Beneficial Owner of Shares Held in “Street Name”: Shares Registered in the Name of a Broker, Bank or Other
NomineeIf you are a beneficial owner of shares held of record by a broker, bank or other nominee, you will receive voting instructions from your broker, bank or other nominee. You must follow the voting instructions provided by your broker, bank or other nominee in order to instruct your broker, bank or other nominee on how to vote your shares. Beneficial owners of shares should generally be able to vote by returning the voting instruction card to their broker, bank or other nominee, or by telephone or via the Internet. However, the availability of telephone or Internet voting will depend on the voting process of your broker, bank or other nominee.
As discussed above, if you are a beneficial owner, you may notonly vote your shares electronically at the annual meeting unlessif you obtain a legal proxy from your broker, bank or other nominee.Can I change my vote or revoke my proxy?
Stockholder of Record: Shares Registered in Your Name.Name. If you are a stockholder of record, you can change your vote or revoke your proxy by:
entering a new vote by telephone or via the Internet (until the applicable deadline for each method as set forth above);
returning a later-dated proxy card (which automatically revokes the earlier proxy);
providing a written notice of revocation prior to the annual meeting to our corporate secretary at our principal executive offices as follows: BlackLine, Inc., 21300 Victory Boulevard, 12th• | providing a written notice of revocation prior to the annual meeting to our corporate secretary at our principal executive offices as follows: BlackLine, Inc., 21300 Victory Boulevard, 12th Floor, Woodland Hills, California 91367, Attn: Corporate Secretary; or |
attending the virtual annual meeting and voting electronically. Attendance at the virtual annual meeting will not cause your previously granted proxy to be revoked unless you specifically so request or cast your vote electronically at the virtual annual meeting.
Beneficial Owner of Shares Held in “Street Name”: Shares Registered in the Name of a Broker, Bank or Other Nominee.Nominee. If you are the beneficial owner of your shares, you must contact the broker, bank or other nominee holding your shares and follow their instructions to change your vote or revoke your proxy.
Why did I receive a notice in the mail regarding the Internet availability of the proxy materials instead of
a paper copy of the full set of proxy materials?In accordance with the rules of the Securities and Exchange Commission, or the SEC, we have elected to distribute our proxy materials, including the notice of annual meeting of stockholders, this proxy statement and our
20192022 annual report, primarily via the Internet. As a result, we are mailing to our stockholders a Notice of Internet Availability instead of a paper copy of the proxy materials. The Notice of Internet Availability contains instructions on how to access our proxy materials on the Internet, how to vote on the proposals, how to request printed copies of the proxy materials and
20192022 annual report, and how to request to receive all future proxy materials in printed form by mail or electronically by e-mail. We encourage stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce our costs and the environmental impact of our annual meetings.
What is the effect of giving a proxy?
Proxies are solicited by and on behalf of our
board of directors.Board. The persons named in the proxy, Mark Partin, our Chief Financial Officer, and Karole Morgan-Prager, our Chief Legal and Administrative Officer and Secretary, have been designated as proxies for the annual meeting by our
board of directors.Board. When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted electronically at the virtual annual meeting in accordance with the instruction of the stockholder on such proxy. If no specific instructions are given, however, the shares will be voted in accordance with the recommendations of our
board of directorsBoard on the proposals as described above and, if any other matters are properly brought before the annual meeting, the shares will be voted in accordance with the proxies’ judgment.
How many votes do I have?
Holders of our common stock are entitled to one vote for each share held as of the Record Date.
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What is the quorum requirement for the annual meeting?
A quorum is the minimum number of shares
or voting power required to be present or represented at the annual meeting for the meeting to be properly held under our amended and restated bylaws and Delaware law. The presence, virtually or represented by proxy, of a majority of the voting power of our stock issued and outstanding and entitled to vote at the annual meeting will constitute a quorum to transact business at the annual meeting. Abstentions, “WITHHOLD” votes, and “broker non-votes” are counted as present and entitled to vote for purposes of determining a quorum. If there is no quorum, the
chairmanChair of the meeting may adjourn the meeting to another time or place.
What are broker non-votes?
Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker, bank or other nominee, as applicable, as to how to vote on matters deemed “non-routine” and there is at least one “routine” matter to be voted upon at the annual meeting. Generally, if shares are held in “street name,” the beneficial owner of the shares is entitled to give voting instructions to the broker, bank or other nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker, bank or other nominee can still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. In the event that a broker, bank or other nominee votes shares on the “routine” matters, but does not vote shares on the “non-routine” matters, those shares will be treated as broker non-votes with respect to the “non-routine” proposals. Accordingly, if you own shares through a nominee, such as a broker or bank, please be sure to instruct your nominee how to vote to ensure that your vote is counted on each of the proposals.
What matters are considered “routine” and “non-routine”?
The ratification of the appointment of PwC as our independent registered public accounting firm for our fiscal year ending December 31,
20202023 (Proposal No. 2) is considered “routine” under applicable
federal securities rules. The election of Class I directors (Proposal No. 1), and the advisory non-binding vote to approve the compensation of our named executive officers (Proposal No. 3) are considered “non-routine” under applicable
federal securities rules.
What are the effects of abstentions and broker non-votes?
An abstention represents a stockholder’s affirmative choice to decline to vote on a proposal.
If a stockholder indicates on its proxy card that it wishes to abstain from voting its shares, or if a broker, bank or other nominee causes abstentions to be recorded for shares, these sharesAbstentions will be considered
as shares present and entitled to vote at the annual meeting. As a result, abstentions will be counted for purposes of determining the presence or absence of a quorum and will also count as votes against a proposal in cases where approval of the proposal requires the affirmative vote of a majority of the voting power of the shares present virtually or represented by proxy and entitled to vote
aton the
annual meetingproposal (Proposals No. 2 and No. 3). However, because the outcome of Proposal No. 1 (election of directors) will be determined by a plurality vote, you may only vote “FOR” or “WITHHOLD” and abstentions will have no impact on the outcome of such proposal as long as a quorum exists.
Broker non-votes will be counted for purposes of calculating whether a quorum is present at the annual meeting but will not be counted for purposes of determining the
number of votes castvoting power entitled to vote on a proposal. Therefore, a broker non-vote will make a quorum more readily attainable but will not otherwise affect the outcome of the vote on any of the proposals.
What is the voting requirement to approve each of the proposals?
Proposal No. 1: Election of Class I
Directors.Directors. The election of Class I directors requires a plurality of the voting power of the shares present virtually or represented by proxy at the annual meeting and entitled to vote on the election of directors. This means that the three nominees for Class I director receiving the highest number of “FOR” votes will be elected as Class I directors. You may vote (i) “FOR” for each director nominee or (ii) “WITHHOLD” for each director nominee. Because this is an uncontested election where the number of nominees equals the number of directors to be elected, and the outcome of this proposal will be determined by a plurality vote, shares voted “WITHHOLD” will not prevent a director nominee from being elected as a director.have no legal effect on the outcome of the proposal. Broker non-votes will not affect the outcome of voting on this proposal.TABLE OF CONTENTS
Proposal No. 2: Ratification of Appointment of PwC.PwC. The ratification of the appointment of PwC requires the affirmative vote of a majority of the voting power of the shares present virtually or represented by proxy at
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the annual meeting and entitled to
vote.vote on the proposal. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions
will count towards the quorum requirement for the annual meeting and will have the same effect as a vote against the proposal. Broker non-votes will not affect the outcome of
voting on this proposal.
Proposal No. 3: Advisory Non-Binding Vote to Approve the Compensation of Named Executive Officers
. The advisory non-binding vote to approve the fiscal 20192022 compensation of our named executive officers requires the affirmative vote of a majority of the voting power of the shares present virtually or represented by proxy at the annual meeting and entitled to vote.vote on the proposal. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions will count towards the quorum requirement for the annual meeting and will have the same effect as a vote against the proposal. Broker non-votes will not affect the outcome of voting on this proposal. Because this vote is advisory only, it will not be binding on our board of directors.Board. The compensation committeeCompensation Committee will review the voting results and take them into consideration when making future decisions regarding executive compensation.Who will count the votes?
A representative of Broadridge Financial Solutions will tabulate the votes and act as inspector of elections.
What if I do not specify how my shares are to be voted or fail to provide timely directions to my broker,
bank or other nominee?
Stockholder of Record: Shares Registered in Your Name. If you are a stockholder of record and you submit a proxy but you do not provide voting instructions, your shares will be voted:
• | “FOR” each of the three nominees for Class I director named in this proxy statement; |
• | “FOR” the ratification of the appointment of PwC as our independent registered public accounting firm for our fiscal year ending December 31, 2023; and |
• | “FOR” the advisory non-binding vote to approve the compensation of our named executive officers. |
“FOR” each of the three nominees for Class I director named in this proxy statement;
“FOR” the ratification of the appointment of PwC as our independent registered public accounting firm for our fiscal year ending December 31, 2020; and
“FOR” the advisory non-binding vote to approve the compensation of our named executive officers.
