Red Hat, Inc. (NYSE:RHT) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Item5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers

(e) On May17, 2017, the Compensation Committee of the Board of
Directors (the Committee) of Red Hat, Inc. (the Company):

established the annual base salaries of the Companys principal
executive officer, principal financial officer and other named
executive officers (collectively, the Executive Officers);

established the target award amounts for the Companys fiscal year
ending February28, 2018 (FY2018) for the Executive Officers under
the Companys Executive Variable Compensation Plan (EVC Plan);

established the financial performance objectives that will be
used to determine the cash award amounts for the Executive
Officers for FY2018 under the EVC Plan;

approved the performance objectives for use with grants of
performance share units (PSUs) in FY2018 with payouts based on
the Companys revenue and operating income (the Operating PSUs);

approved the performance objective for use with grants of PSUs in
FY2018 with payouts based on the total shareholder return (TSR)
provided by the Companys common stock (the TSR PSUs);

approved the use of the peer group (the Peer Group) to be used
for measuring performance for PSUs to be awarded in FY2018; and

established the performance objective to be included in the form
of award agreement to be used for grants of restricted stock
awards (RSAs) in FY2018.

Executive Base Salaries

The annual base salaries for the Executive Officers are set forth
on Exhibit 99.1 to this Current Report on Form 8-K (this
Form8-K).

FY2018 Target Award Amounts under the EVC Plan

The target award amounts under the EVC Plan for FY2018 for the
Executive Officers are set forth on Exhibit 99.1 to this Form
8-K. For a discussion of the EVC Plan, see the Companys Current
Report on Form 8-K filed with the Securities and Exchange
Commission (the SEC) on May16, 2007 (the May 2007 Form 8-K).

FY2018 Performance Objectives under the EVC Plan

The financial performance objectives for FY2018 under the EVC
Plan are (a)a specified dollar amount of total revenues, (b)a
specified dollar amount of cash flow from operations plus excess
tax benefits from share-based payment arrangements and (c)a
specified percentage of operating margin, excluding the impact of
expense related to share-based payment arrangements and the
amortization of intangible assets. The cash flow from operations
and operating margin performance objectives are considered
non-GAAP financial measures.

The revenue and operating margin performance objectives are based
on a Euro/U.S. dollar exchange rate of 1.00Euro: U.S.$1.07 and a
yen/ U.S. dollar exchange rate of 115 yen:U.S.$1.00, and these
objectives are subject to adjustment if actual exchange rates for
these currencies differ from these assumed rates by 2% or more.
Additionally, the following items shall be excluded in
determining whether any financial performance objective has been
satisfied for FY2018: the impact of acquisitions and divestitures
approved by the Board of Directors, goodwill write-offs,
restructuring charges, litigation and insurance settlement
charges, the impact of discontinued operations and the cumulative
effect of changes in tax laws or accounting procedures. The
Committee has reserved the right to exercise negative discretion
to limit or forego any of these exclusions and may adjust any
financial performance objective for FY2018 in its discretion as
permitted by Section VIII of the EVC Plan. For a discussion of
the EVC Plan, see the May 2007 Form 8-K.

The Committee determined that 75% of a participants target award
amount will be based upon the financial performance objectives
discussed above, and 25% of a participants target award amount
will be based on individual performance objectives or the
achievement of individual goals, which may be objectively or
subjectively determined (the Individual Objectives). Individual
Objectives relate to strategy development, planning and/or
implementation, corporate initiatives, executive development and
operational improvements. The Committee determined that each of
the financial performance objectives discussed above will be
weighted equally in calculating the financial component of the
award, and, with respect to each financial metric and the
Individual Objectives metric, payments range from 0 50%per
metric. The target award amounts approved by the Committee for
the Executive Officers are set forth on Exhibit 99.1 of this Form
8-K.

