UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
  FORM
10-K/A
 (Amendment
No. 1)
  x
              ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
                For
      the fiscal year ended December 31, 2008ORp
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
                For
      the transition period
      from                                        
               
  toCommission
      file number: 001-33517
  Data
Domain, Inc.
 (Exact
name of registrant as specified in its charter)
 
  Delaware
              94-3412175(State
      or other jurisdiction of incorporation or organization)
              (I.R.S.
      Employer Identification No.)2421
      Mission College Blvd., Santa Clara, CA
              95054(Address
      of principal executive offices)
              (Zip
      Code)Registrant’s
      telephone number, including area code
              (408)
      980-4800Securities
      registered pursuant to Section 12(b) of the Act:Title
      of each class
              Name
      of each exchange on which registeredCommon
      Stock, par value $.0001 per share
              NASDAQ
      Global Select Market
 
 Securities registered pursuant to
Section 12(g) of the Act: None
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.    Yes   ̈    No  x
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the
Act.    Yes   ̈    No  x
 Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.    Yes  x    No   ̈
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes   ̈    No    ̈
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405) is not contained herein, and will not be contained,
to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.     ̈
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
 Large
      accelerated filer  ̈
              Accelerated
      filer x
              Non
      accelerated filer  ̈
              Smaller
      reporting company  ̈
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).    Yes   ̈    No  x
  The
aggregate market value of the common stock held by non-affiliates of the
registrant, based upon the closing price of such common stock on June 30,
2008, the last business day of the registrant’s most recently completed second
fiscal quarter, asreported by The NASDAQ
Global Market, was approximately $680,579,610. Shares of common stock held
by each executive officer and director of the registrant and by eachperson who owns 10% or
more of the registrant’s outstanding common stock have been excluded in that
such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive determination for other
purposes.
  The
number of outstanding shares of the registrant’s common stock as of April 15,
2009, was 61,103,388.
 
 DOCUMENTS INCORPORATED BY
REFERENCE
  The
following documents (or parts thereof) are incorporated by reference into the
following parts of this Form 10-K:
  None.
 1
 
 EXPLANATORY
NOTE
 
 This Amendment No. 1 to the Annual
Report on Form 10-K (this “Amendment”) amends the Annual Report on Form 10-K for
the fiscal year ended December 31, 2008, as filed with the Securities and
Exchange Commission (the “SEC”) on March 13, 2009 (the “2008 10-K”) of Data
Domain, Inc., a Delaware corporation (“the Company”, “we”, “us” or
“our”).  We are filing this Amendment to add required disclosure to
Items 10, 11, 12, 13 and 14 of Part III of the 2008 10-K, as we will not file
our definitive proxy statement within 120 days of the end of our fiscal year
ended December 31, 2008.  We are also including as exhibits the
certifications required under Section 302 of the Sarbanes-Oxley Act of 2002 in
Item 15 of Part IV of this Amendment.
 
 Except as otherwise expressly stated
herein, this Amendment does not reflect events occurring after the date of the
2008 10-K, nor does it modify or update the disclosure contained in the 2008
10-K in any way other than as required to reflect the amendments discussed above
and reflected below.  Accordingly, this Amendment should be read in
conjunction with the 2008 10-K and our other filings made with the SEC on or
subsequent to March 13, 2009.
  Any stockholder may request a copy of the 2008 10-K and this Amendment without
charge upon receipt of a written request identifying the person so requesting a
report as a stockholder of the Company at such date.  Requests should
be directed to: Corporate Secretary, Data Domain, Inc., 2421 Mission College
Boulevard, Santa Clara, CA 95054.
 
 
 
 2
 Table
of Contents
  PagePART
      IIIItem
      10.
              Directors,
      Executive Officers and Corporate
      Governance
              4Item
      11.
              Executive
      Compensation
              6Item
      12.
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              17Item
      13.
              Certain
      Relationships and Related Transactions, and Director
      Independence
              19Item
      14.
              Principal
      Accounting Fees and
      Services
              19PART
      IVItem
      15.
              Exhibits
      and Financial Statement
      Schedules
              20SIGNATURES
              
              21
 
 
 3
 
 PART
III
 
 Item
10.  Directors, Executive Officers and Corporate
Governance
 
 DIRECTORS
 
 The names
of the members of our Board of Directors, their ages as of April 15, 2009 and
certain information about them are set forth below.
  Name
                Age
                Principal Occupation
                Director SinceRonald
      D. Bernal (1)(3)
                53
                Partner
      at Sequel Venture Partners
                2003Aneel
      Bhusri(2)
                43
                Partner
      at Greylock Partners
                2002Ronald
      E.F. Codd(1)
                53
                Independent
      business consultant
                2006Reed
      E. Hundt(2)(3)
                61
                A
      principal of Charles Ross Partners, LLC
                2007Kai
      Li, Ph.D.
                54
                Professor
      at Princeton University and Chief Scientist of Data Domain
                2001Jeffrey
      A. Miller (1)(2)
                58
                President
      and Chief Executive Officer of JAMM Ventures
                2006Scott
      D. Sandell(3)
                44
                General
      Partner of New Enterprise Associates
                2002Frank
      Slootman
                50
                President
      and Chief Executive Officer of Data Domain
                2003
 ____________________________
 
 (1)           Member
of our Audit Committee.
 (2)           Member
of our Compensation Committee.
 (3)           Member
of our Nominating/Corporate Governance Committee.
 
 Ronald D.
Bernal has been a member of our Board of Directors since December
2003.  Mr. Bernal has been a partner at Sequel Venture Partners since
May 2006.  From May 2002 to May 2006, Mr. Bernal served as a Venture
Partner at Sutter Hill Ventures.  From March 2000 to April 2002, Mr.
Bernal served as Vice President of Operations for the Product Technology Groups
and the Service Provider Line of Business for Cisco Systems, Inc.  Mr.
Bernal holds a B.S.E.E. degree from DeVry Institute of Technology.
 
 Aneel
Bhusri has been a member of our Board of Directors since February 2002
and was elected as chairman of our Board of Directors in March
2007.  Mr. Bhusri has been a partner at Greylock Partners since April
1999.  Mr. Bhusri also serves as President of Workday, Inc., an
enterprise business services company, which he co-founded in March
2005.  From February 2002 to June 2003, Mr. Bhusri served as our
President and Chief Executive Officer.  From March 1999 to September
2001 and September 2004 to December 2004, Mr. Bhusri served as vice chairman of
PeopleSoft, Inc.  Mr. Bhusri holds a B.S. in Electrical Engineering
and Economics from Brown University and an M.B.A. from Stanford
University.
 
 Ronald E. F.
Codd has been a member of our Board of Directors since October
2006.  Mr. Codd has been an independent business consultant since
April 2002.  From January 1999 to April 2002, Mr. Codd served as
President, Chief Executive Officer and a director of Momentum Business
Applications, Inc., an enterprise software company.  From September
1991 to December 1998, Mr. Codd served as Senior Vice President of Finance and
Administration and Chief Financial Officer of PeopleSoft, Inc.  Mr.
Codd currently serves on the Board of Directors of DemandTec, Inc., a provider
of consumer demand management software.  Mr. Codd holds a B.S. in
Accounting from the University of California, Berkeley and an M.M. from the
Kellogg Graduate School of Management at Northwestern University.
 
 Reed E.
Hundt has been a member of our Board of Directors since March
2007.  Since 1998, Mr. Hundt has been a principal of Charles Ross
Partners, LLC, a private investor and business advisory firm, an independent
advisor on information industries to McKinsey & Company, Inc. and
Co-Chairman of the Forum on Communications and Society at the Aspen Institute, a
public policy organization.  From 1993 to 1997, Mr. Hundt served as
Chairman of the Federal Communications Commission.  Mr. Hundt
currently serves on the Board of Directors of Intel Corporation and Infinera
Corporation. Mr. Hundt holds a B.A. in History from Yale College and a J.D. from
Yale Law School.
 
 Kai Li,
Ph.D. co-founded the Company in October 2001.  Dr. Li has been
consulting as Chief Scientist for us since September 2002.  In
addition, Dr. Li served as our Chief Technology Officer from October 2001 to
August 2002 and as President and Chief Executive Officer from November 2001 to
February 2002.  Dr. Li has also served as a member of our Board of
Directors since our inception.  Since September 1986, Dr. Li has also
been a professor of Computer Science at Princeton University.  Dr. Li
holds a B.S. in Computer Science from Jilin University, an M.S. in Computer
Science from the University of Science and Technology of China, Chinese Academy
of Sciences and a Ph.D. in Computer Science from Yale University.
 
 Jeffrey A.
Miller has been a member of our Board of Directors since October
2006.  Mr. Miller has served as President and Chief Executive Officer
of JAMM Ventures, a consulting and venture capital firm, since January
2002.  From January 2002 to March 2006, Mr. Miller also served as a
Venture Partner with Redpoint Ventures.  Mr. Miller holds a B.S. in
Electrical Engineering and Computer Science and an M.B.A. from Santa Clara
University.
 
 Scott D.
Sandell has been a member of our Board of Directors since February
2002.  Mr. Sandell became a partner at New Enterprise Associates in
1996 and a general partner in 2000.  Mr. Sandell is also a director of
Spreadtrum Communications and several private companies. Mr. Sandell holds an
A.B. in Engineering Sciences from Dartmouth College and an M.B.A. from Stanford
University.
 
 Frank
Slootman has served as a member of our Board of Directors and as our
President and Chief Executive Officer since July 2003.  Prior to
joining us, Mr. Slootman served as an executive at Borland Software Corporation
from June 2000 to June 2003, most recently as Senior Vice President of
Products.  From March 1993 to June 2000, Mr. Slootman held management
positions for two enterprise software divisions of Compuware Corporation. Mr.
Slootman earned his undergraduate and graduate degrees in Economics from Erasmus
University Rotterdam in the Netherlands.
  4
 
 EXECUTIVE
OFFICERS
 
 Our executive officer’s, and their ages
and positions as of April 15, 2009 are as follows:
  Name
                
                Age
                
                Principal OccupationFrank
      Slootman
                
                
                50
                
                President
      and Chief Executive OfficerNick
      Bacica
                
                
                55
                
                Senior
      Vice President of OperationsDaniel
      R. McGee
                
                
                49
                
                Senior
      Vice President of EngineeringMichael
      P. Scarpelli
                
                
                42
                
                Senior
      Vice President, Chief Financial Officer, Treasurer and
      SecretaryDavid
      L. Schneider
                
                
                40
                
                Senior
      Vice President of Worldwide
Sales
  Please
see the section entitled “Directors,” above, for a brief description of the
educational background and business experience of Mr. Slootman.
 
 Nick
Bacica joined us as our Vice President of Operations in September 2008
and was promoted to Senior Vice President of Operations in January 2009. From
2004 to August 2008, Mr. Bacica was Vice President of Operations at Azul
Systems, a global provider of enterprise server appliances. From 2001 to 2004,
Mr. Bacica served as Senior Vice President of World-Wide Operations for Brocade
Communications Systems. From 1997 to 2001, Mr. Bacica served as Director of
Global Transformation at Cisco Systems, Inc. Mr. Bacica has also held senior
level positions at Apple Computer, Burroughs Corporation and Xerox Corporation.
Mr. Bacica attended East Texas State University.
 