In addition, if any other matters are properly brought before the annual meeting or any adjournments or postponements thereof, the persons named as proxies will be authorized to vote or otherwise act on those matters in accordance with their judgment.
Beneficial Owner of Shares Held in “Street Name”: Shares Registered in the Name of a Broker, Bank or
Other Nominee. Brokers, banks and other nominees holding shares of common stock in “street name” for customers are generally required to vote such shares in the manner directed by their customers. In the absence of timely directions, your broker, bank or other nominee will have discretion to vote your shares on our sole “routine” matter—Proposal No. 2 (ratification of the appointment of PwC). Absent direction from you, however, your broker, bank or other nominee will not have the discretion to vote on Proposal No. 1 relating to the election of directors, and Proposal No. 3 relating to the approval of the compensation of our named executive officers.How can I contact BlackLine’s transfer agent?
You may contact our transfer agent, AST, by telephone at (800) 937-5449 (toll-free for United States residents), or by email at info@amstock.com. Materials may be mailed to AST at:
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
How can I attend the annual meeting?
The annual meeting will be a virtual meeting held over the Internet. You will be able to attend the virtual annual meeting, vote your shares electronically and submit your questions during the live webcast of the meeting by visiting www.virtualshareholdermeeting.com/
BL2020BL2023 and entering
yourthe sixteen-digit control number located on your proxy card. The annual meeting webcast will begin promptly at 9:00 a.m., Pacific time. We encourage you to access the meeting prior to the start time. Online check-in will begin at 8:
5045 a.m., Pacific time, and you should allow ample time for the check-in procedures. You will have the same rights and opportunities that would be afforded by an in-person meeting.
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Beneficial Owner of Shares Held in “Street Name”: Shares Registered in the Name of a Broker, Bank or
Other Nominee. If you were a beneficial owner of shares that are held in “street name” at the close of business on the Record Date, you may not vote your shares electronically at the virtual annual meeting unless you obtain a “legal proxy” from your broker, bank or other nominee who is the stockholder of record with respect to your shares. You may still attend the virtual annual meeting even if you do not have a legal proxy. For admission to the virtual annual meeting, visit www.virtualshareholdermeeting.com/BL2020BL2023 and enter yourthe sixteen-digit control number located on your proxy card.How are proxies solicited for the annual meeting and who is paying for such solicitation?
Our
board of directorsBoard is soliciting proxies for use at the annual meeting by means of the proxy materials. We will bear the entire cost of proxy solicitation, including the preparation, assembly, printing, mailing and distribution of the proxy materials. Copies of solicitation materials will also be made available upon request to brokers, banks and other nominees to forward to the beneficial owners of the shares held of record by such brokers, banks or other nominees. The original solicitation of proxies may be supplemented by solicitation by telephone, electronic communication, or other means by our directors, officers or employees. No additional compensation will be paid to these individuals for any such services, although we may reimburse such individuals for their reasonable out-of-pocket expenses in connection with such solicitation. We do not plan to retain a proxy solicitor to assist in the solicitation of proxies.
If you choose to access the proxy materials and/or vote over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur.
Where can I find the voting results of the annual meeting?
We will announce preliminary voting results at the annual meeting. We will also disclose voting results on a Current Report on Form 8-K
(Form 8-K) filed with the SEC within four business days after the annual meeting. If final voting results are not available to us in time to file a
Current Report on Form 8-K within four business days after the annual meeting, we will file a
Current Report on Form 8-K to publish preliminary results and, within four business days after final results are known, file an
additional Current Report onamendment to the Form 8-K to publish the final results.
What does it mean if I receive more than one Notice of Internet Availability or more than one set of
printed materials?If you receive more than one Notice of Internet Availability or more than one set of printed materials, your shares may be registered in more than one name and/or are registered in different accounts. Please follow the voting instructions on each Notice of Internet Availability or each set of printed materials, as applicable, to ensure that all of your shares are voted.
I share an address with another stockholder, and we received only one paper copy of the proxy materials.
How may I obtain an additional copy of the proxy materials?We have adopted an SEC-approved procedure called “householding,” under which we can deliver a single copy of the Notice of Internet Availability and, if applicable, the proxy materials and annual report, to multiple stockholders who share the same address unless we receive contrary instructions from one or more of the stockholders. This procedure reduces our printing and mailing costs. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, we will deliver promptly a separate copy of the Notice of Internet Availability and, if applicable, the proxy materials and annual report, to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy, or, if you are receiving multiple copies, to request that we only send a single copy of next year’s proxy materials and annual report, you may contact us as follows:
BlackLine, Inc.
Attention: Investor Relations
21300 Victory Boulevard, 12th Floor
Woodland Hills, CA 91367
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Stockholders who hold shares in street name may contact their broker, bank or other nominee to request information about householding.
Is there a list of stockholders entitled to vote at the annual meeting?
The names of stockholders of record entitled to vote at the annual meeting will be available from our Corporate Secretary for ten days prior to the meeting for any purpose germane to the annual meeting between the hours of 9:00 a.m. and 4:30 p.m., Pacific time, at our
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corporate headquarters located at 21300 Victory Boulevard,
12th12th Floor, Woodland Hills, California 91367.
The listPlease contact our Corporate Secretary a reasonable time in advance to make appropriate arrangements, but in no event less than 48 hours in advance of
stockholdersyour desired visiting time, and please note that you will
also be
available during the annual meeting through the meeting websiterequired to comply with all COVID-19 health and safety protocols required by law at
www.virtualshareholdermeeting.com/BL2020.that time.
When are stockholder proposals due for next year’s annual meeting?
Please see the section entitled
Stockholder Proposal Deadlines for 20212024 Annual Meeting in this proxy statement for more information regarding the deadlines for the submission of stockholder proposals for our
20212024 annual meeting.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE Our
board of directorsBoard is currently comprised of
ten members. Our board of directors consists ofnine members, divided into three classes of directors, each serving staggered three-year terms. Upon expiration of the term of a class of directors, directors in that class will be elected for a three-year term at the annual meeting of stockholders in the year in which that term expires. Each director’s term continues until the election and qualification of his or her successor, or his or her earlier death, resignation or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.
Stockholders’ AgreementWe are party to
In connection with our initial public offering, we entered into an Amended and Restated Stockholders’ Agreement with Silver Lake Sumeru Fund, L.P., Silver Lake Technology Investors Sumeru, L.P.
(individually and/or collectively, Silver Lake Sumeru), Iconiq Strategic Partners, L.P., ICONIQ Strategic Partners-B, L.P., Iconiq Strategic Partners Co-Invest, L.P., BL Series and Iconiq Strategic Partners Co-Invest, L.P., BL2 Series,
(individually and/or collectively, Iconiq), Therese Tucker and Mario Spanicciati
(together, the “Stockholder Parties”), dated as of October 27, 2016 (or the
Stockholders’ Agreement)“Stockholders’ Agreement”). Pursuant to the Stockholders’ Agreement,
Silver Lake Sumeru, Iconiq,only Ms. Tucker
and Mr. Spanicciati (or the Stockholder Parties) are entitledcontinues to
designate members of our board of directors subject to certain restrictions, provided, however, that in the event any of the Stockholder Parties no longer beneficially
owns at least 5% of the totalown a sufficient number of shares
of our common stock then outstanding (or the Designation Threshold), on a date that is 120 days before the date of our annual meeting at which directors are to be elected (or the Ownership Measurement Date), then with respect to such meeting and thereafter, the Stockholder Parties shall have no right to designate a designee on our
board of directors.Silver Lake Sumeru no longer owns shares of our common stock, and is therefore no longer entitled to designate any directors. Silver Lake Sumeru previously designated Mr. Babcoke and Mr. Brennan as Silver Lake Sumeru designees at our 2018 and 2019 annual meetings of shareholders, respectively, and each of Mr. Babcoke and Mr. BrennanBoard. Ms. Tucker will continue to serve until 2021 and 2022, respectively. Before the Ownership Measurement Date, neither Iconiq nor Mr. Spanicciati held the Designation Threshold and are therefore no longer entitled to designate designees for this annual meeting.
Ms. Tucker still holds the Designation Threshold and isbe entitled to membership on our board of directorsBoard for so long as she continues to hold the Designation Threshold as of the Ownership Measurement Date (each as defined in the Stockholder Agreement), provided,,however,, in the event that Ms. Tucker ceases to be employed by the companyCompany for any reason and she beneficially owns less than the Designation Threshold (i) she will be required to immediately tender her resignation from our board of directorsBoard effective only upon acceptance by our board of directors,Board, and (ii) our board of directorsBoard may, in its sole discretion, accept or reject such resignation. If our board of directorsBoard rejects the resignation, Ms. Tucker will continue to have the right to be designated for membership on our board of directors;Board; provided that our board of directorsBoard will have the right, by unanimous vote of the other directors (excluding Ms. Tucker), to require her resignation from our board of directorsBoard if our board of directorsBoard determines such resignation would be in the best interests of the company,Company, regardless of the number of shares of common stock held by Ms. Tucker. The affiliates of each of the Stockholder Parties who continue to hold shares have agreed to vote their shares in favor of the directors designated as set forth above.
