The Board recommends a vote “FOR” the election of each of the Nominee Directors.
The Compensation Committee of the Board is responsible for reviewing, evaluating and approving the agreements, plans, policies, and programs of the Company to compensate its officers and directors. The Compensation Committee currently consists of Messrs. Kackley, Derrickson, Lundeen, and Lundeen.Wimberly.
The Compensation Committee makes all decisions related to the compensation package of the CEO. To determine the compensation of the CEO, the Compensation Committee reviews the individual performance of the CEO in the context of the Company’s performance as well as the analysis of its independent compensation consultant, Lockton Companies LLC (“Lockton”). For the compensation packages of the named executive officers, other than himself, the CEO annually reviews their performance, including individual contribution and demonstrated leadership, and external market references and presents individual compensation recommendations to the Compensation Committee. The Compensation Committee reviews the recommendations of the CEO as well as the analysis of Lockton. The Compensation Committee has the authority to accept, modify, or disregard the CEO’s compensation recommendations. These compensation packages are the result of the evaluation and judgment of the Compensation Committee, rather than a precise formula. The Compensation Committee does not specifically focus in any material way on any of the individual compensation elements discussed below but considers the compensation elements as a whole.
At the 2015 Annual2019 Meeting, of Stockholders, the “Advisory Vote on Executive Compensation” proposal (the “say on pay” vote) received support from approximately 94%96% of votes cast. The Compensation Committee considered these results in determining the Company’s compensation plans and programs for 2015.2019.
Executive Compensation Objectives and Elements of Compensation
During 2015, various2019, certain types of compensation were provided to the named executive officers of the Company set forth in the “Summary Compensation Table” at page 15,17, who are:
• | Jeffrey S. Davis, CEO and President; |
• | Kathryn J. Henely, COO; and |
• | Paul E. Martin, CFO. |
Jeffrey S. Davis, CEO and President;
Thomas J. Hogan, COO; and
Paul E. Martin, CFO.
The objectives of the Company’s compensation programs are to:
• | Recruit and retain top executive officers with the experience and skills to aid and to support the Company’s growth; |
• | Recognize job responsibility and offer competitive and compelling compensation programs that provide executives with an incentive to continue to expand their contributions to the Company; |
• | Reward individuals for their continued contribution to the success of the Company, including the Company’s execution against its business plan and creation of stockholder value; and |
• | Allow employees to acquire a proprietary interest in the Company as an incentive to remain employed with the Company. |
Recognize job responsibility and offer competitive and compelling compensation programs that provide executives with an incentive to continue to expand their contributions to the Company;
Reward individuals for their continued contribution to the success of the Company, including the Company’s execution against its business plan and creation of stockholder value; and
Allow employees to acquire a proprietary interest in the Company as an incentive to remain employed with the Company.
The Company’s compensation programs are designed to attract, retain, and reward executives who are responsible for achieving the business objectives necessary to assure both revenue and profit growth while providing clients of the Company with the highest quality solutions and services. A significant portion of compensation paid to executives is directly related to delivering revenue and profit growth and other factors that influence stockholder value, thereby aligning executive interests closely with stockholder interests. This leads the Company to focus more on variable compensation than on base salary. The Company’s variable compensation programs for executives are structured to pay for high performance and are typically dependent on the Company’s financial results. It is the Company’s view that including an incentive-based compensation element keepsmanagement motivated and retains top executives to ensure the Company’s long-term success. Each named executive officer is rewarded with, or has the opportunity to receive, the following types of cash and non-cash compensation:
• | Base salary; |
• | Performance-based annual cash bonus award; |
• | Long-term equity incentive compensation; and |
• | Company-sponsored employee benefits, such as life insurance benefits and a tax-qualified savings plan (401(k) plan). | |
Base salary;
Performance-based annual cash bonus award;
Long-term equity incentive compensation; and
Company-sponsored employee benefits, such as life insurance benefits and a tax-qualified savings plan (401(k) plan).
In accordance with their respective employment agreements, Messrs. Davis, Hogan and Martin may also be entitled to severance, and for Messrs. Davis and Martin, the potential acceleration of vesting of long-term equity awards, upon a termination of employment for certain specified reasons or a change in control. Ms. Henely is not entitled to any such payments or accelerated vesting of her long-term equity awards.
There is no predetermined policy for allocating compensation between these elements and each type of compensation is designed to achieve a specific purpose in line with the objectives of the Company’s compensation philosophy.
The Compensation Committee has the discretion to directly engage the services of a compensation consultant or other advisors. The Compensation Committee has engaged Lockton, an independent compensation consulting firm, on an as-needed basis to serve as the Compensation Committee’s compensation consultant. LocktonLockton’s executive compensation consultant does not own any shares of the Company’s stock. There are no personal or business relationships between the Lockton consultants and any executive of the Company. In addition, there are no personal relationships between the Lockton consultants and any member of the Compensation Committee. Lockton maintains a detailed conflict of interest policy in order to ensure that the Compensation Committee receives conflict-free advice. Lockton did not provide additional services to the Company in excess of $120,000 during 2015.2019. The project-based consulting fee received by Lockton in connection with its services to the Compensation Committee is less than 1% of Lockton’s annual revenue.
In 2019, Lockton has conducted a comprehensive assessment to determine ifof the Company’s named executive officer compensation is comparablepackages to determine how the total compensation available to named executive officers compared to those of the Company’s peers and a market median. The market median was comprised of a combination of market compensation data from peer company proxy statements as well as published industry sources utilizing companies that operate in the computer programming services industry with revenue less than $500 million (the “external market”). The following companies were included in the peer group: Advent Software,ADTRAN, Inc., Blackbaud,Aspen Technology, Inc., Ciber,Blackbaud, Inc., Commvault Systems, Inc., Computer Task Group, Incorporated, Dealertrack Technologies, Inc., IGATE Corporation, Informatica Corporation, MedAssets,CornerStone OnDemand, CSG Systems, Inc., MicroStrategy Incorporated,EPAM Systems, Inc., EVERTEC, Inc., ExlService Holdings, Extreme Networks, LiveRamp Holdings, Inc., Manhattan Associates, NetScout Systems, Inc., NetSuiteUltimate Software Group, Inc., Sapient Corporation, Synaptics Incorporated and Virtusa Corporation. The report prepared by Lockton analyzed the proposed compensation to be paid to the Company’s named executive officers for 2015.2019. While the data and input provided by Lockton is a factor in its analysis of various compensation elements, the Compensation Committee makes the final determination on all compensation decisions.
The named executive officers are offered a competitive salary in order to retain their services and to also reward their performance with the Company. For the CEO, COO and CFO, salary is set as part of a written agreement that has been approved by the Compensation Committee but may be increased from time to time with the approval of the Board. Several factors are considered by the Compensation Committee when determining and approving an employment agreement or arrangement for a named executive officer. These factors include the named executive officer’s performance relative to the Company’s goals and objectives, such as the Company’s financial performance and relative stockholder return. For newly hired executives, the individual’s relevant experience in the industry is considered. The base salary of other executive officers of the Company is recommended by the CEO after his review of the aforementioned factors with final approval given by the Compensation Committee.
The Compensation Committee determined that the base salary of the named executive officersCFO was below the desired 50th50th percentile of the external market and approved increases during February 2015 to bring theirthe base salaries closer to the recommended targeted position according to the analysis performed by Lockton. The increase was deemed appropriate due to the importance of the rolesCEO and COO were above the 50th percentile of the named executive officers andexternal market. As a result, the Company’s compensation strategy.Compensation Committee approved an increase only for the CFO. See the “Summary Compensation Table” at page 15 17for a detailed discussion of the named executive officers’ base salaries for fiscal years 2013, 2014,2017, 2018 and 2015.2019.
Performance-Based Executive Bonus Plan
The named executive officers are eligible for cash bonuses under the Executive Bonus Plan, which is tied to the Company’s operating performance. The determination of bonus payments is based on various targets and factors. Annual incentive targets are an integral component of compensation that link and reinforce executive decision making and performance with the annual objectives of the Company. The Compensation Committee has the discretion to determine the appropriate performance criteria, which is objective and established in writing during the first quarter of each year. Typically, these targets include an Adjusted Generally Accepted Accounting Principles Earnings Per Share (“Adjusted GAAP EPS”) target that must be met and is discussed and agreed upon by the Compensation Committee and management during the Company’s annual planning process. Adjusted GAAP EPS is a performance measure defined as net income
plus amortization of intangibles, stock compensation expense, acquisition-related costs and adjustments, amortization of debt discount and issuance costs and other infrequent or non-cash items, including related tax effects, divided by shares used in computing adjusted diluted net income per share, which is not in accordance with U. S. Generally Accepted Accounting Principles (“U.S. GAAP”).
Management and the Compensation Committee believe in the importance of structuring a bonus arrangement that pays the Company’s stockholders first. Therefore, no incentive bonuses are payable to the Company’s executives until the Company surpasses the Adjusted GAAP EPS target established by the Compensation Committee. However, finalFinal overall funding decisions are made after the end of the year based upon the Company’s performance against this target and are subject to approval by the Compensation Committee.
For 2015,In February 2019, the Compensation Committee determined that under the Executive Bonus Plan, a portion of the bonus pool was to be funded upon the achievement of Adjusted GAAP EPS in excess of $1.38$1.62 (and earnings in excess of the portion of the bonus pool funded would be retained by the Company), and the bonus pool would not be fully funded until the achievement of Adjusted GAAP EPS in excess of $1.50. at $1.72. The Compensation Committee implementedutilized this “stair-step” feature based on the recommendation of management to ensure that the Company’s executives and management would share in the benefits of increased earnings on Common Stock with the Company’s stockholders. Management and the Compensation Committee believe the inclusion of the “stair-step” feature in the 20152019 Executive Bonus Plan furthers the Company’s policy of paying stockholders before executives are rewarded for Company performance.
In accordance with the original approval of the Executive Bonus Plan, the Compensation Committee reassessed the Executive Bonus Plan targets and adjusted upward the threshold target to Adjusted EPS at $1.63 and adjusted upward the target to fully-fund the bonus pool to Adjusted EPS at $1.73. These adjustments reflect the acquisition completed by the Company during 2019.
For 2015,2019, the Company achieved $1.22 Adjusted GAAP EPS. Therefore,EPS of $2.07. As such, the Compensation Committee at management’s recommendation, did not fundauthorized the bonus plan and did not pay anypayment by the Company of cash incentive bonusesbonus compensation to the named executive officers for 2015at 150% of the target funding level based on the Company’s performance.
performance with respect to certain key metrics.
The short-term incentive target for the named executive officers is generally competitive with the external market in the study provided by Lockton.Lockton for targeted total compensation. Lockton’s review of executive compensation for 20152019 and prior years demonstrated that the Company’s Executive Bonus Plan targets have been consistently aggressive compared to the external market.
Long-Term Equity Incentive Compensation
Share-based compensation such as restricted stock awards are granted to executives on a discretionary basis by the Compensation Committee. The grants are typically made in the first quarter of each year. It is the Company’s current practice to grant awards of restricted stock instead of stock options. See additional discussion of these awards at the “2015“2019 Grants of Plan-Based Awards” table at page 17.19. The Company believes that this type of incentive compensation rewards the highest quality management and will retain that management in the future. Share-based payments allow the executives to obtain a proprietary interest in the Company and therefore participate in the profit and success of the Company in meeting its objectives and goals. Additionally, by focusing on equity-based compensation, the Company is able to provide competitive total compensation packages and use cash resources to operate and expand the business.
