit www.evisionreports.com/CONE     Call
800-652-8683
    Complete, sign, date and
return proxy card
    Attend
Annual Meeting
 

By Order of the Board of Directors:

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ROBERT M. JACKSON
Executive Vice President, General Counsel and Secretary
March 18, 2020

*
As part of our precautions regarding the coronavirus, we are planning for the possibility that we might hold a "virtual annual meeting," where participation would be via remote communication. If we take this step, we will announce the decision, including details on how to participate, in a press release available at www.cyrusone.com as soon as practicable before our meeting.

Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to be held on April 27, 2020:

The Company's Proxy Statement and Annual Report are available at:
www.evisionreports.com/CONE


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PROXY STATEMENT SUMMARY

  1

PROPOSAL 1: ELECTION OF SEVEN DIRECTORS

 
5

PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION

 
10

PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 
12

AUDIT COMMITTEE REPORT

 
14

EXECUTIVE OFFICERS

 
15

CORPORATE GOVERNANCE

 
17

Role of the Board in Risk Oversight

  17

Board Leadership

  18

Director Independence

  18

Board Meetings

  19

Board Committees

  20

Board and Committee Evaluations

  21

Nomination of Directors

  21

Majority Voting Resignation Policy for Election of Directors

  22

Compensation Committee Interlocks and Insider Participation

  22

Corporate Governance Materials Available on Website

  23

Contacting the Board of Directors

  23

BOARD COMPENSATION FOR 2019

 
24

EXECUTIVE COMPENSATION

 
26

COMPENSATION COMMITTEE REPORT

 
41

EXECUTIVE COMPENSATION TABLES

 
42

Summary Compensation Table

  42

Grants of Plan-Based Awards

  44

Outstanding Equity Awards at Fiscal Year End

  45

Option Exercises and Stock Vested

  46

No Pension Benefits

  46

No Nonqualified Deferred Compensation

  46

Potential Payments Upon Termination of Employment or Change in Control

  46

Estimated Payments in Connection with a Termination of Employment or Change in Control

  48

EQUITY COMPENSATION PLAN INFORMATION

 
51

CEO PAY RATIO DISCLOSURE

 
52

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 
53

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 
55

Indemnification of Officers and Directors

  55

Review and Approval of Transactions with Related Persons

  55

STOCKHOLDER PROPOSALS

 
57

GENERAL INFORMATION ABOUT THE ANNUAL MEETING

 
58

APPENDIX A — NON-GAAP FINANCIAL MEASURES

 
A-1

2020 Proxy Statement     GRAPHIC

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2020 Proxy Statement at a Glance

Proxy Statement Summary

Proposal
  Board Voting
Recommendation

  Page
Reference

Election of directors   FOR EACH NOMINEE   5
Advisory vote on executive compensation   FOR   10
Ratification of appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2020   FOR   12

Corporate Governance Highlights

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    Independent Oversight  

All 7 director nominees are independent directors

Chairman of the Board is an independent director

Regular executive sessions of independent directors at Board and Committee meetings

Active Board oversight of the Company's strategy and risk management, including cybersecurity and annual enterprise risk assessments

   
   
    Board Composition and Diversity  

Focus on diversity - >25% of directors are women or ethnically diverse, including Chairman of the Board and Audit Committee Chair

Commitment to actively seeking out additional highly qualified women and minority candidates

Annual Board and Committee self-evaluations

Mandatory retirement age of 72

Ongoing director education

   
   
    Stockholder Rights  

Annual election of all directors

   
     

Majority-vote director resignation policy for directors in uncontested elections

   
     

One class of shares with each share entitled to one vote

   
     

Our Bylaws may be amended by our stockholders

   
     

We have opted out of the Maryland control share acquisition statute

   
     

No stockholders rights plan in effect

   
   
    Stockholder Engagement  

Governance trends

Compensation practices

Board composition, diversity and succession planning

Sustainability

   
   
    Sustainability  

Environmentally-friendly and energy efficient waterless cooling

   
     

Utilization of solar and other renewable, zero-emission power

   
 

2020 Proxy Statement     GRAPHIC

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2020 Proxy Statement at a Glance

Track Record of Value Creation

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5-Year Cumulative TSR

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  Comparison of the cumulative total stockholder return on CyrusOne Inc.'s common stock for the year ended December 31, 2019, with the cumulative total return on the S&P 500 Market Index and the MSCI US REIT Index (RMZ). The comparison assumes that $100 was invested on December 31, 2014 in CyrusOne Inc.'s common stock and in each of these indices and assumes reinvestment of dividends, if any.

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2020 Proxy Statement at a Glance

2019 Company Snapshot

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2019 Compensation Snapshot

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Named Executive Officers for 2019   Base
Salary
($)
  Bonus
($)
  Stock
Awards
($)
  All Other
Comp.
($)
  Total
($)
Gary Wojtaszek, President & CEO(2)   800,000   2,312,800   3,978,260   17,868   7,108,928
Diane Morefield, EVP & Chief Financial Officer   475,000   784,700   1,049,240   21,282   2,330,222
Venkatesh Durvasula, EVP & President, Europe(2)   545,769   908,600   1,442,704   292,368   3,189,441
Kevin Timmons, EVP & Chief Technology Officer   460,577   760,873   1,349,231   21,612   2,592,293
Robert Jackson, EVP, General Counsel & Secretary   352,000   581,504   699,547   22,713   1,655,764
(1)
Pay mix charts reflect the amounts in the table, excluding the "all other comp." column.

(2)
As previously disclosed, effective February 20, 2020, Mr. Wojtaszek stepped down as President & CEO and Mr. Durvasula was elected President & CEO on an interim basis.

2020 Proxy Statement     GRAPHIC

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2020 Proxy Statement at a Glance

Sustainability

Our data centers power the modern world, enabling cloud computing, artificial intelligence, machine learning and many of the technologies that power daily life for people around the globe. Although the exponential growth of data centers creates a lot of efficiencies, it also consumes more resources - in particular electricity and water. Recognizing these realities, we design data centers that are compatible with a sustainable future by focusing in three areas: (1) water scarcity and conservation, (2) energy efficiency, and (3) partnering with our customers to support their sustainability goals.

    Water Scarcity & Conservation     Energy Efficiency

  Strategic Partnering

    Data centers integrate technologies and equipment that use vast amounts of energy and generate enormous amounts of heat - requiring cooling at scale. Water usage has historically been an essential element of traditional cooling designs.

Our newest data centers design minimizes water usage - including Zero Water Consumption Cooling facilities, which use less than one cup of water for every kilowatt hour of electricity delivered to servers, saving millions of gallons

10 of our data centers have a Water Usage Effectiveness ratio - water used relative to the electricity delivered to the IT hardware - of 0.1 or less

Water conservation is particularly critical for certain of our key markets, including Phoenix, Northern Virginia, Chicago, Dallas and Northern California

      We utilize an integrated approach to energy efficiency for our data centers, initiated by our project development process and continuing with design & construction, procurement and operations.

Our Massively Modular® data centers combine the needs of lighting, cooling and power at scale to provide efficiencies and economies to reduce overall electric consumption

We utilize high-efficiency uninterruptible power supplies, power distribution units and variable speed fans

Our building management systems include sensors and flexible infrastructure to allow precise delivery of cooling to data halls.

Data centers London I and London II run on a 100% renewable energy tariff

      Our customers, particularly cloud companies, have some of the most ambitious sustainability goals of any industry. In response, our strategy is to partner with our customers to support each in achieving such goals.

Increasingly the availability of renewable energy at a data center is a threshold issue for our customers

Local electric grid providers are increasing availability for renewable energy, typically including sources such as wind, solar, biomass, hydro and geothermal

We provide our customers with sustainability information to assist with site selection and reporting - including trends and values for the carbon intensity of the grid and the amount of renewable power on the grid

   

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Proposal 1: Election of Seven Directors

Proposal 1: Election of Seven Directors

At the 2020 annual meeting, we are asking our stockholders to elect the seven directors named below (the "Nominees"), each to serve until the 2021 annual meeting and until their respective successors are duly elected and qualified.

            Director   Independent   Board Committees
Name   Age   Occupation   Since       A   C   N   T   E
Alex Shumate*   69   Managing Partner, North America, Squire Patton Boggs (US) LLP   2013   Yes           ·       (C)
David H. Ferdman   52   Founder and former President & Chief Executive Officer, CyrusOne   2013   Yes               ·    
John W. Gamble, Jr.   57   Corporate Vice President & Chief Financial Officer, Equifax Inc.   2014   Yes   ·                
Michael A. Klayko   65   Chief Executive Officer, MKA Capital; and Operating Executive at Marlin Equity Partners   2016   Yes       ·   ·   (C)    
T. Tod Nielsen   54   President & Chief Executive Officer, Financial Force   2013   Yes       (C)            
William E. Sullivan   65   Former Chief Financial Officer & Treasurer, Purdue University   2013   Yes   ·       (C)        
Lynn A. Wentworth   61   Former Senior Vice President, Chief Financial Officer & Treasurer, BlueLinx Holdings Inc.   2014   Yes   (C)   ·       ·   ·

 

*   Chairman of the Board and
Lead Independent Director
  A = Audit
C = Compensation
N = Nominating/Governance
T = Transaction
E = Executive
(C) Denotes committee chair

Biographical information about the Nominees and the experience, qualifications, attributes, and skills considered by our Nominating and Corporate Governance Committee and the Board of Directors in determining that the Nominee should serve as a director appears below. All of the Nominees currently serve as directors. The Board of Directors anticipates that each of the Nominees will serve, if elected, as a director. However, if any Nominee is unable to serve or declines to do so, the discretionary authority provided in the proxy will be exercised by the proxy holders to vote for a substitute or substitutes nominated by the Board of Directors, or the Board of Directors, on the recommendation of the Nominating and Corporate Governance Committee, may reduce the size of the Board and number of nominees.

       
  The Board of Directors recommends
a vote
FOR each Nominee.
 
     

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Proposal 1: Election of Seven Directors

Nominees for Election to the Board of Directors

The biographical descriptions below set forth certain information with respect to each of the Nominees.

Alex Shumate

Chairman of the Board &
Lead Independent Director

Board Committees:

Nominating and
Corporate Governance

Executive (Chair)

Mr. Shumate has served as the Managing Partner, North America, of Squire Patton Boggs (US) LLP, an international law firm, since 2009. He joined Squire Patton Boggs in 1988 and he has served as the Managing Partner of its Columbus, Ohio office since 1991. He is a member of the Board of Trustees of The Ohio State University, where he is chairman of the board's Governance Committee; he currently is serving his third term as a trustee and has twice served as Chairman of the Board. Mr. Shumate is the lead independent director of The J.M. Smucker Company and chairman of the board's Nominating, Governance and Corporate Responsibility Committee. He previously served as a director of the Wm. Wrigley Jr. Company from 1998 until its acquisition in 2008, of Nationwide Financial Services from 2002 until its acquisition in 2009, and of Cincinnati Bell Inc. ("Cincinnati Bell") from 2005 to January 2013. Prior to joining Squire Patton Boggs, Mr. Shumate served as chief counsel and deputy chief of staff to the Governor of the State of Ohio and as assistant attorney general, State of Ohio.