Ms. Tucker.
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The following
table setstables and biographical descriptions set forth the names, ages, and certain other information for each of the directors
with terms expiringwho are standing for reelection at the annual meeting,
(including those who are also nominees for election as
a director at the annual meeting) and forwell as each of the continuing members of our
board of directors.Board. All information is as of March
16, 2020.Name | Class | Age | Position | Director Since | Current Term Expires | Expiration of Term for Which Nominated |
Nominees for Director
| | | | | | | | | | | | | | | | | | |
Marc Huffman | I | 49 | President and Chief Operating Officer | | — | | | — | | | 2023 | |
Therese Tucker | I | 58 | Chief Executive Officer and Director | | 2001 | | | 2020 | | | 2023 | |
Thomas Unterman(2)(3) | I | 75 | Director | | 2010 | | | 2020 | | | 2023 | |
Continuing Directors
| | | | | | | | | | | | |
Jason Babcoke | II | 47 | Director | | 2013 | | | 2021 | | | — | |
Owen Ryan(1)(3) | II | 57 | Director | | 2018 | | | 2021 | | | — | |
Kevin Thompson(1)(2) | II | 54 | Director | | 2017 | | | 2021 | | | — | |
Sophia Velastegui | II | 44 | Director | | 2020 | | | 2021 | | | — | |
John Brennan(2)(3) | III | 55 | Chairman of the Board | | 2013 | | | 2022 | | | — | |
Graham Smith(1)(3) | III | 60 | Director | | 2015 | | | 2022 | | | — | |
Mika Yamamoto(2) | III | 47 | Director | | 2019 | | | 2022 | | | — | |
Director Not Continuing
| |
Mario Spanicciati(4) | I | 39 | Chief Strategy Officer and Director | | 2013 | | | 2020 | | | — | |
17, 2023.
Nominees for Director
| | | | | | | | | | | | | | | | | | |
Therese Tucker(6) | | | I | | | 61 | | | Co-Chief Executive Officer and Director | | | 2001 | | | 2023 | | | 2026 |
Thomas Unterman(2)(3) | | | I | | | 78 | | | Director | | | 2010 | | | 2023 | | | 2026 |
Amit Yoran(2)(3) | | | I | | | 52 | | | Director | | | 2023 | | | 2023 | | | 2026 |
Continuing Directors
| | | | | | | | | | | | | | | | | | |
Owen Ryan(4)(5) | | | II | | | 60 | | | Chair of the Board and Co-Chief
Executive Officer | | | 2018 | | | 2024 | | | — |
Kevin Thompson(1)(2) | | | II | | | 57 | | | Director | | | 2017 | | | 2024 | | | — |
Sophia Velastegui(1) | | | II | | | 47 | | | Director | | | 2020 | | | 2024 | | | — |
Brunilda Rios(1) | | | III | | | 57 | | | Director | | | 2023 | | | 2025 | | | — |
Barbara Whye(3) | | | III | | | 55 | | | Director | | | 2021 | | | 2025 | | | — |
Mika Yamamoto(2) | | | III | | | 50 | | | Director | | | 2019 | | | 2025 | | | — |
| (1)
| Member of audit committee.Audit Committee. |
| (2)
| Member of compensation committee.Compensation Committee. |
| (3)
| Member of nominatingNominating and corporate governance committee.Corporate Governance Committee. |
(4)
| In January 2023, Ms. Tucker stepped down as the Executive Chair of the Board and Mr. Ryan was elected Chair of the Board. |
(5)
| In March 2023, Mr. Ryan transitioned to the role of Co-Chief Executive Officer. |
(6)
| In March 2023, Ms. Tucker transitioned to the role of Co-Chief Executive Officer. |
| (4) | Mr. Spanicciati is not standing for re-election at the 2020 annual meeting, but will continue to serve as a member of our board of directors until the expiration of his current term ending on the date of the 2020 annual meeting of stockholders. |
Nominees for Director
Marc Huffman has served as our Chief Operating Officer since February 2018, and as our President and Chief Operating Officer since February 2020. Prior to joining us, Mr. Huffman served as President, Worldwide Sales and Distribution of NetSuite Inc., a global cloud ERP software provider (acquired by Oracle Corporation), from April 2014 to February 2018, Senior Vice President of North American Verticals, Channels and APAC of NetSuite from 2010 to April 2014, Senior Vice President of Sales, North America of NetSuite from 2008 to 2010 and Vice President of Sales of NetSuite from December 2003 to 2008. Prior to joining NetSuite, Mr. Huffman served as a director of sales responsible for Canada and the central United States at Oracle Corporation. Currently, Mr. Huffman serves on the board of directors of Channel Advisor Corporation, a provider of software-as-a-service solutions that help retailers and branded manufacturers improve their online performance. Mr. Huffman holds a B.S. with an emphasis on marketing from California State University, Chico.
Mr. Huffman brings valuable experience to our board of directors, including extensive management experience in the technology industry, and operational insight and expertise he has accumulated as our President and Chief Operating Officer.
Therese
Tucker. Ms. Tucker
is our founder and has served as a member of our Board since August 2001. She has been the Company's Co-Chief Executive Officer (Co-CEO) since March 2023, and previously served as our Chief Executive Officer from August 2001 to January 2021 and a memberExecutive Chair of our board of directors since August 2001.the Board from January 2021 to January 2023. Prior to founding the Company, Ms. Tucker served as Chief Technology Officer for SunGard Treasury Systems, Inc. and SunGard Trading Systems, Inc., providers of software solutions and information technology services. Ms. Tucker holds a B.S. in Computer Science and Mathematics from University of Illinois at Urbana-Champaign.Our Board believes that Ms. Tucker is
qualified to serve as a
valuable member of our board of directors, possessing over 25 years ofdirector based on her extensive leadership experience in the finance and technology industry, and the operational insight and expertise she has accumulated as our founder and
an executive of our company, including as Chief Executive Officer.
Thomas
Unterman. Mr. Unterman
has served as a member of our board of directorsBoard since 2010. Since September 1999, Mr. Unterman has served as Partner for Rustic Canyon Partners, an early stage venture capitalTABLE OF CONTENTS
firm, which he founded in September 1999. Previously, Mr. Unterman served as Executive Vice President and Chief Financial Officer of The Times Mirror Company, a newspaper publishing company that was acquired by Tribune Co. Currently, Mr. Unterman serves as a director of several civil rights non-profit companies. He also serves as a director for several of the Rustic Canyon portfolio companies. Mr. Unterman holds a J.D. from University of Chicago and a B.A. from the Woodrow Wilson School of Public Affairs at Princeton University.
Our Board believes that Mr. Unterman is
qualified to serve as a
valuable member of our board of directors, bringingdirector based on his substantial experience as an executive officer of a public company, as an investment professional, and as a director of private technology
companies. We also believe that Mr. Unterman bringscompanies, as well as his historical knowledge
of the Company and
his ability to bring continuity to the
board of directors.Continuing Directors
Jason Babcoke. Mr. BabcokeBoard.
Amit Yoran has served as a member of our board of directorsBoard since September 2013.January 2023. Since January 2017, Mr. BabcokeYoran has served as CEO and Chairman of Tenable, a Managingcybersecurity company. Before joining Tenable, Mr. Yoran spent over five years with RSA Security, an identity and access management software company, as President, spearheading
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its transformation into a successful global security company. Mr. Yoran joined RSA through its acquisition of NetWitness, the network forensics company he founded in 2006 and led as CEO. Prior to NetWitness, Mr. Yoran served as Founding Director of Sumeru Equity Partners,the United States Computer Emergency Readiness Team (US-CERT) program in the US Department of Homeland Security. He holds a private equity firm, since March 2014. Since July 2011, Mr. Babcoke has beenB.S. in Computer Science from the United States Military Academy at Silver Lake Sumeru, a middle-market investment group of Silver Lake, a global private equity firm,West Point and is currently a Managing Director. Previously, Mr. Babcoke worked at Symphony Technology Group, a private equity firm, and served as a Senior Manager for Life Technologies, a biotech company, as Director of Engineering for Angstron Systems, Inc., a nano-deposition technology company, acquired by Novellus, and as a Venture Capital Associate for The Spark Group, a technology-focused investment group. Currently, Mr. Babcoke serves as a member of the board of directors for Criteria Corp and Snow Software. Mr. Babcoke holds an M.B.A. from Harvard Business School, an M.S. in ManagementComputer Science and Engineering from Stanford University andThe George Washington University.