Beginning in 2011, theThe vesting period for long-term equity incentive awards was shortened from five years to employees of the Company is three years with one-third of the award vesting on each anniversary of the date of the grant. Prior to 2011, these types of awards had a vesting period of five years with 20% of the award vesting on each anniversary of the date of grant. Currently, there are no performance conditions associated with the share-based awards granted by the Company. Award amounts and the timing of grants are determined by the Compensation Committee. In 2015, all of2019, the long-term equity incentive awards granted by the Company were primarily in the form of restricted stock although a limited number of restricted stock and phantom stock units were granted to certain international employees in substitution for restricted stock. One-third of each award made to the named executive officers in 20152019 vests on each anniversary of the date of grant through 2018.2022. Any potential acceleration of the vesting schedules pursuant to a change in control or a termination is discussed on page 2023 under “Potential Payments Uponupon Termination and/or Change in Control.”
The Compensation Committee utilized the report prepared by Lockton to determine how the long-term incentives granted to the Company’s named executive officers, like share-based payments, compared to the market median (see discussion under “Peer Group” for additional information). The analysis showed that the aggregate value of the equity awards received by the Company’s named executive officers was belowjust above peer practices at the 50th25th percentile of the external market for the CEO and CFO and below peer practices for the COO, and between the 50th and 75th percentilesbut as a result of the external market forCOO's newness in the CFO, when long term incentive awards are calculated based on a percentage of base salary. However, since total cash compensation wasrole and current competitiveness against the peer group, the COO's multiple remained steady at or above the 50th percentile, based2.75. Based on the competitive peer data contained in the Lockton report and the Compensation
Committee’s approval, noan adjustment was made to equity awards for the named executive officers executive’sofficers' compensation component tied to the Company’s stock (determined based on a multiple of the executive’s base salary) as shown in the table below:
|
| | | | |
| | 20142018 Multiple of Base Salary | | 20152019 Multiple of Base Salary |
CEO | | 4.00X5.00X | | 4.00X5.50X |
COO | | 2.75X | | 2.75X |
CFO | | 2.75X | | 2.75X3.00X |
Total Direct Compensation Analysis
Based on the analysis performed by Lockton for 2015,2019, actual total direct compensation paid to the Company’sCompany's named executive officers was betweenincreased such that the 50thCEO and 75ththe CFO would have total direct compensation slightly below the 50th percentiles of the peer group.group and the COO would have total direct compensation slightly above the 50th percentile. This corresponds to the Compensation Committee’s goal to pay compensation comparable to the Company’s peers while still providing executives of the Company with the opportunity to increase the value of their compensation package through extraordinary performance.
Company-SponsoredCompany Sponsored Benefit Plans
The named executive officers are provided with primarily the same company-sponsoredCompany-sponsored health, welfare, and retirement benefits as all other employees, including life insurance benefits and a tax-qualified retirement savings plan. The Company provides all employees with basic life insurance in the amount of two times their annual salary with a $100,000$10,000 minimum benefit and a $400,000 maximum benefit. In addition to the standard life insurance, the Company retains a $1.5 million life insurance policy for the CEO. The benefit on this policy is payable to the CEO’s beneficiary as applicable, upon death. The Company also provides short- and long-term disability benefits to all employees, including the named executive officers, at no cost, for 60% of base salary up to $1,350 per week for up to 90 days and 60% of base salary up to a maximum benefit of $10,000 per month after 90 days, respectively. In addition to the standard short- and long-term disability benefits, the Company pays for additional disability coverage for the CEO, which provides a monthly income benefit of $15,000 for five years.
The Perficient 401(k) Employee Savings Plan (the “401(k) Plan”) is a tax-qualified retirement savings plan to which all employees, including the named executive officers, are able to contribute from 1% to 100%80% of their annual salary on a before-tax basis, up to the limits established by the Internal Revenue Code of 1986, as amended (the “Code”). During 2015,2019, the Company matched 50% of contributions of the first 6% of eligible compensation contributed by participants, comprised of 25% in cash and 25% in Company stock. Employee contributions to the 401(k) Plan vest upon contribution and Company matching funds are fully vested after three years of service.In 2015, the Company amended the 401(k) Plan to exclude executive bonus amounts from the definition of compensation, which reduced permitted and matching contributions for the executives.
Attributed costs of the benefits described above for the named executive officers for the year ended December 31, 20152019 are included in the “All Other Compensation” column of the “Summary Compensation Table” at page 15.17.
Severance Benefits
The Company has entered intoCompany’s employment agreements with the CEO and the CFO which contain severance and change in control provisions. Severance benefits under the agreements are payable upon a “double-trigger.” In other words, although the employment agreements provide for accelerated vesting of equity upon a change in control, additional payments under thesuch agreements are only triggered upon both a change in control and termination of employment. employment without cause. The Company’s employment agreement with the COO provides for severance payments if he is terminated without cause or if he resigns after a constructive termination. The COO’s employment agreement does not provide for accelerated vesting of equity upon a change in control.
The Company provides a level of severance benefits that the Compensation Committee believes is necessary to provide a competitive compensation package to these senior executives. Maintaining these arrangements enables the Company to attract and retain senior executives, provide senior executives with a degree of certainty regarding their future employment relationship, and ensure the continued commitment of senior executives in the event of a potential or actual change in control. Payments upon a change in control also further align the interests of the executives with those of the stockholders. Providing change in control benefits is designed to reduce the reluctance of management to pursue potential change in control transactions that may be in the best interests of the stockholders and helps ensure stability in the event of a change in control of the Company.
The Compensation Committee further believes that the level of severance benefits and vesting of outstanding equity awards under the employment agreements, including multiples of pay, are consistent with market practice and necessary for the
Company to be competitive in attracting and retaining talent in the Company’s industry, and are also commensurate with each senior executive’s level of responsibility.
Finally, the Compensation Committee believes that the potential payments to be made upon termination and/or change in control are an important part of executive compensation as structured at the Company. As discussed above, Company executives are generally paid a lower base salary than market but receive long-term equity compensation at a greater rate than the market. The focus on variable compensation helps to retain executives and reward them for performance over time. Due to this philosophy, offering potential payments upon termination and/or change in control is an attractive compensation element that allows the executives to become equalized with market compensation should these events occur.
Additional information regarding severance and other change in control benefits is provided in the section entitledtitled “Potential Payments upon Termination and/or Change in Control” beginning at page 20.23.
Tax and Accounting Implications
Deductibility of Executive Compensation
As part of its role, the Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) ofapplicable tax laws. The Compensation Committee retains the Code (“IRC Section 162(m)”), which limits the deductibility of certain executive officer compensation. Generally, the Company’s policy isflexibility to structureapprove compensation so that executive compensation is tax-deductible. However, in certain cases the Compensation Committee may approve compensation that will not meet these requirementsbe tax deductible in order to ensure competitive levels of total compensation for its executive officers while creating and improving stockholder value.
The Company’s stockholders approved the Perficient, Inc. Plan for Tax Deductible Executive Incentive Compensation (the “162(m) Plan”) on May 23, 2012. The 162(m) Plan formalizes the Company’s practices for awarding bonuses under the Executive Bonus Plan, which is administered by In these situations, the Compensation Committee. TheCommittee has approved compensation that is non-deductible under Section 162(m) Plan is structured to avoidof the limitations on deductibility imposed byCode (“IRC Section 162(m)”). IRC Section 162(m) in orderlimits the deductibility of certain executive officer compensation to allow the Company to deduct the bonus amounts paid under the Executive Bonus Plan. Taxable income associated with restricted stock awards, however, is subject to the limitations of IRC Section 162(m). The named executive officers were not awarded bonuses in March 2016 with respect to Company performance in 2015 under the 162(m) Plan.
$1 million.
For 2015,2019, the total compensation for income tax purposes of the named executive officers, including base salary, bonus and vesting of restricted stock awards, was in excess of $1,000,000.$1 million. Due primarily to the vesting of restricted stock awards, a portion of the amount of compensation in excess of $1,000,000$1 million was not deductible.
Anti-HedgingAmended and Anti-PledgingRestated Insider Trading Policy
The Board has previously adopted an anti-hedgingamended and anti-pledgingrestated insider trading policy that generallywhich, among other things, prohibits directors and executive officersCompany employees from entering intotrading in Company securities while in the possession of material nonpublic information or hedging and pledging transactions involving our Common Stock.Company securities. Additional restrictions on the trading of Company securities apply to directors and officers. Prohibited transactions include, but are not limited to, purchasing Common Stock on margin, short sales of the Common Stock and buying or selling put or call options or other derivative instruments related to the Common Stock. Under the policy, the Board may grant exceptions on a limited case-by-case basis based on the Board’s assessment of the potential risk to the Company and its stockholders and may subject such transactions to conditions to reduce risk to the Company and its stockholders.
Risk Oversight of the Company’s Compensation Policies and Programs
The Compensation Committee carefully monitors compensation levels to ensure they reflect an appropriate balance of pay-for-performance within acceptable risk parameters. Based on current and evolving best practices guidance, the Compensation Committee conducted a compensation risk assessment of the various elements of the Company’s overall compensation program (including incentive compensation programs). In its analysis, the Compensation Committee reviewed, with input from management, the Company’s compensation programs including appropriate internal controls to mitigate or reduce risk. Based on its review, the Compensation Committee determined that the Company’s compensation programs and policies do not create excessive and unnecessary risk taking. In addition to review by the Compensation Committee, the Board maintains proper policies and procedures to ensure ongoing management and assessment of compensation practices as they relate to risk.
20162020 Compensation Updates
Based in part on the analysis of Lockton and the input of management, the Compensation Committee has determineddesired, with the proposed changes, to maintain generallyset the Company’s 2015named executive officers’ total direct compensation programs as they are described above for 2016. In March 2016,opportunity in line with the 50th percentile of its peers. Accordingly, the Compensation Committee approved certain base salary increases and long-term incentive awards.awards, as noted below. No adjustments were made to the target percentage levels of the performance-based Executive Bonus Plan.
Base Salary Increases
Effective as of April 1, 2016,February 18, 2020, the Compensation Committee approved increasesan increase in the base salaries of Mr. Davis, Ms. HenelyMr. Hogan, and Mr. Martin to $575,000, $385,000$650,000, $435,000, and $335,000,$400,000, respectively. The Compensation Committee approved these increasesthis increase as being consistent with the Compensation Committee’s desire to maintain base salariesremain competitive and as a reflection of the named executive officers atexecutive’s role within the 50th percentile of the external market.Company.
Long-Term Incentive Awards
TheOn February 18, 2020, the Compensation Committee also approved the following long-term incentive awards of restricted stock to the named executive officers: Mr. Davis, $2,300,000; Ms. Henely, $1,058,750;$3,900,000; Mr. Hogan, $1,631,000; and Mr. Martin, $921,250.$1,500,000, with the grant date to be the first business day following the Company’s earnings release for the fourth quarter of 2019. Under the terms of the restricted sharestock award agreements, one-third of the shares subject to an award will vest on each anniversary of March 3, 2016February 26, 2020 with the final tranche vesting on March 3, 2019,February 26, 2023 provided the named executive officer continues his or her employment with the Company through the applicable vesting dates.
