After “approaching” Nutanix CEO Rajeev Ramaswami about a role with a competitor, the Nutanix board decided to retire approximately $50 million “off-cycle,” citing “immediate retention concerns,” according to a recent filing with the SEC. ” Stock awards responded.

Nutanix Chairman and CEO – and a former VMware C-level executive – Rajeev Ramaswamy won a big pay day this year after the company’s board crafted an “off-cycle” compensation package for its “chief architect,” valuing the stock and There was $51.1 million in cash. They hired him after a competitor approached him with a job offer, the company said in a recent filing.
“Against the backdrop of the highly competitive market for CEO talent, the committee learned that (Ramaswami) had been approached regarding a potential competitive opportunity outside Nutanix,” board member Max de Groen, chairman of the compensation committee, said in an October it wrote in a regulatory filing. 22. “Under these extraordinary circumstances, the Committee determined that a long-term performance-based equity award would address immediate retention concerns and provide Rajiv a strong performance incentive to continue to drive long-term value for stockholders.”
The Nutanix board said that after becoming aware of the job offer in January 2024, it had “immediate retention concerns” and needed to provide “strong incentives” for Ramaswamy to remain at the company.
“Following a series of meetings in consultation with its external advisors, (the board determined) that a supplemental long-term performance-based equity option would be appropriate to address immediate retention concerns and provide a strong incentive for Mr. Ramaswami to continue to drive The reward was necessary. significant long-term value for stockholders,” the company said in its annual report.
CRN contacted Nutanix to ask for the name of the competitor who contacted Ramaswamy and the nature of the “opportunity” offered to Ramaswamy. A Nutanix spokesperson responded with a statement.
“Rajeev is committed to Nutanix. He is focused on driving long-term company growth and profitability, including leading Nutanix to become the leading platform for running applications and managing data anywhere,” the spokesperson said. Is.” According to Nutanix’s proxy statement, the compensation committee believes that Rajiv’s supplemental long-term performance-based equity award helps secure his strategic vision and leadership through the next phase of Nutanix’s growth.
To follow up Ramaswamy’s January “opportunity,” Nutanix created a $49.7 million, performance-driven compensation plan that applies only if he can deliver “meaningful superior performance” on multiple operational targets.
“Although specific goals have not been disclosed for competitive reasons, the performance levels required to receive payment for each metric are based on the high-end of our long-range goals,” the company said.
The name of the company that contacted Ramaswami was not disclosed. However, de Groen said in his letter that Nutanix’s board felt it could not lose Ramaswamy. Ramaswamy previously held executive roles at VMware and Broadcom. Broadcom acquired Nutanix’s main rival, VMware, for $69 billion last year.
“Rajiv is a proven strategic leader. He has been the key architect of our company’s transformation. “Under Rajeev’s leadership, Nutanix has achieved profitable growth, nearly doubling its stock price from its inception date to fiscal 2024,” De Groen wrote.
While the board of directors is recommending that shareholders vote in favor of the compensation at the company’s annual shareholder meeting on December 13, some of them need to lobby earlier to win hearts and minds. Nutanix said it has held six meetings with shareholders, who represent 27 percent of its outstanding stock, to convince them.
“The Compensation Committee appreciates many stockholders’ skepticism of supplemental, off-cycle equity awards and has engaged extensively to provide stockholders an understanding of the extraordinary circumstances that required the awards,” Nutanix wrote. “In addition, the Committee discussed with shareholders its efforts to develop an award structure that addresses these unique circumstances while furthering the alignment of Mr. Ramaswamy’s pay opportunities with long-term value creation for stockholders. ,
Ramaswami joined Nutanix in December 2020, leaving his role as VMware’s chief operating officer, products and cloud services. Ramaswamy replaced Dheeraj Pandey, former CEO and co-founder of Nutanix, as the company’s leader. VMware sued Nutanix a month later, accusing Ramaswamy of “material ongoing breach” of his employment contract with the virtualization leader. The lawsuit was dismissed in January 2021 after a settlement was reached between the two companies.
“Rajiv has played a key role in the next phase of Nutanix’s growth, including taking advantage of recent industry disruptions and becoming the leading platform for running applications and managing data anywhere,” De Groen wrote in a letter to investors. “It involves moving toward a goal.” “Since receiving the award, Rajiv has continued to build on the achievements he has already achieved.”
Last year, the company achieved $1.91 billion in annual recurring revenue, up 22 percent from the previous year. It reached $597.7 million in free cash compared to $390.7 a year earlier, and total revenue for the year exceeded $2 billion for the first time.
Nutanix’s market cap has surged nearly 500 percent since Broadcom announced its intention to buy VMware in May 2022. Nutanix shares are trading at $68.42 today, with a market cap of $18.31 billion. On May 27, 2022, Nutanix stock closed at $16.88 with a market cap of $3.78 billion.
San Jose, California-based Nutanix specializes in hybrid-cloud infrastructure, and has a hypervisor that competes with Broadcom’s vSphere. Nutanix sells its products primarily through channels.
In the company’s annual report, Nutanix told investors it wants to “deepen” relationships with key resellers and distributors in each geographic region, and that it plans to continue putting cash behind partners to increase sales into larger enterprise customers. Is planning.