Qualifications
Mr. Shumate brings to our Board of Directors demonstrated managerial ability and a thorough understanding of the principles of good corporate governance.

 

David H. Ferdman

Board Committees:

Transaction

Mr. Ferdman was the founder of CyrusOne and served as President & Chief Executive Officer from 2000 until its acquisition by Cincinnati Bell in June 2010. Mr. Ferdman served as the President until August 2011 and served as the Chief Strategy Officer until January 2013. Upon consummation of our initial public offering in 2013, Mr. Ferdman resigned from his employment with the Company. Prior to founding CyrusOne, Mr. Ferdman was the Chief Operating Officer and co-founder of UWI Association Programs (d/b/a Eclipse Telecommunications), a facilities-based telecommunications service provider. As Chief Operating Officer of UWI, Mr. Ferdman was instrumental in the company's rapid growth, which culminated in its acquisition by IXC Communications (now part of Level 3 Communications Inc.) in 1998. Mr. Ferdman is also a director of Circuit of the Americas, Quality Uptime Services, Filmwerks International, LLC and Cybraics, Inc.

Qualifications
Mr. Ferdman brings to our Board of Directors a comprehensive understanding of our business coupled with extensive experience in the data center industry.

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Proposal 1: Election of Seven Directors


John W. Gamble, Jr.

Board Committees:

Audit

Mr. Gamble is Corporate Vice President & Chief Financial Officer of Equifax Inc., where he is responsible for corporate finance, accounting, treasury, tax, internal audit and investor relations. From September 2005 to May 2014, Mr. Gamble was Executive Vice President & Chief Financial Officer for Lexmark International, Inc. In addition to corporate finance functions, he was responsible for Lexmark's investor relations, information technology, strategy and development, and internal audit and security functions. Prior to joining Lexmark, Mr. Gamble was executive vice president and chief financial officer of Agere Systems, Inc. Mr. Gamble also served in finance leadership roles with AlliedSignal, Inc., and then Honeywell International, Inc., following the merger of the two entities. Earlier, Mr. Gamble served in a variety of finance capacities with General Motors. Mr. Gamble began his career as an electrical engineer with Bethlehem Steel Corporation.

Qualifications
Mr. Gamble brings to our Board of Directors extensive knowledge regarding financial management and the information technology market.

 

Michael A. Klayko

Board Committees:

Transaction (Chair)

Compensation

Nominating and
Corporate Governance

Mr. Klayko has been Chief Executive Officer of MKA Capital, an investment company focusing on technology investments, since January 2013. He has also been an Operating Executive at Marlin Equity Partners, a global investment firm, since March 2018. From January 2005 until January 2013, Mr. Klayko served as Chief Executive Officer and served on the board of directors of Brocade Communications Systems, Inc., a comprehensive network solutions provider ("Brocade"). Previously, Mr. Klayko was Vice President of Worldwide Sales at Brocade and also served as its Vice President of Marketing and Support and Vice President of OEM Sales. Additionally, Mr. Klayko has held management positions at Rhapsody Networks, McDATA, EMC, Hewlett-Packard Company and IBM. Mr. Klayko serves on the board of directors of Allscripts Healthcare Solutions, Inc., a healthcare information technology provider, and previously served on the board of directors of Brocade (2005 through 2013), PMC-Sierra, Inc. (2012 through January 2016) and Bally Technologies (2014).

Qualifications
Mr. Klayko brings to our Board of Directors a comprehensive understanding of the technology and network solutions industry coupled with extensive experience as a director of other publicly-held technology companies.

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Proposal 1: Election of Seven Directors


T. Tod Nielsen

Board Committees:

Compensation (Chair)

Mr. Nielsen has served as the President & Chief Executive Officer and a member of the board of directors of FinancialForce, a private cloud ERP vendor, since January 2017. Mr. Nielsen served as Chief Executive Officer from June 2013 to June 2016 of Heroku, a cloud application development company that was acquired by Salesforce in 2011, and as Executive Vice President of Platform at Salesforce from June 2013 to June 2016. Prior to that, Mr. Nielsen was Co-President, Applications Platform Group at VMware, Inc. Mr. Nielsen served as VMware's Chief Operating Officer from January 2009 to January 2013. Prior to that, he served as President and Chief Executive Officer of Borland Software Corporation from November 2005 to December 2008. From June 2005 to November 2005, Mr. Nielsen served as Senior Vice President, Marketing and Global Sales Support for Oracle Corporation, an enterprise software company. From August 2001 to August 2004, Mr. Nielsen served in various positions at BEA Systems, Inc., a provider of application infrastructure software, including Chief Marketing Officer and Executive Vice President, Engineering. Mr. Nielsen also spent 12 years with Microsoft Corporation ("Microsoft") in various roles, including General Manager of Database and Developer Tools, Vice President of Developer Tools, and at the time of his departure, Vice President of Microsoft's platform group. Mr. Nielsen is a current director of BTI Systems, and former director of MyEdu Corp., Fortify Software and Club Holdings, LLC.

Qualifications
Mr. Nielsen brings to our Board of Directors a strong technical background in software development, coupled with extensive management experience and knowledge of the information technology market.

 

William E. Sullivan

Board Committees:

Nominating and
Corporate Governance
(Chair)

Audit

Mr. Sullivan served as the Chief Financial Officer & Treasurer for Purdue University in Indiana from June 2014 until his retirement at the end of 2019. Mr. Sullivan served as the Chief Financial Officer of ProLogis Inc., a real estate investment trust ("REIT") operating as an owner, manager and developer of distribution facilities, from March 2007 to May 2012. Prior to joining ProLogis, Mr. Sullivan was the founder and President of Greenwood Advisors, Inc., a private financial consulting and advisory firm, from 2005 to 2007. Prior to that, Mr. Sullivan served as the Chairman (2001 to 2007) & Chief Executive Officer (2001 to 2005) of SiteStuff, Inc., a procurement solutions company specializing in real estate property and facility management. Mr. Sullivan worked for Jones Lang LaSalle Incorporated, and its predecessor, LaSalle Partners, in a variety of positions from 1984 to 2001, including as Chief Financial Officer from 1997 to 2001 and as a member of the Board of Directors from 1997 to 1999. Prior to joining Jones Lang LaSalle, Mr. Sullivan was a member of the Communications Lending Group of the First National Bank of Chicago and also served as a member of the tax division of Ernst & Ernst LLP, a predecessor to Ernst & Young LLP. Mr. Sullivan has also served as a director and audit committee chairman of Jones Lang LaSalle Income Property Trust,  Inc. since September 2012 and served as a director of Club Corp. from August 2013 until September 2017.

Qualifications
Mr. Sullivan brings to our Board of Directors a comprehensive understanding of the commercial real estate industry coupled with extensive REIT management experience.

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Proposal 1: Election of Seven Directors


Lynn A. Wentworth

Board Committees:

Audit (Chair)

Compensation

Transaction

Executive

Ms. Wentworth served as Senior Vice President, Chief Financial Officer & Treasurer of BlueLinx Holdings Inc. (a building products distributor) from 2007 until her retirement in 2008. Prior to joining BlueLinx, Ms. Wentworth served as Vice President and Chief Financial Officer for BellSouth Corporation's Communications Group and held various other positions at BellSouth from 1985 to 2007. Ms. Wentworth began her career at Coopers & Lybrand, where she served in both the audit and tax divisions. Ms. Wentworth is a certified public accountant licensed in the state of Georgia. Ms. Wentworth chairs the Board of Directors and is a member of the audit committee of Cincinnati Bell. Ms. Wentworth also serves as a director and chair of the audit committee of Graphic Packaging Holding Company.

Qualifications
Ms. Wentworth brings to our Board of Directors extensive knowledge regarding complex financial, accounting and corporate governance matters affecting large corporations.

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Proposal 2: Say-on-Pay

Proposal 2: Advisory Vote on Executive Compensation

Pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we are asking our stockholders to approve, on an advisory basis, the compensation of the Company's named executive officers ("NEOs") as described in this proxy statement ("Say-on-Pay").

Our executive compensation program rewards performance, supports our business strategies, discourages excessive risk-taking, makes us competitive for top talent among our peers and other relevant enterprises, while at the same time creates an ownership culture that aligns our executives' interests with the long-term interests of our stockholders. Our Compensation Discussion and Analysis and the related compensation tables describe in detail the components of our executive compensation program and the process by which our Compensation Committee makes executive compensation decisions. Highlights of our program include the following:

we support a culture committed to paying for performance where compensation is commensurate with the results achieved

we cap individual payouts under our executive compensation plans

we do not guarantee incentive compensation under our annual cash bonus plan or long-term incentive plan

clawback policies allow recovery of certain compensation payments and proceeds from executives in the event of a significant restatement of financial results

we do not provide "single-trigger" change-in-control vesting on equity awards or severance

we do not provide gross-ups to cover personal income taxes that pertain to change in control or severance benefits

we do not provide special executive retirement programs


PERFORMANCE-BASED COMPENSATION*

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*
Pay mix charts reflect the amounts in the 2019 Summary Compensation Table, excluding the "All Other Compensation" column

At our 2019 annual meeting of stockholders, approximately 86.5% of the votes cast were in favor of the advisory vote on the 2018 compensation of our NEOs.

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Proposal 2: Say-on-Pay

We are asking our stockholders to approve the following non-binding advisory resolution:

"RESOLVED, that the stockholders of CyrusOne Inc. approve, on an advisory basis, the compensation of CyrusOne Inc.'s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K of the rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, Summary Compensation Table and other related tables and disclosures."

While the vote is non-binding, we highly value the opinions of our stockholders and the Compensation Committee will consider the outcome of this advisory vote in connection with future executive compensation decisions.

The Board has adopted a policy of providing annual advisory votes on the compensation of our NEOs. The next advisory vote is expected to occur at our 2021 annual meeting of stockholders.

       
  The Board of Directors recommends
a vote
FOR the approval of the advisory
resolution on executive compensation.
 