The Compensation Committee will consider the results of the “say on pay” vote at the Meeting in making compensation decisions for 2016.2020.
COMPENSATION COMMITTEE REPORT
The 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, has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
The Compensation Committee
James R. Kackley, Chairman
Ralph C. Derrickson, Chairman
David S. Lundeen
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are James R. Kackley, Ralph C. Derrickson, and David S. Lundeen.Lundeen, and Gary M. Wimberly, who became a member in February 2020, replacing James R. Kackley. No member of the Compensation Committee in 20152019 was, or had ever been, an officer or employee of the Company or any of its subsidiaries or had any substantial business dealings with the Company. In addition, no “compensation committee interlocks”“Compensation Committee Interlocks” existed during 2015,2019, that is no member of the Compensation Committee or the Board was an executive officer of another company on whose compensation committee or board any of the executive officers served.
SUMMARY COMPENSATION TABLE
The following table summarizes the total compensation paid or earned by each of the named executive officers for the fiscal years ended December 31, 2013, 2014,2017, 2018, and 2015,2019, including the Principal Executive Officer, which is the CEO, the Principal Financial Officer, which is the CFO, and the other most highly compensated executive officer for 2019, the COO, based on total compensation:compensation.
|
SUMMARY COMPENSATION TABLE |
Name and Principal Position | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)(1) | | | Stock Options ($) | | | Non-Equity Incentive Plan Compensation ($)(2) | | | All Other Compensation ($)(3) | | | Total ($) |
Jeffrey S. Davis | 2015 | | $ | 537,500 | | | $ | - | | | $ | 2,200,015 | | | $ | - | | | $ | - | | | $ | 16,060 | (4) | | $ | 2,753,575 |
President and Chief Executive Officer | 2014 | | $ | 483,333 | | | $ | - | | | $ | 1,999,990 | | | $ | - | | | $ | 520,000 | | | $ | 16,930 | | | $ | 3,020,253 |
| 2013 | | $ | 386,667 | | | $ | - | | | $ | 1,400,001 | | | $ | - | | | $ | 414,982 | | | $ | 15,184 | | | $ | 2,216,834 |
Kathryn J. Henely | 2015 | | $ | 366,250 | | | $ | - | | | $ | 1,031,009 | | | $ | - | | | $ | - | | | $ | 9,718 | | | $ | 1,406,977 |
Chief Operating Officer | 2014 | | $ | 331,667 | | | $ | - | | | $ | 935,005 | | | $ | - | | | $ | 176,800 | | | $ | 9,010 | | | $ | 1,452,482 |
| 2013 | | $ | 280,000 | | | $ | - | | | $ | 724,995 | | | $ | - | | | $ | 150,430 | | | $ | 7,627 | | | $ | 1,163,052 |
Paul E. Martin | 2015 | | $ | 322,500 | | | $ | - | | | $ | 893,012 | | | $ | - | | | $ | - | | | $ | 10,094 | | | $ | 1,225,606 |
Chief Financial Officer | 2014 | | $ | 308,333 | | | $ | - | | | $ | 866,258 | | | $ | - | | | $ | 131,040 | | | $ | 10,556 | | | $ | 1,316,187 |
| 2013 | | $ | 268,333 | | | $ | - | | | $ | 687,497 | | | $ | - | | | $ | 114,210 | | | $ | 9,680 | | | $ | 1,079,720 |
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| | | | | | | | | | | | | | | | | | | | | | | | | | |
SUMMARY COMPENSATION TABLE |
Name and Principal Position | | Year | | Salary | | Bonus (1) | | Stock Awards (2) | | Non-Equity Incentive Plan Compensation (3) | | All Other Compens- ation (4) | | Total |
Jeffrey S. Davis | | 2019 | | $ | 625,000 |
| | $ | — |
| | $ | 3,415,330 |
| | $ | 1,875,000 |
| | $ | 53,280 |
| (5) | $ | 5,968,610 |
|
President, Chief Executive Officer and Chairman | | 2018 | | 621,683 |
| | — |
| | 3,125,012 |
| | 1,360,000 |
| | 47,596 |
| | 5,154,291 |
|
| | 2017 | | 596,587 |
| | 300,000 |
| | 2,384,315 |
| | 450,000 |
| | 30,203 |
| | 3,761,105 |
|
Thomas J. Hogan | | 2019 | | $ | 410,000 |
| | $ | — |
| | $ | 1,119,576 |
| | $ | 615,000 |
| | $ | 162,616 |
| (5) | $ | 2,307,192 |
|
Chief Operating Officer | | 2018 | | 306,667 |
| | — |
| | 400,015 |
| | 247,500 |
| | 7,930 |
| | 962,112 |
|
(November 2018 - Present) | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Paul E. Martin | | 2019 | | $ | 372,833 |
| | $ | — |
| | $ | 1,117,572 |
| | $ | 450,000 |
| | $ | 12,071 |
| | $ | 1,952,476 |
|
Chief Financial Officer | | 2018 | | 360,408 |
| | — |
| | 995,018 |
| | 315,100 |
| | 11,059 |
| | 1,681,585 |
|
| | 2017 | | 347,952 |
| | 70,000 |
| | 956,214 |
| | 100,000 |
| | 10,737 |
| | 1,484,903 |
|
| |
(1) | Amounts reflect supplemental bonuses paid to named executive officers as a result of the one-time benefit the Company received under the Tax Cuts and Jobs Act of 2017 and to facilitate retention of the Company’s executive employees. |
| |
(2) | Amounts listed represent the aggregate grant date fair value, with respect to restricted stock awards, computed in accordance with ASC Topic 718. In accordance with SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Assumptions used in the calculation of the 20152019 amounts were disclosed in Note 8Notes 2 and 5 to the Company’s consolidated financial statements for 2015,2019, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 3, 2016.February 25, 2020. |
| |
(2) (3) | Amounts are earned and accrued during the fiscal year indicated and paid subsequent to the end of the fiscal year pursuant to the Company’s performance-based Executive Bonus Plan. |
(3) | |
(4) | Other than as noted in footnote (4)(5), the amounts listed represent the value of the Company’s matching contributions under the 401(k) Plan, Company-paid standard life insurance premiums, and cell phone allowances. The named executive officers, from time to time, received certain immaterial personal benefits or other compensation items from the Company; however, in no case did the value of these items exceed $10,000 in the aggregate. |
(4) | |
(5) | As part of his overall compensation, Mr. Davis received matching contributions of $6,875 from the Company under the 401(k) Plan, Company-paid life and disability insurance premiums of $6,705, Company-paid standard life insurance premiums$41,209. As part of $860, and a $1,620 cell phone allowance.his overall 2019 compensation, Mr. Hogan received relocation benefits of $154,627. |
The table below summarizes the 20152019 total compensation mix for the named executive officers by pay element:
PERCENT OF 2015 TOTAL COMPENSATION BY PAY ELEMENT |
Name | Base Salary | | Incentive Compensation | | Other Compensation |
| | | | | |
Jeffrey S. Davis | 19% | | 80% | | 1% |
| | | | | | | | | | | |
Kathryn J. Henely | 26% | | 73% | | 1% |
| | | | | | | | | | | |
Paul E. Martin | 26% | | 73% | | 1% |
|
| | | | | | | | | | |
PERCENT OF 2019 TOTAL COMPENSATION BY PAY ELEMENT |
Name | | Base Salary | | Incentive Compensation (1) | | | Other Compensation (2) |
Jeffrey S. Davis | | 10 | % | | 89 | % | | | Less than 1% |
|
Thomas J. Hogan | | 18 | % | | 75 | % | | | 7 | % |
Paul E. Martin | | 19 | % | | 80 | % | | | Less than 1% |
|
| |
(1) | Includes restricted stock awards under the Incentive Plan and payments under the performance-based Executive Bonus Plan. |
| |
(2) | For Mr. Hogan, includes one-time relocation benefits of $154,627. |
Employment Agreements
Mr. Davis
The Company entered into an employment agreement with Mr. Davis effective January 1, 20152018 that expires on December 31, 2017.2020. Mr. Davis’s employment agreement provides for the following compensation:
An annual salary of $600,000 that may be increased by the Board from time to time;
• | an annual salary of $500,000 that may be increased by the Board from time to time; |
• | an annual performance bonus of up to 200% of Mr. Davis’s annual salary in the event the Company achieves certain performance targets; |
• | entitlement to participate in such insurance, disability, health, and medical benefits and retirement plans or programs as are from time to time generally made available to our executive employees, pursuant to our policies and subject to the conditions and terms applicable to such benefits, plans or programs; |
• | severance benefits, if Mr. Davis’s employment with the Company is terminated by the Company without cause (as defined in the agreement) either before or after a change in control, of a lump-sum payment equal to two years’ annual salary and Mr. Davis’s target bonus for the year in which termination of employment occurs, acceleration of option and restricted stock vesting, and welfare benefits for one year following termination; |
• | severance benefits of a lump-sum payment equal to two years’ annual salary and Mr. Davis’s target bonus, and welfare benefits for one year following resignation if Mr. Davis voluntarily resigns after a constructive termination, as defined in the agreement; |
• | death and disability benefits, including a payment of one year’s base salary and one year’s target bonus; and |
• | 100% of all unvested options and restricted shares vest upon a change in control. |
An annual performance bonus of up to 300% of Mr. Davis’s annual salary in the event the Company achieves certain performance targets;
Entitlement to participate in such insurance, disability, health, and medical benefits and retirement plans or programs as are from time to time generally made available to our executive employees, pursuant to our policies and subject to the conditions and terms applicable to such benefits, plans or programs;
Severance benefits, if Mr. Davis’s employment with the Company is terminated by the Company without cause (as defined in the agreement) either before or after a change in control, of a lump-sum payment equal to two years’ annual salary and Mr. Davis’s target bonus for the year in which termination of employment occurs, acceleration of option and restricted stock vesting, and welfare benefits for one year following termination;
Severance benefits of a lump-sum payment equal to two years’ annual salary and Mr. Davis’s target bonus, and welfare benefits for one year following resignation if Mr. Davis voluntarily resigns after a constructive termination, as defined in the agreement;
Death and disability benefits, including a payment of one year’s base salary and one year’s target bonus; and
100% of all unvested options and restricted shares vest upon a change in control.
Mr. Davis has agreed to refrain from competing with the Company for a period of three years following the termination of his employment. Mr. Davis’s compensation is subject to review and adjustment on an annual basis in accordance with the Company’s compensation policies as in effect from time to time. Mr. Davis’s annual salary was increased to $550,000 and $575,000$650,000 in March 2015 and March 2016, respectively.February 2020.
Mr. Hogan
The Company entered into an employment agreement with Mr. Hogan effective November 1, 2018 that expires on December 31, 2020. Mr. Hogan’s employment agreement provides for the following compensation:
An annual salary of $410,000 that may be increased by the CEO, with approval by the Board or its Compensation Committee, from time to time;
An annual performance bonus of up to 150% of Mr. Hogan’s annual salary in the event the Company achieves certain performance targets;
Entitlement to participate in such insurance, disability, health, and medical benefits and retirement plans or programs as are from time to time generally made available to executive employees of the Company, pursuant to the policies of the Company and subject to the conditions and terms applicable to such benefits, plans or programs; and
Severance benefits, if Mr. Hogan’s employment with the Company is terminated by the Company without cause (as defined in the agreement) or if Mr. Hogan voluntarily resigns after a constructive termination (as defined in the agreement), of a lump-sum payment equal to one year’s annual salary, continued vesting of restricted stock, and welfare benefits for one year following termination.