Our Board believes that Mr. Yoran is qualified to serve as a
B.S. in Mechanical Engineering from University of California, Berkeley.Mr. Babcoke brings valuabledirector based on his leadership experience in venture capital investing and knowledgethe technology industry, including extensive cybersecurity experience, as well as his service on the boards of several public companies in the technology companies to the board of directors.
John Brennan. Mr. Brennansector.
Brunilda Rios has served as a member of our board of directorsBoard since September 2013January 2023. Since 2020, Ms. Rios has worked as Chief Accounting Officer at Dell Technologies, a leading technology and is the Chairman of our board of directors. Mr. Brennan cofounded Sumeru Equity Partners, a private equity firmIT solutions company. Ms. Rios has spent twenty-two years in Finance and has served as Managing Director since March 2014. Since February 2008, Mr. Brennan has served as a Managing Director for Silver Lake Sumeru, a middle-market investment group of Silver Lake, a global private equity firm. Mr. Brennan has also previously served asAccounting at Dell Technologies in various roles including Senior Vice President of Platform Software for Adobe Systems Incorporated, a computer software company, as SeniorGlobal Revenue and Vice President of SMB Segment Operations for Hewlett Packard Company, an information technology company,Corporate Accounting. She holds a Bachelor’s degree in Accounting and as Principal and Associate Partner of Electronics and High-Tech Practice for Accenture Strategic Services, a management consulting, technology services and outsourcing company. Mr. Brennan currently serves onFinance from the board of directors of several private companies. Mr. Brennan holds an M.B.A. from University of California, Berkeley Haas School of BusinessPuerto Rico.
Our Board believes that Ms. Rios is qualified to serve as a director based on her extensive management and
a B.A. in History from Yale University.Mr. Brennan brings valuable management experience as well asfinancial experience in private equity investing and knowledge ofthe technology companies to the board of directors.
industry.
Owen
Ryan. Mr. Ryan
has served as our Co-CEO since March 2023, as a member of our board of directorsBoard since August 2018. Since 2018, and as Chair of the Board since January 2023. From July 2018 through April 2022, Mr. Ryan has worked as thefor Geller & Company and Geller Advisors in several roles including Chief Executive Officer, Managing Principal, and Chief Strategy Officer,Officer. Geller & Company provides outsourced CFO and subsequently CEO, oftechnology services, and Geller Advisors aprovides strategic financial advisory and wealth management company.services. From October 2016 to November 2017, Mr. Ryan served as the President and Chief Executive Officer of AEGIS Insurance, a mutual insurance company. Prior to joining AEGIS Insurance, Mr. Ryan was Managing Partner and Chief Executive Officer of Deloitte Advisory, a financial advisory company, from 2008 until 2016. Mr. Ryan holds a B.S. from New Jersey City University and an M.B.A. from Columbia University, and is a certified public accountant.Our Board believes that Mr. Ryan is
qualified to serve as a
valuable member of our board of directors, bringingdirector based on his extensive management and financial expertise,
to our board.Graham Smith. Mr. Smithas well as his leadership experience at the Company, including his recent appointment as Co-CEO.
Kevin Thompson has served as a member of our board of directorsBoard since May 2015. Mr. Smith served as Executive Vice President and Chief Financial Officer of Salesforce, Inc., a provider of customer relationship management software from March 2008 to August 2014. Mr. Smith previously served as Chief Financial Officer of Advent Software, Inc., a provider of portfolio accounting software. Mr. Smith has served as a member of the board of directors for Splunk Inc., a provider of operational intelligence software, since July 2011, of Xero, Inc., a provider of online accounting software, since February 2015, and of Slack, Inc. since TABLE OF CONTENTS
December 2018. Mr. Smith also served as a member of the board of directors of Citrix Systems, Inc., a provider of workplace software, from December 2015 to June 2018, and MINDBODY, Inc., a provider of software to the wellness industry, from February 2015 to February 2019. Mr. Smith holds a B.Sc. in Economics and Politics from University of Bristol in England and qualified as a chartered accountant in England and Wales.
Mr. Smith brings valuable experience to our board of directors, including his experience in the software industry and service as an executive and a director for publicly traded companies, where he has served on various committees and held leadership roles.
Kevin Thompson.October 2017. Since April 2021, Mr. Thompson has served as Chairman and Chief Executive Officer of Tricentis, a member of our board of directors since October 2017. Sincecompany that provides software testing automation and software quality assurance products for enterprise software. From March 2010 to December 2020, Mr. Thompson has served as President and Chief Executive Officer of SolarWinds Inc., an enterprise information technology infrastructure management software company, or SolarWinds, and has held several other positions since he joinedjoining SolarWinds in July 2006. Mr. Thompson has served as Chairman of the board of directors of SolarWinds sincefrom October 2018.2018 through November 2020. Prior to joining SolarWinds, Mr. Thompson served as Chief Financial Officer of Surgient, Inc., a software company, and also served as Senior Vice President and Chief Financial Officer of SAS Institute, a business intelligence software company, and as Executive Vice President and Chief Financial Officer of Red Hat, Inc., an enterprise software company. Currently, Mr. Thompson servespreviously served on the board of directors of Instructure, Inc.,Inc, an educationaleducation technology company. Previously, Mr. Thompsoncompany, from November 2016 to February 2020, and also served on the board of directors of Barracuda Networks, Inc., a data security and storage company, from September 2013 to June 2016, and the board of directors of NetSuite Inc., a business management software company, from September 2006 to November 2016. Mr. Thompson holds a B.B.A. from the University of Oklahoma.
Our Board believes that Mr. Thompson is
qualified to serve as a
valuable memberdirector based on his extensive leadership and financial experience in the technology industry, as well as his service on the boards of
our board of directors, bringing extensive experience working with software and otherseveral public companies in the technology
companies.sector.
Sophia Velastegui. Ms. Velastegui has served as a member of our board of directorsBoard since March 2020. Since February 2022, Ms. Velastegui has served as Chief TechnologyProduct Officer for Operation Applicationsat Aptiv PLC, an automotive technology company. Prior to joining Aptiv, Ms. Velastegui served in various roles at Microsoft Corporation, (or Microsoft), a software and technology company, since February 2020, and previously servedfrom December 2017 to January 2022, most recently as General Manager of Product, AI Products & Search, and General Manager of Product, Knowledge Graph in theits Chief Technology Officer, AI and Research Group at Microsoft since December 2017.Product Head of Power Apps Edge within Microsoft's Business Application Group. Prior to joining Microsoft,
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Ms. Velastegui served as Chief Product Officer at Doppler Labs, an audio technology company, from April 2017 to September 2017. Prior to joining Doppler Labs, Ms. Velastegui worked at Nest Labs, Inc., a home automation specialist company, from July 2014 to April 2017, first as Lead for Silicon/Architecture Roadmap, then as Head of Silicon/Architecture Roadmap. Ms. Velastegui holds a B.S. in Mechanical Engineering from Georgia Institute of Technology, and an M.S. in Mechanical Engineering from the University of California at Berkeley.
Our Board believes that Ms. Velastegui is
qualified to serve as a
valuable member of our board of directors, bringingdirector based on her extensive engineering and product development experience, as well as
her experience working with other technology companies.
Mika Yamamoto. Ms. Yamamoto
Barbara Whye has served as a member of our board of directorsBoard since April 2021. Since November 2020, Ms. Whye has worked as Vice President of Inclusion & Diversity at Apple Inc., a consumer electronics and technology company. Before joining Apple, Ms. Whye spent twenty-five years with Intel Corporation, a semiconductor chip and technology company, in various roles including Business operations and Talent Manager, Internal Senior Business Consultant, Director of Global Strategic Initiatives, Director of Diversity in Technology Initiative, Director of Strategy and External Alliances, and most recently, Chief Diversity and Inclusion Officer and Corporate Vice President of Social Impact. Ms. Whye holds a B.S. in Electrical Engineering from the University of South Carolina (USC) and holds an M.B.A. from USC’s Darla Moore School of Business.
Our Board believes that Ms. Whye is qualified to serve as a director based on her leadership experience in the technology industry, and her extensive expertise in fostering inclusion and diversity.
Mika Yamamoto has served as a member of our Board since April 2019. Since May 2019, Ms. Yamamoto has served as EVP, Chief Marketing and Customer Experience Officer at F5 Networks, since May 2019.Inc., an enterprise network monitoring and technology company. Ms. Yamamoto previously served as Global President, and subsequently Vice President/GM of Marketo, Inc., an Adobe Company, from August 2018 to March 2019. From June 2016 to August 2018, Ms. Yamamoto worked at SAP SE, an enterprise business application company, first as Chief Marketing Officer and most recentlythen as Chief Digital Marketing Officer. Prior to joining SAP, Ms. Yamamoto worked as Head of Marketing & Merchandising at Amazon,Amazon.com, Inc., a retail and cloud computing company, from October 2015 to May 2016. Prior to joining Amazon, Ms. Yamamoto served as Growth Officer and Strategist at Drumroll, a brand experience agency, from January 2013 to October 2015. Ms. Yamamoto holds a Bachelor of Commerce, Economics and Marketing from Queen’s University. Our Board believes that Ms. Yamamoto
brings more than 20 years ofis qualified to serve as a director based on her extensive enterprise marketing experience and leadership experience in
software companies to our board of directors.the technology industry.