     

2020 Proxy Statement     GRAPHIC

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Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm

Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm

The Audit Committee of the Board of Directors has appointed Deloitte & Touche LLP ("Deloitte") to serve as the Company's independent registered public accounting firm for the year ending December 31, 2020, and the Board of Directors is asking stockholders to ratify this appointment. Although current law, rules and regulations, as well as the Audit Committee Charter, require the Company's independent registered public accounting firm to be engaged, retained and supervised by the Audit Committee, the Board of Directors considers the selection of the independent registered public accounting firm to be an important matter of stockholder concern and is submitting the appointment of Deloitte for ratification by stockholders as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee may reconsider whether or not to retain Deloitte in the future. Deloitte has served as the Company's independent registered public accounting firm since 2011. Even if the appointment is ratified, the Audit Committee may, in its discretion, appoint a different independent registered public accounting firm.

Fee Disclosure

The following is a summary of the fees billed by Deloitte for professional services rendered for the years ended December 31, 2019 and December 31, 2018:

  Year Ended
December 31, 2019
($)
  Year Ended
December 31, 2018
($)

Audit Fees

  1,639,351   1,486,603

Audit Related Fees

  183,048   168,050

Tax Fees

    12,222

All Other Fees

    2,020

Total

  1,822,399   1,668,895

Audit Fees

"Audit Fees" consist of fees and related expenses billed for professional services rendered for the audit of the financial statements and services that are normally provided by Deloitte in connection with statutory and regulatory filings or engagements. For example, audit fees include fees for professional services rendered in connection with quarterly and annual reports, and the issuance of consents by Deloitte to be named in our registration statements and to the use of their audit report in the registration statements.

Audit-Related Fees

"Audit-Related Fees" consist of fees and related expenses for products and services other than services described under "Audit Fees", "Tax Fees" and "All Other Fees". These services included, among others, due diligence related to completed and potential acquisitions, accounting consultations that were not required by statute or regulation and consultations concerning financial accounting and reporting.

Tax Fees

"Tax Fees" consist of fees and related expenses billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal and state tax compliance and tax planning and structuring.

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Table of Contents

Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm

Pre-Approval Policy

All audit, tax and other services provided to us were reviewed and pre-approved by the Audit Committee or a member of the Audit Committee designated by the full committee to pre-approve such services.

Generally, the scope of the work to be performed by Deloitte, and the proposed fees associated with the work, are reviewed by management. The proposed work and associated fees are then presented to the Audit Committee for review, and if deemed appropriate, approved. The Audit Committee in its discretion meets with both Deloitte and with management together and, if needed, separately, prior to giving its approval. For approval of minor adjustments to the scope of work or fees, the Audit Committee in its discretion may delegate approval to its chair. The Audit Committee or designated member concluded that the provision of such services by Deloitte was compatible with the maintenance of that firm's independence in the conduct of its auditing functions.

A representative of Deloitte will be present at the annual meeting, will be given the opportunity to make a statement if he or she so desires and will be available to respond to appropriate questions.

       
  The Board of Directors recommends
a vote
FOR the ratification of the appointment
of Deloitte & Touche LLP as the Company's
independent registered public accounting firm for 2020.
 
     

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Table of Contents

Audit Committee Report

Audit Committee Report

The following is a report by the Audit Committee regarding the responsibilities and functions of the Audit Committee.

The Audit Committee oversees the Company's financial reporting process on behalf of the Board of Directors, in accordance with the Audit Committee Charter adopted by the Board. All members of the Audit Committee are independent under applicable SEC rules and Nasdaq listing standards related to service on audit committees, and all three members of the Audit Committee are "audit committee financial experts" as defined by SEC rules. Management is responsible for the preparation of the Company's financial statements and the financial reporting process, including implementing and maintaining effective internal control over financial reporting and for the assessment of, and reporting on, the effectiveness of internal control over financial reporting. The Company's independent registered public accounting firm, Deloitte, is responsible for expressing an opinion on the conformity of the Company's audited financial statements and financial statement schedules with accounting principles generally accepted in the United States of America.

The Audit Committee is responsible for the appointment, compensation and oversight of our independent auditor. Deloitte has served as the Company's independent auditor since 2011. In fulfilling its oversight responsibilities, the Audit Committee reviewed with management and Deloitte the audited financial statements for the year ended December 31, 2019 contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, and discussed with management the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee also reviewed and discussed with management and Deloitte the disclosures made in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Controls and Procedures" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

In addition, the Audit Committee received and discussed the written disclosures and the letter from Deloitte that are required by applicable requirements of the Public Company Accounting Oversight Board regarding the firm's communications with the Audit Committee concerning independence, discussed with Deloitte the firm's independence from management and the Audit Committee, and discussed with Deloitte the matters required to be discussed by Auditing Standard No. 16, "Communications with Audit Committees" (as codified, AS 1301). In reviewing the independence of Deloitte, the Audit Committee considers the non-audit fees paid to Deloitte, if any, during the year.

In reliance on the reviews and discussions referred to above, prior to the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2019 with the SEC, the Audit Committee recommended to the Board of Directors (and the Board approved) that the audited financial statements be included in such Annual Report for filing with the SEC.

 

Submitted by the Audit Committee
of the Board of Directors

 

Lynn A. Wentworth (Chair)
John W. Gamble, Jr.
William E. Sullivan

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Executive Officers

Executive Officers

Name   Position(s)   Age
Venkatesh S. Durvasula(1)   President & CEO, Former Executive Vice President & President, Europe   53
Diane M. Morefield   Executive Vice President & Chief Financial Officer   61
Kevin L. Timmons   Executive Vice President & Chief Technology Officer   56
Robert M. Jackson   Executive Vice President, General Counsel & Secretary   52
(1)
As previously disclosed, effective February 20, 2020, Mr. Wojtaszek stepped down as a director and as President & CEO and Mr. Durvasula was elected President & CEO on an interim basis.

Venkatesh S. Durvasula

President & CEO, and
Former Executive Vice
President & President, Europe

Education:

BA - Syracuse University

Venkatesh S. Durvasula was elected President & CEO on an interim basis effective February 20, 2020. Prior to that election, he was Executive Vice President & President, Europe since December 1, 2018. He previously served as our Executive Vice President & Chief Commercial Officer, overseeing strategy, marketing and sales from October 2012 through November 2018. Prior to joining CyrusOne, Mr. Durvasula served as the Chief Marketing and Business Officer of Quality Technology Services ("QTS") from March 2010 through April 2012. Prior to QTS, he was a co-founder and Chief Operating Officer of NYC-Connect, a privately-held interconnection business that was sold to Digital Realty Trust, Inc. and Telx in 2007. Following that sale, Mr. Durvasula served as the Chief Marketing Officer at Telx until August 2009. Prior to NYC-Connect, Mr. Durvasula served as Vice President of Internet Services Division at AboveNet, Inc.

Diane M. Morefield

Executive Vice President &
Chief Financial Officer

Education:

BS - University of Illinois

MBA -University of Chicago

Diane M. Morefield has served as our Executive Vice President & Chief Financial Officer since November 2016. Prior to joining CyrusOne, from 2010 until 2015, Ms. Morefield served as the Executive Vice President & Chief Financial Officer of Strategic Hotels & Resorts, a NYSE-listed REIT, where she was responsible for the company's accounting, finance, capital markets, tax, investor relations and IT. Ms. Morefield was also a member of Strategic Hotels' Executive Management Committee that oversaw the strategy and investment activity for the company. Prior to joining Strategic Hotels, Ms. Morefield served in a variety of financial, operating and investor relations roles for leading real estate organizations. From 2007 to 2009, Ms. Morefield was the Chief Financial Officer of Equity International, a private equity firm controlled by Sam Zell, which invests in international real estate companies. From 1997 to 2006, Ms. Morefield was a senior officer with Equity Office Properties Trust ("EOP"), a publicly traded REIT, where she served as Regional Senior Vice President for EOP's Midwest region. Previously, Ms. Morefield was Senior Vice President-Investor Relations at EOP, and was responsible for all investor and public relations. Ms. Morefield is a CPA. Ms. Morefield is a director and chair of the nominating and governance committee of Copart Inc. and previously served as a director and chair of the audit committee of Spirit Realty Capital, a triple-net lease REIT listed on the NYSE.

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Executive Officers

Kevin L. Timmons

Executive Vice President &
Chief Technology Officer

Education:

BS - University of Illinois

Kevin L. Timmons has served as our Executive Vice President & Chief Technology Officer since October 2011. Prior to joining CyrusOne, Mr. Timmons led Microsoft's global data center team as General Manager, Data Center Services from 2009 to 2011. Prior to that, Mr. Timmons held several positions between 1999 and 2009 within the operations team at Yahoo! Inc. Mr. Timmons originally joined Yahoo! via the GeoCities acquisition in 1999 as Director of Operations, he was then promoted to Senior Director in 2000, and assumed the role of Vice President, Operations in 2006.

Robert M. Jackson

Executive Vice President, General Counsel & Secretary

Education:

BS - Indiana University

JD - University of
Missouri-Kansas City

LLM -University of Florida

Robert M. Jackson has served as our Executive Vice President, General Counsel & Secretary since August 2015. Prior to joining CyrusOne, Mr. Jackson served as Executive Vice President & Chief Administrative Officer of Storage Post, a privately held owner and operator of self-storage facilities, from April 2014 to July 2015, where he was responsible for legal, accounting, human resources and risk management. Prior to that, from December 2004 to September 2012, Mr. Jackson was Senior Vice President, General Counsel & Corporate Secretary of Cousins Properties Incorporated, a NYSE-listed REIT, where he was responsible for legal, human resources, information technology and risk management. Mr. Jackson was previously a partner at Troutman Sanders LLP, an international law firm headquartered in Atlanta, Georgia.

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Corporate Governance

Corporate Governance

Notable features of our corporate governance structure include the following:

the Board of Directors is not classified; instead, each of our directors is subject to election annually

as a condition to being nominated, each director nominee must agree to offer to resign if he or she receives a greater number of votes "withheld" than votes "for" his or her election as a director in an uncontested election

each current director is "independent" within the meaning of the NASDAQ listing standards

the Board has a mandatory retirement age (72)

the Board has separated the positions of Chairman and Chief Executive Officer ("CEO"), with an independent director serving as Chairman (as well as Lead Independent Director)

we have opted out of the control share acquisition statute of the Maryland General Corporation Law

we have no stockholder rights plan in effect

our Bylaws may be amended by our stockholders by the affirmative vote of a majority of the votes entitled to be cast on the matter

our independent directors meet regularly in executive sessions without the presence of management

each of the members of the Audit Committee and Compensation Committee meet the applicable heightened independence standards of the federal securities laws and Nasdaq listing standards for service on those committees

each member of the Audit Committee qualifies as an "audit committee financial expert" as defined by SEC rules

Role of the Board in Risk Oversight

One of the key functions of the Board of Directors is informed oversight of our enterprise risk management process. The Board administers this oversight function directly, with support from other standing committees of the Board, each of which addresses risks specific to its respective areas of oversight. In particular, among other things, the Audit Committee has the responsibility to consider and discuss our major financial and regulatory risk exposures (including cybersecurity) and the steps our management has taken to identify, assess, monitor and mitigate these exposures, including the process by which risk assessment and management is undertaken. The Audit Committee also reviews and evaluates the performance of our internal audit function and the system of internal controls and the results of internal audits as well as oversees and monitors compliance with the Company's policy on related party transactions, our executives' compliance with the Company's code of business conduct and ethics, and the Company's ethics and compliance reporting helpline. The Compensation Committee oversees succession planning for our executive officers and assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking. The Nominating and Corporate Governance Committee monitors the effectiveness of our corporate governance guidelines and the Company's compliance with applicable corporate governance requirements. The Transaction Committee assists the Board with its oversight function in reviewing strategic transactions and capital allocations that arise between regularly scheduled Board meetings, as delegated by the Board.