Mr. Hogan has agreed to refrain from competing with the Company for a period of three years following the termination of his employment. Mr. Hogan’s compensation is subject to review and adjustment on an annual basis in accordance with the Company’s compensation policies as in effect from time to time. Mr. Hogan's annual salary was increased to $435,000 in February 2020.
Mr. Martin
The Company entered into an employment agreement with Mr. Martin effective January 1, 20152018 that expires on December 31, 2017.2020. Mr. Martin’s employment agreement provides for the following compensation:
An annual salary of $350,000 that may be increased by the CEO, with approval by the Board or its Compensation Committee, from time to time;
• | an annual salary of $310,000 that may be increased by the CEO, with approval by the Board or its Compensation Committee, from time to time; |
• | an annual performance bonus of up to 80% of Mr. Martin’s annual salary in the event the Company achieves certain performance targets; |
• | entitlement to participate in such insurance, disability, health, and medical benefits and retirement plans or programs as are from time to time generally made available to executive employees of the Company, pursuant to the policies of the Company and subject to the conditions and terms applicable to such benefits, plans or programs; |
• | severance benefits, if Mr. Martin’s employment with the Company is terminated by the Company without cause (as defined in the agreement) or if Mr. Martin voluntarily resigns after a constructive termination (as defined in the agreement), of a lump-sum payment equal to one year’s annual salary, continued vesting of restricted stock, and welfare benefits for one year following termination; |
• | severance benefits if Mr. Martin’s employment with the Company is terminated by the Company without cause (as defined in the agreement) within the first year after a change in control equal to one year’s annual salary and immediate vesting of all remaining unvested restricted stock previously awarded to Mr. Martin and welfare benefits for one year following termination; and |
• | 50% of all unvested options and restricted shares vest upon a change in control. |
An annual performance bonus of up to 120% of Mr. Martin’s annual salary in the event the Company achieves certain performance targets;
Entitlement to participate in such insurance, disability, health, and medical benefits and retirement plans or programs as are from time to time generally made available to executive employees of the Company, pursuant to the policies of the Company and subject to the conditions and terms applicable to such benefits, plans or programs;
Severance benefits, if Mr. Martin’s employment with the Company is terminated by the Company without cause (as defined in the agreement) or if Mr. Martin voluntarily resigns after a constructive termination (as defined in the agreement), of a lump-sum payment equal to one year’s annual salary, continued vesting of restricted stock, and welfare benefits for one year following termination;
Severance benefits, if Mr. Martin’s employment with the Company is terminated by the Company without cause (as defined in the agreement) within the first year after a change in control equal to one year’s annual salary and immediate vesting of all remaining unvested restricted stock previously awarded to Mr. Martin and welfare benefits for one year following termination; and
50% of all unvested options and restricted shares vest upon a change in control.
Mr. Martin has agreed to refrain from competing with the Company for a period of three years following the termination of his employment. Mr. Martin’s compensation is subject to review and adjustment on an annual basis in accordance with the Company’s compensation policies as in effect from time to time. Mr. Martin’s annual salary was increased to $325,000 and $335,000$400,000 in March 2015 and March 2016, respectively.
GRANTS OF PLAN-BASED AWARDS
The following table reflects awards granted to the named executive officers during 20152019 under the Company’s equity and non-equity incentive plans:
|
| | | | | | | | | | | | | | | | | | | | | |
2019 GRANTS OF PLAN-BASED AWARDS |
Name | | Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | All Other Stock Awards: Number of Shares of Stock (#) (2) | | Grant Date Fair Value of Stock Awards (3) |
| | Threshold | | Target | | Maximum | | |
Jeffrey S. Davis | | 2/27/2019 | | $ | — |
| | $ | — |
| | $ | — |
| | 119,292 |
| | $ | 3,415,330 |
|
| | N/A | | — |
| | 1,250,000 |
| | 1,875,000 |
| | — |
| | — |
|
Thomas J. Hogan | | 2/27/2019 | | $ | — |
| | $ | — |
| | $ | — |
| | 39,105 |
| | $ | 1,119,576 |
|
| | N/A | | — |
| | 410,000 |
| | 615,000 |
| | — |
| | — |
|
Paul E. Martin | | 2/27/2019 | | $ | — |
| | $ | — |
| | $ | — |
| | 39,035 |
| | $ | 1,117,572 |
|
| | N/A | | — |
| | 300,000 |
| | 450,000 |
| | — |
| | — |
|
2015 GRANTS OF PLAN-BASED AWARDS |
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | All Other Stock Awards: Number of Shares of | | | Grant Date Fair Value of Stock |
Name | | Grant Date | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Stock (#)(2) | | | Awards ($)(3) |
Jeffrey S. Davis | | 3/3/2015 | | | $ | - | | | $ | - | | | $ | - | | | | 110,832 | | | $ | 2,200,015 |
| | N/A | | | | - | | | | 1,000,000 | | | | 1,500,000 | | | | - | | | | - |
Kathryn J. Henely | | 3/3/2015 | | | | - | | | | - | | | | - | | | | 51,940 | | | | 1,031,009 |
| | N/A | | | | - | | | | 340,000 | | | | 510,000 | | | | - | | | | - |
Paul E. Martin | | 3/3/2015 | | | | - | | | | - | | | | - | | | | 44,988 | | | | 893,012 |
| | N/A | | | | - | | | | 252,000 | | | | 378,000 | | | | - | | | | - |
| |
(1) | Reflects the target and maximum bonus award amounts that could potentially be earned by each named executive officer under the 20152019 Executive Bonus Plan based on 20152019 performance, as described in the “Annual Incentive Cash Bonus Compensation” section following this table. |
| |
(2) | Reflects the Compensation Committee’s grant of restricted shares to the named executive officers on March 3, 2015February 27, 2019 in the respective amounts listed in the table. The terms of these restricted share awards are described in the section entitledtitled “Restricted Share Award Terms” below. |
| |
(3) | The grant date fair value is based on the per share closing market price of the Common Stock on March 3, 2015February 27, 2019 (the date of grant) of $19.85.$28.63. |
Annual Incentive Cash Bonus Compensation
Bonuses available to the named executive officers as an annual incentive bonus under the 20152019 Executive Bonus Plan are based upon pre-set percentages of salary and are earned by reaching certain target performance levels, which are subject to adjustment by the Compensation Committee based on acquisitions and other extraordinary or non-recurring items. Final overall funding decisions are made after the year-end by the Compensation Committee, which may exercise its discretion to adjust downward the amounts to be paid to the participants.
In February 2015,2019, the Compensation Committee established the targets for the named executive officers under the 20152019 Executive Bonus Plan. The table below lists the potential bonus awards as a percent of base salary for the named executive officers as reflected in the “2015“2019 Grants of Plan-Based Awards” table:
| | Target Bonus Percentage | | | Maximum Bonus Percentage |
CEO | | 200% | | | 300% |
COO | | 100% | | | 150% |
CFO | | 80% | | | 120% |
|
| | | | |
| | Target Bonus Percentage | | Maximum Bonus Percentage |
CEO | | 200% | | 300% |
COO | | 100% | | 150% |
CFO | | 80% | | 120% |
The named executive officers may share in every dollar of earnings above the targets established pursuant to the 20152019 Executive Bonus Plan up to the maximum bonus percentage set for each. The named executive officers may receive up to the maximum bonus percentage to the extent the Adjusted GAAP EPS target is exceeded up to 1.5 times the target. The Compensation Committee has the discretion to decrease bonus amounts, even if the target is met or exceeded. In order to meet this target, the Company’s Adjusted GAAP EPS must meet the predetermined target after considering the estimated bonus payout. Please refer to the section entitledtitled “Performance-Based Executive Bonus Plan” on page 1012 for additional information regarding the predetermined target. For 2015,2019, the Company did not achieveachieved $2.07 Adjusted EPS, which surpassed the applicable Adjusted GAAP EPS threshold. Therefore,threshold target level. As such, the Compensation Committee at management’s recommendation, did not fundauthorized the bonus plan and did not pay anypayment by the Company of cash incentive bonusesbonus compensation to the named executive officers for 2015at 150.0% of the target funding level based on the Company’s performance.
performance with respect to certain key metrics.
Restricted Share Award Terms
The restricted shares awarded to the named executive officers on March 3, 2015February 27, 2019 were granted under the Amended and Restated Perficient, Inc. 2012 Long-TermLong Term Incentive Plan as amended.(as amended, the “Incentive Plan”). Under the terms of the restricted share award agreements, one-third of the shares subject to an award will vest on each anniversary of March 3, 2015February 27, 2019 with the final tranche vesting on March 3, 2018,February 27, 2022, provided the named executive officer continues his or her employment with the Company through the applicable vesting dates.
In the event of a recipient’s termination of employment with the Company for any reason (including death or disability) prior to full vesting of the restricted shares, restricted shares that have not vested as of the date of termination will be null and void and will be forfeited to the Company, unless the terms of the recipient’s employment agreement provide otherwise. The employment agreements for Messrs. Davis and Martin provide for accelerated vesting of equity awards such as the restricted share awards in the case of certain involuntary terminations or upon the occurrence of a change in control. These acceleration provisions are described below in the section of this Proxy Statement entitledtitled “Potential Payments upon Termination and/or Change in Control.” Mr. Hogan’s employment agreement does not provide for such acceleration.