Operating PSUs

The Committee approved the performance objectives to be used
with, and authorized the grant to each Executive Officer of, an
Operating PSU award. Each Operating PSU represents the right to
receive in the future one share of the Companys common stock, or
at the Companys election, the value of such share, according to a
formula specified in, and subject to the terms and conditions of,
the form of Operating PSU agreement (the Operating PSU Agreement)
filed as Exhibit 99.2 to this Form 8-K

In March 2017, the Committee approved a new form of Operating PSU
Agreement that updates a number of provisions. The material terms
of the Operating PSU Agreement are substantially similar to the
terms of the Companys form of Performance Share Unit Agreement
filed as Exhibit 99.1 to the Companys Current Report on Form 8-K
filed with the SEC on October15, 2007 (the October 2007 Form
8-K). The summary of such terms in the October 2007 Form 8-K is
incorporated by reference herein.

Under the Operating PSU Agreement, an executive will be granted
an award for a target number of PSUs, and depending on the
Companys financial performance, the executive may earn up to 200%
of the target number of PSUs (the Maximum PSUs) over a period
with two separate performance segments. The first segment
measures performance at the end of the second fiscal year within
the Performance Period against performance in the Base Year. The
second segment measures performance at the end of the third
fiscal year of the Performance Period against performance in the
Base Year. Up to 50% of the Maximum PSUs may be earned in respect
of the first performance segment and up to 50% of the Maximum
PSUs may be earned in respect of the second performance segment,
less the amount earned in respect of the first performance
segment.

The number of PSUs earned, according to the specified formula in
the Operating PSU Agreement, will be determined based on a
comparison of the Companys performance during each performance
segment ending during the Performance Period with respect to
Percentage Revenue Growth and Percentage Operating Income Growth
(the Performance Goals) as compared to the performance of
specified peer companies during each performance segment of the
Operating Performance Period with respect to the same Performance
Goals.

If the executives continuous service with the Company or any of
its affiliates as an employee, consultant or director (a Business
Relationship) ceases for any reason prior to the end of the
Performance Period, any then unearned PSUs will be forfeited;
provided, however, if the executives Business Relationship ceases
by reason of death or Disability or by reason of the Companys
termination of the executive without Good Cause, he or she will
be entitled to payment of a pro rata portion of the earned PSUs
for the performance segment in which the Business Relationship
ceased.

If a Change in Control occurs, and provided the executives
Business Relationship has not ceased, the Committee may determine
that either (i)all of the shares underlying the award that have
not previously been paid or earned will be treated as earned
(x)to the Target Performance Share Unit level if the Change in
Control occurs during the first two fiscal years of the
Performance Period or (y)based on the Companys performance as of
the last day of the most recently completed fiscal quarter before
the date that the Change in Control occurs if the Change in
Control occurs during the third fiscal year in the Performance
Period, and will be paid out in a single lump sum within 30 days
following the Change in Control, or (ii)the Operating Performance
PSUs will be continued, assumed, converted or substituted for
immediately following a Change in Control, using restricted stock
of the Company, Parent Corporation or Surviving Corporation.

The foregoing description of the terms of the Operating PSU
awards and the Operating PSU Agreement does not purport to be
complete and is qualified in its entirety by the provisions of
the form of Operating PSU Agreement filed as Exhibit 99.2 to this
Form8-K.

TSR PSUs

The Committee approved the performance objective to be used with,
and authorized the grant to each Executive Officer of, a TSR PSU
award. Each TSR PSU represents the right to receive in the future
one share of the Companys common stock, or at the Companys
election, the value of such share, according to a formula
specified in, and subject to the terms and conditions of, the
form of TSR PSU agreement (the TSR PSU Agreement) filed as
Exhibit 99.3 to this Form 8-K.

In March 2017, the Committee approved a new form of TSR PSU
Agreement that updates a number of provisions. The material terms
of the TSR PSU Agreement are substantially similar to the terms
of the Companys form of Performance Share Unit Agreement (Fiscal
Year 2010 SPP Form) filed as Exhibit 99.1 to the Companys Current
Report on Form8-K filed with the SEC on June29, 2009 (the June
2009 Form 8-K). The summary of such terms in the June 2009
Form8-K is incorporated by reference herein.

Under the TSR PSU Agreement, an executive will be granted an
award for a target number of PSUs, and depending on the Companys
TSR performance over a thirty-six month period (the TSR
Performance Period), the executive may earn up to 200% of the
target number of PSUs. The number of PSUs earned, according to
the formula specified in the TSR PSU Agreement, will be
determined based on Red Hats TSR growth measured against the TSR
growth of specified peer companies during the TSR Performance
Period. Stock price performance is measured by the change in the
average price of common stock calculated over the ninety trading
day periods ending at both the beginning and the end of the TSR
Performance Period. TSR is determined by measuring stock price
performance plus any cash dividends payable with respect to a
record date set, and not rescinded, within the TSR Performance
Period.