 Daniel
McGee joined us as our Vice President of Engineering in February 2006,
and was promoted to Senior Vice President of Engineering in January
2008.  From March 2004 to February 2006, Mr. McGee was the Vice
President of Engineering for Aventail Corporation, a provider of secure remote
access products.  From August 1999 to March 2004, Mr. McGee held
various senior management positions at Pinnacle Systems, Inc., a provider of
video editing solutions, TV tuners for personal computers and digital media
adapters.  Mr. McGee holds a M.S. in Engineering Management from
Stanford University and a B.S. in Electrical Engineering & Computer Science
from Oregon State University.
 
 Michael P.
Scarpelli joined us as our Vice President and Chief Financial Officer in
September 2006, and was promoted to Senior Vice President in January
2008.  From January 2006 to September 2006, Mr. Scarpelli served as
Executive Vice President and Chief Financial Officer for Lexar Media, Inc., a
flash memory manufacturer which was acquired by Micron Technology, Inc. in
2006.  From January 2002 to January 2006, Mr. Scarpelli held senior
positions at HPL Technologies, Inc., a provider of yield management software and
test chip solutions, most recently as Senior Vice President and Chief Financial
Officer.  Mr. Scarpelli began his career at PricewaterhouseCoopers LLP
from May 1989 to December 2001.  Mr. Scarpelli holds a B.A. in
Economics from the University of Western Ontario.
 
 David
Schneider joined us as our Vice President of Worldwide Sales in January
2004, and was promoted to Senior Vice President of Worldwide Sales in January
2008.  From January 2003 to December 2003, Mr. Schneider served as
Vice President of Alliances, Channel and OEM sales for Borland Software
Corporation.  From May 2002 to January 2003, Mr. Schneider served as
Vice President of Western United States Sales for TogetherSoft Corporation
(later acquired by Borland Software Corporation).  From January 1999
to May 2002, Mr. Schneider was Western Regional Manager at Iona Technologies,
Inc.  Mr. Schneider holds a B.A. in Political Science from the
University of California, Irvine.
 SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
 Section
16 of the Securities Exchange Act of 1934 requires our directors and officers,
and persons who own more than 10% of a registered class of our equity
securities, to file initial reports of ownership and reports of changes in
ownership with the SEC. SEC regulations also require these persons to furnish us
with a copy of all Section 16(a) forms they file.  Based solely on our
review of the copies of the forms furnished to us and written representations
from our executive officers and directors, we believe that one Section 16(a)
filing deadline was missed by Messrs Slootman, McGee, Scarpelli and Schneider
relating to stock option grants made to each of them in February 2008, one
Section 16(a) filing deadline was missed by Mr. Bernal relating to the
distribution by a private venture capital firm of our stock to a trust
controlled by Mr. Bernal in December 2008 and one Section 16(a) filing deadline
was missed by Mr. Hundt relating to the distribution by a private venture
capital firm of our stock to a partnership indirectly owned by Mr. Hundt in
November 2008.  The late filings were administrative oversights, which
we worked to correct as soon as the errors were
discovered.
 CORPORATE
GOVERNANCE
 
 Code
of Ethics and Committee Charters
 
 Our Board of Directors has adopted a
formal Code of Business Conduct that applies to all of our employees, officers
and directors.  The latest copy of the Code of Business Conduct, as
well as the charters of the Audit Committee, the Compensation Committee and the
Nominating/Corporate Governance Committee of the Board of Directors, are
available under the heading “Corporate Governance” in the “Company—Investor
Relations” section of our website at www.datadomain.com.  We
intend to disclose future amendments to certain provisions of our Code of
Business Conduct, or waivers of such provisions, at the same location on our
website and also in public filings.
 
  Audit
Committee
 
 During the fiscal year ended December
31, 2008, our separately-designated Audit Committee was composed at all times of
three non-employee directors, Messrs. Bernal, Codd and Miller, each of whom
meets the “independent director” definition of the NASDAQ Marketplace Rules,
including the more stringent requirements under Rule 5605(c)(2) for members of
audit committees and the criteria for independence under Rule 10A-3(c) under the
Securities Exchange Act of 1934 .  In addition, our Board of Directors
has determined that the chairman of the Audit Committee, Mr. Codd, is an “audit
committee financial expert” as defined in Item 407(d)(5) of Regulation
S-K.  The designation does not impose on Mr. Codd any duties,
obligations or liabilities that are greater than those generally imposed on him
as a member of our Audit Committee and our Board of Directors.
   5
 Item
11.  Executive Compensation
 
 COMPENSATION
DISCUSSION AND ANALYSIS
 
 Our
Compensation Committee is composed of Messrs. Bhusri, Hundt and Miller, each of
whom meets the “independent director” definition of the NASDAQ Marketplace
Rules; the “non-employee director” definition of Rule 16b-3 under Section 16 of
the Securities Exchange Act of 1934; and the “outside director” definition of
Section 162(m) of the Internal Revenue Code of 1986.  Our Compensation
Committee operates under a written charter, which is available under the heading
“Corporate Governance” in the “Company—Investor Relations” section of our
website at www.datadomain.com.  Our
Compensation Committee holds quarterly meetings and, in addition, meets as often
as it deems necessary to carry out its responsibilities.  The
Committee met five (5) times in fiscal year 2008.
 
 As
detailed below, our Compensation Committee’s philosophy is to foster a
performance-oriented culture that aligns the interests of our executive officers
with the interests of our stockholders.  Our Compensation Committee
believes that the compensation of our executive officers is both appropriate and
responsive to the goal of improving stockholder value.
 
 Compensation
Philosophy, Objectives and Approach
 
 Our
Compensation Committee believes that the quality, skills and dedication of our
executive officers are critical factors affecting long-term stockholder value
creation.  Our Compensation Committee also believes it is important to
maintain executive compensation programs that are performance-oriented and
encourage our executive officers to manage the Company from the perspective of
owners.  With these factors in mind, our overall executive
compensation philosophy is to provide a competitivetotal compensation
package that will allow us to attract, retain and motivate highly qualified
executive officers who are capable of operating in the dynamic environment in
which we operate.  Our Compensation Committee’s objectives also
include linking our executive officers’ compensation with our long-term and
short-term business objectives and performance.  Our Compensation
Committee implements this philosophy by making a significant percentage of our
executive officers’ compensation performance-based over time through a mix of
variable cash and equity, targeting base salaries at or below competitive median
levels.  To ensure that the compensation of each executive officer
reflects that officer’s own contribution to the Company and his or her level of
performance, various elements of our executive officers’ compensation are linked
to individual performance as well as the performance of the Company in achieving
corporate goals and financial objectives.
 
 Consistent
with its philosophy, in determining the compensation of our executive officers
for fiscal year 2008, our Compensation Committee considered competitive data at
approximately the 33rd
percentile for base salaries, a range of approximately the 50th to
66th
percentile for target total cash compensation and the 75th
percentile for equity compensation (see below under “Role of Compensation
Consultant; Executive Officer Market Compensation Data” for a list of the peer
companies and other data that was reviewed).  Our Compensation
Committee does not rigidly position the different elements of our executive
officers' compensation at these levels.  Rather, it applies its
judgment in determining the amount and mix of compensation elements for each
executive officer.  Factors affecting the Compensation Committee’s
judgment include performance compared to strategic goals established for the
individual at the beginning of the year, the nature and scope of the executive
officer’s responsibilities, the individual’s effectiveness in leading our
initiatives to achieve corporate goals and our corporate
performance.
 
 Except as
described above, our Compensation Committee has not adopted formal policies or
guidelines for allocating compensation between long-term and currently paid out
compensation, between cash and non-cash compensation, or among different forms
of non-cash compensation.
 
 Role
of Chief Executive Officer
 
 Our chief
executive officer, Frank Slootman, supports our Compensation Committee in its
work by providing information relating to our financial plans, performance
assessments of our executive officers and other personnel-related
data.  Mr. Slootman assesses the officers’ contributions to corporate
goals as well as achievement of their individual goals, and offers advice to our
Compensation Committee with respect to any merit increase in salary, cash bonus
and equity award replenishment for each executive officer, other than
himself.  Our Compensation Committee meets to evaluate, discuss and
determine these matters, as well as to determine Mr. Slootman’s compensation
based on his contributions to our corporate goals and his achievement of
individual goals as determined by the entire Board of Directors.
  Role
of Compensation Consultant; Executive Officer Market Compensation
Data
 
 Our
Compensation Committee has the authority under its charter to engage the
services of outside advisors, experts and others to assist the Compensation
Committee in performing its duties.  Our Compensation Committee
engaged Compensia, Inc., a management consulting firm, in December 2007 to act
as an independent advisor to the Committee on executive compensation
matters.  This engagement continued into 2008.  Compensia
provides information to our Compensation Committee on emerging compensation
practices and competitive pay levels for our officers.  The
information provided by Compensia assists our Compensation Committee in
evaluating the compensation of our officers relative to companies against which
we compete for talent and for stockholder investment.
 
 Compensia
has worked directly with the Compensation Committee (and not on behalf of
management) to assist the Compensation Committee in satisfying its
responsibilities and will undertake no projects for management except at the
request of the Compensation Committee chair and in the capacity of the
Compensation Committee’s agent.  To date, Compensia has not undertaken
any projects for management.
  For 2008
executive compensation, Compensia reviewed the compensation practices of the
following peer companies:
 
 ·3Par
              ·Commvault
      Systems
              ·FalconStor
              ·Netezza
      Corporation·Blade
      Logic
              ·Riverbed
      Technology
              ·Cybersource
              ·Starent
      Networks·Infinera
              ·Double-Take
      Software
              ·Mellanox
      Technologies
              ·Sycamore·Cogent
              ·Compellent
              ·Isolon
              ·Aruba·Cbeyond
 
 In addition to these peer companies,
Compensia also reviewed compensation data from high-technology companies
contained in the July 2007 Radford High-Tech Industry Executive Compensation
Survey that had total revenues of $50-to $200MM.  In analyzing the
data both from the peer companies and the Radford survey, Compensia updated the
data to January 1, 2008, using a competitive 4.2% annual update factor
consistent with then prevailing market practices.
 
 In January 2008, Compensia reported
that, as of that date, our 2007 target total cash compensation levels for our
executive officers were below the competitive median of peer
companies.  However, based on the Company’s actual performance,
significant cash bonuses would be paid and actual total cash compensation for
2007 would be between the 60th and
75th
percentiles.  Target total cash compensation consisted of base salary
plus target annual incentive opportunity.  Actual total cash
compensation consisted of base salary plus payment of the aggregate annual
incentive opportunity.  Compensia reported that, on an individual
basis, target total cash compensation levels for Messrs. Slootman and McGee were
below the competitive 25th
percentile, and target cash compensation levels for Messrs. Schneider and
Scarpelli were between the competitive 25th and 50th
percentiles.  Despite the fact that our target cash compensation was
below the median of our peers, the total cash compensation actually paid to our
executives, including our named executive officers ranged from the 33rd to the 75th
percentile.  This was due to the fact that we paid more than 100% of
target bonus amounts to our executive officers for their over-achievement of
revenue and bookings goals, as discussed below under “Principal Elements of
Executive Compensation – Annual Incentive Compensation.”  The
Compensation Committee considered the results of Compensia’s studies when
determining compensation levels for our executive officers for
2008.
   6
 Principal
Elements of Executive Compensation
 
 Base
Salaries.  Base salary for Mr. Slootman and our other executive
officers is established based on the underlying scope of their respective
responsibilities, taking into account competitive market
compensation.  As noted above, the Compensation Committee’s philosophy
is to make a significant percentage of an executive officer’s compensation
performance-based through annual incentive compensation and equity
awards.  Our focus on performance-based compensation has resulted in
the base salaries of our executive officers generally being below the median of
our peers.  For 2008, the Committee generally targeted at
approximately the 33rd
percentile of the peer group companies for base salary.  Base salaries
are reviewed annually and adjusted from time to time.  Salary
adjustments are based on competitive conditions, individual performance, our
overall financial results, changes in job duties and responsibilities, and our
overall budget for base salary increases.  The salary increase budget
is designed to allow salary increases to retain and motivate successful
performers while maintaining affordability within our business
plan.
 