Dividends are payable on restricted shares once vested at the same rate and at the same time that dividends are paid to stockholders generally; however, we have never declared or paid any cash dividends on our common stock. Our credit facility currently restricts the Company has not historically paid,payment of cash dividends. Any future determination as to the declaration and inpayment of dividends will be made at the future does not intend to pay, dividends.discretion of our Board of Directors and will depend on our earnings, operating and financial condition, capital requirements and other factors deemed relevant by our Board of Directors, including the applicable requirements of the Delaware General Corporation Law.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table presents the number and market value of unvested restricted share awards held by each named executive officer as of December 31, 2015:2019:
2015 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | |
| | 2019 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | | 2019 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END |
| | Stock Awards | | Stock Awards |
| | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested (1) |
Name | |
| | | | | | |
Jeffrey S. Davis | | | 40,160 | (2) | | $ | 687,539 | | 43,573 |
| (2) | | $ | 2,007,408 |
|
| | | 64,040 | (3) | | | 1,096,365 | | 94,611 |
| (3) | | 4,358,729 |
|
| | | 110,832 | (4) | | | 1,897,444 | | 119,292 |
| (4) | | 5,495,782 |
|
| | | | | | | | |
Kathryn J. Henely | | | 20,797 | (2) | | | 356,045 | |
| | | 29,939 | (3) | | | 512,556 | |
Thomas J. Hogan | | | 4,993 |
| (2) | | $ | 230,028 |
|
| | | 51,940 | (4) | | | 889,213 | | 12,110 |
| (3) | | 557,908 |
|
| | | | | | | | | 39,105 |
| (4) | | 1,801,567 |
|
Paul E. Martin | | | 19,721 | (2) | | | 337,624 | | 17,474 |
| (2) | | $ | 805,027 |
|
| | | 27,738 | (3) | | | 474,875 | | 30,124 |
| (3) | | 1,387,813 |
|
| | | 44,988 | (4) | | | 770,195 | | 39,035 |
| (4) | | 1,798,342 |
|
| |
(1) | Based on the per share closing market price of $17.12$46.07 of the Common Stock on December 31, 2015.2019. |
| |
(2) | Represents awards of restricted shares made to the named executive officers on March 2, 2017. One-third of the restricted shares subject to each award vests on each anniversary of March 2 with the final tranche vesting on March 2, 2020. |
| |
(3) | Represents awards of restricted shares made to the named executive officers on March 2, 2018. One-third of the restricted shares subject to each award vests on each anniversary of March 2 with the final tranche vesting on March 2, 2021. |
| |
(4) | Represents awards of restricted shares made to the named executive officers on February 26, 2013.27, 2019. One-third of the restricted shares subject to each award vests on each anniversary of February 2627 with the final tranche vesting on February 26, 2016. |
(3) | Represents awards of restricted shares made to the named executive officers on March 4, 2014. One-third of the restricted shares subject to each award vests on each anniversary of March 4 with the final tranche vesting on March 4, 2017. |
(4) | Represents awards of restricted shares made to the named executive officers on March 3, 2015. One-third of the restricted shares subject to each award vests on each anniversary of March 3 with the final tranche vesting on March 3, 2018. |
| 27, 2022. |
STOCK AWARDS VESTED
��
The following table presents stock awards vested on behalf of the named executive officers during 2015:2019:
2015 STOCK AWARDS VESTED | |
| | 2019 STOCK AWARDS VESTED | | 2019 STOCK AWARDS VESTED |
Name | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)(1) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting (1) |
Jeffrey S. Davis | | | 125,241 | (2) | | $ | 2,516,245 | | 128,889 |
| (2) | | $ | 3,749,495 |
|
| | | | | | | | |
Kathryn J. Henely | | | 62,526 | (3) | | | 1,256,828 | |
| | | | | | | | |
Thomas J. Hogan | | | 15,593 |
| (3) | | 453,634 |
|
Paul E. Martin | | | 58,615 | (4) | | | 1,177,950 | | 47,758 |
| (4) | | 1,388,902 |
|
| |
(1) | Calculated as the aggregate market value on the date of vesting of the shares with respect to which restrictions lapsed during 20152019 (calculated before payment of any applicable withholding or other income taxes). |
| |
(2) | Mr. Davis was granted: (i) 103,000 restricted114,030 shares on March 22, 2010,4, 2016, a portion of which vested on March 22, 20154, 2019 when the market price of the Company’s stock was $20.72;$28.83; (ii) 97,377 restricted130,719 shares on May 23, 2012,March 2, 2017, a portion of which vested on AprilMarch 2, 20152019 when the market price of the Company’s stock was $20.98;$29.20; and (iii) 120,482 restricted141,917 shares on February 26, 2013,March 2, 2018, a portion of which vested on February 26, 2015March 2, 2019 when the market price of the Company’s stock was $19.45; and (iv) 96,061$29.20. |
| |
(3) | Mr. Hogan was granted: (i) 13,634 shares on March 4, 2014,2016, a portion of which vested on March 4, 20152019 when the market price of the Company’s stock was $19.59. |
(3) | Ms. Henely was granted: (i) 45,000 restricted$28.83; (ii) 14,979 shares on March 22, 2010,2, 2017, a portion of which vested on March 22, 2015,2, 2019 when the market price of the Company’s stock was $20.72; (ii) 53,279 restricted$29.20; and (iii) 18,166 shares on May 23, 2012,March 2, 2018, a portion of which vested on AprilMarch 2, 2015,2019 when the market price of the Company’s stock was $20.98; (iii) 62,392 restricted$29.20. |
| |
(4) | Mr. Martin was granted: (i) 45,661 shares on February 26, 2013,March 4, 2016, a portion of which vested on February 26, 2015March 4, 2019 when the market price of the Company’s stock was $19.45; and (iv) 44,909$28.83; (ii) 52,424 shares on March 4, 2014,2, 2017, a portion of which vested on March 4, 20152, 2019 when the market price of the Company’s stock was $19.59. |
(4) | Mr. Martin was granted: (i) 45,000 restricted$29.20; and (iii) 45,187 shares on March 22, 2010,2, 2018, a portion of which vested on March 22, 2015,2, 2019 when the market price of the Company’s stock was $20.72; (ii) 48,074 restricted shares on May 23, 2012, a portion of which vested on April 2, 2015, when the market price of the Company’s stock was $20.98; (iii) 59,165 restricted shares on February 26, 2013, a portion of which vested on February 26, 2015 when the market price of the Company’s stock was $19.45; and (iv) 41,607 shares on March 4, 2014, a portion of which vested on March 4, 2015 when the market price of the Company’s stock was $19.59.$29.20. |
PENSION BENEFITS
The Company does not sponsor or maintain any plans that provide for specified retirement payments or benefits, such as tax-qualified defined benefit plans or supplemental executive retirement plans, for the named executive officers.
NON-QUALIFIED DEFERRED COMPENSATION
The following table summarizes information regarding the Company’s named executive officers’ participation in the Perficient, Inc. Executive Deferred Compensation Plan (the “Deferred Compensation Plan”).:
2015 NON-QUALIFIED DEFERRED COMPENSATION | |
| | 2019 NON-QUALIFIED DEFERRED COMPENSATION | | 2019 NON-QUALIFIED DEFERRED COMPENSATION |
Name | | Executive Contributions ($)(1) | | | Company Contributions ($) | | | Aggregate Losses ($)(2) | | | Aggregate Withdrawals/ Distributions ($) | | | Aggregate Balance at December 31, 2015 ($) | | Executive Contributions (1) | | Company Contributions | | Aggregate Gains (2) | | Aggregate Withdrawals/ Distributions | | Aggregate Balance at December 31, 2019 |
Jeffrey S. Davis | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| | | | | | | | | | | | | | | | | | | | |
Kathryn J. Henely | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | |
Thomas J. Hogan | | | — |
| | — |
| | — |
| | — |
| | — |
|
Paul E. Martin | | | 16,125 | | | | - | | | | (2,469 | ) | | | - | | | | 319,171 | | 50,151 |
| | — |
| | 204,323 |
| | — |
| | 657,660 |
|
| |
(1) | All amounts reported as contributions in this column have been reported in the Salary column of the “Summary Compensation Table” at page 15.17. |
| |
(2) | The amounts in this column represent the aggregate lossesgains that accrued during 20152019 on amounts of salary deferred at the election of the named executive officer pursuant to the Deferred Compensation Plan. These lossesunrealized gains have not been reported as compensation to the named executive officers in the “Summary Compensation Table” at page 15.17. |
The Deferred Compensation Plan allows each participant to contribute up to 80% of base salary and commissioncommissions and 100% of annual incentive bonus payments. Contributions may be made to either the retirement account or the in-service account of the participant; however, no contributions may be made to a participant’s in-service account during a deferral period when amounts are scheduled to be distributed from that account. Also, if the Compensation Committee determines that a participant has incurred a financial hardship, it may terminate the participant’s deferrals.
The Company may, in its discretion, provide a matching contribution of 25% of the participant’s contribution to the Deferred Compensation Plan up to the first 6% of a participant’s compensation (including base salary and bonus or incentive compensation); however, any matching contribution under the Deferred Compensation Plan will be reduced by the amount of matching contributions actually made on the participant’s behalf under the Company’s 401(k) Plan. Matching contributions vest annually over a three-year period. The Company may also make discretionary contributions on behalf of participants in the Deferred Compensation Plan, which will be in the amounts and will vest in accordance with the schedule determined by the Company. The Company made no matching contributions to the Deferred Compensation Plan in 2015.2019.
The Deferred Compensation Plan permits each participant to make investment allocation choices for both the participant’s contributions and any Company matching or discretionary contributions made on the participant’s behalf among the investment choices designated by the Company, which earn market rates of return. Participants are permitted to change their investment elections on a daily basis.
A participant will receive a distribution of amounts deferred in a particular year upon the earlier to occur of: (i) the time specified in the participant’s deferral commitment election with respect to the participant’s in-service account; (ii) his termination of employment; or (iii) his death or disability. In addition, a participant may receive a distribution if the Compensation Committee determines that the participant has experienced a financial hardship, to the extent reasonably necessary to satisfy the participant’s needs. Upon a participant’s termination of employment, the participant’s benefits under the Deferred Compensation Plan shall be paid to him as soon as administratively practicable following the date of the participant’s termination of employment, unless the participant constitutes a “specified employee” (within the meaning of Section 409A of the Code), in which case the initial payment will be made no earlier than the first day of the seventh month following the participant’s termination. A participant’s vested benefits may, at the option of the participant, be distributed in one cash lump sum payment, or in up to a maximum of 15 annual installments (or a maximum of five annual installments with respect to the participant’s in-service account). Certain small account balances (a retirement account balance of less than $50,000 and an in-service account balance of less than $25,000) will be paid in a lump sum regardless of the participant’s election.
Potential Payments upon Termination and/or Change in Control
As part of their employment agreements, Messrs. Davis, Hogan and Martin have certain provisions detailing payments due to them in the event of termination of their employment with the Company, including the resulting compensation from a change in control.
Mr. Davis
Mr. Davis’s employment agreement provides for the following death, disability, severance, and change in control benefits (certain applicable definitions are set forth below):
• | death benefits of a lump-sum payment equal to one year’s annual salary and Mr. Davis’s Target Bonus; |
• | disability benefits paid over 12 months of one year’s annual salary and Mr. Davis’s Target Bonus; |
• | severance benefits, if Mr. Davis’s employment with the Company is terminated by the Company in a Without Cause Termination either before or after a Change in Control, of a lump-sum payment equal to two years’ annual salary and Mr. Davis’s Target Bonus for the year in which termination of employment occurs, acceleration of option and restricted stock vesting, and welfare benefits for one year following termination; |
• | severance benefits of a lump-sum payment equal to two years’ annual salary and Mr. Davis’s Target Bonus, and welfare benefits for one year following resignation if Mr. Davis voluntarily resigns after a Constructive Termination; and |
• | immediate vesting of 100% of all unvested stock option grants and restricted stock grants previously awarded to Mr. Davis upon the occurrence of a Change in Control. |
Death benefits of a lump-sum payment equal to one year’s annual salary and Mr. Davis’s Target Bonus;
Disability benefits paid over 12 months of one year’s annual salary and Mr. Davis’s Target Bonus;
Severance benefits, if Mr. Davis’s employment with the Company is terminated by the Company in a Without Cause Termination either before or after a Change in Control, of a lump-sum payment equal to two years’ annual salary and Mr. Davis’s Target Bonus for the year in which termination of employment occurs, acceleration of option and restricted stock vesting, and welfare benefits for one year following termination;
Severance benefits, if Mr. Davis voluntarily resigns after a Constructive Termination, of a lump-sum payment equal to two years’ annual salary and Mr. Davis’s Target Bonus for the year in which resignation occurs, acceleration of option and restricted stock vesting and welfare benefits for one year following resignation; and
Immediate vesting of 100% of all unvested stock option grants and restricted stock grants previously awarded to Mr. Davis upon the occurrence of a Change in Control.