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Corporate Governance

Board Leadership

The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight of management. The Board understands that there is no single, generally accepted approach to providing Board leadership and the right Board leadership structure may vary as circumstances warrant. Consistent with this understanding, the Board of Directors considers its leadership structure on an annual basis.

The Board of Directors may designate a chairman of the Board, who may or may not be an executive chairman. Since June 2014, Alex Shumate, an independent director, has served as our Chairman of the Board of Directors. Based on its most recent review of our leadership structure and the needs of the Company, the Board continues to believe that having Mr. Shumate serving in this position is optimal because it provides our Company with strong, effective and consistent leadership. Furthermore, our corporate governance guidelines provide that it is the Board's general policy that the positions of Chairman of the Board and CEO should be separate persons as an aid to the Board's oversight of management. The corporate governance guidelines also require a lead independent director, which since June 2014 has been Mr. Shumate.

In considering its leadership structure, the Board has taken a number of factors into account. The Board consists solely of independent directors and exercises a strong, self-governing oversight function. Further, each committee is comprised entirely of independent directors, enhancing the Board's oversight function. A number of Board and committee processes and procedures, including regular executive sessions of independent directors and a regular review of our executive officers' performance, provide substantial independent oversight of our management's performance. Finally, under our Bylaws and corporate governance guidelines, the Board has the ability to change this structure, should it deem doing so to be appropriate and in the best interests of our Company. The Board believes that these factors currently provide the appropriate balance between the independent authority of those who oversee our Company and those who manage it on a day-to-day basis.

The Chairman of the Board presides at all meetings of the Board of Directors, unless otherwise prescribed. The Chairman performs such other duties, and exercises such powers, as from time to time shall be prescribed in our Bylaws or by the Board of Directors.

Director Independence

In accordance with the corporate governance listing standards of Nasdaq and our corporate governance guidelines, the Board, upon the recommendation of the Nominating and Corporate Governance Committee, affirmatively evaluates and determines the independence of each director and each nominee for election. Based on an analysis of information supplied by the directors, and other information including the matters set forth in "Certain Relationships and Related Transactions," the Board evaluates whether any director has any relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Based on these standards, the Board affirmatively determined that each of the following directors is independent: Alex Shumate, David H. Ferdman, John W. Gamble, Jr., Michael A. Klayko, T. Tod Nielsen, William E. Sullivan and Lynn A. Wentworth. In determining Mr. Klayko's independence, the Board has considered the Company's employment of Mr. Klayko's son-in-law as an account director in the Company's sales organization and determined that such employment did not interfere with the exercise of independent judgment by Mr. Klayko in carrying out his responsibilities as a director of the Company. Mr. Klayko's son-in-law is not an officer of the Company and his employment was reviewed and approved by the Audit Committee of the Board pursuant to the Company's Policy on Related Party Transactions. For 2019, Mr. Klayko's son-in-law's compensation was approximately $251,000 and this relationship is disclosed below in "Certain Relationships and Related Transactions – Review and Approval of Transactions with Related Persons".

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Corporate Governance

Board Meetings

In 2019, the Board of Directors held 16 meetings, the Audit Committee held 6 meetings, the Compensation Committee held 7 meetings, and the Nominating and Corporate Governance Committee held 4 meetings. The Transaction Committee held 10 meetings and the Executive Committee did not meet during 2019. Each director attended over 75% of the aggregate of the total number of meetings of the Board and his or her respective committee(s) in 2019, in each case during the periods which he or she served.

Although we do not have a policy requiring directors' attendance at annual meetings of stockholders, they are expected to do so. Each of our directors attended our 2019 annual meeting of stockholders.

The Board of Directors and the committees regularly meet in executive session without management present and, prior to the departure of Mr. Wojtaszek, met regularly in independent sessions without management or non-independent directors present. Generally, these executive sessions follow after each quarterly meeting of the Board and each committee. Alex Shumate, our Chairman and lead independent director, presides over such independent, non-management sessions of the Board. In 2019, the independent directors met at least four times in such independent sessions. As deemed necessary, directors also discuss matters informally between Board and committee meetings.

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Corporate Governance

Board Committees

  Audit Committee
  The Audit Committee helps ensure the integrity of our accounting and financial reporting processes and our financial statements, the qualifications and independence of our independent auditor, the performance of our internal audit function and independent auditors, as well as our compliance with legal and regulatory requirements and our overall risk profile. The Audit Committee selects, approves compensation of, assists and meets with the independent auditor, oversees each annual audit and quarterly review, discusses with management disclosures relating to our internal controls over financial reporting and prepares the report that federal securities laws require be included in our annual proxy statement.   Members:

Ms. Wentworth (chair)*

Mr. Gamble*

Mr. Sullivan*

*Audit Committee

Financial Expert

 
         
  Compensation Committee
  The Compensation Committee evaluates and approves the compensation and benefits of our executive officers, administers and makes recommendations to our Board of Directors regarding our base compensation and short- and long-term incentive compensation, oversees CEO and management performance and succession planning, and produces an annual report on executive compensation for inclusion in our proxy statement.   Members:

Mr. Nielsen (chair)

Mr. Klayko

Ms. Wentworth

 
         
  Nominating and Corporate Governance Committee
  The Nominating and Corporate Governance Committee oversees an annual evaluation of our Board of Directors and its committees, develops and recommends to our Board of Directors a set of corporate governance guidelines, a code of business conduct and ethics and related policies and periodically reviews and recommends updates and changes to the Board of Directors, monitors our compliance with applicable corporate governance requirements and the rules and regulations of Nasdaq, establishes criteria for prospective members of our Board of Directors, conducts candidate searches and interviews and recommends individuals to fill vacant director and committee positions to our Board of Directors.   Members:

Mr. Sullivan (chair)

Mr. Klayko

Mr. Shumate

 
         
  Transaction Committee
  The Transaction Committee has the authority to assist our Board of Directors in fulfilling its oversight responsibility with the review, and to the extent so delegated approval, of strategic transactions or capital investments that may arise between regularly scheduled meetings of the Board.   Members:

Mr. Klayko (chair)

Mr. Ferdman

Ms. Wentworth

 
         
  Executive Committee
  The Executive Committee has the authority and power to exercise all duties of the Board between meetings, except as prohibited by law, when urgent action is required and such other functions which from time to time may be assigned to it by the Board. The Executive Committee is responsible for reporting to the full Board at its next regular meeting all actions taken or items discussed at any Executive Committee meetings.   Members:

Mr. Shumate (chair)

Ms. Wentworth

 

Each of the committees, other than the Executive Committee, operates pursuant to a written charter which is available on our website at www.cyrusone.com in the "Corporate Governance" section.

Under our corporate governance guidelines, the composition of each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee must comply with applicable Nasdaq listing standards and SEC rules. Our corporate governance guidelines define "independent director" by reference to applicable rules and regulations of the SEC and listing standards of Nasdaq, which generally deem a director to be independent if the director has no relationship that may interfere with the exercise of independent judgment in carrying out such director's responsibilities, and which further impose heightened requirements of independence for members of the Audit and Compensation Committees.

Each of our committees consists entirely of independent directors, and each of the members of the Audit Committee and the Compensation Committee meet applicable heightened requirements for service on such committees.

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Corporate Governance

Board and Committee Evaluations

The Board and each of its committees perform an annual performance evaluation, with each director performing a self-evaluation of his or her Board and committee experiences. The Nominating and Corporate Governance Committee oversees the annual performance evaluation process and considers various methods of performing the same. For 2019, the self-evaluations were conducted through questionnaires prepared by the Corporate Secretary. Generally, the evaluation process described below is managed by the Corporate Secretary's office with oversight by the Nominating and Corporate Governance Committee to ensure the process remains as thorough and transparent as possible. The annual evaluation includes a review of each Committee's charter.

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Nomination of Directors

Before each annual meeting of stockholders, the Nominating and Corporate Governance Committee considers the nomination of all incumbent directors, and also considers new candidates whenever there is a vacancy on the Board or whenever a vacancy is anticipated due to a change in the size or composition of the Board, a retirement of a director or for any other reason. In addition to considering incumbent directors, the Committee may identify director candidates based on recommendations from any qualified individual or group, including, but not limited to, stockholders, the incumbent directors and members of management. The Committee has, and may in the future, engage the services of third-party search firms to assist in identifying or evaluating director candidates.

The Committee evaluates annually the effectiveness of the Board as a whole, its committees, and of each individual director and identifies any areas in which the Board would be better served by adding new members with different skills, backgrounds or areas of experience.

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Corporate Governance

The Board of Directors considers director candidates based on a number of attributes, including:

Established leadership reputation in his/her field

Reputation for good business judgment

Active in business or academia

Knowledge of business on a national/global basis

Meets high ethical standards

Commitment to regular Board/committee meeting attendance

Familiarity with data center facilities and operations

Whether the candidate would contribute to Board's diversity of experience, profession, expertise, skills and background (including with respect to race and gender)

Candidates also are evaluated based on their understanding of our business and willingness to devote adequate time to carrying out their duties. The Committee also monitors the mix of skills, experience and background to assure that the Board has the necessary composition to effectively perform its oversight function. As listed above, diversity characteristics of the Board as a whole and of a particular candidate are one of several factors considered by the Committee when evaluating director candidates. However, a candidate will neither be included nor excluded from consideration solely based on his or her diversity traits. The Committee conducts regular reviews of current directors in light of the considerations described above and their past contributions to the Board of Directors.

The Committee will consider appropriate director candidates recommended by a stockholder, evaluating such candidates on the same basis as any other candidate. We did not receive any recommendations of director candidates or director nominations by stockholders for the 2020 annual meeting.

Recommendations for nominations should be addressed to CyrusOne Inc., 2850 N Harwood Street, Suite 2200, Dallas, Texas 75201, Attention: Corporate Secretary, indicating the candidate's qualifications and other relevant biographical information and providing confirmation of the candidate's consent to serve as a director, if elected. Stockholders may also nominate qualified individuals for election to the Board by complying with the advance notice and other requirements of our current Bylaws regarding director nominations. These requirements are also described under "Stockholder Proposals."