 In
January 2008, the Compensation Committee of the Board of Directors established
the base salaries of our named executive officers as follows:
  Name
                2008 Title
                
                2008
      Base SalaryFrank
      Slootman...........................
                President
      and Chief Executive Officer
                
                $
                275,000Daniel
      McGee..............................
                Senior
      Vice President of Engineering
                
                $
                220,000Peter
      Rukavina...........................
                Senior
      Vice President of Operations
                
                $
                220,000Michael
      Scarpelli.........................
                Senior
      Vice President and Chief Financial Officer
                
                $
                250,000David
      Schneider..........................
                Senior
      Vice President of Worldwide Sales
                
                $
                215,000
  Annual Incentive
Compensation.  Annual cash incentives for our executive
officers are designed to align our executive officers’ goals with our revenue
and bookings objectives for the year.  For 2008, bonuses were paid
quarterly to our named executive officers based on achievement of quarterly
revenue objectives, other than Mr. Schneider who participated in the bonus plan
based on achievement of bookings objectives.  In January 2008, the
Compensation Committee established the quarterly revenue and bookings
objectivesbased on
our fiscal year 2008 revenue and bookings plan approved by the Board of
Directors.  The Committee determined that the fiscal year 2008 revenue
and bookings plan approved by the Board of Directors was an appropriate basis to
determine financial objectives for performance-based compensation for the
executive officers.  The Compensation Committee believes that
quarterly bonuses align our executive compensation program with the quarterly
business cycle on which we report financial results as a public
company.  Under the plan, target bonus amounts, expressed as a
percentage of base salary, were established for participants in January 2008,
and in determining the bonus targets the Committee generally targeted a range of
approximately the 50th to
66th
percentile of the peer companies for target total annual cash
compensation.  The bonus targets as a percentage of base salary for
each of our named executive officers were as follows for 2008:
  Name
                
                2008
      Target
                  Bonus
      as a % of Base
      Salary
                
                
                2008
      Target BonusFrank
      Slootman......................................................
                
                
                100
                %
                
                $
                275,000Daniel
      McGee.......................................................
                
                
                50
                %
                
                $
                110,000Peter
      Rukavina.....................................................
                
                
                60
                %
                
                $
                130,000Michael
      Scarpelli...................................................
                
                
                50
                %
                
                $
                125,000David
      Schneider.....................................................
                
                
                100
                %
                
                $
                215,000
  7
 Bonus
payouts for each quarter were then determined by our financial results for the
quarter relative to the predetermined performance measures.  The
following chart illustrates our revenue objectives for each quarter of 2008 and
our actual performance relative to those objectives; we have not disclosed our
bookings objectives, as these are competitively sensitive to us and confidential
(amounts in thousands):
 
 Q1
      2008
              
              
              Q2
      2008
              
              
              Q3
      2008
              
              
              Q4
      2008
              
              
              2008
      TotalPlan
              
              
              Actual
              
              
              Plan
              
              
              Actual
              
              
              Plan
              
              
              Actual
              
              
              Plan
              
              
              Actual
              
              
              Plan
              
              
              ActualRevenues
              
              $
              48,041
              
              
              $
              52,615
              
              
              $
              53,765
              
              
              $
              61,211
              
              
              $
              57,669
              
              
              $
              75,030
              
              
              $
              65,569
              
              
              $
              85,229
              
              
              $
              225,044
              
              
              $
              274,085
 
 Payout of
bonuses began at 80% plan achievement and scaled linearly to 100% at 100% plan
achievement.  Over-achievement of goals beyond 100% and up to 125% of
plan accelerates bonus payout at the rate of 2:1, that is, for every 1% of
overachievement the bonus accelerates by 2% of the total bonus
amount.  From 126% to 150% of plan achievement the bonus payout
decelerates to 1.5% per percent of overachievement and from 151% achievement of
plan and beyond the bonus payout decelerates to 1.25% per percent of
achievement.
 
 Our
Compensation Committee could increase or reduce the bonus, at its discretion,
based on criteria in addition to revenue and bookings (including our achievement
of our financial plan in areas other than bookings or revenue, particularly
operating profit and gross margins and the individual’s achievement of quarterly
objectives).  In 2008, the Compensation Committee did not exercise its
discretion to adjust the bonuses of our executive officers.
 
 As a
result of our achievement above plan for each quarter of 2008, our executive
officers received bonuses for 2008 that exceeded their target bonus amounts, as
illustrated below:
  Name
                
                2008
      Target
                  Bonus
                
                
                2008
      Actual BonusFrank
      Slootman......................................................
                
                $
                275,000
                
                
                $
                386,184Daniel
      McGee.......................................................
                
                $
                110,000
                
                
                $
                154,473Peter
      Rukavina.....................................................
                
                $
                130,000
                
                
                $
                107,523
                (1)Michael
      Scarpelli...................................................
                
                $
                125,000
                
                
                $
                175,538David
      Schneider.....................................................
                
                $
                215,000
                
                
                $
                298,093
  (1)           Mr.
Rukavina was with the Company from March 2008 until January 2009; this is a
partial year bonus.
 
 Long-Term
Incentive Compensation.  Generally, we make a significant
equity award in the year that an executive officer commences employment with
us.  Thereafter, equity awards may be made at varying times and in
varying amounts at the discretion of our Compensation Committee or Board of
Directors.  Our Board of Directors evaluates executive officer
performance on an annual basis, and the Compensation Committee will grant
additional options where warranted.  We also consider additional
equity awards to executive officers, with the purpose of ensuring proper overall
compensation and motivation for the executive officer to remain with us and to
align the executive officer’s interests with those of our
stockholders.  In determining equity award amounts, our Compensation
Committee or Board of Directors also takes into account the executive officer’s
existing equity holdings and degree of vesting in future years.  The
size of each grant is generally set at a level that our Compensation Committee
or Board of Directors deems appropriate based on competitive benchmarking, our
recruiting and retention goals, our desire to create a meaningful opportunity
for stock ownership for our executive officers and to reflect the executive’s
position with us and potential for future responsibility.  For fiscal
2008, the Committee took into account approximately the 75th
percentile of the peer group companies for target equity compensation, among the
other factors.  The relative weight given to each of the factors
varied from individual to individual at our Compensation Committee’s
discretion.
 
 In
February and March 2008, long-term incentive awards made to our executive
officers were as follows:
  Name
                Grant Date
                
                Number of Options
                
                
                Exercise PriceFrank
      Slootman
                February
      11, 2008
                
                
                100,000
                
                
                $
                21.94Daniel
      McGee
                February
      11, 2008
                
                
                50,000
                
                
                $
                21.94Peter
      Rukavina
                March
      10, 2008
                
                
                250,000
                
                
                $
                19.46Michael
      Scarpelli
                February
      11, 2008
                
                
                50,000
                
                
                $
                21.94David
      Schneider
                February
      11, 2008
                
                
                50,000
                
                
                $
                21.94
  Each of
the options granted in February begins vesting two years from the anniversary of
the grant date, and then vests with respect to 12.5% of the underlying shares
each succeeding quarter such that the option is fully vested six years after
grant.  The vesting schedule and the number of shares granted are
established to ensure a meaningful incentive for the recipient to remain
employed by us.  Accordingly, the option will provide a return to the
employee only if he or she remains in our employ, and then only if the market
price of our common stock is above the exercise price and appreciates over the
option term.  The March new hire grant to Mr. Rukavina vests with
respect to 20% of the shares 12 months after grant and with respect to 1/60th of the
shares each succeeding month such that the option is fully vested after five
years.  Mr. Rukavina left the Company in January 2009 and thus none of
the shares had vested.
  
 8
 Grant Timing and
Price.  The exercise price of stock options is the fair market
value of our common stock on the date of grant.  Prior to our initial
public offering, the grant price was established by our Board of Directors using
factors it considered appropriate, which at times included a written report of
an independent, outside valuation firm.  The grant price is currently
set at the closing price of our common stock on The NASDAQ Global Select Market
on the date of the grant in accordance with an equity award policy adopted by
our Board of Directors.
 
 Our Board
of Directors has adopted an equity award policy to govern the process of
granting options and other equity awards.  Equity awards to executive
officers are made by our Compensation Committee pursuant to the terms of this
policy, provided that our Compensation Committee may make exceptions to the
policy in appropriate circumstances.  Our Compensation Committee may
grant awards at meetings or by written consent.  All awards are
effective on the “date of grant,” which is generally the 10th day of a month
following the date the Compensation Committee acted, or the 10th day of the
following month if the Compensation Committee acted after the 7th day of any
month.  To the extent the 10th day of the month falls on a weekend or
holiday, the grant will be effective on the next business day after the
10th.
 
 Perquisites
 
 Our
executive officers are eligible for the same health and welfare programs and
benefits as the rest of our employees.  There are no other perquisites
provided to executive officers.
 
 Post-Termination
Protection
 
 We have
entered into offer letters with our executive officers that provide severance
benefits in the event the officer’s employment is terminated by us without
cause.  If we terminate one of our executive officers, other than Mr.
Slootman, without cause, we will continue to pay his base salary for three
months and will reimburse him for a portion of the premiums he pays to continue
his health insurance through COBRA for up to three months.  If we
terminate Mr. Slootman’s employment for any reason other than cause or
disability, his severance benefits would include payment of his base salary for
six months and six months of accelerated vesting on options granted to him prior
to 2008 that he holds at the time of his termination.
 
 We also
provide additional vesting on change in control for our executive
officers.  The program requires a “double trigger,” or a change in
control followed by an involuntary loss of employment within 12 months
thereafter.  Under the program, each of our named executive officers
would be vested in 50% of his then unvested option shares, restricted shares,
and/or restricted stock units, as applicable, upon a double trigger, except that
Mr. Slootman would be fully vested in all of his option shares upon a double
trigger.  In addition, Mr. Scarpelli would receive lump sum payments
equal to six months of his base salary and 50% of his target bonus in effect at
the time of his termination within 12 months of a change of control in lieu of
the severance benefits he would be entitled to for a separation apart from a
change of control.  See the section entitled “Potential Payments Upon
Termination or Change in Control” for a more detailed discussion of the
quantification of these payments.
 
 Our
Compensation Committee believes the additional vesting on a change in control is
a critical part of the overall compensation package offered to our executive
officers since it enhances our ability to attract and retain executive
officers.  The program also is intended to preserve employee morale
and productivity and encourage retention in the face of the disruptive impact of
an actual or potential change in control of the Company.  In addition,
the program is intended to align executive officer and stockholder interests by
enabling executive officers to consider corporate transactions that are in the
best interests of the stockholders and other constituents of the Company without
undue concern over whether the transactions may jeopardize the executive
officer’s own employment.
 