To the extent payments and benefits to Mr. Davis in connection with a change in control would constitute “excess parachute payments” for purposes of Section 280G of the Code subject to excise taxes, Mr. Davis can elect to receive a lesser amount and eliminate the accelerated vesting of his unvested stock options and restricted stock in order to decrease or eliminate the excise taxes.
Mr. Hogan
Mr. Hogan’s employment agreement provides for the following severance benefits (certain applicable definitions are set forth below): if Mr. Hogan’s employment with the Company is terminated by the Company in a Without Cause Termination or if Mr. Hogan voluntarily resigns after a Constructive Termination, of a lump-sum payment equal to one year’s annual salary, continued vesting of restricted stock, and welfare benefits for one year following termination.
Mr. Martin
Mr. Martin’s employment agreement provides for the following severance and change in control benefits (certain applicable definitions are set forth below):
20
Severance benefits, if Mr. Martin’s employment with the Company is terminated by the Company in a Without Cause Termination or if Mr. Martin voluntarily resigns after a Constructive Termination, of a lump-sum payment equal to one year’s annual salary, continued vesting of restricted stock, and welfare benefits for one year following termination;Severance benefits, if Mr. Martin’s employment with the Company is terminated by the Company pursuant to a Without Cause Termination within the first year after a Change in Control, equal to one year’s annual salary and immediate vesting of all remaining unvested restricted stock previously awarded to Mr. Martin. In addition, the Company will provide welfare benefits for one year following termination; and
• | severance benefits, if Mr. Martin’s employment with the Company is terminated by the Company in a Without Cause Termination or if Mr. Martin voluntarily resigns after a Constructive Termination, of a lump-sum payment equal to one year’s annual salary, continued vesting of restricted stock, and welfare benefits for one year following termination; |
• | immediate vesting of 50% of all unvested restricted stock grants previously awarded to Mr. Martin upon the occurrence of a Change in Control; and |
• | severance benefits if Mr. Martin’s employment with the Company is terminated by the Company pursuant to a Without Cause Termination within the first year after a Change in Control equal to one year’s annual salary and immediate vesting of all remaining unvested restricted stock previously awarded to Mr. Martin. In addition, the Company will provide welfare benefits for one year following termination. |
Immediate vesting of 50% of all unvested restricted stock grants previously awarded to Mr. Martin upon the occurrence of a Change in Control.
The employment agreements for Messrs. Davis, Hogan and Martin generally use the following terms:
“Change in Control” means: (a) the acquisition by one person, or more than one person acting as a group, of ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company;Company; (b) the acquisition by one person, or more than one person acting as a group, of ownership of stock of the Company, that together with stock of the Company acquired during the 12-month period ending on the date of the most recent acquisition by such person or group, constitutes 30% or more of the total voting power of the stock
of the Company;Company; (c) a majority of the members of the Company’s boardBoard of directorsDirectors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s boardBoard of directorsDirectors before the date of the appointment or election;election; or (d) one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) assets from the Company that have a total gross fair market value (determined without regard to any liabilities associated with such assets) equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions.acquisitions.
Persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
This definition of Change in Control shallis to be interpreted in accordance with, and in a manner that will bring the definition into compliance with, the regulations under Section 409A of the Code.
“ConstructiveTermination” means his voluntary termination of his employment with the Company following: (i) a material diminution inhis base compensation (including benefits); (ii) a material reduction of his performance-based target bonus or other incentive programs; (iii) a relocation of his place of employment of more than 50 miles without his consent; or (iv) a failure of the Company to renew the term of this Agreement following the expiration thereof, or to offer him employment under the terms and conditions of a replacement agreement, on terms and conditions no less favorable to him as under the then existing terms and conditions of the employment agreement; in each case where the condition is notremediedor corrected by the Company within 30 days after he sends notice to the Company in writing specifying the reason why he claims thereexists grounds for a Constructive Termination, and he sends the notice within ninety days of discovering the existence of the condition that gives rise to a right toclaim a Constructive Termination.
“Disability” means he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
“Termination for Cause” means a termination of the executive’s employment by reason of: (a) the repeated or willful failure of the executive to substantially perform his duties that has not been cured after written demand from, with regard to Mr. Davis, the Board, and with regard to Mr.Messrs. Hogan and Martin, the CEO; (b) conviction of; entering a plea of guilty or nolo contendere to, a crime involving moral turpitude or dishonesty or to any other crime that constitutes a felony; (c) executive’s intentional misconduct, gross negligence or material misrepresentation in the performance of his duties to the Company; or (d) material breach by executive of any written covenant or agreement with the Company including any covenants not to compete or to non-disclosure of confidential information.
“Without Cause Termination” means a termination of the executive’s employment by the Company other than due to (a) Termination for Cause; (b) Disability; (c) death; or (d) the expiration of the employment agreement.
Under the employment agreements with Messrs. Davis, Hogan and Martin, each executive would be entitled to receive the estimated benefits described below. These disclosed amounts are estimates only and do not necessarily reflect the actual amounts that would be paid to the aforementioned executives, which would only be known at the time that they become eligible for payment and would only be payable if the events set forth in the table below occur.
Quantification of Potential Payments Uponupon Termination and/or Change in Control
The table below reflects the amount that could be payable under the various arrangements assuming that the triggering event set forth in the title of each column occurred on December 31, 2015.2019. Any actual payments that may be made pursuant to the arrangements described above are dependent on various factors, which may or may not exist at the time a termination of employment or change in control actually occurs.
|
POTENTIAL PAYMENTS UPON TERMINATION AND/OR CHANGE IN CONTROL |
Name (1) | Severance/ Change in Control Payment | | Accelerated Restricted Stock Vesting (2) | | Accelerated Stock Option Vesting | | Continuation of Benefits (3) | | Tax Gross-up Payment | | Total |
Jeffrey S. Davis (4) | | $ | 2,200,000 | | | $ | 3,681,348 | | | $ | - | | | $ | 11,367 | | | $ | - | | | $ | 5,892,715 |
| | | | | | | | | | | | | | | | | | | | | | | |
Paul E. Martin (5) | | | 325,000 | | | | 1,582,694 | | | | - | | | | 11,840 | | | | - | | | | 1,919,534 |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
POTENTIAL PAYMENTS UPON TERMINATION AND/OR CHANGE IN CONTROL |
Name (1) | | Severance/ Change in Control Payment | | Accelerated Restricted Stock Vesting (1) | | Accelerated Stock Option Vesting | | Continuation of Benefits (2) | | Tax Gross-up Payment | | Total |
Jeffrey S. Davis (3) | | $ | 2,500,000 |
| | $ | 11,861,919 |
| | $ | — |
| | $ | 11,168 |
| | $ | — |
| | $ | 14,373,087 |
|
Thomas J. Hogan (4) | | 410,000 |
| | 1,109,504 |
| | — |
| | 11,168 |
| | — |
| | 1,530,672 |
|
Paul E. Martin (5) | | 375,000 |
| | 3,991,182 |
| | — |
| | 11,168 |
| | — |
| | 4,377,350 |
|
(1) | Ms. Henely is not included in this table since she does not have an arrangement with the Company in the event of termination of her employment with the Company, including upon a change in control. |
(2) (1) | Calculated using the closing market price per share of $17.12$46.07 of the Common Stock on December 31, 20152019 for the total number of restricted shares accelerated. |
(3) | |
(2) | Represents the estimated present value of all future payments of premiums for benefits which would be paid on behalf of the specified executive officers under the Company’s medical, disability, life, and dental insurance programs. |
(4) | |
(3) | Upon a without cause termination or if Mr. Davis voluntarily resigns upon the occurrence of a constructive termination, Mr. Davis would receive each of the payments and benefits listed in the table above. Upon Mr. Davis’s death or disability, he would receive thea severance payment only. If Mr. Davis voluntarily resigns upon the occurrence of a constructive termination, he would receive the severance paymentequal to one year’s base salary and the continuance of benefits listed in the table above.target bonus only. If a change in control were to occur, 100% of Mr. Davis’s unvested restricted stock would immediately vest. If Mr. Davis were to terminate his employment with the Company voluntarily or be terminated by the Company for cause, he would receive no compensation except his unpaid salary and bonus earned through the termination date. |
(5) | |
(4) | Upon a without cause termination or if Mr. Hogan voluntarily resigns upon the occurrence of a constructive termination, Mr. Hogan would receive each of the payments and benefits listed in the table above. For Mr. Hogan, the benefit listed under the column “Accelerated Restricted Stock Vesting” represents continued vesting of 24,083 shares of Mr. Hogan’s restricted stock during the one-year period following such termination or resignation. Upon Mr. Hogan’s death, he would not be entitled to a severance payment. If Mr. Hogan were to terminate his employment with the Company voluntarily or be terminated by the Company for cause, he would receive no compensation except his unpaid salary and bonus earned through the termination date. |
| |
(5) | Upon a without cause termination within the first year after a change in control, Mr. Martin would receive each of the payments and benefits listed in the table above. Upon Mr. Martin’s death, he would not be entitled to a severance payment. Ifwithout cause termination other than within the first year after a change in control or if Mr. Martin voluntarily resigns upon the occurrence of a constructive termination, he would receive the severance payment and the continuance of benefits listed in the table above.above, and Mr. Martin would be entitled to continued vesting of his restricted stock during the one-year period following such termination or resignation, which would apply to 45,548 shares of restricted stock having an aggregate value of $2,098,396 using the closing market price per share of $46.07 of the Common Stock on December 31, 2019. Upon Mr. Martin’s death, he would not be entitled to a severance payment. Upon the occurrence of a change in control, 50% of Mr. Martin’s unvested restricted stock would immediately vest. If Mr. Martin were to terminate his employment with the Company voluntarily or be terminated by the Company for cause, he would receive no compensation except his unpaid salary and bonus earned through the termination date. |
Pay Ratio Disclosure Rule
In August 2015, pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (“PEO”). The Company’s PEO is Jeffrey S. Davis, Chief Executive Officer. The purpose of the required disclosure is to provide a measure of the equitability of pay within the organization. The results are as follows:
COMPARATIVE STOCK PERFORMANCE |
| | | |
Median Employee total annual compensation | $ | 98,094 |
|
Jeffery S. Davis (PEO) total annual compensation | $ | 5,968,610 |
|
Ratio of PEO to Median Employee compensation | 60.8 : 1.0 |
|
In determining the median employee, a listing was prepared of all employees as of October 1, 2017. The Company excluded employees from the United Kingdom and Canada (a total of 48 employees), as they comprised less than 5% of total employees. The Company used gross annual pay per its 2016 payroll records, including stock compensation to determine the median employee. The Company annualized the compensation of employees that were hired prior to 2017. The median employee was selected from this annualized list. As of October 1, 2017, the Company employed a total of 3,013 persons worldwide. Excluding the 48 employees from the United Kingdom and Canada, as of October 1, 2017, the Company employed 2,965 persons in the
United States, China, and India. Since October 1, 2017, there has been no material change in the Company’s employee population or employee compensation arrangements that the Company believes would significantly impact its pay ratio disclosure. Accordingly, the Company is continuing to use the same median employee in 2019 as used in 2018 and 2017.