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Director Not Continuing
Mario Spanicciati. Mr. Spanicciati joined us in 2004,
The table below provides certain highlights of the composition of our Board members and has servedbeen completed based on each director's self-identification. Each of the categories in the table has the meaning set forth in Nasdaq Rule 5605(f).
Board Diversity Matrix (As of March 17, 2023)
| Part I: Gender Identity
| | | | | | | | | | | | | |
| Directors | | | 4 | | | 5 | | | — | | | — | |
| Part II: Demographic Background
| | | | | | | | | | | | | |
| African American or Black | | | — | | | 1 | | | — | | | — | |
| Alaskan Native or Native American | | | — | | | — | | | — | | | — | |
| Asian | | | — | | | 1 | | | — | | | — | |
| Hispanic or Latinx | | | — | | | 1 | | | — | | | — | |
| Native Hawaiian or Pacific Islander | | | — | | | — | | | — | | | — | |
| White | | | 4 | | | 1 | | | — | | | — | |
| Two or More Races or Ethnicities | | | — | | | 1 | | | — | | | — | |
| LGBTQ+ | | | — | |
| Did Not Disclose Demographic Background | | | — | |
We understand the importance of having a Board comprised of talented people with the highest integrity and the necessary skills and qualifications to oversee our business. Our Board as
our Chief Strategy Officer since September 2018. Previously, Mr. Spanicciati served as our Chief Marketing Officer from October 2016 to September 2018,a whole is strong in its diversity, vision, strategy and
as our Executive Vice President and as our Chief Strategy Officer from August 2015 to October 2016. He has been a member of our board of directors since September 2013. Prior to joining us, Mr. Spanicciati served as an Analyst for Merrill Lynch’s Private Banking & Investment Group, a division of Merrill Lynch that offers personalized wealth management products and services. Mr. Spanicciati holds a B.S. in Hotel Administration from Cornell University.Mr. Spanicciatibusiness judgment. Below is a valuable membersummary of the primary experience, qualifications and skills that our board ofdirector nominees and continuing directors bringing important perspective and experience as our Chief Strategy Officer. We also believe that he brings historical knowledge, operational expertise and continuitybring to the boardBoard:
| Cybersecurity | | | Deep insight in cybersecurity infrastructure, prioritization, and risk | | | 4 | |
| SaaS Operations Leadership | | | Experience growing successful SaaS companies, strong knowledge of the operating model, evolution, and scaling of SaaS businesses | | | 5 | |
| Investment | | | Experience creating long-term value through investment, acquisitions, and growth strategies | | | 4 | |
| Executive Experience | | | Experience as a functional leader at a large, complex, global company | | | 9 | |
| Modern Cloud Technologist | | | Deep knowledge in technology architecture, including SaaS, cloud-based platforms, integrated solutions and customer data journey | | | 6 | |
| Sales | | | Experience building global sales capability for cloud services and enterprise software | | | 4 | |
| Marketing | | | Marketing and brand-building capability in rapidly changing industries, including new markets and opportunities for innovation and disruption | | | 5 | |
| Finance | | | Financial expert with expertise in financial strategy, accounting and reporting | | | 4 | |
| People and Compensation | | | Expertise in aligning company culture, performance, reward and talent with strategy, as well as remote and flexible work strategies | | | 6 | |
| Governance, Risk and Compliance | | | Experience in public company corporate governance, privacy, compliance, policy, activism and creating long term sustainable value | | | 4 | |
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Our Board believes that it should consist of
directors.Director Independence
Our boarda substantial majority of independent directors, and has undertaken a review of its composition and the independence of each director. The Board has determined that, except for Mr. Ryan and Ms. Tucker, each of the other seven current directors is independent within the meaning of the listing rules of the Nasdaq Stock Market (Nasdaq). In addition, our Board has undertaken a review of the composition of its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, and considering the relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, our board of directors has determined that each of our directors, other than Ms. Tucker,that:
Mr. Thompson, and if elected, Mr. Huffman, is an “independent director” as defined under the rules of the NASDAQ Stock Market. In addition, our board of directors determined that Messrs. Ryan, Smith,Mses. Rios and Thompson,Velastegui, who are members of our audit committee,Audit Committee, satisfy the enhanced independence standards for audit committeeAudit Committee members established by applicable SEC rules and the rules of the NASDAQ Stock Market. Our board of directors has determined that Nasdaq rules.
Messrs. Brennan, Thompson, Unterman and Unterman,Yoran, and Ms. Yamamoto, who are members of our compensation committee,Compensation Committee, satisfy the enhanced independence standards for compensation committeeCompensation Committee members established by applicable SEC rules and the rules of the NASDAQ Stock Market. Our board of directors has determined that Nasdaq rules.
Messrs.
Brennan, Ryan, SmithUnterman and
Unterman,Yoran and Ms. Whye, who are members of our
nominatingNominating and
corporate governance committee,Corporate Governance Committee, satisfy the independence standards for
nominatingNominating and
corporate governance committeeCorporate Governance Committee members established by applicable
SEC rules and the rules of the NASDAQ Stock Market.Nasdaq rules.
There are no family relationships among any of our directors or executive officers.
Board Leadership Structure Our board of directorsBoard has adopted corporate governance guidelines that provide that onethere will at all times be a majority of our independent directors on the Board, as defined by the applicable Nasdaq rules. The guidelines further provide that if the Board does not have an independent Chair, then a Lead Independent Director will servebe appointed by the Board, which we believe strengthens our governance and the independent role of the Board.
Chair of the Board
From January 2021 to January 2023, Ms. Tucker served as the Executive Chair of the Board, and the individual then serving as our lead independent director at any time when ourPresident and Chief Executive Officer serves as the Chairmanwas a member of the Board, or ifbut did not serve as Chair of the Chairman isBoard. Because Ms. Tucker was not otherwise independent. The leadan independent director, willduring her period of service as Executive Chair, our Board appointed a Lead Independent Director.
In January 2023, Mr. Ryan was appointed Chair of the Board as part of a planned succession of Board leadership. At the time of his appointment, Mr. Ryan was an independent director and therefore the Board did not appoint a Lead Independent Director. When Mr. Ryan was appointed Co-CEO in March 2023, he was no longer an independent director, and accordingly the Board again appointed a Lead Independent Director. The role of the Lead Independent Director is described below. The Chair of the Board determines the agenda and presides over the meetings of the Board and may also call special meetings of the Board. The Chair of the Board also has the power to call special meetings of stockholders, to preside over meetings of the stockholders, and to perform such other duties as may be responsible for calling separaterequested by the Board. The Board believes that having a strong strategic leader as Chair of the Board is important and enables the Board to best oversee and support the strategic direction of the Company.
Lead Independent Director
Graham Smith served as the Lead Independent Director from May 2021 to May 2022, at which time he left our Board in connection with the expiration of his term. Mr. Ryan served as the Lead Independent Director from May 2022 to January 2023, at which time he was elected Chair of the Board. When Mr. Ryan was appointed as Co-CEO, Mr. Unterman was appointed as Lead Independent Director. As a seasoned director with extensive experience as a public company executive and investment professional, Mr. Unterman has experience advising our senior management in key areas and has provided independent oversight in his roles on various committees. Mr. Unterman brings continuity to our Board and has been appointed as Lead Independent Director due to his experience as a strong independent leader. The Lead Independent Director determines the agenda and presides over the meetings of the independent directors, determiningserves as a liaison between the agenda and serving as chair of meetings of independent directors reporting toand the Chief Executive Officer and Chairman of our board ofnon-independent directors, regarding feedback from executive sessions, servingincluding the Co-CEOs, serves as spokesperson for the companyCompany as requested, and performing such other responsibilities as may be designated by athe majority of the independent directors may determine from time to time.
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Currently, the roles of Chief Executive Officer and Chairman are separate and Mr. Brennan, an independent director, serves as the Chairman of the Board. Our board of directors
The Board believes that
having an independent director serve as the non-executive Chairman of the Board is the appropriatethis leadership structure,
for our company at this time because it allows our Chief Executive Officer to focuscoupled with a strong emphasis on
executing our company’s strategic plan and managing our company’s operations and performance, while allowing the Chairman of the Board to focus on the effectiveness of the board
andindependence, provides effective independent oversight of
management while allowing both the Board and management to benefit from Mr. Ryan's leadership and years of experience in the technology industry. We believe the expertise of Mr. Ryan and Mr. Unterman serving in Board leadership roles and Mr. Ryan now as Co-CEO, together with the outside experience, oversight, and expertise of our
seniorindependent directors, allows for different perspectives and facilitates effective strategy development that benefits our stockholders. This structure enables Mr. Ryan to act as the key link between the Board and other members of management. Further, the Board believes that Mr. Ryan's combined role enables decisive leadership in management
team.and on the Board, ensures strategic and operational direction and enhances the Company's ability to communicate its message and strategy clearly and consistently to its stockholders, employees, customers and partners. At this time, the Board believes that stockholders are best served by this leadership structure.