 CEO
Compensation
 
 Our
Compensation Committee bases its compensation decisions for Mr. Slootman on the
Board’s assessment of the Company’s performance and his performance using
methods consistent with those used for our other executive
officers.  Mr. Slootman’s 2008 compensation consisted of base salary,
his quarterly cash bonuses and a stock option award.  Mr. Slootman’s
annual salary for fiscal 2008 was $275,000, which the Compensation Committee
determined was below median competitive practices.  Mr. Slootman’s
target annual incentive compensation was set at 100% of base salary, which our
Compensation Committee determined would bring Mr. Slootman’s target total cash
compensation to approximately the 50th
percentile of the peer companies.  Mr. Slootman’s awards under the
quarterly bonus program were paid in accordance with the terms of the bonus
program for all officers discussed above and included the same over-achievement
percentages paid to the other officers.  In February 2008, our Board
of Directors approved an option grant for 100,000 shares of our common stock to
Mr. Slootman taking into account the factors discussed above, including his
existing stock holdings, the extent to which he is vested in his existing stock
options, and his overall performance.  The actual amounts paid to Mr.
Slootman in 2008 are shown in the Summary Compensation Table below.
 
 Financial
Restatement
 
 Our
Compensation Committee has not adopted a policy with respect to whether we will
make retroactive adjustments to any cash or equity based incentive compensation
paid to officers or others where the payment was predicated upon the achievement
of certain financial results that were subsequently the subject of a
restatement.
 
 Stock
Ownership
 
 Although ownership of our stock is
encouraged, we have not adopted a policy requiring a specific level of stock
ownership by our executive officers or members of our Board of
Directors.
 
 Tax
Deductibility of Pay
 
 Section
162(m) of the Internal Revenue Code places a limit of $1.0 million on the amount
of compensation that we may deduct in any one year with respect to each of our
named executive officers.  There is an exception to the $1.0 million
limitation for performance-based compensation meeting certain requirements.
Under our 2007 Equity Incentive Plan, any compensation deemed paid to an officer
when he or she exercises an option with an exercise price that is at least equal
to the fair market value of the option shares on the grant date is deemed to
qualify as performance-based compensation and should not be subject to the $1.0
million deduction limitation.  To maintain flexibility in compensating
officers in a manner designed to promote varying corporate goals, our
Compensation Committee has not adopted a policy requiring all compensation to be
deductible.
 
 9
 
 EXECUTIVE
COMPENSATION
 
 Summary
Compensation Table
 
 The
following table sets forth the total compensation during fiscal years 2006, 2007
and 2008, awarded to, earned by, or paid to our principal executive officer,
principal financial officer, and the next three most highly compensated
executive officers who were serving as executive officers at the end of the last
completed fiscal year (collectively, the “named executive
officers”).
  Name and Principal Position
                Year
                
                Salary
                
                
                Bonus
                
                
                Option
      Awards(1)
                
                
                Non-Equity
      Incentive Plan Compensation
                
                
                All
      Other Compensation
                
                
                TotalFrank
      Slootman
                2008
                
                $
                275,000
                
                
                
                -----
                
                
                $
                2,194,000
                
                
                $
                386,184
                (2)
                
                
                -----
                
                
                $
                2,855,184President
      and ChiefExecutive
      Officer
                2007
                
                
                275,000
                
                
                
                -----
                
                
                
                480,737
                
                
                
                189,333
                (3)
                
                
                -----
                
                
                
                945,0702006
                
                
                264,583
                (4)
                
                
                50,000
                (5)
                
                
                22,678
                
                
                
                50,000
                (6)
                
                
                -----
                
                
                
                387,261Daniel
      R. McGee
                2008
                
                
                220,000
                
                
                
                -----
                
                
                
                1,097,000
                
                
                
                154,473
                (2)
                
                
                -----
                
                
                
                1,471,473Senior
      Vice President ofEngineering
                2007
                
                
                200,000
                
                
                
                -----
                
                
                
                178,726
                
                
                
                75,741
                (3)
                
                
                -----
                
                
                
                454,4672006
                
                
                175,769
                
                
                
                68,836
                (7)
                
                
                147,811
                
                
                
                43,836
                (6)
                
                
                10,451
                (8)
                
                
                446,703Peter
      Rukavina ............
                2008
                
                
                199,269
                
                
                
                -----
                
                
                
                4,865,000
                
                
                
                107,523
                (2)
                
                
                -----
                
                
                
                5,171,792Former
      Senior Vice President of Operations(9)Michael
      P. Scarpelli
                2008
                
                
                250,000
                
                
                
                -----
                
                
                
                1,097,000
                
                
                
                175,538
                (2)
                
                
                -----
                
                
                
                1,522,538Senior Vice President andChief
      Financial Officer
                2007
                
                
                250,000
                
                
                
                12,539
                (10)
                
                
                257,057
                
                
                
                94,675
                (3)
                
                
                -----
                
                
                
                614,2712006
                
                
                62,500
                
                
                
                14,932
                (5)
                
                
                61,044
                
                
                
                14,932
                (6)
                
                
                -----
                
                
                
                153,408David
      L. Schneider
                2008
                
                
                215,000
                
                
                
                -----
                
                
                
                1,097,000
                
                
                
                298,093
                (2)
                
                
                -----
                
                
                
                1,610,093Senior
      Vice President ofWorldwide
      Sales
                2007
                
                
                200,000
                
                
                
                -----
                
                
                
                202,869
                
                
                
                385,951
                (3)
                
                
                -----
                
                
                
                788,8202006
                
                
                170,000
                
                
                
                -----
                
                
                
                10,068
                (11)
                
                
                418,700
                (6)
                
                
                -----
                
                
                
                598,768
 
  ___________________________
  (1)
                The
      amounts in this column represent the dollar amount recognized for
      financial statement reporting purposes with respect to the fiscal year in
      accordance with SFAS 123(R), excluding forfeiture
      estimates.  See Note 1 of the notes to our consolidated
      financial statements included in our Annual Report on Form 10-K for
      the year ended December 31, 2008, as filed with the SEC on March 13,
      2009, for a discussion of our assumptions in determining the SFAS
      123(R) values of our option awards.
 
 (2)
                Reflects
      payments pursuant to our 2008 bonus program.  For Messrs.
      Slootman, Scarpelli, Rukavina and McGee, quarterly bonuses were paid on
      achievement of quarterly revenue objectives, while quarterly bonuses were
      paid to Mr. Schneider based on the achievement of bookings
      objectives.
 
 (3)
                Reflects
      payments pursuant to our 2007 bonus program.  For Messrs.
      Slootman, Scarpelli and McGee, quarterly bonuses were paid on achievement
      of quarterly revenue objectives, while quarterly bonuses were paid to Mr.
      Schneider based on the achievement of bookings
  objectives.
 
 (4)
                Mr.
      Slootman’s base salary was increased to $275,000 on April 1,
      2006.
 
 (5)
                Reflects
      discretionary bonuses approved by our Board of Directors for performance
      of the Company that exceeded the goals set forth in our 2006 bonus
      program.  The bonus amounts for Messrs. Scarpelli and McGee were
      pro-rated based on their start
dates.
 
 (6)
                Reflects
      payments pursuant to our 2006 bonus program.  The bonus amounts
      for Messrs. Scarpelli and McGee were pro-rated based on their start
      dates.
 
 (7)
                Represents
      a $25,000 signing bonus in addition to a $43,836 discretionary bonus
      described in footnote 5 above.
 
 (8)
                Represents
      relocation expenses paid by us in connection with Mr. McGee’s commencement
      of employment in order to assist him in moving his family to
      California.
 
 (9)
                Mr.
      Rukavina joined the Company in March 2008 and left in January 2009. Mr.
      Rukavina received $55,000 in severance when he left the Company in January
      2009.
 (10)
                Reflects
      a bonus awarded to Mr. Scarpelli by our compensation Committee due to his
      achievement of individual performance goals related to our initial public
      offering that occurred in June
2007.
 
 (11)
                Includes
      dollar amounts recognized for financial statement reporting purposes in
      connection with an option to purchase 110,000 shares of our common stock
      granted in December 2006 with an exercise price of $1.00 per share that
      was mutually rescinded by Mr. Schneider and
us.
  10
 Grants
of Plan-Based Awards During 2008
 
 The
following table sets forth each plan-based award granted to our named executive
officers during 2008.
 
 The
amounts shown in the “Estimated Possible Payouts Under Non-Equity Incentive Plan
Awards” column for Messrs. Slootman, McGee, Rukavina, Scarpelli and Schneider
reflect their participation in our 2008 bonus program, which is described in
greater detail in the section entitled “Compensation Discussion and Analysis”
above.  The amounts actually paid to each officer are reflected in the
“Non-Equity Incentive Plan Compensation” column of the Summary Compensation
Table above.
 
  Name
                Award
                  Type
                Grant
      Date
                
                Estimated
      Possible Payouts Under
                  Non-Equity
      Incentive Plan Awards
      Target
                
                
                All
      Other Option Awards: Number of Securities Underlying Options
                
                
                Exercise
      or Base Price of Option Awards Per Share(1)
                
                
                Grant
      Date Fair Value of Stock and Option Awards(2)Frank
      Slootman
                Annual
      Cash
                  Annual
      Option
                N/A
                  02/11/2008
                
                $
                275,000
                  N/A
                
                
                $
                N/A
                  100,000
                
                
                $
                N/A
                  21.94
                
                
                $
                N/A
                  1,328,540Daniel
      R. McGee
                Annual
      Cash
                  Annual
      Option
                N/A
                  02/11/2008
                
                
                110,000
                  N/A
                
                
                
                N/A
                  50,000
                
                
                
                N/A
                  21.94
                
                
                
                N/A
                  664,270Peter
      Rukavina
                Annual
      Cash
                  Annual
      Option
                N/A
                  03/10/2008
                
                
                130,000
                  N/A
                
                
                
                N/A
                  250,000
                
                
                
                N/A
                  19.46
                
                
                
                N/A
                  2,693,075Michael
      P. Scarpelli
                Annual
      Cash
                  Annual
      Option
                N/A
                  02/11/2008
                
                
                125,000
                  N/A
                
                
                
                N/A
                  50,000
                
                
                
                N/A
                  21.94
                
                
                
                N/A
                  664,270David
      L. Schneider
                Annual
      Cash
                  Annual
      Option
                N/A
                  02/11/2008
                
                
                215,000
                  N/A
                
                
                
                N/A
                  50,000
                
                
                
                N/A
                  21.94
                
                
                
                N/A
                  664,270
 _____________________________
 
 (1)
              The
      amounts in this column represent the fair market value of our common stock
      on the date of grant.
  (2)
                The
      amounts in this column represent the aggregate grant date fair value of
      the stock option, computed in accordance with SFAS 123(R).  See
      Note 1 of the notes to our consolidated financial statements included
      in our Annual Report on Form 10-K for the year ended
      December 31, 2008, as filed with the SEC on March 13, 2009, for a
      discussion of our assumptions in determining the SFAS 123(R) values of our
      option awards.
 11
 Outstanding
Equity Awards at December 31, 2008
 
 The
following table presents information regarding outstanding option awards held as
of December 31, 2008 by each named executive officer.
 