Majority Voting Resignation Policy for Election of Directors

Our corporate governance guidelines provide that, as a condition to nomination, each director will agree to offer to resign if at a meeting of the stockholders relating to an uncontested election, the director receives a greater number of votes "withheld" than votes "for" such election. The Nominating and Corporate Governance Committee will consider the offer and recommend to the Board whether to accept or reject the offer to resign within 60 days following the certification of the stockholder vote. No later than 90 days following the certification of the stockholder vote, the Board will decide whether to accept the offer to resign. Any director who offers to resign is prohibited from participating in the Nominating and Corporate Governance Committee's deliberations or recommendation, or in the Board's deliberations and determination, regarding whether to accept his or her offer of resignation.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee has been an officer or employee of the Company. None of our executive officers serves on the board of directors or compensation committee of a company that has an executive officer that serves on our Board of Directors or the Compensation Committee.

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Corporate Governance

Corporate Governance Materials Available on Website

We have adopted corporate governance guidelines and a code of business conduct and ethics that applies to all of our executive officers and employees, and each member of the Board of Directors. We anticipate that any amendments or waivers of our code of business conduct and ethics will be posted on our website. The following documents are available on our website at www.cyrusone.com in the "Corporate Governance" area of the "Investors" tab:

Corporate Governance Guidelines

 

Compensation Committee Charter

Code of Business Conduct and Ethics

 

Nominating and Corporate Governance Committee Charter

Audit Committee Charter

 

Transaction Committee Charter

Copies of the documents listed above are also available in print to any stockholder who requests them. Requests should be sent to CyrusOne Inc., 2850 N Harwood Street, Suite 2200, Dallas, Texas 75201, Attention: Corporate Secretary.

Contacting the Board of Directors

Any party may contact the Board of Directors, any committee of the Board, the independent directors as a group, or any individual director(s), via mail at the address listed below.

The Audit Committee has adopted a process for anyone to send communications to the Audit Committee with concerns or complaints concerning our Company's regulatory compliance, accounting, audit or internal controls. Any party may contact the Audit Committee via mail or email at the address listed below:

Alternatively, anyone may call our toll-free ethics and compliance helpline at 1-844-348-5823 or visit www.cyrusone.ethicspoint.com.

Relevant communications are distributed to the Board, or to any individual director or directors, as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the Board of Directors has requested that certain items unrelated to the duties and responsibilities of the Board should be excluded or redirected, as appropriate, such as: business solicitations or advertisements; junk mail and mass mailings; resumes and other forms of job inquiries; spam; and surveys.

In addition, material that is unduly hostile, threatening, potentially illegal or similarly unsuitable will be excluded.

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Board Compensation for 2019

Board Compensation for 2019

We use a combination of cash and equity compensation to attract and retain qualified candidates to serve on the Board. The Compensation Committee periodically reviews non-employee director compensation with the advice of its independent compensation consultant and makes recommendations to the Board for any changes it considers appropriate. There were no changes to our director compensation program in 2019.

Non-Employee Director Compensation Program

2019 Compensation Component

Amount

ANNUAL BOARD RETAINER:

 

Cash

$ 75,000

Equity (restricted stock with 1-year vesting requirement)

$ 125,000

CHAIRPERSON RETAINERS:

 

Independent Chairperson of the Board

$ 100,000

Audit Committee Chair

$ 25,000

Compensation Committee Chair

$ 20,000

Nominating and Corporate Governance Committee & Transaction Committee Chairs

$ 15,000

COMMITTEE MEMBER RETAINERS:

 

Audit Committee Member

$ 10,000

Compensation Committee Member

$ 10,000

Nominating and Corporate Governance Committee & Transaction Committee Members

$ 7,500

PER-MEETING FEES

$

BOARD COMPOSITION:

 

Number of Board Members(1)

8

Number of Independent Members

7

Independent Chairperson of the Board

Yes

BOARD STOCK OWNERSHIP POLICIES:

 

Director Stock Ownership Guidelines

5x Annual Cash Retainer

Pledging and Hedging

Prohibited
(1)
Effective February 20, 2020, Mr. Wojtaszek stepped down as a director and President and CEO and the size of the Board was reduced to 7.

Our non-employee directors have five years from the time they are elected to meet the minimum stock ownership requirements. As of December 31, 2019, each of our non-employee directors has met the minimum requirements for stock ownership. Directors are also covered by our written policy that prohibits hedging and pledging of Company securities, as described under "Other Compensation-Related Policies" of this proxy statement.

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Board Compensation for 2019

The following table summarizes the compensation that we paid to our non-employee directors in 2019. Mr. Wojtaszek's compensation for 2019 is disclosed in the Summary Compensation Table, and he did not receive any additional compensation for his service as a director.


2019 Director Compensation Table

Name
  Fees Earned or
Paid in Cash
($)


  Stock
Awards
($)(1)


  Total
($)


Alex Shumate

  182,500   125,012   307,512

William E. Sullivan

  100,000   125,012   225,012

Lynn A. Wentworth

  117,500   125,012   242,512

T. Tod Nielsen

  95,000   125,012   220,012

John W. Gamble, Jr.

  85,000   125,012   210,012

David H. Ferdman

  82,500   125,012   207,512

Michael A. Klayko

  107,500   125,012   232,512
(1)
Reflects the aggregate grant date fair value of the restricted stock awards granted in 2019, determined in accordance with Financial Accounting Standards Board ASC Topic 718 Stock Compensation (FASB ASC 718). The assumptions used in the calculation of the grant date fair value are set forth in Note 17 to the financial statements in our annual report on Form 10-K filed with the SEC on February 20, 2020.

As of December 31, 2019, each of our non-employee directors held 2,383 shares of unvested restricted stock and no stock options.

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Executive Compensation

Executive Compensation

Compensation Discussion and Analysis

The Compensation Committee is responsible for the Company's executive compensation philosophy and policies, as well as the annual executive compensation program that flows from them. This section of the Proxy Statement contains a detailed explanation of the compensation arrangements for our NEOs for 2019.

    CyrusOne's Named Executive Officers for 2019
  Gary J. Wojtaszek(1)
President & Chief Executive Officer
 
  Diane M. Morefield
Executive Vice President & Chief Financial
Officer
 
  Venkatesh S. Durvasula(1)
Executive Vice President & President, Europe
 
  Kevin L. Timmons
Executive Vice President & Chief Technology
Officer
 
  Robert M. Jackson
Executive Vice President, General Counsel &
Secretary
(1)
As previously disclosed, effective February 20, 2020, Mr. Wojtaszek stepped down as President & CEO and Mr. Durvasula was elected President & CEO on an interim basis.

Table of Contents

Executive Summary   26

How We Make Compensation Decisions

 

28

Role of the Compensation Committee

  28

Use of Judgment

  28

Role of Compensation Consultant

  28

Use of Data

  29

Peer Groups

  29

Stockholder Engagement and Say-on-Pay Vote

  30

2019 Executive Compensation Components

 

31

Base Salary

  31

Annual Incentive

  32

Long-Term Incentives

  34

Other Elements of Compensation

  36

Other Compensation-Related Policies

  37

Employment Agreements

  38

Compensation Committee Analysis of Risk

 

38
Developments in Early 2020   38

2020 Compensation Decisions

 

39

Compensation Committee Report

 

41

Executive Compensation Tables

 

42

Executive Summary

Our long-term success depends on our ability to attract, motivate, focus and retain highly talented individuals who are committed to our vision and strategy. A key objective of our executive compensation program is to create an ownership culture that aligns pay to performance that advances our business strategies and overall stockholder value creation. Other objectives include encouraging high-performing executives to remain with us over the course of their careers. We believe that the amount of compensation for each of our NEOs reflects extensive management experience, continued high performance and exceptional service to CyrusOne. We also believe that our compensation strategies have been effective in attracting executive talent and promoting performance and retention.

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Executive Compensation

Compensation Objectives and Governance Highlights

Our fundamental objective is to be outstanding stewards of our stockholders' capital by creating value on a consistent, long-term basis. Our compensation philosophy is to incentivize thoughtful capital allocation and value creation for our stockholders by attracting and retaining talented executives with competitive pay packages intended to cultivate an ownership culture, to align the compensation for our executive officers with sustainable, consistent, balanced growth and to achieve specific short- and long-term goals set by the Compensation Committee. We use a combination of compensation programs to incent our executive officers to achieve growth and value creation over the short- and long-term. We supplement our pay for performance program with a number of compensation polices intended to encourage an ownership culture and align the interests of management with those of our stockholders. These include:

DESIGN PRINCIPLES
  WHAT WE DO:     WHAT WE DON'T DO:
    We link pay to performance; we reward our NEOs based upon the value they create       We do not target pay based on the market median but rather use it as an initial reference point
    The vast majority of NEO pay is variable, based on performance       We do not encourage unnecessary or excessive risk taking as a result of our compensation policies
    We set rigorous and measurable performance goals at the beginning of the performance period across our annual incentive and long-term incentive plans, placing significant emphasis on multi-year, total stockholder return performance       We do not guarantee incentive compensation under our annual cash bonus or long-term incentive plan
    We compensate fairly and competitively, but not excessively       We do not have uncapped bonus amounts under our incentive plans.


GOVERNANCE PRACTICES
  WHAT WE DO:     WHAT WE DON'T DO:
    We have robust stock ownership guidelines for our CEO (6x base salary) and directors (5x cash retainer)       We do not provide NEOs with tax gross-ups on executive or severance benefits, including upon a change in control
    We maintain a clawback policy whereby we can recoup incentive compensation in the event of certain financial restatements       We do not re-price outstanding stock options, whether vested or unvested
    We prohibit pledging and hedging of our common stock       We do not pay dividends on unvested performance awards – rather, such amounts are paid only if and to the extent that the applicable performance targets are in fact met
    The Compensation Committee retains an independent compensation consultant.       We do not provide separate benefit plans for our NEOs; our NEOs participate in the same benefit plans available to salaried employees
    We perform an annual compensation risk assessment       We do not provide pension benefits or supplemental retirement plans
    We engage with our stockholders on compensation and governance matters       We do not provide excessive perquisites to our NEOs

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Alignment of Pay with Performance

Our executive compensation program provides significant alignment between pay and performance by linking a meaningful portion of our NEOs' compensation to the achievement of pre-established financial and strategic goals under our annual incentive bonus program and the Company's relative total shareholder return ("TSR") under our long-term incentive grants. The following charts present the allocation of total pay among different components for our CEO and for our other NEOs as a group, in 2019, as set forth in the 2019 Summary Compensation Table, excluding amounts shown in the "All Other Compensation" column.