Role of Board in Risk Oversight Process Risk is inherent with every business, and we face a number of risks, including strategic, financial, business and operational, legal and compliance, and reputational. We have designed and implemented processes to manage risk in our
operations.operations, including longer term risks as well as near term risks and potential business continuity risks. Management is responsible for the day-to-day management of risks the
companyCompany faces, while our
board of directors,Board, as a whole and assisted by its committees, has responsibility for the oversight of
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risk management. Our board of directorsBoard reviews strategic and operational risk in the context of discussions, question and answer sessions, and reports from the management team at each regular boardBoard meeting, receives reports on all significant committee activities at each regular boardBoard meeting, and evaluates the risks inherent in significant transactions. In its assessment of risks and risk management, our Board and its committees consult with outside advisors, including the Company's independent auditors, legal counsel and the compensation consultant engaged by the Compensation Committee. Our audit committeeAudit Committee assists our board of directorsBoard in fulfilling its oversight responsibilities with respect to oversight of risk assessment and risk management generally, and specifically in the areas of internal control over financial reporting and disclosure controls and procedures, legal and regulatory compliance, cybersecurity risk, and also, among other things, discusses guidelines with management and the independent auditor guidelinesauditor. Our Nominating and policies with respect to risk assessment and risk management. Our nominating and corporate governance committeeCorporate Governance Committee assists our board of directorsBoard in fulfilling its oversight responsibilities with respect to risks relating to our corporate governance practices, the independence of the board of directorsNominating and Corporate Governance Committee and potential conflicts of interest.interest, as well as our policies and practices with regard to environmental, social and governance matters. In addition, as part of its oversight of the composition of our Board, our Nominating and Corporate Governance Committee takes into account the Company's business, risks and strategies to determine the appropriate expertise needed on our Board. Our compensation committeeCompensation Committee assesses risks relating to our executive compensation plans and arrangements, and whether our compensation policies and programs have the potential to encourage excessive risk taking.
Our
board of directorsBoard believes its current leadership structure supports the risk oversight function of the
board.Board. In particular, our
boardBoard believes that our
non-executive Chairmanlead independent director and our majority of independent directors provide a well-functioning and effective balance to the members of executive management
and employees on our
board.Board. Further, our Board and Compensation Committee review and discuss with management matters related to human capital management, including our commitments and progress on inclusion and diversity, employee engagement, compensation and benefits, business conduct and compliance, and executive succession planning. During 2022, the Board and its committees also reviewed and discussed with management on a regular basis the impact of the COVID-19 pandemic and unfavorable macroeconomic trends on BlackLine’s operations, as well as management’s strategies and initiatives to respond to and mitigate adverse impacts of the pandemic and economic uncertainty, such as risks related to continuing remote work by us and our customers, economic risk, longer sales cycles, and the impacts of continuing virtual customer events and remote sales activities.
Board Meetings and Committees During our fiscal year ended December 31, 2019,2022, our board of directorsBoard held fivetwelve meetings (including regularly scheduled and special meetings), and each director attended at least 75% of the aggregate of (i) the total number of meetings of our board of directorsBoard held during the period for which he or she has been a director and (ii) the total number of meetings held by all committees of our board of directorsBoard on which he or she served during the periods thatwhen he or she served. We do not have a formal policy regarding attendance by members of our board of directorsBoard at annual meetings of stockholders, but we strongly encourage our directors to attend. AllA majority of the then-serving directors attended the 2019our 2022 annual meeting of stockholders.
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Our
board of directorsBoard has established a standing
audit committee,Audit Committee, a standing
compensation committee,Compensation Committee, and a standing
nominatingNominating and
corporate governance committee.Corporate Governance Committee. Each of the committees has the composition and the responsibilities described below.
Our
audit committeeAudit Committee currently consists of
Messrs. Ryan, Smith,Mr. Thompson and
Thompson,Mses. Rios1 and Velastegui, with
Mr. RyanMs. Rios serving as
chairperson.Chair.2 Each of
Messrs. Ryan, Smith,Mr. Thompson and
ThompsonMs. Rios, is considered an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K promulgated under the Securities Act and all members of the
audit committeeAudit Committee are financially literate.
Our audit committeeAudit Committee oversees our corporate accounting and financial reporting process and assists our board of directorsBoard in monitoring our financial systems and our legal and regulatory compliance. Our audit committeeAudit Committee also:
oversees the work of our independent registered public accounting firm (“independent auditors”) and our internal control functions;
approves the hiring, discharging and compensation of our independent auditors;
approves engagements of the independent auditors to render any audit or permissible non-audit services;
reviews the qualifications, independence and performance of our independent auditors;
reviews the scope of the annual audit;
reviews our financial statements and reviews our critical accounting policies and estimates;
reviews the adequacy and effectiveness of our internal controls;
reviews and discusses with management and our independent auditors the results of our annual audit and our quarterly financial statements;
oversees our liquidity needs and borrowing requirements;
reviews our investment policy and performance;
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reviews our risk assessment and risk management processes;
establishes procedures for receiving, retaining and investigating complaints received by us regarding accounting, internal accounting controls or audit matters; and
reviews and approves related party transactions under Item 404 of Regulation S-K.
Our audit committeeAudit Committee operates under a written charter approved by our board of directorsBoard and that satisfies the applicable rules and regulations of the SEC and the NASDAQNasdaq listing rules. The charter is available on our website at http://investors.blackline.com. Our audit committeeAudit Committee held sevenfive meetings during 2019.
2022.
Our
compensation committeeCompensation Committee currently consists of Messrs.
Brennan, Thompson,
Unterman and
Unterman,Yoran, and Ms. Yamamoto, with
Mr. BrennanMs. Yamamoto serving as
the chairperson. Ms. Yamamoto joined our compensation committee effective April 1, 2019, and Mr. Unterman joined our compensation committee effective May 8, 2019.Chair.3
Our compensation committeeCompensation Committee oversees our corporate compensation programs. Our compensation committeeCompensation Committee also:
reviews and recommends policies relating to compensation and benefits of our officers and employees;
reviews and approves corporate goals and objectives relevant to compensation of our Chief Executive Officer and other senior officers;
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evaluates the performance of our officers in light of established goals and objectives;
recommends compensation of our officers based on its evaluations;
oversees the Company's efforts to promote diversity and inclusion in the workforce;
administers our equity compensation plans; and
makes recommendations regarding non-employee director compensation to the full board of directors.Board.
Our compensation committeeCompensation Committee operates under a written charter approved by our board of directorsBoard and that satisfies the applicable rules and regulations of the SEC and the NASDAQNasdaq listing rules. The charter is available on our website at http://investors.blackline.com. Our compensation committeeCompensation Committee held foureleven meetings during 2019.
2022.
Nominating and Corporate Governance Committee
Our nominatingNominating and corporate governance committeeCorporate Governance Committee currently consists of Messrs. Brennan, Ryan, Smith,Unterman and Unterman,Yoran4, and Ms. Whye, with Mr. UntermanMs. Whye serving as the chairperson. Messrs. RyanChair.5
Our Nominating and
Smith joined our nominating and corporate governance committee effective May 8, 2019.Our nominating and corporate governance committeeCorporate Governance Committee oversees and assists our board of directorsBoard in reviewing and recommending nominees for election as directors. Our nominatingNominating and corporate governance committeeCorporate Governance Committee also:
evaluates and makes recommendations regarding the organization and governance of the board of directorsBoard and its committees;
assesses the performance of members of the board of directorsBoard and makes recommendations regarding committee and chairChair assignments;
recommends desired qualifications for board of directorsBoard membership and conducts searches for potential members of the board of directors;
Board;
reviews and makes recommendations with regard to our corporate governance guidelines;
approves our committee charters;
oversees compliance with our code of business conduct and ethics;
oversees our programs relating to corporate responsibility and sustainability;
contributes to succession planning;
reviews actual and potential conflicts of interest of our directors and officers other than related party transactions reviewed by our audit committee;Audit Committee; and
oversees the boardBoard self-evaluation process.
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Our nominatingNominating and corporate governance committeeCorporate Governance Committee operates under a written charter approved by our board of directorsBoard and that satisfies the applicable rules and regulations of the SEC and the NASDAQNasdaq listing rules. The charter is available on our website at http://investors.blackline.com. Our nominatingNominating and corporate governance committeeCorporate Governance Committee held fivesix meetings in 2019.
2022.