 The
options granted to our named executive officers, other than options granted to
Mr. Slootman and Mr. Scarpelli in March 2007, are immediately exercisable,
whether vested or unvested at the time of exercise for all of the underlying
option shares, except to the extent exercisability is deferred to maximize the
number of shares eligible for treatment as incentive stock
options.  The options granted to Mr. Slootman and Mr. Scarpelli in
March 2007 will become exercisable as they vest.  Unvested shares are
subject to repurchase by us at the exercise price upon termination of the
officer’s service for any reason.  The numbers reported in the “Number
of Securities Underlying Unexercised Options” columns indicate the number of
shares underlying unexercised options that were exercisable
and unexercisable as of December 31, 2008.
 
 The
vesting applicable to each outstanding option is described in the footnotes to
the table below.  For a description of the acceleration of vesting
provisions applicable to the options held by our executive officers, please see
the section titled “Potential Payments Upon Termination or Change in Control”
below.
  Option
      AwardsNumber
      of Securities
                  Underlying
      Unexercised
                  Options
      (#)Name
                
                Exercisable
                
                
                Unexercisable
                
                
                Option
                  Exercise Price
                
                Option
                  Expiration DateFrank
      Slootman ...........................
                
                
                993,536
                (1)
                
                
                -----
                
                
                $
                0.10
                
                8/27/13Frank
      Slootman ...........................
                
                
                677,018
                (2)
                
                
                29,436
                
                
                
                0.40
                
                8/9/15Frank
      Slootman ...........................
                
                
                33,333
                (3)
                
                
                56,667
                
                
                
                8.90
                
                3/25/17Frank
      Slootman ...........................
                
                
                -----
                
                
                
                100,000
                (4)
                
                
                21.94
                
                2/10/18Daniel
      R. McGee .....................
                
                
                193,109
                (5)
                
                
                96,875
                
                
                
                0.70
                
                3/14/16Daniel
      R. McGee .....................
                
                
                -----
                
                
                
                50,000
                (6)
                
                
                21.94
                
                2/10/18Peter
      Rukavina   .........................
                
                
                -----
                
                
                
                250,000
                (7)
                
                
                19.46
                
                3/10/18Michael
      P. Scarpelli .....................
                
                
                314,596
                (8)
                
                
                -----
                
                
                
                0.75
                
                9/13/16Michael
      P. Scarpelli .....................
                
                
                2,777
                (9)
                
                
                47,223
                
                
                
                8.90
                
                3/25/17Michael
      P. Scarpelli .....................
                
                
                -----
                
                
                
                50,000
                (10)
                
                
                21.94
                
                2/10/18David
      L. Schneider .....................
                
                
                46,327
                (11)
                
                
                9,066
                
                
                
                0.40
                
                9/13/15David
      L. Schneider .....................
                
                
                82,165
                (12)
                
                
                83,335
                
                
                
                7.26
                
                2/11/17David
      L. Schneider .....................
                
                
                -----
                
                
                
                50,000
                (13)
                
                
                21.94
                
                2/10/18
 ___________________________
  (1)
                  This
      option covered 1,743,536 shares of our common stock.  Mr.
      Slootman has exercised 804,381 of the shares subject to the
      option.  Twenty-five percent (25%) of the option shares vested
      when Mr. Slootman completed 12 months of continuous service after July 28,
      2003.  An additional 1/48th of the option shares vested upon Mr.
      Slootman’s completion of each additional month of continuous service
      thereafter.
 
 (2)
                  The
      shares subject to this option vest in equal monthly installments over four
      years of continuous service after August 10,
  2005.
 
 (3)
                  The
      shares subject to this option vest in 36 equal monthly installments
      beginning on April 25, 2009 and ending on March 25,
  2012.
 
 (4)
                  The
      shares subject to this option shall vest and become exercisable as to
      1/16th
      of such shares when Mr. Slootman completes 27 months of continuous service
      after the vesting commencement date of February 11, 2008, and as to an
      additional 1/16th
      of such shares when Mr. Slootman completes each three months of continuous
      service thereafter.
 
 (5)
                  This
      option covered 490,000 shares of our common stock.  Mr. McGee
      has exercised 200,016 of the shares.  Twenty-five percent (25%)
      of the option shares vested when Mr. McGee completed 12 months of
      continuous service after February 15, 2006.  An additional
      1/48th of the option shares will vest when Mr. McGee completes each
      additional month of service
thereafter.
 
 (6)
                  The
      shares subject to this option shall vest and become exercisable as to
      1/16th
      of such shares when Mr. McGee completes 27 months of continuous service
      after the vesting commencement date of February 11, 2008, and as to an
      additional 1/16th
      of such shares when Mr. McGee completes each three months of continuous
      service thereafter.
 
 (7)
                  These
      options expired unvested when Mr. Rukavina resigned in January 2009.
 
 (8)
                  This
      option covered 625,000 shares of our common stock.  Mr.
      Scarpelli has exercised 310,404 of the shares subject to the
      option.  Twenty-five percent (25%) of the option shares vested
      upon Mr. Scarpelli’s completion of 12 months of continuous service after
      September 14, 2006.  An additional 1/48th of the option shares
      will vest when Mr. Scarpelli completes each additional month of continuous
      service thereafter.
 
 (9)
                  The
      shares subject to this option vest in 36 equal monthly installments
      beginning on April 25, 2009 and ending on March 25,
  2012.
 
 (10)
                  The
      shares subject to this option shall vest and become exercisable as to
      1/16th
      of such shares when Mr. Scarpelli completes 27 months of continuous
      service after the vesting commencement date of February 11, 2008, and as
      to an additional 1/16th
      of such shares when Mr. Scarpelli completes each three months of
      continuous service thereafter.
 
 (11)
                  This
      option covered 217,573 shares of our common stock.  Mr.
      Schneider exercised 162,180 of the shares subject to the option in
      2006.  The shares subject to this option vest in equal monthly
      installments over four years of continuous service after August 10,
      2005.
 
 (12)
                  This
      option covered 200,000 shares of our common stock.  Mr.
      Schneider has exercised 18,500 of the shares subject to the
      option.  The shares subject to this option vest in equal monthly
      installments over four years of continuous service after February 11,
      2007.
 
 (13)
                  The
      shares subject to this option shall vest and become exercisable as to
      1/16th
      of such shares when Mr. Schneider completes 27 months of continuous
      service after the vesting commencement date of February 11, 2008, and as
      to an additional 1/16th
      of such shares when Mr. Schneider completes each three months of
      continuous service
thereafter.
  12
 Option
Exercises During 2008
 
 The
following table shows the number of shares acquired pursuant to the exercise of
options by each named executive officer during 2008 and the aggregate dollar
amount realized by the named executive officer upon exercise of the
option:
  Name
                
                Number
      of Shares
                  Acquired
      on
                  Exercise
                
                
                Value
      Realized
                  On Exercise(1)Frank
      Slootman...............................................................
                
                
                500,000
                
                
                $
                10,237,843Daniel
      McGee.................................................................
                
                
                160,000
                
                
                $
                3,187,597Peter
      Rukavina(2).............................................................
                
                
                -
                
                
                
                -Michael
      Scarpelli.............................................................
                
                
                139,500
                
                
                $
                2,759,783David
      Schneider..............................................................
                
                
                18,500
                
                
                $
                316,149
 _________________________
 
 (1)
              The
      aggregate dollar amount realized upon the exercise of an option represents
      the difference between the aggregate market price of the shares of our
      common stock underlying that option on the date of exercise and the
      aggregate exercise price of the
option.
 
 (2)
              Mr.
      Rukavina joined the Company in March of 2008 and left in January of
      2009.  His stock option was not vested at the time he
      left.
 
 Employment
Agreements and Offer Letters
 
 We have
entered into offer letters with each of our executive officers.
 
 Frank
Slootman.  We entered into an offer letter with Mr. Slootman in
June 2003, which sets forth his initial base salary of $250,000 per
year.  If we terminate Mr. Slootman’s employment for any reason other
than cause or disability, then we will continue to pay him his base salary for 6
months provided he signs a release of claims.
 
 Daniel R.
McGee.  We entered into an offer letter with Mr. McGee in
January 2006 which sets forth his initial base salary of $200,000 per year and
the opportunity to earn an annual bonus with a target amount of
$50,000.  Mr. McGee also received a $25,000 signing bonus. To assist
Mr. McGee in relocating his family from Washington, we offered him up to $15,000
in relocation benefits. If we terminate Mr. McGee’s employment for any reason
other than cause or disability, then we will continue to pay him his base salary
for 3 months and will reimburse him for a portion of the premiums he pays to
continue his health insurance through COBRA for up to 3 months.  All
severance benefits are contingent on Mr. McGee signing a release of
claims.
 
 Peter J.
Rukavina.  We entered into an offer letter with Peter J.
Rukavina on March 5, 2008 for Mr. Rukavina to become our Senior Vice President,
Operations.  We agreed to pay Mr. Rukavina an annual salary of
$220,000, and Mr. Rukavina was eligible for an annual bonus under our 2008 Bonus
Plan.  His bonus target has been set at $130,000 for 2008, payable in
quarterly increments of 25% and pro-rated for the first quarter of fiscal 2008
from his date of hire.  The bonus was to be awarded based on objective
or subjective criteria established by Mr. Slootman and approved by our Board of
Directors.  If we were to terminate Mr. Rukavina’s employment for any
reason other than cause or disability, then we were to continue to pay him his
base salary for 3 months and to reimburse him for a portion of the premiums he
paid to continue his health insurance through COBRA for up to 3
months.  All severance benefits were to be contingent on Mr. Rukavina
signing a release of claims.  In January 2009, Mr. Rukavina left the
company and received $55,000 after signing a release of claims.
 
 Michael P.
Scarpelli.  We entered into an offer letter with Mr. Scarpelli
in September 2006 which sets forth his initial base salary of $250,000 per year
and the opportunity to earn an annual bonus with a target amount of
$25,000.  If we terminate Mr. Scarpelli’s employment for any reason
other than cause or disability, then we will continue to pay him his base salary
for 3 months and will reimburse him for a portion of the premiums he pays to
continue his health insurance through COBRA for up to 3 months.  If
the termination occurs within 12 months after a change in control of the
Company, then we will pay Mr. Scarpelli a lump sum severance amount equal to 6
months of his base salary and 50% of his target bonus in effect at the time of
the termination.  All severance benefits are contingent on Mr.
Scarpelli signing a release of claims.
 
 David L.
Schneider.  We entered into an offer letter with Mr. Schneider
in December 2003 which sets forth his initial base salary of $160,000 per year
and the opportunity to earn commissions.  If we terminate Mr.
Schneider’s employment for any reason other than cause or disability, then we
will continue to pay him his base salary for 3 months and will reimburse him for
a portion of the premiums he pays to continue his health insurance through COBRA
for up to 3 months.  All severance benefits are contingent on Mr.
Schneider signing a release of claims.
 The
following definitions are used in the offer letters with our executive
officers:
 
 “Cause”
means (1) an unauthorized use or disclosure of our confidential information or
trade secrets, (2) a material failure to comply with our written rules or
policies, (3) conviction of, or plea of “guilty” or “no contest” to, a felony or
(4) gross misconduct.
 