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How We Make Compensation Decisions

Role of the Compensation Committee

All compensation for the NEOs (including the CEO) is set by the Compensation Committee annually. The Committee also determines measurements and targets, and performance relative to them, under our annual and long-term incentive plans. Individual base salaries, along with annual and long-term incentive targets, are determined by the Committee after taking into consideration a number of internal and external factors, including the external marketplace and peer group data, the executive's position and responsibility, the demand for executive talent in the marketplace, the Company's performance, and the individual's performance and future potential. The Committee also considers the CEO's self-performance evaluation when setting the CEO's compensation and, with respect to each of the other NEOs, the CEO's recommendations based on his assessment of their individual performance.

Use of Judgment

The Compensation Committee believes that the application of its collective experiences and judgment is as important to excellence in compensation as the use of data and formulae while market data provides an important tool for analysis and decision-making, the Committee believes that over-reliance on data can give a false illusion of precision. Consequently, the Committee also gives consideration and emphasis to an individual's personal contributions to the organization, as well as his or her skill set, qualifications and experience. The Committee also values and seeks to reward performance that develops talent within the Company, embraces the sense of urgency that we believe distinguishes the Company and demonstrates the qualities of imagination and drive that enables a Company executive to resolve longer-term challenges and address important new issues. The Committee believes these and similar qualities and attributes are not easily correlated to typical compensation data, but also deserve consideration and weight in reaching compensation decisions.

Role of Compensation Consultant

Since 2017, the Compensation Committee has engaged FPL Associates, L.P. ("FPL") to assist it in the performance of its duties and to make recommendations to the Committee with respect to NEO and director compensation. FPL assisted the Committee in development of the peer group framework for

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2019 and advised the Committee on the 2019 base salaries, target bonuses and long-term incentive ("LTI") awards for our NEOs. The Committee also worked with FPL to conduct a competitive market assessment of the compensation elements for each of our executive officers and the design of our annual incentive plan and long-term incentive awards, compared to our peer groups. FPL did not perform any other work for the Company in 2019.

In connection with the engagement of FPL, the Committee conducts an annual evaluation of the independence of FPL and its individual consultants, which includes reviewing information from FPL and the Company's directors and executive officers addressing any potential conflicts of interest. For 2019, as with prior years, the Committee concluded that FPL and its individual consultants are independent and that their work did not raise any conflicts of interest.

Use of Data

The Compensation Committee believes that data plays an important role in the design and implementation of optimal compensation programs, and considers a number of types of internal and external data in making both individual and plan-level compensation decisions. In particular, the Committee uses peer groups to maintain an awareness of market data and pay practices, but considers various factors – each as discussed in greater detail below in this Compensation Discussion and Analysis – and does not target any element of compensation at a particular percentile or percentile range of the peer group data. Rather, the Committee uses data and the market median as an initial reference point and to aid its judgment in its decision-making process.

Peer Groups

The Compensation Committee evaluates the members of our peer group and the use of peer data each year to ensure that they continue to be appropriate. In the second half of 2017, after considering feedback from our stockholders received as part of our outreach efforts, the Compensation Committee, with the assistance of FPL, determined to revise our compensation peer groups to take into account our size and our complex business model. Based on a review of market data, with the assistance of FPL, the Compensation Committee determined to use two peer groups for reference points in evaluating and determining compensation, an approach it continued to use in 2019:

a size-based peer group, comprised of high growth REITs of similar size (0.5x to 2x of our total capitalization) and asset focus (such as data center/industrial or specialty); and

a technology real estate peer group.

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The table below identifies the companies in each of these peer groups:


SIZE-BASED REIT PEER GROUP

Alexandria Real Estate Equities, Inc.*   First Industrial Realty Trust, Inc.*   Liberty Property Trust*

American Campus Communities, Inc.*

 

Gramercy Property Trust*

 

Medical Properties Trust, Inc.*

Camden Property Trust*

 

Healthcare Trust of America, Inc.*

 

STAG Industrial, Inc.*

CubeSmart

 

Hudson Pacific Properties, Inc.*

 

STORE Capital Corporation*

DCT Industrial Trust Inc.*

 

Invitation Homes Inc.*

 

Sun Communities, Inc.*

Duke Realty Corporation*

 

Iron Mountain Incorporated*

 

 

 


TECHNOLOGY REAL ESTATE PEER GROUP

American Tower Corporation*   Equinix, Inc.*   Uniti Group Inc.*

CoreSite Realty Corporation*

 

QTS Realty Trust, Inc.*

 

Zayo Group Holdings Inc.*

Crown Castle International Corp.*

 

SBA Communications Corporation*

 

 

Digital Realty Trust, Inc.*

 

Switch, Inc.

 

 

*Included in prior year Peer Group

Stockholder Engagement & Say-on-Pay Vote

We continue to maintain an active dialogue with our stockholders regarding our executive compensation program. Since 2017, our Board, primarily through the Compensation Committee, has held individual meetings with stockholders who collectively owned approximately 60% of our outstanding stock. We remain committed to listening to feedback from our stockholders and will continue to actively engage with our investors to solicit feedback on our executive compensation program and governance practices generally. At our 2019 annual meeting, approximately 86.5% of the votes cast were in favor of the Company's executive compensation for fiscal 2018. We hold annual Say-on-Pay votes.

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2019 Executive Compensation Components

    Component   Objective   Key features
Fixed compensation

Base Salary   To provide salary levels sufficient to attract and retain NEOs.  

Fixed cash salary that is both market-derived and market-driven.

Adjustments considered yearly based on performance, market data and other factors described below.

     
Variable compensation

Annual Incentive Bonus   To encourage NEOs to pursue annual goals that will benefit the Company and stockholders in both the short- and long-term.  

80% of our annual cash bonus awards are tied to achievement of financial goals-30% is tied to revenue and 50% is tied to Normalized FFO.

20% of our annual cash bonus awards are tied to individual performance.

     
  Long-Term Incentive*   To promote NEO retention and to create an ownership culture that closely aligns the interests of the NEOs with those of our stockholders.  

75% of our LTI awards consist of a performance-based restricted stock unit component, which vests over a three-year period contingent upon achievement of relative TSR goals.

25% of our LTI awards consist of a time-based restricted stock unit component, which vests ratably over three years.

     

*As discussed below in "2020 Compensation Decisions," the Committee implemented certain design changes effective with the 2020 LTI grants, including the addition of a second TSR metric and the elimination of the annual vesting feature for performance awards.

Base Salary

Policy and Process. Base salary, which under our compensation program is market-derived and market-driven, represents the fixed component of our executive officer compensation program paid in cash. The main purpose of base salary compensation is to provide cash compensation levels sufficient to attract and retain executive officers. Because one of the primary objectives of our executive compensation program in to instill an ownership mentality base salary is targeted to be approximately 10% to 30% or less of total target annual compensation opportunity for each of the NEOs. The actual percentages will vary from year to year based on each NEO's performance, as well as the Company's performance, within

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that year. On an annual basis, the Compensation Committee reviews the base salary of each of the NEOs and considers adjustments to executive officer base salaries based primarily on the individual's performance, but also taking into account the base salary paid to similarly situated executives of the peer group companies and other factors such as Company performance.

2019 Base Salaries. The table below summarizes the base salaries approved for each of our NEOs for 2019.

    2019
Base Salary
($)
    2018
Base Salary
($)
    2019 vs. 2018
Change
(%)
 

Mr. Wojtaszek

    800,000     800,000      

Ms. Morefield

    475,000     475,000      

Mr. Durvasula(1)

    550,000     475,000     16%  

Mr. Timmons(2)

    475,000     425,000     12%  

Mr. Jackson

    352,000     352,000      
(1)
Effective December 1, 2018, Mr. Durvasula received a base salary increase to $550,000 in connection with his promotion to Executive Vice President and President, Europe.

(2)
Effective April 1, 2019, Mr. Timmons received a base salary increase to $475,000 in connection with enhanced responsibility for construction, design and operations oversight.

Annual Incentive Bonus Opportunity

Policy and Process. Our annual incentive bonus awards are designed to encourage our executive officers to pursue annual goals that will inure to the benefit of our Company and stockholders in both the short- and long-term. Annual incentive bonus award opportunities are intended to reward NEOs whose contributions improve the operational performance of our existing portfolio and the Company, enhance short-term strategic goals and generate new business opportunities and investments, all of which are intended to create stockholder value over the long-term.

Each of our NEOs participated in our annual incentive bonus plan for 2019, pursuant to which each NEO had an opportunity to earn additional cash compensation based on achievement of pre-established financial goals (weighted 80%) and individual performance (weighted 20%).

The Compensation Committee reviewed the bonus targets, as a percentage of base salary, of our NEOs in February 2019 as part of its annual compensation review and determined no adjustments were necessary for 2019. The annual incentive target remained 175% of base salary for our CEO and 100% of base salary for other NEOs.

The table below depicts the annual incentive bonus opportunity for each NEO for 2019:

Name

    Threshold
(25% of Target)
($)
    Target
($)
    Maximum
(200% of Target)
($)
 

Mr. Wojtaszek

    350,000     1,400,000     2,800,000  

Ms. Morefield

    118,750     475,000     950,000  

Mr. Durvasula

    137,500     550,000     1,100,000  

Mr. Timmons

    118,750     475,000     950,000  

Mr. Jackson

    88,000     352,000     704,000  

Amounts in the table above assume annualized 2019 base salary rates. Each NEO's actual bonus is calculated using actual salary earned for 2019, as reported in the Salary Column of the 2019 Summary Compensation Table.

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Financial Goals. The following graphs show the threshold, target, maximum and actual performance levels for each financial component of the 2019 bonus opportunities for our NEOs, in millions:

Revenue: The Compensation Committee considers revenue to be an important indicator of financial performance. It also is a metric typically evaluated by investors and analysts and is used by many of our peers to evaluate performance. The revenue target established for 2019 was approximately 19% higher than the actual revenue for 2018 ($975.0M vs. $821.4M). Actual revenue for 2019 was $981.3 million.   Revenue (30%)              

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Normalized FFO(1): The Compensation Committee considers Normalized Funds From Operations ("Normalized FFO" or "NFFO"), to be an important indicator of the Company's overall financial performance. It also is a metric typically used by investors and analysts, as well as many of our peers, to evaluate performance. The Normalized FFO target established for 2019 was approximately 9% higher than the actual Normalized FFO results for 2018 ($361.2M vs. $332.3M). Actual Normalized FFO for 2019 was $409.0 million.

 

NFFO (50%)              

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(1)   Normalized FFO is a non-GAAP financial measure calculated from the Company's financial statements as set forth in Appendix A.

 

 

In determining payouts, the following sliding scale is applied to the financial performance targets, with data between points interpolated on a straight-line basis.