Compensation Committee Interlocks and Insider Participation During 2019,2022, our compensation committeeCompensation Committee was comprised of Messrs. Brennan, Thompson and Unterman, effectiveand Mses. Velastegui and Yamamoto. On May 12, 2022, Mr. Unterman stepped down as the Chair of May 8, 2019,our Compensation Committee, and was replaced by Ms. Yamamoto. On January 1, 2023, Mr. Yoran joined our Compensation Committee, and Ms. Yamamoto, effective as of April 1, 2019. Mr. Brennan is the chairperson ofVelastegui stepped down from our compensation committee.Compensation Committee. None of the members of our compensation committeeCompensation Committee is an officer or employee of our company.the Company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directorsBoard or compensation committeeCompensation Committee of any entity that has one or more executive officers serving on our board of directorsBoard or compensation committee.Compensation Committee.
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Considerations in Evaluating Director Nominees
In its evaluation of director candidates, including the members of the
board of directorsBoard eligible for re-election, our
nominatingNominating and
corporate governance committeeCorporate Governance Committee considers the current size and composition of the
board,Board, the needs of the
boardBoard and its respective committees, the directors nominated or designated in accordance with the Stockholders’ Agreement,
if applicable, and the desired board qualifications, expertise and characteristics, including such factors as business experience and diversity. While we do not have a formal policy with respect to diversity, our
nominatingNominating and
corporate governance committeeCorporate Governance Committee may consider such factors as differences in professional background, education, skill, race, ethnicity, gender, age and other individual characteristics, qualities and attributes that contribute to the total mix of viewpoints and experience represented on the
board of directors.Board. Our
board of directorsBoard is committed to seeking out highly qualified women and individuals from
minority groupsunderrepresented communities and diverse
backgrounds.backgrounds, and we will comply with any applicable law or other requirement in this regard. Our
nominatingNominating and
corporate governance committeeCorporate Governance Committee has
from time to time, engaged an executive search firm to assist in identifying and recruiting potential candidates for membership on our
board of directors.Board.
Our
nominatingNominating and
corporate governance committeeCorporate Governance Committee evaluates each individual in the context of the membership of the
board of directorsBoard as a group, with the objective of having a group that can best perpetuate the success of the business and represent stockholder interests
throughwith high character and integrity, and the exercise of sound judgment using its diversity of background and experience in
the various areas.
Each director should be an individual of high character and integrity. The
board of directorsBoard annually evaluates the performance of the
board of directorsBoard and its committees. Our
nominatingNominating and
corporate governance committeeCorporate Governance Committee reviews
the self-assessment questionnaires to evaluate the performance of individual members. In determining whether to recommend a director for re-election, our
nominatingNominating and
corporate governance committeeCorporate Governance Committee also considers the director’s past attendance at meetings, participation in and contributions to the activities of the
board of directorsBoard and the
companyCompany, and other qualifications and characteristics determined by the
board of directors.Board. Each director must ensure that other existing and anticipated future commitments do not materially interfere with his or her service as a director.
After completing
theirits review and evaluation of director candidates, in accordance with the rules of
the NASDAQ Stock Market,Nasdaq, our
nominatingNominating and
corporate governance committeeCorporate Governance Committee will recommend a director nominee for selection by our
board of directors.Board. Our
boardBoard has the final authority in determining the selection of director candidates for nomination to our
board.Board.
Stockholder Recommendations for Nominations to Our Board A stockholder that wants to recommend a candidate for election to the
boardBoard should direct the recommendation in writing by letter to the
company,Company, attention of our Chief Legal and Administrative Officer at BlackLine, Inc., 21300 Victory Boulevard,
12th12th Floor, Woodland Hills, California 91367. Such recommendation should include the candidate’s name, home and business contact information, detailed biographical data and relevant qualifications, a signed letter from the candidate confirming willingness to serve, information regarding any relationships between us and the candidate, and evidence of the recommending stockholder’s ownership of our stock. Such recommendation should also include a statement from the recommending stockholder in support of the candidate, particularly within the context of the criteria for
boardBoard membership. We do not have a formal policy regarding the consideration of director candidates recommended by stockholders, but subject to the foregoing, our independent directors will consider candidates recommended by stockholders in the same manner
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as candidates recommended from other sources. Our independent directors have discretion to decide which individuals to recommend for nomination as directors. Our boardBoard has the final authority in determining the selection of director candidates for nomination to our board.Board. A stockholder that wants to nominate a person directly for election to the boardBoard at an annual meeting of the stockholders must meet the deadlines and other requirements set forth in our amended and restated bylaws and the rules and regulations of the SEC. Any nomination should be sent in writing to BlackLine, Inc., 21300 Victory Boulevard, 12th12th Floor, Woodland Hills, California 91367, Attention: Corporate Secretary. To be timely for our 20212024 annual meeting of stockholders, our corporate secretary must receive the nomination no earlier than January 8, 202112, 2024 and no later than February 7, 2021.12, 2024. Any notice of director nomination submitted must include the additional information required by Rule 14a-19(b) under the Exchange Act. Please see the section entitled “Stockholder Proposal Deadlines for 20212024 Annual Meeting” in this proxy statement for more information.
Communications with the Board of Directors In cases where stockholders wish to communicate directly with our non-management directors, messages can be sent to our Chief Legal and Administrative Officer at BlackLine, Inc., 21300 Victory Boulevard, 12th
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12th Floor, Woodland Hills, California 91367. Our Chief Legal and Administrative Officer will, in consultation with appropriate directors as necessary, review incoming stockholder communications and decide whether a response to any stockholder or interested party communication is necessary.
This procedure does not apply to (i) communications to non-management directors from our officers or directors who are stockholders or (ii) stockholder proposals submitted pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are discussed further in the section entitled “
Stockholder Proposal Deadlines for 20212024 Annual Meeting” in this proxy statement.
Code of Business Conduct and Ethics Our
board of directorsBoard has adopted a written code of business conduct and ethics that applies to all of our employees, officers and directors, including our
chief executive officer, chief financial officer,Co-CEOs, Chief Financial Officer, and other executive and senior financial officers. The full text of our code of business conduct and ethics is available on the corporate governance section of our website, which is located at http://investors.blackline.com. We intend to disclose any amendments to our code of business conduct and ethics, or waivers of its requirements, on our website or in filings under the Exchange Act.
We are committed to maintaining high standards of financial integrity, open communication, and a workplace environment where employees can raise concerns free of harassment, discrimination or retaliation. We maintain a formal whistleblower policy which describes the means by which employees, directors and officers can report suspected violations of our code of business conduct and ethics. Reports of suspected violations may be made directly to human resources or the legal department, or through our reporting hotline, which allows anonymous reporting where permitted by law. Retaliation is strictly prohibited under both our code of business conduct and ethics and our whistleblower policy.
Director Stock Ownership Guidelines In February 2020, the
compensation committeeCompensation Committee and the
nominatingNominating and
corporate governance committeeCorporate Governance Committee recommended, and our
board of directorsBoard approved, stock ownership guidelines for our directors. Under these guidelines, each director is expected to attain minimum levels of stock ownership equal to 4x the director’s annual cash retainer for service on our
board of directorsBoard (not including any additional fees received for committee service or serving as a
chairChair of a committee). For purposes of this requirement, shares counted toward these guidelines include any shares outright, and in-the-money value of vested but unexercised stock options. The value for purposes of satisfying this requirement is the 90-day trailing average of the closing price of our common stock as of the last trading day of the fiscal year prior to the compliance date. Directors have until the later of February 2025 or, if applicable, the fifth anniversary of the date they join our
board of directorsBoard to attain the requisite level of ownership. If a director does not achieve the minimum level of ownership by the director’s compliance date, then 50% of the after-tax value of the director’s exercised options or vested RSUs will be retained until the minimum level of ownership for the director is met.
As of December 31, 2022, five of our six non-employee directors had exceeded their requisite level of stock ownership under the guidelines.
Corporate Responsibility and Sustainability
BlackLine recognizes the importance of a thoughtful approach to corporate citizenship, and sustainability.this is reflected in our Board's oversight of our environmental, social, and governance (“ESG”) programs. Our Nominating and Corporate Governance Committee oversees our programs relating to corporate responsibility and sustainability, including environmental, social, and corporate governance matters, and our Compensation Committee oversees our efforts to promote diversity and inclusion in our workforce, and management's efforts to foster a corporate culture in alignment with the Company's values and strategy.