 “Change
in control” is defined as either a merger or other reorganization in which 50%
or more of the Company’s voting power is transferred to new stockholders or a
sale of all or substantially all of our assets.
 
 “Disability”
means that the officer is unable to perform the essential functions of his
position for at least 120 days because of physical or mental
impairment.
 
 Each of
our executive officers has entered into an agreement with us with respect to
confidential information and inventions.  Among other things, these
agreements obligate our officers to assign any inventions conceived or developed
during their employment by us and to refrain from disclosing our confidential
information.  These agreements also include a covenant not to solicit
our employees for a period of 12 months following the termination of the
officer’s employment.
   13
 Potential
Payments Upon Termination or Change in Control
 
 Please
see the section titled “Employment Agreements and Offer Letters” above for a
description of the severance arrangements for our executive
officers.
 
 The
options granted to our executive officers include the following provisions for
acceleration of vesting:
 
 Frank
Slootman.  The stock options, restricted shares and/or
restricted stock units granted to Mr. Slootman provide that if he is subject to
an involuntary termination within 12 months after a change in control of the
Company, 100% of his unvested option shares, restricted shares and/or restricted
stock units will vest.  Any awards granted to Mr. Slootman in the
future under our 2007 Equity Incentive Plan will also include this
provision.  In addition, the stock options granted to Mr. Slootman
prior to 2007 provide that if Mr. Slootman’s employment is terminated for any
reason other than cause or disability, then, provided Mr. Slootman signs a
release of claims, Mr. Slootman will receive 6 months of additional
vesting.
 
 Daniel R. McGee,
Peter J. Rukavina Michael P. Scarpelli and David L.
Schneider.  The stock options, restricted shares and/or
restricted stock units granted to Messrs. McGee, Rukavina, Scarpelli and
Schneider provide that if the individual is subject to an involuntary
termination within 12 months after a change in control of the Company, 50% of
his unvested option shares, restricted shares and/or restricted stock units will
vest.  Any awards granted to Messrs. McGee, Scarpelli and Schneider in
the future under our 2007 Equity Incentive Plan will also include this
provision.
 
 Notwithstanding
the foregoing, for any awards granted to our named executive officers in the
future under our 2007 Equity Incentive Plan, if the surviving company in a
merger does not assume such options or replace them with comparable awards, then
50% of the unvested shares, restricted shares and/or restricted stock units
(100% in the case of Mr. Slootman) subject to each of their options will vest at
the time of such change in control regardless of whether they are subject to an
involuntary termination.  This acceleration of vesting shall be in
place of (and not in addition to) any acceleration of vesting that our executive
officers would otherwise be entitled to under our 2007 Equity Incentive
Plan.  Options granted to our executive officers under our 2002 Stock
Plan will accelerate as to all shares if the surviving corporation does not
assume the options or replace them with comparable options.
 
 The
following definitions apply to our executive officers’ stock
options:
 
 “Cause”
means (1) an unauthorized use or disclosure of our confidential information or
trade secrets, (2) a material failure to comply with our written policies or
rules, (3) conviction of, or plea of “guilty” or “no contest” to, a felony, (4)
gross misconduct, (5) a continuing failure to perform assigned duties after
written notice from our Board of Directors or (6) failure to cooperate in good
faith with a governmental or internal investigation of the Company or its
officers, directors or employees, if requested by the Company.
 
 “Change
in control” means (1) a merger of the Company after which our own stockholders
own 50% or less of the surviving corporation or its parent company, (2) a sale
of all or substantially all of our assets, (3) a change in the composition of
our Board of Directors, as a result of which less than half of the incumbent
directors either had been directors two years before the change in composition
of the Board of Directors or were appointed or nominated by the Board by a
majority of the directors who had been directors two years before or had been
selected in this manner, or (4) an acquisition of 50% or more of our outstanding
stock by any person or group, other than a person related to the Company, such
as a holding company owned by our stockholders.
 
 “Involuntary
termination” means (1) a termination by us for reasons other than cause or (2) a
voluntary resignation following (a) a change in the officer’s position with the
Company that materially reduces his scope of authority or level of
responsibility, (b) a reduction in the officer’s base salary (other than
pursuant to generally applicable reductions to similarly situated employees) or
(c) receipt of notice that the officer’s principal workplace will be relocated
more than 40 miles (we refer to a resignation following (a), (b) or (c) as a
resignation for “good reason”); provided, however, that the officer shall
provide notice to the Company within 90 days of the occurrence of one of the
above-referenced conditions and allow the Company 30 days in which to cure the
condition.  For the purpose of clause (a), upon or after a change in
control, a change in authority or responsibility shall not be deemed to occur
solely as a result of being part of a larger organization or because of a change
in title (except for a change in the title of the chief executive officer or the
chief financial officer).
  14
 Estimated
Benefits and Payments Upon Termination of Employment
 
 The
following table describes the potential payments and benefits upon termination
of our executive officers’ employment before or after a change in control of the
Company as described above, as if each officer’s employment terminated as of
December 31, 2008.




Name
              Benefit
              
              Voluntary
                Resignation/
                Termination
                for
      Cause or
                Disability
              
              
              Termination
                Other
      than
                For
      Cause or
                Disability
                Prior
      to
                Change
      in
                Control
              
              
              Termination
                Other
      than
                For
      Cause or
                Disability
                After
      a
                Change
      in
                Control
              
              
              Resignation
                For
      Good
                Reason
      after
                a
      Change in
                ControlFrank
      Slootman
              Severance
              
              $
              -----
              
              
              $
              137,500
              
              
              $
              137,500
              
              
              $
              -----Option
      Acceleration
              
              
              -----
              
              
              
              7,792,471
              
              
              
              7,792,471
              
              
              
              7,792,471COBRA
      Premiums
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----Vacation
      Payout(1)
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----Total
      Value
              
              
              -----
              
              
              
              7,929,971
              
              
              
              7,929,971
              
              
              
              7,792,471Daniel
      R. McGee
              Severance
              
              
              -----
              
              
              
              55,000
              
              
              
              55,000
              
              
              
              -----Option
      Acceleration
              
              
              -----
              
              
              
              1,214,899
              
              
              
              1,214,899
              
              
              
              1,214,899COBRA
      Premiums
              
              
              -----
              
              
              
              3,544
              
              
              
              3,544
              
              
              
              -----Vacation
      Payout(1)
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----Total
      Value
              
              
              -----
              
              
              
              1,273,443
              
              
              
              1,273,443
              
              
              
              1,214,899Peter
      Rukavina(2)
              Severance
              
              
              -----
              
              
              
              55,000
              
              
              
              55,000
              
              
              
              -----Option
      Acceleration
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----COBRA
      Premiums
              
              
              -----
              
              
              
              5,141
              
              
              
              5,141
              
              
              
              5,141Vacation
      Payout(1)
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----Total
      Value
              
              
              -----
              
              
              
              60,141
              
              
              
              60,141
              
              
              
              5,141Michael
      P. Scarpelli
              Severance
              
              
              -----
              
              
              
              62,500
              
              
              
              156,250
              
              
              
              -----Option
      Acceleration
              
              
              -----
              
              
              
              2,636,778
              
              
              
              2,636,778
              
              
              
              2,636,778COBRA
      Premiums(3)
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----Vacation
      Payout(1)
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----Total
      Value
              
              
              -----
              
              
              
              2,699,278
              
              
              
              2,793,028
              
              
              
              2,636,778David
      L. Schneider
              Severance
              
              
              -----
              
              
              
              53,750
              
              
              
              53,750
              
              
              
              -----Option
      Acceleration
              
              
              -----
              
              
              
              890,800
              
              
              
              890,800
              
              
              
              890,800COBRA
      Premiums
              
              
              -----
              
              
              
              5,141
              
              
              
              5,141
              
              
              
              -----Vacation
      Payout(1)
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----Total
      Value
              
              
              -----
              
              
              
              949,691
              
              
              
              949,691
              
              
              
              890,800


_____________________________




(1)
              Effective
      July 1, 2008, our executives no longer accrue vacation
    time.
 
 (2)
              Mr.
      Rukavina joined the Company in March 2008 and left in January
      2009.
 
 (3)
              Pursuant
      to his offer letter, Mr. Scarpelli is eligible for three months of
      company-paid COBRA premiums if he is terminated other than for cause or
      disability; however, he currently has elected not to participate in our
      health plan.


For
purposes of valuing the severance and vacation payments in the table above, we
used each executive’s base salary in effect at the end of 2008.





The value
of option acceleration shown in the table above was calculated based on the
assumption that the officer’s employment was terminated and the change in
control (if applicable) occurred on December 31, 2008 and that the fair market
value of our common stock on that date was $18.80, which represents the closing
price of our common stock on The NASDAQ Global Market on that
date.  The value of the vesting acceleration was calculated by
multiplying the number of unvested shares subject to each option by the
difference between the fair market value of our common stock as of December 31,
2008 and the exercise price of the option.







15


DIRECTOR
COMPENSATION





Under our
director compensation policy currently in effect, directors who are also
officers or employees of the Company receive no additional compensation for
services as a director, committee participation or special
assignments.
 
 Directors
who are not officers or employees of the Company or any of its subsidiaries
(each, a “Non-Employee Director”) receive the following
compensation:
 
 • Each
Non-Employee Director will receive a $10,000 annual retainer, commencing at each
Annual Meeting of Stockholders, payable quarterly in arrears.
 
 • The
chairman of our Board of Directors will receive an additional $10,000 annual
retainer, commencing at each Annual Meeting of Stockholders, payable quarterly
in arrears.
 
 • The
chairman of our Audit Committee will receive an additional $20,000 annual
retainer, commencing at each Annual Meeting of Stockholders, payable quarterly
in arrears.
 
 • The
chairman of our Compensation Committee will receive an additional $10,000 annual
retainer, commencing at each Annual Meeting of Stockholders, payable quarterly
in arrears.
 
 • Each
Non-Employee Director will receive an annual grant at each Annual Meeting of
Stockholders to purchase 15,000 shares of our common stock with an exercise
price equal to the fair market value of our common stock on the date of the
grant. Each annual grant will vest in equal monthly installments over twelve
months, commencing on the date of grant.  Each annual grant will
expire on the tenth anniversary of the date of grant or twelve months after the
termination of service as a member of our Board of Directors.
 
 • Each
new Non-Employee Director joining our Board of Directors will receive an initial
grant of stock options to purchase 50,000 shares of our common stock with an
exercise price equal to the fair market value of our common stock on the date of
grant. The grant will vest in equal monthly installments over three years. Each
new Non-Employee Director will be eligible in the following year to receive the
annual stock option grant referred to above.
 
 In September 2003, we entered into an
amended and restated consulting agreement with Dr. Li, one of our co-founders
and a current member of our Board of Directors.  Pursuant to this
agreement, Dr. Li agreed to serve as our Chief Scientist on a part-time
consulting basis.  As remuneration for these services, we have agreed
to pay Dr. Li a consulting fee of $7,500 per month and a monthly housing
allowance of $2,000 per month for any month in which Dr. Li provides services at
our headquarters.


The
following table sets forth the total compensation awarded to, earned by, or paid
to each person who served as a director during 2008, other than a director who
also served as an executive officer.