Performance Percentage of Target

    Payout Percentage  

<80%

    0%  

80%

    25%  

90%

    50%  

100%

    100%  

115%

    200%  

Based on this, the Company's performance relative to the financial goals resulted in a weighted payout of 145.2% of target on the financial component, which accounts for 80% of each NEO's bonus.

Individual Performance. The remaining 20% of each NEO's bonus is based on individual performance. For 2019, the Committee determined to pay the individual component at 200% of target for each NEO. This determination was based on each NEO's contributions and accomplishments during the year, including the following:

extraordinary performance relative to our annual bonus plan notwithstanding evolving market dynamics and aggressive actions to right-size the Company's cost structure;

outperformance of European expansion plans, with sales bookings contributing to overall Company performance well ahead of original underwriting;

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achievement of second investment grade rating, a milestone achievement for the Company and central to our long-term strategy; and

continued successful development of multiple layers of leadership in the Company, creating a deep bench of talent to leverage opportunistically and as part of a well-developed comprehensive succession plan.

2019 Annual Incentive Bonus Payouts. The following table sets forth the award earned by each NEO under the 2019 annual incentive bonus plan (and, for reference, under the 2018 annual incentive bonus plan):

    2019     2018  

Name

    ($)     % of
Target(1)
    ($)     % of
Target(1)
 

Mr. Wojtaszek

    2,312,800     165.2 %   1,683,101     120.2  

Ms. Morefield

    784,700     165.2 %   610,147     131.7  

Mr. Durvasula

    908,600     165.2 %   527,117     111.7  

Mr. Timmons

    760,873     165.2 %   468,071     111.7  

Mr. Jackson

    581,504     165.2 %   453,686     131.7  
(1)
Bonus and % of Target are based on actual salary earned during the fiscal year as presented in the Summary Compensation Table.

Long-Term Incentives

Policy and Purpose. The third component of NEO compensation is targeted toward providing rewards for long-term stockholder value creation. We believe that outstanding long-term performance is achieved through an ownership culture that encourages a focus on long-term stockholder value creation by our executive officers through the use of equity-based awards. Accordingly, at the target level, long-term incentive awards constitute the highest targeted percentage of any of the compensation components paid to each of our NEOs.

2019 LTI Awards. The LTI awards granted to our NEOs in 2019 consisted of a performance-based restricted stock unit component (75%), which vests based upon achievement of specified TSR goals as compared to the MSCI US REIT Index over a three-year performance period (2019-2021), and a time-based restricted stock unit component (25%), which vests ratably over three years.   Long-Term Incentive Program

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In selecting relative TSR as the sole performance metric for the 2019 (and 2018) awards, the Compensation Committee considered relevant peer data as well as market practices. The Compensation Committee believes TSR is widely accepted by investors and demonstrates the strong alignment between executive pay and performance.

In determining 2019 LTI award values for our NEOs, the Compensation Committee considered the market and peer data provided by FPL, individual and Company performance in 2018, and the value of the other components that make up each NEO's target total direct compensation. Based on these considerations, the Compensation Committee increased the target dollar value of 2019 LTI awards by

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approximately 6% for Mr. Wojtaszek and by approximately 10% to 40% for Messrs. Durvasula and Jackson. In addition, to reflect Mr. Timmons's enhanced responsibility for construction, design and operations, he was awarded additional grants of time-based restricted stock units on April 1, 2019 and May 2, 2019, each of which vests ratably over three years.

The grant date fair value of the LTI awards to our NEOs made in 2019, as determined in accordance with FASB ASC 718, was:

    Total Target
LTI Award Value
($)
    Performance Share
Units
(at target)
($)(1)
    Time-Based
Restricted Stock
Units
($)
 

Mr. Wojtaszek

    3,978,260     2,840,717     1,137,543  

Ms. Morefield

    1,049,241     749,222     300,019  

Mr. Durvasula

    1,442,704     1,030,159     412,545  

Mr. Timmons

    1,349,231     749,222     600,009  

Mr. Jackson

    699,547     499,517     200,030  
(1)
Reflects FASB ASC 718 value. The number of units granted represents 75% of the total award.

LTI Payout Determinations

In February 2020, the Compensation Committee certified the performance results under outstanding performance awards granted in 2017, 2018 and 2019 based upon the performance period ending December 31, 2019, as described below. Our performance awards vest over a three-year period contingent upon TSR achievement relative to the MSCI US REIT Index for the applicable one, two and three-year performance period(s). However, even if our TSR achievement exceeds the index performance, if absolute TSR achievement is negative, then the vesting amount is reduced by 50%.

2017 LTI Performance Awards - Final Vesting Determination

The performance awards granted in 2017 vested in February 2020. These awards consisted of restricted stock units which vested over a three-year performance period ending in December 31, 2019 based upon achievement of TSR targets compared to the MSCI US REIT Index. Up to one-third of the total target award could be earned after each of the first year and first two years of the performance period if actual performance over such periods met or exceeded the target performance for such period. Actual TSR for 2017 awards for the 2019 performance period (the three years ending December 31, 2019) was 59.3%, which outperformed the MSCI US REIT Index by 32%, resulting in achievement at 200%. Actual shares that vested for each NEO as a result of 2019 performance are as follows: Mr. Wojtaszek-74,796; Ms. Morefield-17,660; Mr. Durvasula-18,700; Mr. Timmons-16,640; and Mr. Jackson-13,296. Additional information about the 2017 performance award is disclosed in the Outstanding Equity Awards at 2019 Fiscal Year End table.

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2017 Awards Performance:

Performance Measure

  Target   Maximum   Actual Cumulative Performance     Payout%(1)  

TSR(2)

  ³ Index   > 2.0% above Index   32.0% above Index     200.0%  
(1)
2019 is the third year for this performance award, in which up to 200% of the total target award may be earned (less any portion previously earned). TSR payout was based on the three-year performance period from January 1, 2017 through December 31, 2019.

For purposes of LTI awards, TSR is defined as (i) the trailing one-month average adjusted closing stock price at the end of the performance period minus the trailing one-month average adjusted closing stock price at the beginning of the performance period, divided by (ii) the trailing one-month average adjusted closing stock price at the beginning of the performance period.

2018 LTI Performance Awards

The performance awards granted in 2018 vest solely upon achievement of TSR targets compared to the MSCI US REIT Index. Up to one-third of the total target award can be earned after each of the first year and first two years of the performance period if actual performance over such periods meets or exceeds the target performance. Actual TSR for 2018 awards for the 2019 performance period (the two years ending December 31, 2019) was 14.9%, which underperformed the MSCI US REIT Index, resulting in achievement at 0%. The target and maximum number of shares that may be earned by the NEOs under the 2018 performance awards over the full three-year performance period are disclosed in the Grants of Plan-Based Awards Table for 2018 in our proxy statement for our 2019 annual meeting of stockholders.

2018 Awards Performance:

Performance Measure

  Target   Maximum   Actual Cumulative Performance(1)     Payout%  

TSR

  ³ Index   > 2.0% above Index   –4.0% below Index     0.0%  
(1)
Based on performance period of January 1, 2018 through December 31, 2019.

2019 LTI Performance Awards

The performance awards granted in 2019 vest solely upon achievement of TSR targets compared to the MSCI US REIT Index. Up to one-third of the total target award can be earned after each of the first year and first two years of the performance period if actual performance over such periods meets or exceeds the target performance. Actual TSR for 2019 awards for the 2019 performance period was 17.5%, which underperformed the MSCI US REIT Index, resulting in achievement at 0%. The target and maximum number of shares that may be earned by the NEOs under the 2019 performance awards over the full three-year performance period are disclosed in the Grants of Plan-Based Awards Table for 2019.

2019 Awards Performance:

Performance Measure

  Target   Maximum   Actual Cumulative Performance(1)     Payout%  

TSR

  ³ Index   > 2.0% above Index   –1.6% below Index     0.0%  
(1)
Based on performance period of January 1, 2019 through December 31, 2019.

Other Elements of Compensation

Retirement and Other Benefits

Benefits are established based upon a determination of what is needed to aid in attracting and retaining a talented and motivated work force. The Compensation Committee does not view benefits and

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perquisites for our NEOs as a key component of our executive compensation program. Our NEOs participate in benefit plans on the same terms as our other participating employees and their total value remains a negligible percentage of each executive officer's total compensation package.

We do not provide perquisites or other personal benefits to our NEOs that are not available to all employees of the Company other than offering an annual physical to certain of our executives and their spouses. In addition, in connection with his appointment as President, Europe, we required Mr. Durvasula to relocate to our London office and reimbursed certain costs associated with such relocation, as described in more detail in the Summary Compensation Table. We provide the following benefits to all employees of the Company: medical, dental, vision and disability insurance, parking at our corporate offices or public transportation credit, 401(k) employer match and group life insurance premiums. We do not maintain any defined benefit or supplemental retirement plans.

The Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to our NEOs and may revise, amend or add to any such benefits and perquisites in the future as it deems advisable.

Severance Benefits

In order to achieve our compensation objective of attracting, retaining and motivating qualified executives, we believe that we need to provide the NEOs with severance protections provided in an employment agreement. Each NEO is entitled to certain severance benefits based on the nature of their termination. See "Employment Agreements" and "Executive Compensation Tables—Potential Payments Upon Termination of Employment or Change in Control" below for complete details of severance benefits payable to the NEOs upon certain terminations of employment.

Other Compensation-Related Policies

Stock Ownership Guidelines. The Company's corporate governance guidelines specify that the CEO is expected to hold shares worth at least six times his or her annual base pay, and each other NEO is expected to hold at least one and a half times his or her annual base pay. As of December 31, 2019, each of our NEOs has met the minimum requirements for stock ownership.

Hedging and Pledging. The Company has a written policy prohibiting the purchase or sale of puts, calls, options or other derivative securities based on the Company's securities by directors, officers or employees, including Company securities granted to a director, officer or employee by the Company as part of the compensation of such individual or held, directly or indirectly, by the director, officer or employee. This prohibition also includes hedging or monetization transactions, such as exchange funds, equity swaps, collars and prepaid variable forward contracts, in which the stockholder continues to own the underlying Company security without all the risks or rewards of ownership. Directors and officers of the Company are also prohibited from pledging Company securities or from holding Company securities in a margin account, absent specific preapproval. This same prohibition applies to any employee as set out in the Company's policy on insider trading, and any exceptions to this prohibition must be authorized in advance in accordance with the pre-clearance requirements of such policy. No such preapprovals have been requested or provided.

Clawback. The Company has a written clawback policy allowing it to recover incentive payments and equity awards realized by our NEOs in the preceding three years in the event of a material restatement of the Company's financial statements, if the incentive payments or amount of equity awards received would have been lower if calculated based on the restated financials, and the executive engaged in actual fraud or willful unlawful misconduct that materially contributed to the need for the restatement. To the extent that the SEC adopts final rules for clawback policies that require changes to our policy, we will revise our policy accordingly.