If the executives Business Relationship ceases for any reason
prior to the end of the Performance Period, any then unearned
PSUs will be forfeited; provided, however, if the executives
Business Relationship ceases by reason of death or Disability or
by reason of the Companys termination of the executive without
Good Cause, he or she will be entitled to payment of a pro rata
portion of the earned PSUs for the Performance Period.

If a Change in Control occurs, and provided the executives
Business Relationship has not ceased, the Committee may determine
that either (i)all of the shares underlying the award that have
not previously been paid or earned will be treated as earned
based on the Relative TSR Performance as of the date that the
Change in Control occurs using the per share equivalent of the
cash consideration and securities paid or payable to the Company
or its stockholders in connection with the Change in Control as
the Average Closing Price, and will be paid out in a single lump
sum within 30 days following the Change in Control, or (ii)the
TSR PSUs will be continued, assumed, converted or substituted for
immediately following a Change in Control, using restricted stock
of the Company, Parent Corporation or Surviving Corporation.

The foregoing description of the terms of the TSR PSU awards and
the TSR PSU Agreement does not purport to be complete and is
qualified in its entirety by the provisions of the form of TSR
PSU Agreement filed as Exhibit 99.3 to this Form 8-K and
incorporated by reference herein.

Peer Group

The Peer Group approved by the Committee to be used to measure
performance for each of the Operating PSU and the TSR PSU awards
in FY2018 is set forth on Exhibit 99.4 to this Form 8-K.

RSAs

The Committee authorized the grant to each Executive Officer of a
RSA award, subject to the terms and conditions of the form of RSA
Agreement (the RSA Agreement) filed as Exhibit 99.5 to this Form
8-K. An executives right to receive the shares subject to a RSA
award is subject to achievement of a specified dollar amount of
revenues established by the Committee as the performance
objective for FY2018 under the Companys 2016 Performance
Compensation Plan (the RSA Performance Goal). If the Company
fails to achieve the RSA Performance Goal for FY2018, then all
shares of restricted stock subject to the award are forfeited. If
the Company achieves the Performance Goal for FY2018, 25% of the
restricted stock vests on July16, 2018, and the remainder vests
ratably on a quarterly basis over the course of the subsequent
threeyear period, provided that the executives Business
Relationship with Red Hat has not ceased.

In March 2017, the Committee approved a new form of RSA Agreement
that updates a number of provisions. The material terms of the
RSA Agreement are substantially similar to the terms of the
Companys Performance RSA Agreement filed as Exhibit 99.4 to the
Companys Current Report on Form 8-K filed with the SEC on May25,
2010 (the May 2010 Form 8-K). The summary of such terms in the
May 2010 Form 8-K is incorporated by reference herein.

The foregoing description of the terms of the RSA Agreement does
not purport to be complete and is qualified in its entirety by
the provisions of the form of RSA Agreement filed as Exhibit 99.5
to this Form 8-K and incorporated by reference herein.

Capitalized terms not defined in this 8-K are defined in the form
of the applicable equity award agreement.

Item9.01. Financial Statements and Exhibits.

See Exhibit Index attached hereto.

About Red Hat, Inc. (NYSE:RHT)

Red Hat, Inc. (Red Hat) provides open source software solutions, using a community-powered approach to develop and offer operating system, virtualization, management, middleware, cloud, mobile and storage technologies. Red Hat operates through three geographical segments: the Americas, including the United States, Canada and Latin America; EMEA, including Europe, Middle East and Africa, and Asia Pacific. Its products and services include infrastructure-related offerings, application development-related and other technology offerings, and consulting, support and training services. Its infrastructure-related offerings include Red Hat Enterprise Linux, Red Hat Satellite and Red Hat Enterprise Virtualization. Its application development-related and other technology offerings include Red Hat JBoss Middleware, Red Hat cloud offerings, Red Hat Mobile and Red Hat Storage. Its consulting services include upgrade planning, platform migrations, solution integration and application development.

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