Comparative Stock Performance
The following graph compares the cumulative five-year total stockholder return on the Common Stock from December 31, 20102014 through December 31, 2015,2019, with the cumulative total return on (i) the NASDAQ Composite Index, and (ii) S&P 500 Index, and (iii) S&P 500 Information Technology Index. The comparison assumes the investment of $100 on December 31, 2010,2014, in the Common Stock and in each of the indices and, in each case, assumes reinvestment of all dividends.
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 12/31/2014 | | 12/31/2015 | | 12/31/2016 | | 12/31/2017 | | 12/31/2018 | | 12/31/2019 |
Perficient | | $ | 100.00 |
| | $ | 91.89 |
| | $ | 93.88 |
| | $ | 102.36 |
| | $ | 119.48 |
| | $ | 247.29 |
|
NASDAQ Composite Index | | 100.00 |
| | 105.73 |
| | 113.66 |
| | 145.76 |
| | 140.10 |
| | 189.45 |
|
S&P 500 Index | | 100.00 |
| | 99.27 |
| | 108.74 |
| | 129.86 |
| | 121.76 |
| | 156.92 |
|
S&P 500 Information Technology Index | | 100.00 |
| | 104.27 |
| | 116.76 |
| | 159.86 |
| | 157.28 |
| | 232.84 |
|
| | | | | | | | | | | | | | | | | |
| | 12/31/10 | | | 12/31/11 | | | 12/31/12 | | | 12/31/13 | | | 12/31/14 | | | 12/31/15 |
Perficient | | $ | 100.00 | | | $ | 80.08 | | | $ | 94.24 | | | $ | 187.36 | | | $ | 149.04 | | | $ | 136.96 |
NASDAQ Composite Index | | $ | 100.00 | | | $ | 98.20 | | | $ | 113.82 | | | $ | 157.44 | | | $ | 178.53 | | | $ | 188.75 |
S&P 500 Index | | $ | 100.00 | | | $ | 100.00 | | | $ | 113.40 | | | $ | 146.97 | | | $ | 163.71 | | | $ | 162.52 |
PROPOSAL 2. APPROVAL OF ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the stockholders of the Company are being provided with the opportunity to vote on an advisory resolution to approve the 20152019 compensation of the named executive officers, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K (including the Compensation Discussion and Analysis section (the “CD&A”), compensation tables and accompanying narrative). Item 402 of Regulation S-K is the SEC regulation that sets forth what companies must include in their CD&A and
compensation tables. The Compensation Committee and the Board valuesvalue the opinions expressed by the Company’s stockholders and will carefully consider the outcome of the vote when making future compensation decisions for the named executive officers.
As described in the CD&A beginning on page 9,11, the Company believes that the quality, ability, and commitment of the named executive officers are significant factors contributing to the proper leadership of Perficient and driving stockholder value for the Company. Accordingly, our executive compensation programs are designed to:
• | attract, retain, and motivate qualified talent; |
• | motivate executives to improve the overall performance of the Company and reward executives when the Company achieves specific measurable results; |
• | encourage accountability by determining salaries and incentive awards based on the Company’s collective performance and contribution; |
• | ensure compensation levels are externally competitive and create internal pay equity among executives; and |
• | align our executives’ long-term interests with those of our stockholders. |
Attract, retain, and motivate qualified talent;
Motivate executives to improve the overall performance of the Company and reward executives when the Company achieves specific measurable results;
Encourage accountability by determining salaries and incentive awards based on the Company’s collective performance and contribution;
Ensure compensation levels are externally competitive and create internal pay equity among executives; and
Align our executives’ long-term interests with those of our stockholders.
Stockholders are urged to read the CD&A beginning on page 9,11, which more thoroughly discusses how the compensation policies and procedures implement the Company’s compensation philosophy. The Compensation Committee and the Board believe that these policies and procedures are effective in implementing the Company’s compensation philosophy and in achieving its goals.
Stockholders have the opportunity to vote “FOR,” “AGAINST,”“FOR”, “AGAINST”, or “ABSTAIN” on the following advisory resolution relating to the executive compensation of our named executive officers as disclosed in this Proxy Statement:
“Resolved, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion set forth in this Proxy Statement, is hereby approved.”
This vote is not intended to address a specific item of compensation, but rather the overall compensation of the named executive officers and the philosophy, policies, and practices as described in this Proxy Statement. The affirmative vote of a majority of the shares of the Company’s Common Stock cast in person or by proxy, excluding abstentions, on the proposal will be considered approval by the stockholders of the advisory resolution on executive compensation.
The Board recommends a vote “FOR” the proposal to approve the advisory resolution relating to the executive compensation of our named executive officers.
PROPOSAL 3. RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed the firm of KPMG LLP (“KPMG”) as the Company’s independent registered public accounting firm for 2016.2020. KPMG has served as the Company’s independent registered public accounting firm since 2007. Although action by the stockholders in this matter is not required, the Audit Committee believes that in light of the critical role played by the independent registered public accounting firm in maintainingproviding assurance regarding the integrity of the Company’s financialinternal controls andover financial reporting, it is a matter of good practice. The affirmative vote of a majority of the shares of our Common Stock cast in person or by proxy, excluding abstentions, on the proposal will be considered approved by the stockholders.
In the event our stockholders fail to approve the proposal to appoint KPMG as the Company’s independent registered public accounting firm, the Audit Committee will reconsider whether or not to retain the firm. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interest of the Company and its stockholders.
The Board recommends a vote “FOR” the proposal to ratify the independent registered public accounting firm.
Principal Accounting Firm Fees and Services
The table below sets forth an estimate of the fees that we expect to be billed for professional audit services rendered by KPMG for fiscal year 2015,years 2019 and 2018, as well as the fees expected to be billed with respect to audit-related, tax and all other services rendered during that period. In addition, the table sets forth the fees billed for audit, audit-related, tax and all other services during or in connection with fiscal year 2014.those periods.
| |
| Year Ended December 31, |
| | 2015 | | | | 2014 |
Audit fees | $ | 739,000 | | | $ | 810,000 |
Audit-related fees | | 9,000 | | | | - |
Tax fees | | 530,000 | | | | 510,000 |
Total fees | $ | 1,278,000 | | | $ | 1,320,000 |
|
| | | | | | | | |
| | Year Ended December 31, |
| | 2019 | | 2018 |
Audit fees | | $ | 855,000 |
| | $ | 1,033,000 |
|
Audit-related fees | | — |
| | — |
|
Tax fees | | 69,000 |
| | 28,000 |
|
All other fees | | — |
| | — |
|
Total fees | | $ | 924,000 |
| | $ | 1,061,000 |
|
Audit Fees. Audit fees represent fees for professional services provided in connection with the auditaudits of the Company’s annual consolidated financial statements and of management’s assessment and the operating effectiveness of internal control over financial reporting included in the Company’s Annual Report on Form 10-K,10-K; the quarterly reviews of condensed consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q,10-Q; statutory audits of subsidiaries; other statutory or regulatory filings,filings; and services that are normally provided in connection with such filings.
Tax Fees. Tax fees represent all fees provided for professional services rendered by KPMG for tax compliance, tax advice and tax planning.planning. The Company did not pay any other tax-related fees to KPMG for the years ended December 31, 20152019 or December 31, 2014.2018.
Audit-Related Fees. Assurance and related services that are reasonably related to the performance of the audit or review of financial statements including attest or audit services that are not required.
All Other Fees. The Company did not pay any other fees to KPMG for the years ended December 31, 2015 and 2014.
Services. The audit report of KPMG on the Company’s financial statements as of December 31, 2015 and 2014 and for each of the three years ended December 31, 2015 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles. KPMG’s audit report on the effectiveness of internal control over financial reporting as of December 31, 2015 and 2014 indicated that in KPMG’s opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015 and 2014.
We expect that one or more representatives of KPMG will be presentavailable at the Meeting. Each of these representatives will have the opportunity to make a statement, if he or she desires, and is expected to be available to respond to any questions.
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee has adopted policies and procedures relating to the pre-approval of all audit services and non-audit services that are permitted by applicable laws and regulations, and that are to be performed by the Company’s independent auditors. As part of those policies and procedures, the Audit Committee has pre-approved specific audit and audit-relatednon-audit services that may be provided by the Company’s independent auditors subject to certain maximum dollar amounts. No further approval by the Audit Committee is required in advance of services falling within the specific types of services and cost-levels included in the pre-approved services. Any proposed services not specifically pre-approved or exceeding pre-approved cost levels require specific pre-approval by the Audit Committee. All requests to provide services that require specific approval by the Audit Committee must be submitted to the Audit Committee by both the independent auditor and management, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC’s rules on auditor independence. No services of any kind were approved pursuant to a waiver permitted pursuant to 17 CFR 210.2-01(c)(7)(i)(C).
The Audit Committee reports to and acts on behalf of the Board by providing oversight of the financial management, legal compliance programs, independent auditors, and accounting policies and procedures of the Company. The Company’s management is responsible for preparing the Company’s financial statements and systems of internal control and the independent auditors are responsible for auditing those financial statements and expressing its opinion as to whether the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the Company in conformity with U.S. GAAP. The Audit Committee is responsible for overseeing the conduct of these activities by the Company’s management and the independent auditors.
In this context, the Audit Committee has met and held discussions with management and the independent auditors. Management represented to the Audit Committee that the Company’s consolidated financial statements, as of and for the fiscal year ended December 31, 2015,2019, were prepared in accordance with U.S. GAAP, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent auditors.
The Audit Committee has discussed with the independent auditors matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 161301 “Communications with Audit Committees.” The Audit Committee also received the written disclosures from the independent auditors required by applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence and discussed with the independent auditors their independence and related matters.
The Audit Committee also has discussed with the Company’s independent auditors, with and without management present, their evaluationsevaluation of the Company’s internal accounting controls over financial reporting and the overall quality of the Company’s financial reporting.
In further reliance on the reviews and discussions with management and the independent auditors referred to above, the Audit Committee recommended to the Board the inclusion of the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015,2019, for filing with the SEC.
The Audit Committee
David S. Lundeen, Chairman
Ralph C. Derrickson
James R. Kackley
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Directors and Executive Officers
The following table sets forth the beneficial ownership of the Common Stock as of April 1, 2016March 23, 2020 for each director, each of the Nominee Directors, and each executive officer named in the Summary Compensation Table herein, and by all directors and executive officers of the Company as a group.
| | | | | | |
Name and Company Position | | Shares Beneficially Owned (1) | | | Percent of Class (2) | |
Jeffrey S. Davis, President and CEO | | | 597,440 | | | | 1.7 | % |
Kathryn J. Henely, COO | | | 255,509 | | | | * | |
Paul E. Martin, CFO | | | 246,009 | | | | * | |
Ralph C. Derrickson, Director | | | 36,420 | | | | * | |
John S. Hamlin, Director | | | 34,395 | | | | * | |
James R. Kackley, Director | | | 33,780 | | | | * | |
David S. Lundeen, Director | | | 54,170 | | | | * | |
Directors and executive officers as a group (7 persons) | | | 1,257,723 | | | | 3.5 | % |
|
| | | | | | |
Name and Company Position | | Shares Beneficially Owned (1) | | Percent of Class (2) |
Jeffrey S. Davis, President, CEO and Chairman | | 444,713 |
| | 1.3 | % |
Thomas J. Hogan, COO | | 78,675 |
| | * |
|
Paul E. Martin, CFO | | 152,598 |
| | * |
|
Ralph C. Derrickson, Director | | 39,476 |
| | * |
|
James R. Kackley, Director | | 31,164 |
| | * |
|
David S. Lundeen, Director | | 41,707 |
| | * |
|
Brian L. Matthews, Director | | 9,386 |
| | * |
|
Gary M. Wimberly, Director | | 19,775 |
| | * |
|
Directors and executive officers as a group (8 active persons) | | 817,494 |
| | 2.5 | % |
(1) Represents the Company’s only class of voting Common Stock.
