Five9 Inc

This proposal seeks shareholder approval to amend and restate Five9’s certificate of incorporation to phase out the current classified (three-class) board structure and transition to annual director elections over a three-year schedule, culminating in full declassification after the 2028 annual meeting. Management framed the change as a response to stockholder outreach indicating support for declassification and as an enhancement of director accountability through annual elections, while noting that the classified structure has benefits for board continuity, institutional knowledge, and takeover defenses. The amendment requires a supermajority vote (66 2/3% of voting power), which is a material procedural hurdle and underscores the significance management places on a clear mandate. If approved, the amended charter will be filed promptly and the board will make conforming bylaw changes; if not approved, the classified structure will remain intact. The phased approach (Class III elected for one year at the 2026 meeting, then Class I and Class III at 2027, and full annual elections thereafter) is designed to preserve board stability and recruitment plans while increasing accountability. Management retains the right to abandon the amendment before filing if it determines the change is no longer in stockholders’ best interests, which leaves some discretion with the board even after approval but before filing. From a governance perspective, declassification ordinarily increases director accountability and shortens the period before stockholders can effect board turnover, but it can also reduce continuity and make long-term initiatives more susceptible to short-term pressures; management emphasizes mitigations such as continued stockholder engagement and phased implementation. Investors evaluating the proposal should weigh the tradeoff between accountability and continuity, the high approval threshold, the board’s rationale informed by stockholder outreach, and the potential impact on takeover dynamics and director recruitment.

This management proposal requests stockholder approval to amend and restate Five9’s certificate of incorporation to remove existing supermajority voting thresholds (currently 66 2/3%) for certain charter and bylaw amendments so that, after the conclusion of the 2027 annual meeting, such amendments will generally be approved by a simple majority consistent with Delaware default rules. Management frames the change as responsive to stockholder preferences for increased board accountability and alignment with peer practices, while recognizing the historical rationale for supermajority thresholds to protect against coercive transactions and self-interested actions by large holders. The proposal itself nonetheless requires a 66 2/3% affirmative vote to become effective, reflecting the company’s current charter entrenchment provisions. If approved, the Amended and Restated Charter will be filed and the standard for charter and bylaw amendments will revert to majority approval as of the conclusion of the 2027 meeting; if not approved, the current supermajority protections remain. The board emphasizes that elimination of supermajority thresholds can enhance stockholder influence and corporate governance responsiveness but also reduces a structural barrier that can deter opportunistic or poorly informed changes, so investors should weigh the tradeoff between governance responsiveness and protections against opportunistic actions. Management also reserves the right to abandon the amendment before filing, preserving board discretion if circumstances change. For investors, material considerations include the high approval hurdle to enact the change, implications for future governance amendments and potential effects on takeover dynamics and negotiating leverage in deal contexts.

This proposal is a non-binding advisory vote (say-on-pay) asking stockholders to approve the disclosed compensation of Five9’s named executive officers. Management positions the program as market-competitive and aligned with pay-for-performance principles, combining base salary, annual cash incentives tied to revenue and levered free cash flow, RSUs and market-based PRSUs tied to relative TSR and multi-year performance, and various governance features such as clawbacks, stock ownership guidelines, anti-hedging/pledging policies, and double-trigger change-in-control protections. The proxy highlights recent adjustments to compensation design (e.g., PRSU measurement periods and metric weighting, CEO new-hire grants, and continued emphasis on performance-based equity) and notes the board and Compensation Committee’s responsiveness to stockholder feedback and peer benchmarking by Compensia. Although advisory, the Compensation Committee and Board will consider voting outcomes in setting future pay policies and may adjust program design in response to significant opposition. Analysts should note that recent certifications of PRSU measurement periods resulted in low RTSR outcomes for recent measurement windows and that the company has emphasized subscription revenue CAGR and RTSR in 2026 PRSU design to better align operational execution and market performance. For investors, the vote provides an opportunity to register approval or concerns with executive pay structures, recognizing that the vote is advisory and that the Board retains discretion but is signaling that it will take results into account when designing future compensation.