2014 Annual Report

2015 Notice and Proxy Statement And 2014 Annual Report 14OCT201422193676 SONUS NETWORKS, INC. 4 Technology Park Drive Westford, MA 01886 April 29, 2015 Dear Stockholder: We cordially invite you to attend the annual meeting of stockholders of Sonus Networks, Inc. The meeting will be held on Thursday, June 11, 2015, at 10:00 a.m., local time, at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, located at 60 State Street, Boston, Massachusetts 02109. At the annual meeting, stockholders will be asked to consider and vote on (i) the election of eleven nominees for director to hold office until the 2016 annual meeting of stockholders; (ii) the approval of amendments to the Sonus Networks, Inc. 2007 Stock Incentive Plan, as amended; (iii) the ratification of the appointment of Deloitte & Touche LLP to serve as Sonus’ independent registered public accounting firm for the fiscal year ending December 31, 2015; (iv) the approval, on a non-binding basis, of the compensation of our named executive officers as disclosed in the ‘‘Compensation Discussion and Analysis’’ section and the accompanying compensation tables and related narratives contained in the accompanying Proxy Statement; and (v) the transaction of any other business that may properly come before the meeting and any adjournments or postponements thereof. Sonus’ Board of Directors recommends a vote FOR each of the proposals, each of which is described in more detail in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement. We look forward to greeting personally those stockholders who are able to be present at the meeting; however, whether or not you plan to attend in person, it is important that your shares be represented. Your vote is very important. Therefore, please vote at your earliest convenience by following the instructions as described in the accompanying Proxy Statement. Thank you for your continued trust and confidence in Sonus. Sincerely, 15APR201117554791 Raymond P. Dolan President and Chief Executive Officer 14OCT201422193676 SONUS NETWORKS, INC. 4 Technology Park Drive Westford, MA 01886 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To be held June 11, 2015 To the Stockholders of Sonus Networks, Inc.: Notice is hereby given that the annual meeting of stockholders of Sonus Networks, Inc. will be held on Thursday, June 11, 2015 at 10:00 a.m., local time, at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, located at 60 State Street, Boston, Massachusetts 02109. At the meeting, we will consider and vote upon the following proposals to: 1. Elect eleven nominees for director to hold office until the 2016 annual meeting of stockholders; 2. Approve amendments to the Sonus Networks, Inc. 2007 Stock Incentive Plan, as amended; 3. Ratify the appointment of Deloitte & Touche LLP to serve as Sonus Networks’ independent registered public accounting firm for the fiscal year ending December 31, 2015; 4. Approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in the ‘‘Compensation Discussion and Analysis’’ section and the accompanying compensation tables and related narratives contained in the accompanying Proxy Statement; and 5. Transact any other business that may properly come before the meeting and any adjournments or postponements thereof. These items are more fully described in the accompanying Proxy Statement. Only stockholders of record at the close of business on April 14, 2015 are entitled to attend and vote at the 2015 annual meeting and any adjournment of the meeting. All stockholders are invited to attend the annual meeting in person. Whether or not you plan to attend the annual meeting, your vote is important. To ensure that your vote is counted at the 2015 annual meeting, please vote as promptly as possible. By Order of the Board of Directors, 23APR201412545615 Westford, Massachusetts Jeffrey M. Snider April 29, 2015 Senior Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary This Notice, the accompanying Proxy Statement and a form of proxy card are being mailed beginning on or about April 29, 2015 to all stockholders entitled to vote at the meeting. The Sonus Networks, Inc. 2014 Annual Report on Form 10-K, which includes our financial statements and constitutes our annual report to our stockholders, is being mailed with this Notice. Important Notice Regarding Availability of Proxy Materials for the Stockholder Meeting to be held on June 11, 2015: The Proxy Statement and the 2014 Annual Report to Stockholders are available at https://materials.proxyvote.com/835916. TABLE OF CONTENTS Page PROXY STATEMENT—SUMMARY ........................................... 1 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS ............ 3 INFORMATION ABOUT THE ANNUAL MEETING ............................... 4 PROPOSAL 1—ELECTION OF DIRECTORS .................................... 8 Board of Directors ........................................................ 8 Nominees Up For Election—Background and Qualifications .......................... 8 Board of Directors’ Recommendation .......................................... 13 PROPOSAL 2—APPROVAL OF AMENDMENTS TO THE SONUS NETWORKS, INC. 2007 STOCK INCENTIVE PLAN, AS AMENDED ................................... 13 Stock Available for Awards .................................................. 14 Reasons for Proposed Amendments to the 2007 Plan ............................... 14 Highlights of Certain Continuing Provisions of the 2007 Plan ......................... 18 Description of the 2007 Plan (as proposed to be amended) .......................... 19 Certain U.S. Federal Income Tax Consequences ................................... 25 Required Vote ........................................................... 26 Board of Directors’ Recommendation .......................................... 27 PROPOSAL 3—RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ................................. 27 Deloitte & Touche LLP Fees ................................................ 27 Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services ............... 28 Board of Directors’ Recommendation .......................................... 28 PROPOSAL 4—A NON-BINDING ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS ........................................... 29 Key Objectives of Our Executive Compensation Program ............................ 29 2014 Say-on-Pay Results and Stockholder Input ................................... 29 2014 Financial and Operating Performance of the Company .......................... 31 2014 Executive Compensation Program ......................................... 33 Board of Directors’ Recommendation .......................................... 35 CORPORATE GOVERNANCE AND BOARD MATTERS ........................... 36 Code of Ethics ........................................................... 36 Oversight of Risk Management ............................................... 36 Director Independence ..................................................... 36 Meeting Attendance ....................................................... 37 Board Committees ........................................................ 37 Compensation Committee Interlocks and Insider Participation ........................ 40 Director Nomination Process ................................................ 40 Board Leadership Structure ................................................. 41 Executive Sessions of the Board .............................................. 41 Stock Ownership Policy .................................................... 42 Additional Governance Matters .............................................. 42 AUDIT COMMITTEE REPORT .............................................. 43 DIRECTOR COMPENSATION ............................................... 44 Director Cash Compensation ................................................ 44 Page Director Equity Compensation ............................................... 45 Total Director Compensation for 2014 .......................................... 46 EXECUTIVE OFFICERS OF THE REGISTRANT ................................. 48 BENEFICIAL OWNERSHIP OF OUR COMMON STOCK .......................... 50 SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE .............. 53 TRANSACTIONS WITH RELATED PERSONS ................................... 53 COMPENSATION COMMITTEE REPORT ...................................... 54 COMPENSATION DISCUSSION AND ANALYSIS ................................. 55 Overview ............................................................... 55 2014 NEOs ............................................................. 55 Summary of 2014 Compensation Payout Decisions ................................. 55 Existing Strong Pay Practices ................................................ 56 2014 Say-on-Pay Results and Stockholder Input ................................... 57 Risk Management and Our Executive Compensation Program ........................ 71 Compensation Decisions for 2015 ............................................. 71 Conclusion ............................................................. 72 EXECUTIVE COMPENSATION TABLES ....................................... 73 EQUITY COMPENSATION PLAN INFORMATION ............................... 79 POTENTIAL PAYMENTS UPON TERMINATION OR UPON CHANGE IN CONTROL .... 90 STOCKHOLDER PROPOSALS FOR INCLUSION IN 2016 PROXY STATEMENT ........ 92 STOCKHOLDER PROPOSALS FOR PRESENTATION AT 2016 ANNUAL MEETING

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