26(2) The percentage of Common Stock owned is based on total shares outstanding of 33,150,155as of March 23, 2020.
* Represents less than 1% of the Company's Common Stock outstanding as of March 23, 2020. (1) | Represents the Company’s only class of voting Common Stock. |
(2) | The percentage of Common Stock owned is based on total shares outstanding of 36,160,117 as of April 1, 2016.
|
* | Represents less than 1% of the Company’s Common Stock outstanding as of April 1, 2016. | |
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of April 1, 2016,March 23, 2020, information for each entity that, to the knowledge of the Company, beneficially owned more than 5% of the Common Stock, based on statements filed with the SEC pursuant to Section 13(g) or 13(d) of the Exchange Act:
| | Amount and Nature of Shares | | | |
Name and Address of Beneficial Owner | | Beneficially Owned | | | Percent of Class (1) |
BlackRock Inc. | | | 3,452,310 | (2) | | | 9.5% |
55 East 52nd Street |
New York, NY 10022 |
FMR LLC | | | 2,284,987 | (3) | | | 6.3% |
245 Summer Street |
Boston, MA 02210 |
|
| | | | | | | |
| | Amount and Nature of Shares |
Name and Address of Beneficial Owner | | Beneficially Owned | | Percent of Class (1) |
BlackRock Inc. | | 5,211,965 |
| (2) | | 15.7 | % |
55 East 52nd Street | |
New York, NY 10055 | |
Dimensional Fund Advisors LP | | 2,212,939 |
| (3) | | 6.7 | % |
6300 Bee Cave Rd., Building One | |
Austin, TX 78746 | |
The Vanguard Group | | 2,203,333 |
| (4) | | 6.6 | % |
100 Vanguard Blvd. | |
Malvern, PA 19355 | |
(1) | |
(1) | The percentage of Common Stock owned is based on total shares outstanding of 36,160,11733,150,155 as of April 1, 2016.March 23, 2020. |
| |
(2) | According to information provided to the Company in an amendment to Schedule 13G filed with the SEC on January 27, 2016.February 4, 2020. The Schedule 13G states that the filer has sole voting power for 3,373,5915,118,748 shares and sole power to dispose or to direct the disposition of all shares. |
| |
(3) | According to information provided to the Company in an amendment to Schedule 13G filed with the SEC on February 12, 2016.2020. The Schedule 13G states that the filer has sole voting power for 408,4722,101,573 shares and sole power to dispose or to direct the disposition of all shares. Dimensional Fund Advisors LP disclaims beneficial ownership of these securities which are owned by various investment companies and accounts for which it serves as investment manager or sub-adviser. |
| |
(4) | According to information provided to the Company in an amendment to Schedule 13G filed with the SEC on February 12, 2020. The Schedule 13G states that the filer has sole voting power for 67,470 shares, shared voting power for 7,953 shares, sole power to dispose or to direct the disposition of 2,132,040 shares and shared power to dispose or to direct the disposition of 71,293 shares. |
Equity Compensation Plan Information
The following table provides information with respect to the equity securities that are authorized for issuance under the Company’s compensation plans as of December 31, 2015:2019:
|
| | | | | | | | | | |
Plan Category | | Number of Securities to Be Issued upon Exercise of Outstanding Options, Warrants and Rights (#) | | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($) | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation (#)(1) |
Equity Compensation Plans Approved by Security Holders | | — | - |
| | $ | -— |
| | 2,428,366 | | 2,582,942
|
Equity Compensation Plans Not Approved by Security Holders | | — | -
| | — |
| | -— | | | | -
|
Total | | — | - |
| | $ | -— |
| | 2,428,366 | | 2,582,942
|
| |
(1) | Represents authorized shares issuable pursuant to the Amended and Restated Perficient, Inc. 2012 Long Term Incentive Plan and its predecessor plan, the Perficient, Inc. 2009 Long-Term Incentive Plan, as amended.Plan. Also includes 385,475 shares reserved for issuance under the Perficient, Inc. Employee Stock Purchase Plan. |
Section 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires executive officers, directors, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the SEC and the Nasdaq. Based solely on a review of the copies of reports furnished to the Company and written representations from the Company’s executive officers, directors, and persons who beneficially own more than 10% of the Company’s equity securities, the Company believes that, during the preceding year, all filing requirements applicable to the Company’s officers, directors, and 10% beneficial owners under Section 16(a) were satisfied.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In order to identify and address concerns regarding related party transactions and their disclosures, the Company uses Directors and Officers Questionnaires and its conduct and ethics policies. The Company also considers the independence of its directors. The discussion of the independence of the directors is contained herein under the caption “Composition and Meetings of the Board of Directors and Committees” beginning on page 5.7.
Directors and Officers Questionnaires are distributed to directors and executive officers and directors at the beginning of each fiscal year to identify any potential related-party transactions. Within the questionnaire, directors and executive officers and directors are asked to describe any transaction, arrangement or relationship or any series of similar transactions, arrangements or relationships, occurring since January 1, 2015,2019, in which the Company was or is to be a participant and the amount involved exceeds $120,000, and in which any of the following had or will have a direct or indirect interest: (i) the individual; (ii) any director or executive officer of
the Company; (iii) a nominee for director; (iv) an immediate family member of a director or executive officer of the Company; (v) an immediate family member of a nominee for director; (vi) a security holder of 5% or more of the Common Stock; or (vii) an immediate family member of the security holder. Responses provided within the questionnaire are reviewed by management of the Company to determine any necessary course of action. In 2015, no relatedNone of our directors or director nominees are a party transactions were entered into.to any agreement or arrangement relating to compensation provided by a third party in connection with their candidacy or board service as required to be disclosed pursuant to NASDAQ Rule 5250(b)(3).
It is the policy of the Company that all employees, directors, and agents maintain the highest ethical standards and comply with all applicable legal requirements when conducting Company business. Guidelines regarding conflicts of interest are detailed in the Company’s Corporate Code of Business Conduct and Ethics (the “Code of Conduct”) for employees and in the Financial Code of Ethics for the CEO, CFO, and Other Senior Financial Officials (the “Financial Code of Ethics”), both adopted by the Board. These policies are available on the Company’s website at www.perficient.com. Any amendment to, or waiver of, the Financial Code of Ethics will be disclosed by the Company on its website at www.perficient.com. All Company employees must deal with vendors, customers, and others doing business with the Company in a manner that avoids even the appearance of conflict between personal interests and those of the Company. Potential conflicts of interest may arise from any of the following:
A direct or indirect financial interest in any business or organization that is a Company vendor or competitor, if the employee or director can influence decisions with respect to the Company’s business with respect to such business or organization; and
• | a direct or indirect financial interest in any business or organization that is a Company vendor or competitor, if the employee or director can influence decisions with respect to the Company’s business with respect to such business or organization; and |
• | serving on the board of directors of, or being employed in any capacity by, a vendor, competitor or customer of the Company. | |
Serving on the board of directors of, or being employed in any capacity by, a vendor, competitor or customer of the Company.
Relationships, including business, financial, personal, and family, may give rise to conflicts of interest or the appearance of a conflict. Employees are encouraged to carefully evaluate their relationships as they relate to Company business to avoid conflict or the appearance of a conflict. To avoid conflicts of interest or the appearance of a conflict:
• | Employees are prohibited from directly or indirectly competing, or performing services for any person or entity in competition with, the Company. |
• | Employees are required to comply with the policies set forth in the Code of Conduct regarding the receipt or giving of gifts, favors or entertainment. |
• | A full-time employee is required to obtain the approval of his or her supervisor before serving as a trustee, regent, director, or officer of a philanthropic, professional, national, regional, or community organization, or educational institution. |
• | Employees may not sell or lease equipment, materials or property to the Company without appropriate corporate authority. |
• | Employees are required to purchase Company equipment, materials or property only on terms available to the general public. |
Employees are prohibited from directly or indirectly competing or performing services for any person or entity in competition with, the Company.
Employees are required to comply with the policies set forth in the Code of Conduct regarding the receipt or giving of gifts, favors or entertainment.
A full-time employee is required to obtain the approval of his or her supervisor before serving as a trustee, regent, director, or officer of a philanthropic, professional, national, regional, or community organization, or educational institution.
Employees may not sell or lease equipment, materials or property to the Company without appropriate corporate authority.
Employees are required to purchase Company equipment, materials or property only on terms available to the general public.
Anyemployee or director who becomes aware of a conflict is required to bring it to the attention of a Company supervisor, corporate management, or other appropriate personnel.
Directors are expected and required to uphold the same dedication to corporate ethics as the Company’s employees.
If a conflict of interest arises involving an executive officer or director, the Board must approve a waiver to the Code of Conduct and if a director has the conflict, that director must abstain from the approval. Waivers are made on a case-by-case basis. The Board has not adopted a formal written policy with respect to waiving conflict of interests or approving related party transactions. In making this determination, the Board considered the infrequency in occurrence of these transactions. Any waivers to the Code of Conduct granted to an executive officer or director shall be disclosed by the Company on its website at www.perficient.com.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any stockholder of Perficient eligible to vote in an election may make stockholder proposals and nominations for the 20172021 Annual Meeting. In order to be considered for inclusion in the 20172021 Proxy Statement and considered at the 20172021 Annual Meeting, all stockholders proposals, nominations and notifications must: (i) comply with the procedures set forth in Perficient’s bylaws; and (ii) be appropriately received by the Secretary of Perficient on or before December 12, 2016.9, 2020.
Pursuant to the bylaws of Perficient, nominations of persons for election to the Board may be made at a meeting of stockholders by or at the direction of the Board or by any stockholder entitled to vote in the election of directors at the meeting who complies with the notice procedures set forth in the bylaws. Such nominations, other than those made by or at the direction
of the Board, shall be made pursuant to notice in writing to the Secretary of the Company, and must be received by the Secretary of Perficient on or before December 12, 2016.9, 2020. Such stockholder’s notice shall set forth:
(1) the name, age, business address and residence address of such person;
(2) the principal occupation or employment of such person;
(3) the class and number of shares of the Company which are beneficially owned by such person;
(4) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder; and
(5) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required in each case pursuant to Regulation 14A of the Exchange Act (including without limitation such person’s written consent to being named in the Proxy Statement, if any, as a nominee and to serve as a director if elected).
Any nominations received from stockholders must be in full compliance with applicable laws and with the bylaws of Perficient.
OTHER MATTERS
The Board does not intend to bring any matters before the Meeting other than those stated in this Proxy Statement and is not aware that any other matters will be presented for action at the Meeting. If any other matters come before the Meeting, the persons named in the enclosed form of proxy will vote the proxy with respect thereto in accordance with their best judgment, pursuant to the discretionary authority granted by the proxy. Whether or not you plan to attend the Meeting in person, please promptly complete, sign, date, and return a proxy card or vote your proxy by telephone or the Internet according to the instructions on your proxy card.
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