Name
              
              Fees
      Earned or Paid in Cash
              
              
              Option
                Awards(1)(2)(3)
              
              
              All
      Other
                Compensation
              
              
              TotalRonald
      D. Bernal
              
              $
              5,000
              
              
              $
              366,600
              (2)
              
              
              -----
              
              
              $
              371,600Aneel
      Bhusri
              
              
              10,000
              
              
              
              366,600
              
              
              
              -----
              
              
              
              376,600Ronald
      E.F. Codd
              
              
              15,000
              
              
              
              366,600
              
              
              
              -----
              
              
              
              381,600Reed
      E. Hundt
              
              
              7,500
              
              
              
              366,600
              
              
              
              -----
              
              
              
              374,100Kai
      Li(4)
              
              
              -----
              
              
              
              266,250
              
              
              
              108,486
              (5)
              
              
              374,736Jeffrey
      A. Miller
              
              
              10,000
              
              
              
              366,600
              
              
              
              -----
              
              
              
              376,600Scott
      D. Sandell
              
              
              5,000
              
              
              
              366,600
              
              
              
              -----
              
              
              
              371,600


___________________________




(1)
              The
      amounts in this column represent the dollar amount recognized for
      financial statement reporting purposes with respect to the fiscal year in
      accordance with SFAS 123(R), excluding forfeiture
      estimates.  See Note 1 of the notes to our consolidated
      financial statements included in our Annual Report on Form 10-K for
      the year ended December 31, 2008, as filed with the SEC on March 13,
      2009, for a discussion of our assumptions in determining the SFAS
      123(R) values of our option awards.
 
 (2)
              The
      directors’ aggregate stock option holdings as of December 31, 2008
      were:  Mr. Bernal - 115,000 shares, Mr. Bhusri - 115,000 shares,
      Mr. Codd – 215,999 shares, Mr. Hundt – 245,000 shares, Mr. Li – 382,997
      shares, Mr. Miller – 215,000 shares and Mr. Sandell – 115,000
      shares.
 
 (3)
              On
      June 4, 2008, we made our annual stock option grants to each of our
      Non-Employee Directors, granting options to purchase 15,000 shares of our
      common stock to each Non-Employee Director at an exercise price of $24.44
      per share.  The grant date fair value of each award was
      $168,450.
 
 (4)
              In
      November 2008, we granted Dr. Li an option to purchase 15,000 shares of
      our common stock at an exercise price of $17.75.  The grant has
      a term of ten years and 6,250 shares were immediately exercisable on the
      grant date and 1,250 shares become exercisable on the fourth day of each
      succeeding month, such that the grant will be fully vested and exercisable
      on June 4, 2009.  The grant date fair value of the award was
      $139,500.
 
 (5)
              Includes
      $90,000 in consulting fees earned and $18,486 in commuting expenses
      incurred by Dr. Li and reimbursed by
us.




Compensation
Committee Interlocks and Insider Participation





As noted
above, the Compensation Committee of our Board of Directors currently consists
of Messrs. Bhusri, Hundt and Miller.  None of our executive officers
has ever served as a member of the board of directors or compensation committee
of any other entity that has or has had one or more executive officers serving
as a member of our Board of Directors or our Compensation
Committee.





COMPENSATION
COMMITTEE REPORT





This
report of the Compensation Committee is required by the SEC and, in accordance
with the SEC’s rules, will not be deemed to be part of or incorporated by
reference by any general statement incorporating by reference this Amendment
into any filing under the Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended, except to the extent that we
specifically incorporate this information by reference, and will not otherwise
be deemed “soliciting material” or “filed” under either the Securities Act of
1933 or the Securities Exchange Act of 1934.





Our
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis required by Item 402(b) of Regulation S-K with management, and,
based on such review and discussions, the Compensation Committee recommended to
the Board that the Compensation Discussion and Analysis be included in this
Amendment.








THE
COMPENSATION COMMITTEE





Jeffrey
A. Miller, Chair


Aneel
Bhusri


Reed
E. Hundt







16


Item
12.  Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters







SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The
following table presents information as to the beneficial ownership of our
common stock as of April 15, 2009 by:





•           each
of our named executive officers;





•           each
of our directors;





•           all
of our directors and executive officers as a group; and





•
            each
      stockholder known by us to be the beneficial owner of more than 5% of our
      common stock.





The
following table lists the applicable percentage beneficial ownership based on
61,103,388 shares of common stock outstanding as of April 15, 2009.





Beneficial
ownership is determined in accordance with the rules of the SEC, and generally
includes voting power and/or investment power with respect to the securities
held.  Shares of common stock subject to stock options exercisable and
RSUs vesting within 60 days of April 15, 2009 are deemed outstanding and
beneficially owned by the person holding such stock options or RSUs for purposes
of computing the number of shares and percentage beneficially owned by such
person, but are not deemed outstanding for purposes of computing the percentage
beneficially owned by any other person.  Except as indicated in the
footnotes to this table, and subject to applicable community property laws, the
persons or entities named have sole voting and investment power with respect to
all shares of our common stock shown as beneficially owned by them.




Unless
otherwise indicated, the principal address of each of the stockholders below is
c/o Data Domain, Inc., 2421 Mission College Blvd., Santa Clara, CA
95054.





Name of Beneficial Owner
              
              Number
      of Shares Beneficially Owned
              
              
              Percent
                of Class5%
      StockholdersEntities
      affiliated with Artis Capital Management(1)..................
              
              
              15,836,844
              
              
              
              25.92
              %Entities
      affiliated with New Enterprise Associates(2).......................
              
              
              9,669,551
              
              
              
              15.82Directors
      and Named Executive OfficersRonald
      D. Bernal(3).............................................................
              
              
              264,116
              
              
              
              *Aneel
      Bhusri(4)..................................................................
              
              
              2,451,545
              
              
              
              4.00
              %Ronald
      E.F. Codd(5)............................................................
              
              
              222,500
              
              
              
              *Reed
      E. Hundt(6)................................................................
              
              
              223,261
              
              
              
              *Kai
      Li(7)...........................................................................
              
              
              1,373,959
              
              
              
              2.24
              %Jeffrey
      A. Miller(8)..............................................................
              
              
              243,196
              
              
              
              *Scott
      D. Sandell(9).............................................................
              
              
              9,782,051
              
              
              
              15.98
              %Frank
      Slootman(10).............................................................
              
              
              1,651,108
              
              
              
              2.63
              %Michael
      P. Scarpelli(11)........................................................
              
              
              172,390
              
              
              
              *Daniel
      R. McGee(12)...........................................................
              
              
              195,115
              
              
              
              *David
      L. Schneider(13)........................................................
              
              
              375,131
              
              
              
              *Peter
      Rukavina (14).............................................................
              
              
              ---
              
              
              
              *All
      current directors and executive officers as a group (12
      persons)(15).....................................................................
              
              
              16,954,372
              
              
              
              26.48
              %


__________________


* Less
than 1%




(1)
              Represents
      shared voting and dispositive power over 15,836,844 shares held by Artis
      Capital Management, L.P. (“Artis”), Artis Capital Management, Inc. (“Artis
      Inc.”) and Stuart L. Peterson, with shared voting and dispositive power
      over 6,683,335 of those shares held by Artis Partners 2X Ltd. (“2X”) and
      shared voting and dispositive power over 3,696,284 of those shares held by
      Artis Partners 2X (Institutional), L.P. (“QP2X”).  Artis Inc. is
      the general partner of Artis.  Mr. Peterson is the president of
      Artis Inc. and the controlling owner of Artis and Artis
      Inc.  Each of Artis, Artis Inc., Mr. Peterson, 2X and QP2X
      disclaims beneficial ownership of the shares except to the extent of that
      person’s pecuniary interest therein.  The address of Artis,
      Artis Inc., Mr. Peterson and QP2X is One Market Plaza, Steuart Street
      Tower, Suite 2700, San Francisco, CA 94105.  The principal
      business address of 2X is c/o Goldman Sachs Administration Services,
      Gardenia Court, Suite 3307, 45 Market Street, Camana Bay, P.O. Box 896,
      KY1-1103, Cayman Islands.  The information regarding the
      beneficial ownership of Artis, Artis Inc., Mr. Peterson, 2X and QP2X is
      derived from a Schedule 13G/A filed on February 17,
  2009.
 
 (2)
              Represents
      9,647,664 shares held by New Enterprise Associates 10, Limited Partnership
      (“NEA 10”) and 21,887 shares held by NEA Partners 10, Limited Partnership
      (“NEA Partners 10”).  The general partner of NEA 10 is NEA
      Partners 10, and the individual general partners of NEA Partners 10 are M.
      James Barrett, Peter J. Barris, C. Richard Kramlich, Charles W. Newhall
      III, Mark W. Perry, Scott D. Sandell and Eugene A. Trainor
      III.  Each of the individual general partners of NEA Partners 10
      exercises shared voting and investment power through NEA Partners 10 over
      the shares held by NEA 10 and NEA Partners 10, and each of the individual
      general partners disclaims beneficial ownership of the shares held of
      record by NEA 10 and NEA Partners 10 except to the extent of his
      individual pecuniary interest therein.  The principal business
      address of each of NEA 10, NEA Partners 10 and Messrs. Newhall and Trainor
      is New Enterprise Associates, 1119 St. Paul Street, Baltimore, Maryland
      21202.  The principal business address of Messrs. Kramlich,
      Perry and Sandell is New Enterprise Associates, 2490 Sand Hill Road, Menlo
      Park, California 94025.  The principal business address of
      Messrs. Barrett and Barris is New Enterprise Associates, 5425 Wisconsin
      Avenue, Suite 800, Chevy Chase, Maryland 20815.  The information
      regarding the beneficial ownership of NEA 10, NEA Partners 10 and each of
      the individual general partners is derived from a Schedule 13G/A filed on
      February 17, 2009.
 
 (3)
              Represents
      125,966 shares held by Ronald Daniel Bernal and Pamela Mayer Bernal as
      Trustees of Bernal Family Trust U/D/T 11/3/95, 25,650 shares held by Wells
      Fargo Bank, Trustee of SHV Profit Sharing Plan FBO Ronald D. Bernal and
      112,500 shares of common stock issuable upon exercise of an option
      exercisable within 60 days of April 15, 2009.  Mr. Bernal
      disclaims beneficial ownership of the shares held by Ronald Daniel Bernal
      and Pamela Mayer Bernal as Trustees of Bernal Family Trust U/D/T 11/3/95
      except to the extent of his individual pecuniary interest
      therein.
 
 (4)
              Includes 1,712,529
      shares held by Greylock XI Limited Partnership (“GXILP”), 47,819 shares
      held by Greylock XI-A Limited Partnership (“GXIALP”), and 195,948 shares
      held by Greylock XI Principals LLC (“GXIPLLC”).  The general
      partner of GXILP and GXIALP is Greylock XI GP Limited Partnership
      (“GXIGPLP”).  Aneel Bhusri is a Managing General Partner of
      GXIGPLP and may be deemed to beneficially own the shares held by GXILP,
      GXIALP and GXIGPLP.  Mr. Bhusri is one of the members of GXIPLLC
      and exercises shared voting and investment power over the shares held of
      record by GXILP, GXIALP and GXIPLLC.  Mr. Bhusri disclaims
      beneficial ownership of such shares except to the extent of his individual
      pecuniary interest therein.  Also includes 382,749 shares
      held directly by Mr. Bhusri and 112,500 shares of common stock issuable
      upon exercise of an option exercisable within 60 days of April 15,
      2009.
 