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Repricing Prohibition. The Company maintains prohibitions on the re-pricing of underwater stock options, and cash buyouts of underwater stock options.

Double-Trigger Change-in-Control Benefits. Severance benefits under an executive's employment agreement are not payable and equity awards do not vest upon a change in control unless the executive is terminated without cause or experiences a constructive termination, in each case, within 12 months following the change in control.

Employment Agreements

The Company has entered into written employment agreements with each of our NEOs. Employment agreements allow the Company the flexibility to make changes in key positions with or without cause, and minimize the potential for disagreements or litigation, by establishing separation terms in advance, including arbitration provisions and the execution of appropriate releases, and perpetuation of important confidentiality and non-competition restrictions. The benefits specified in the employment agreements, including the severance and change in control payments, are important provisions designed to ensure the recruitment and retention of quality executive talent.

Information regarding the severance payable to our NEOs pursuant to their employment agreements and treatment of outstanding equity awards can be found in "Executive Compensation Tables—Potential Payments Upon Termination of Employment or Change in Control."

Compensation Committee Analysis of Risk

The Compensation Committee engaged FPL to perform an annual assessment to determine whether the Company's compensation practices, plans and policies encourage unnecessary risk taking or create risks that are reasonably likely to have a material adverse effect on the Company. These assessments reviewed the material elements of executive and non-executive employee compensation. Based on these assessments, the Compensation Committee concluded these policies and practices do not encourage unnecessary risk taking or create risk that is reasonably likely to have a material adverse effect on CyrusOne.

Developments in Early 2020

As previously disclosed, effective February 20, 2020, Mr. Wojtaszek stepped down as President & CEO and Mr. Durvasula was elected as President & CEO on an interim basis. In connection with Mr. Wojtaszek's departure, to secure certain consulting services, and in order to facilitate the transition of Mr. Wojtaszek's responsibilities, Mr. Wojtaszek and the Company entered into a Transition and Separation Agreement dated February 19, 2020. The agreement provides that Mr. Wojtaszek will receive the severance payments and benefits he would have been entitled to upon a termination without cause under the terms of his employment agreement and long-term incentive awards, except that his severance formula will be based on his full target bonus in lieu of a pro-rata target bonus and he will receive additional vesting of his outstanding time-based restricted stock units and a pro-rata target bonus in respect of fiscal year 2020. Mr. Wojtaszek will also remain subject to all restrictive covenants with the Company pursuant to their terms and conditions.

In consideration of his election as President & CEO, the Company and Mr. Durvasula entered into an Omnibus Amendment Agreement, dated February 26, 2020, to reflect such election. The agreement provides that Mr. Durvasula's employment will generally continue on the same terms as provided in his employment agreement, except his base salary and target bonus will be $700,000 and 175% of his base salary, respectively, and in the event Mr. Durvasula's employment is terminated under conditions entitling him to severance, his cash severance will be no less than the severance he would have received had he been terminated on December 31, 2019, his 2018 and 2019 LTI awards will vest in full (with

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performance criteria deemed achieved at target) and he will receive a pro-rated target bonus. If Mr. Durvasula is elected as President & CEO on a permanent basis, Mr. Durvasula and the Company have agreed to negotiate in good faith a new employment agreement in respect of such election as soon as practicable.

2020 Compensation Decisions

In February 2020, the Compensation Committee approved the 2020 target compensation and LTI awards for our other NEOs. For 2020 LTI awards, the Compensation Committee approved a new framework that incorporates a number of best practices and is responsive to feedback we have received from stockholders. In particular, (i) we have introduced a second TSR metric, which accounts for 25% of the performance-conditioned payout, that compares our TSR to that of our Real Estate Technology Peer Group, (ii) the one- and two-year performance periods for accelerated vesting have been eliminated so that the awards only vest at the end of the three-year performance period and (iii) achieving a target level performance payout on a metric now requires that we outperform our comparators for that metric. In addition, we preserved a best practice with an absolute TSR modifier, whereby our payouts are reduced if our TSR is negative over the performance period, even if we outperformed the index and peer

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benchmarks. The following table highlights key design changes across the performance-based portion of the 2020 Long-Term Incentive Program:

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The performance-based portion of the 2020 LTI awards represented 60% of the LTI grant, with time-based restricted stock units, vesting annually over three years, representing 40%. The Compensation Committee did not make any changes to the design of our annual incentive plan.

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Compensation Committee Report

Compensation Committee Report

The Compensation Committee has the overall responsibility of evaluating the performance and determining the compensation of the Chief Executive Officer and approving the compensation structure for the Company's other NEOs. In fulfilling its responsibilities, the Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for the 2019 Annual Meeting of Stockholders for filing with the SEC.

    Compensation Committee:

 

 

T. Tod Nielsen (Chair)
Michael A. Klayko
Lynn A. Wentworth

2020 Proxy Statement     GRAPHIC

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Table of Contents

Executive Compensation Tables

Executive Compensation Tables

Summary Compensation Table

The following table sets forth information concerning compensation paid to or earned by the Company's NEOs for the years indicated.

Name and Principal Position

  Year   Salary
($)
  Bonus
($)
  Stock
Awards
($)(1)
  Option
Awards
($)(2)
  Non-Equity
Incentive Plan
Compensation
($)(3)
  All Other
Compensation
($)(4)
  Total($)

Gary J. Wojtaszek(5)

  2019   800,000     3,978,260     2,312,800   17,868   7,108,928

President and Chief

  2018   800,000     4,376,808     1,683,101   11,949   6,881,858

Executive Officer

  2017   800,000     4,447,111     1,769,600   9,092   7,025,803

Diane M. Morefield

  2019   475,000     1,049,240     784,700   21,282   2,330,222

Executive Vice President

  2018   463,462     1,221,438     610,147   13,888   2,308,935

and Chief Financial Officer

  2017   425,000     1,049,975     537,200   11,152   2,023,327

Venkatesh S. Durvasula(5)

  2019   545,769     1,442,704     908,600   292,368   3,189,441

Executive Vice President

  2018   472,116     1,221,438     527,117   18,229   2,238,900

and President, Europe

  2017   450,000     1,111,645     568,800   13,840   2,144,285

Kevin L. Timmons

  2019   460,577     1,349,231     760,873   21,612   2,592,293

Executive Vice President

  2018   419,231     1,221,438     468,071   13,019   2,121,759

and Chief Technology Officer

  2017   400,000     989,446     505,600   9,455   1,904,501

Robert M. Jackson

  2019   352,000     699,547     581,504   22,713   1,655,764

Executive Vice President,

  2018   344,616     716,671     453,686   14,088   1,529,061

General Counsel and Secretary

  2017   320,000     790,514     404,480   11,832   1,526,826
(1)
Reflects the aggregate grant date fair value of restricted stock unit awards, determined in accordance with FASB ASC 718. The assumptions used in the calculation of the grant date fair values of these awards are set forth in Note 17 to the financial statements in our Annual Report on Form 10-K filed with the SEC on February 20, 2020.

The amounts shown consist of time-based and performance-based restricted stock unit awards at target:

  Grant Date Fair Value—Performance-Based Restricted Stock Units
($)
  Grant Date Fair Value—Time-Based Restricted Stock Units
($)

  Fiscal
2019
  Fiscal
2018
  Fiscal
2017
  Fiscal
2019
  Fiscal
2018
  Fiscal
2017

Mr. Wojtaszek

  2,840,717   3,301,761   3,547,128   1,137,543   1,075,047   899,983

Ms. Morefield

  749,222   921,429   837,481   300,019   300,010   212,494

Mr. Durvasula

  1,030,159   921,429   886,685   412,545   300,010   224,960

Mr. Timmons

  749,222   921,429   789,225   600,009   300,010   200,221

Mr. Jackson

  499,517   540,626   630,530   200,030   176,045   159,984

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Table of Contents

Executive Compensation Tables

    Assuming performance at maximum levels, the performance-based restricted stock unit awards valued at the closing stock price on the grant date are shown below:

    Value of Performance-Based
Restricted Stock Units Assuming
Maximum Performance
($)
 

    Fiscal
2019
    Fiscal
2018
    Fiscal
2017
 

Mr. Wojtaszek

    6,825,046     6,450,077     5,399,993  

Ms. Morefield

    1,800,008     1,800,057     1,274,964  

Mr. Durvasula

    2,475,063     1,800,057     1,349,950  

Mr. Timmons

    1,800,008     1,800,057     1,201,421  

Mr. Jackson

    1,200,075     1,056,062     959,905  
(2)
No option awards were granted in 2017, 2018 or 2019.

(3)
Reflects annual incentive plan awards earned for the year indicated. For a detailed discussion regarding our annual incentive plan, see "Executive Compensation—2019 Executive Compensation Components—Annual Incentive Bonus Opportunity."

(4)
The components of the "All Other Compensation" column for 2019 include the following:

  401(k) Match
($)
  Insurance
($)(a)
  Perquisites
($)(b)
  Total
($)

Mr. Wojtaszek

  5,536   1,882   10,450   17,868

Ms. Morefield

  8,989   1,543   10,750   21,282

Mr. Durvasula

  5,256   1,621   285,491   292,368

Mr. Timmons

  9,319   1,543   10,750   21,612

Mr. Jackson

  10,549   1,414   10,750   22,713
(a)
Reflects employer-paid life, long-term disability, short-term disability and accidental death and dismemberment insurance.

(b)
Consists of a cell phone allowance in the amount of $750 per year for each NEO, which was eliminated during 2019; an annual physical for each executive and spouse ($10,000 per couple); and, for Mr. Durvasula, the following in connection with his appointment as President, Europe (i) relocation, temporary housing and other costs associated with Mr. Durvasula's relocation to London in connection with such appointment, totaling $145,186; (ii) tax reimbursements on the foregoing of $60,180; and (iii) travel costs between London and the U.S. of $69,375.
(5)
Effective February 20, 2020, Mr. Wojtaszek stepped down as a director and President & CEO and Mr. Durvasula was elected President & CEO on an interim basis.

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Table of Contents

Executive Compensation Tables

Grants of Plan-Based Awards

The following table presents information concerning plan-based awards granted to each of the NEOs during 2019.

2019 Grants of Plan-Based Awards Table

              Estimated Possible Payouts
Under Non-Equity Incentive Plan
Awards(1)
  Estimated Future Payouts
Under Equity Incentive Plan
Awards(2)
  All Other
Stock/Unit
Awards:
Number of
Shares of
  Grant Date
Fair Value of
Stock/Unit

Name

  Award
Type
  Grant
Date
  Approval
Date
  Threshold
($)
  Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
  Stock/Units
(#)
  Awards
($)(3)