 (5)
              Represents
      100,000 shares held by Ronald E. F. Codd, 10,000 shares held by The Codd
      Revocable Trust Dated 3/06/98, Ronald E. and Susan T. Codd, Trustees and
      112,500 shares of common stock issuable upon exercise of an option
      exercisable within 60 days of April 15,
2009.
 
 (6)
              Represents
      30,000 shares held by Reed E. Hundt, 761 shares held by the Charles Ross
      Partners Investment Fund Number 29 and 192,500 shares of common stock
      issuable upon exercise of an option exercisable within 60 days of April
      15, 2009.  Mr. Hundt has a pecuniary interest in shares held by
      Greylock XI Limited Partnership, which is a stockholder of ours, but Mr.
      Hundt has no voting or investment power over the shares held by this
      entity.  The shares set forth in the table above do not reflect
      shares held by this entity.
  17
 
 (7)
              Represents
      658,959 shares held directly by Kai Li, 500,000 shares held by the Kai Li
      GRAT dtd 12/26/07 and 215,000 shares of common stock issuable upon
      exercise of options exercisable within 60 days of April 15,
      2009.  Of the 658,959 shares held directly by Kai Li, 94,497
      shares are subject to a lapsing right of
  repurchase.
 
 (8)
              Represents
      115,000 shares held by the J. Miller 2007 Grantor Retained Annuity Trust,
      115,000 shares held by the K. Miller 2007 Grantor Retained Annuity Trust,
      696 shares held by the Miller Living Trust and 12,500 shares of common
      stock issuable upon exercise of options exercisable within 60 days of
      April 15, 2009.  Of the 115,000 shares held by the J. Miller
      2007 Grantor Retained Annuity Trust and the 115,000 shares held by the K.
      Miller 2007 Grantor Retained Annuity Trust, 83,334 shares are subject to a
      lapsing right of repurchase.  Mr. Miller has a pecuniary
      interest in shares held by Greylock XI Limited Partnership, which is a
      stockholder of ours, but Mr. Miller has no voting or investment power over
      the shares held by this entity.  The shares set forth in the
      table above do not reflect shares held by this
  entity.
 
 (9)
              See
      footnote (2) above regarding Mr. Sandell’s relationship with NEA
      10.  Mr. Sandell disclaims beneficial ownership of the shares
      held by NEA 10 and NEA Partners 10 referenced in footnote (2) above,
      except to the extent of his pecuniary interest therein.  Also
      includes 112,500 shares of common stock issuable upon exercise of an
      option exercisable within 60 days of April 15,
  2009.
 
 (10)
              Represents
      1,602 shares of common stock held by Frank Slootman and Brenda L.
      Slootman, as community property, and 1,649,506 shares of common stock
      issuable upon exercise of options exercisable within 60 days of April 15,
      2009.
 
 (11)
              Represents
      90,330 shares of common stock held by Michael P. Scarpelli and Janet L.
      Scarpelli, as community property with the right of survivorship,
      and 82,060 shares of common stock issuable upon exercise of options
      exercisable within 60 days of April 15,
2009.
 
 (12)
              Represents
      2,006 shares of common stock held by Daniel McGee. Also includes 193,109
      shares of common stock issuable upon exercise of options exercisable
      within 60 days of April 15, 2009.
 
 (13)
              Represents
      84,366 shares of common stock held by David Schneider and Barbara
      Schneider, 162,273 shares of common stock held by the Schneider 2001
      Living Trust, David & Barbara Schneider Trustees, August 31, 2001, and
      128,492 shares of common stock issuable upon exercise of options
      exercisable within 60 days of April 15,
2009.
 
 (14)
              Mr.
      Rukavina departed the Company effective January 5,
  2009.
 
 (15)
              Includes
      2,923,167 shares of common stock issuable upon exercise of options
      exercisable within 60 days of April 15,
  2009.


Equity
Compensation Plans





The
following table sets forth information as of December 31, 2008 regarding equity
awards under our 2002 Stock Plan, 2007 Equity Incentive Plan and 2007 Employee
Stock Purchase Plan.  The 2007 Equity Incentive Plan became effective
on June 26, 2007 in connection with our initial public offering and replaced our
2002 Stock Plan.  No further equity grants will be made under our 2002
Stock Plan.








Plan Category
            
            (a)
              Number
      of Shares to be Issued Upon Exercise of Outstanding Options
              and Rights(1)
            
            
            (b)
              Weighted-Average
      Exercise Price of Outstanding Options and
      Rights(2)
            
            
            (c)
              Number
      of Shares Remaining Available for Future Issuance Under Equity Incentive
      Plans (Excluding Shares Reflected in
              Column (a)(3)Equity
      compensation plansapproved
      by security holders
            
            
            13,783,261
            
            
            $
            10.49
            
            
            
            5,765,816Equity
      compensation plans notapproved
      by security holders
            
            
            -----
            
            
            
            ----
            
            
            
            ----Total
            
            
            13,783,261
            
            
            $
            10.49
            
            
            
            5,765,816





________________________




(1)
              Includes
      18,581shares issuable upon vesting of RSUs granted under the 2007 Equity
      Incentive Plan.  The remaining balance consists of outstanding
      stock options.
 
 (2)
              The
      weighted average exercise price does not take into account the shares
      issuable upon vesting of outstanding RSUs, which have no exercise
      price.
 
 (3)
              Includes
      5,051,549 shares available for future issuance under our 2007 Equity
      Incentive Plan and 714,267 shares available for future issuance under our
      2007 Employee Stock Purchase Plan. The number of shares reserved for
      issuance pursuant to our 2007 Equity Incentive Plan is subject to an
      automatic increase on the first day of our fiscal year in an amount equal
      to the lesser of (a) 5% of the shares of common stock outstanding at that
      time; (b) 5,000,000 shares of common stock; or (c) an amount determined by
      our Board of Directors.





18


Item
13.  Certain Relationships and Related Transactions, and Director
Independence





Related
Party Transactions Policy and Procedures





Any
related party transactions, excluding compensation (whether cash, equity or
otherwise), which is delegated to the Compensation Committee and the
Nominating/Corporate Governance Committee, involving one of our directors or
executive officers, must be reviewed and approved by the Audit Committee or by
the disinterested members of the Board of Directors.  Any member of
the Audit Committee who is a related party with respect to a transaction under
review may not participate in the deliberations or vote on the approval or
ratification of the transaction.  However, such a director may be
counted in determining the presence of a quorum at a meeting of the committee
that considers the transaction.  Related parties include any of our
directors or executive officers, certain of our stockholders and their immediate
family members.  To identify any related party transactions, each
year, we submit and require our directors and officers to complete director and
officer questionnaires identifying any transactions with us in which the
executive officer or director or their family members has an
interest.  In addition, our Board of Directors determines, on an
annual basis, which members of our Board of Directors meet the definition of
independent director as defined in the NASDAQ Marketplace Rules and reviews and
discusses any relationships with a director that would potentially interfere
with his or her exercise of independent judgment in carrying out the
responsibilities of a director.








Director
Independence





Our Board
of Directors has determined that all of its current directors, except for Frank
Slootman who serves as our President and Chief Executive Officer and Kai Li who
serves as our Chief Scientist, qualify as independent directors in accordance
with the published listing requirements of the NASDAQ Marketplace
Rules.  Each of the members of our Audit, Compensation and
Nominating/Governance Committees qualify as independent directors in accordance
with the NASDAQ Marketplace Rules.





The
independent directors are:





Ronald D.
Bernal


Aneel
Bhusri


Ronald
E.F. Codd


Reed E.
Hundt


Jeffrey
A. Miller


Scott D.
Sandell





In making
its subjective determination that each non-employee director is independent, the
Board considered that the director is not, and has not been for at least three
years, one of our employees and that neither the director, nor any of his family
members has engaged in various types of business dealings with us.  In
addition, as further required by the NASDAQ Marketplace Rules, our Board of
Directors has made a subjective determination as to each non-employee director
that no relationships exist which, in the opinion of our Board of Directors,
would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.  In making these determinations, our
Board of Directors reviewed and discussed information provided by the directors
and us with regard to each director’s business and personal activities and
relationships as they may relate to us and our management.  In
particular, our Board of Directors considered Mr. Bhusri’s service as our
interim chief executive officer from February 2002 to June 2003 and Mr. Hundt’s
and Mr. Miller’s status as limited partners of Greylock XI Limited Partnership,
previously one of our principal stockholders.  In addition, our Board
of Directors considered the affiliation of certain directors with one or more of
our vendors and customers.





Items
14.  Principal Accounting Fees and Services





Audit
and Non-Audit Fees and Services





The
following table presents information regarding the fees estimated and billed by
Ernst & Young LLP and affiliated entities for the years ended December 31,
2008 and 2007.








For
      the Fiscal Year Ended
              December
      31,Nature of Services
            
            2008
            
            
            2007Audit
      Fees .............................................
            
            $
            1,107,371
            
            
            $
            2,447,312Audit-Related
      Fees ..................................
            
            
            125,641
            
            
            
            -----Tax
      Fees ...............................................
            
            
            342,000
            
            
            
            -----All
      Other Fees ........................................
            
            
            1,500
            
            
            
            -----Total Fees
      .............................................
            
            $
            1,576,512
            
            
            $
            2,447,312





Audit Fees.  Audit
fees consist of fees billed or to be billed by Ernst & Young LLP for
professional services rendered for (i) the audit of our annual consolidated
financial statements and internal controls over financial reporting under
Sarbanes-Oxley Section 404, and, (ii) the reviews of our quarterly financial
statements.  The 2007 period included services rendered in connection
with our initial and follow-on Registration Statements on Form S-1.





Audit-Related
Fees.  Audit-related fees consist of fees for professional
services rendered for advisory services related to internal controls over
financial reporting.  .





Tax Fees.  Tax fees
consist of fees for professional services rendered for income tax planning and
advisory services.





All Other
Fees.  All other fees consist of fees for products and services
not included in the above categories.





Policy
on Audit Committee Pre-Approval of Services Performed by Independent Registered
Public Accounting Firm





The Audit
Committee’s policy is to pre-approve all audit and permissible non-audit
services provided by our independent registered public accounting
firm.  These services may include audit services, audit-related
services, tax services and other services.  The Audit Committee
generally pre-approves particular services or categories of services on a
case-by-case basis.  The independent registered public accounting firm
and management are required to periodically report to the Audit Committee
regarding the extent of services provided by the independent registered public
accounting firm in accordance with these pre-approvals, and the fees for the
services performed to date.  The Audit
Committee has approved all of our independent registered public accounting
firm’s engagements and fiscal year 2008 fees presented above pursuant to its
pre-approval policy.






19





PART
IV





Item
15.  Exhibits and Financial Statement Schedules





(a)(3)  Exhibits








Exhibit


Number





31.3
            Certificate
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.





31.4
            Certificate
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.





(b)    Exhibits





See
Exhibits listed under Item 15(a)(3) above.





20


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this Amendment to be signed on its behalf,
by the undersigned, thereunto duly authorized, on April 29, 2009.








Data
Domain, Inc.











By:           /s/ Frank
Slootman


Frank Slootman


President and Chief Executive
Officer














21