During 2022, BlackLine's ESG committee continued its work of steering and reporting on BlackLine's ESG strategy and programs, with executive sponsorship and participation from our Chief Legal and Administrative Officer. As we continue to develop our
ESG strategies and practices,
in these areas, we are also committed to
maintaininggrowing and
improvingrefining our
programs using a stakeholder-focused approach. Our current programs
including:Community Responsibility. We drive social good through our commitment to responsible corporate citizenship across the communities where we operate. Through our annual Giving Back Day, our employees volunteer in support of causes that improve lives in our local communities.include:
• | Community Involvement. We drive social good through our commitment to responsible corporate citizenship across the communities in which we operate. We offer employer-matched charitable giving, and promote volunteer opportunities with local organizations such as the Los Angeles Regional Food Bank. Our charitable efforts are focused on three key areas that are shaped by BlackLine’s values and commitment to responsible corporate citizenship: |
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Environmental Responsibility. We work to reduce the environmental impact of our operations through our sustainability initiatives, including:
| ○ | Reducingalleviating hunger and homelessness; |
○ | promoting STEM education, particularly among underrepresented populations; and |
○ | improving educational and professional opportunities for people in underserved communities. |
• | Environmental Responsibility. We adopted an environmental sustainability policy in 2021, and we continue to identify strategies by which we can reduce our environmental footprint. As a global company with offices worldwide, we are working towards reducing waste and energy consumption, measuring and reducing our emissions, and optimizing the performance of our buildings through incorporating green building standards in office design, construction and operation as part of our corporate sustainability efforts. Our ongoing sustainability initiatives in 2022 included: |
○ | reducing waste by providing reusable containers to our employees, and beverages on tap in select facilities.facilities; |
| ○ | Facilitatingfacilitating electric vehicle use by providing electric vehicle charging stations in select facilities.locations; |
| ○ | Donatingpartnering with local non-profit organizations and schools to donate surplus office furniture and select used hardware to area schools, upon approval bywith the authorization of our Information Security team.team; |
○ | practicing sustainability-focused procurement in new office site selection and existing office renovations; and |
○ | reducing employee commutes and travel by offering a hybrid, flexible work model. |
• | Diversity, Equity, and Inclusion. BlackLine is committed to cultivating a workplace where each employee can be themselves and reach their full potential. Diversity, equity and inclusion (“DEI”) are deeply rooted in our culture, and we continue to support this with a company-wide objective to strengthen our culture of diversity, equity, and inclusion in order to develop an agile, diverse, inclusive, and highly engaged workforce. Programs that advance our DEI strategy include employee training to reduce unconscious bias in the workplace, employee recruitment of underrepresented communities, and our employee-led and executive sponsored Employee Resource Groups, designed to help build community and foster a diverse and inclusive workplace by providing networking and team-building opportunities. |
• | Compliance with Laws. BlackLine is committed to complying with all applicable laws in all jurisdictions where it does business, including employment, human rights, and environmental laws and regulations. |
• | Health and Safety. BlackLine is committed to supporting the wellbeing of its employees around the world, and has continued to take a proactive approach to helping our employees remain healthy and productive. This includes access to discounted health programs, a global employee assistance program, and supportive programs to help employees succeed in a hybrid work model. |
| ○ | Reducing air travel by encouraging teleconferencing. |
BlackLine’s products also have a positiveMore information about BlackLine's approach to environmental, impact by allowing our clients to automate their accounting processes, thus potentially reducing the need for voluminous printed financial materials.
Social Responsibility. Inclusionsocial, and diversity are key to our success,governance programs is available at https://www.blackline.com/about/esg/ and we seek employees who bring diverse backgrounds, experiences, and perspectives to our “Think, Create, Serve” ethos. We prohibit discrimination and any form of harassment. We treat all of our employees with respect and dignity and require our employees to conduct themselves similarly. We also ensure that our workplaces are both safe and healthy, in compliance with all applicable local laws and regulations in each of our countries of operation. We continue to evaluate and refine our practices and policies to promote a culture that fosters diversity and equality.https://www.blackline.com/about/diversity-equity-inclusion/.
Compliance with Laws. BlackLine is committed to complying with all applicable employment, human rights and environmental laws and regulations in all locations where it conducts business.
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COMPENSATION OF NON-EMPLOYEE DIRECTORS Outside Director Compensation PolicyOur board of directors adopted our Outside Director Compensation Policy in connection with our initial public offering.
Members of our
board of directorsBoard who are not employees are eligible for compensation under our Outside Director Compensation
Policy.Policy, adopted in 2016 in connection with our initial public offering and amended in December 2022 to adjust certain cash retainer fees and reflect changes in the leadership structure of our Board. Accordingly, neither Ms. Tucker nor
if elected, Mr. Huffman, each an
executive officeremployee of BlackLine
in 2022, was eligible for awards under our Outside Director Compensation Policy for 2022, and neither Ms. Tucker nor Mr. Ryan, each an employee of BlackLine in 2023, is eligible for awards under our Outside Director Compensation
Policy.Policy for 2023.
The Outside Director Compensation Policy was developed in consultation with Compensia, Inc., an independent compensation consulting firm, or Compensia. Compensia provided recommendations and competitive non-employee director compensation data and analyses. Our
board of directorsBoard considered and discussed these recommendations and data, and considered the specific duties and committee responsibilities of particular directors. Our
board of directorsBoard adopted Compensia’s recommendations when it approved our Outside Director Compensation Policy, which we believe provides our non-employee directors with reasonable and appropriate compensation that is commensurate with the services they provide and competitive with compensation paid by our peer group companies to their non-employee directors.
The
compensation committeeCompensation Committee periodically reviews the type and form of compensation paid to our non-employee directors, which includes a market assessment and analysis by Compensia. As part of this analysis, Compensia reviews non-employee director compensation trends and data from companies comprising the same executive compensation peer group used by the
compensation committeeCompensation Committee in connection with its review of executive compensation.
Under our Outside Director Compensation Policy as in effect for fiscal year
2019,2022, non-employee directors received compensation in the form of equity and cash, as described below:
During fiscal year 2019,2022, each non-employee director was eligible to receive the following annual cash retainers for certain boardBoard and/or committee service accordingservice:
Board | | | 40,000 |
Audit Committee | | | 10,000 |
Compensation Committee | | | 7,500 |
Nominating and Corporate Governance Committee | | | 4,000 |
Each non-employee director serving as Lead Independent Director or a committee Chair was eligible to our Outside Director receive the following additional cash retainers:
Lead Independent Director: $30,000
Audit Committee Chair: $20,000
Compensation
Policy:$40,000 per year for service as a board member;
$20,000 per year additionally for service as chair of the audit committee;
$8,000 per year additionally for service on the audit committee;
$12,000 per year additionally for service as chair of the compensation committee;
$5,000 per year additionally for service on the compensation committee;
$8,000 per year additionally for service as chair of the nominatingCommittee Chair: $15,000
Nominating and
corporate governance committee; and$4,000 per year additionally for service on the nominating and corporate governance committee.
Corporate Governance Committee Chair: $8,000
All cash payments to non-employee directors are paid quarterly in arrears on a prorated basis.6
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Non-employee directors are eligible to receive all types of equity awards (except incentive stock options) under our 2016 Equity Incentive Plan, or the 2016 Plan, (or the applicable equity plan in place at the time of grant) including discretionary awards not covered under our Outside Director Compensation Policy. All grants of awards under our Outside Director Compensation Policy
will beare automatic and nondiscretionary.
Initial Award. Award
During fiscal year
2019,2022, upon joining our
board, eachBoard, a newly-elected non-employee director
receivedwould receive an initial equity award having a grant date fair value equal to $185,000 multiplied by a fraction, (1) the numerator of which is (x) 12 minus (y) the number of full months between the date of the last annual meeting of stockholders and the date the individual becomes a member of the
boardBoard and (2) the denominator of which is 12 (rounded to the nearest whole share), or the Initial Award. The Initial Award was comprised of
stock options and restricted stock units, or
RSUs, each having a value of 50% of the aggregate value of the Initial Award. The Outside Director Compensation Policy was subsequently amended to provide the Initial Award solely in the form of RSUs. The Initial Award is granted on the date on which such person first becomes a non-employee director.
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Subject to the terms of the policy, the Initial Award vests as to 100% of the shares subject thereto upon the earlier of the one-year anniversary of the grant date or the day prior to our next annual meeting of stockholders, subject to the individual’s continued service through the applicable vesting date. AAn employee director who is an employee who ceases to be an employee director but who remains a director will not receive an Initial Award.
Annual Award. Award
On the date of our annual meeting of our stockholders, each non-employee director automatically was granted an equity award having a grant date value equal to $185,000, or the Annual Award subject to such individual continuing to be an outside director. The Annual Award was comprised of RSUs. Subject to the terms of the policy, each Annual Award vests as to 100% of the shares subject thereto upon the earlier of the one-year anniversary of the grant date or the day prior to our next annual meeting occurring after the grant date, subject to the individual’s continued service through the applicable vesting date.
The grant date value of all equity awards granted under our Outside Director Compensation Policy is determined in accordance with accounting principles generally accepted in the United States of America.
Any award granted under our Outside Director Compensation Policy will fully vest in the event of a change in control, as defined in our 2016 Plan, provided that the individual remains a director through such change in control.
Director Compensation Table The following table provides information regarding compensation of our non-employee directors for service as directors, for the year ended December 31,
2019. In the fiscal year ended December 31, 2019, our non-employee director affiliated with Iconiq did not receive compensation for his service as a director, and our non-employee directors affiliated with Silver Lake Sumeru only received compensation for their service as directors in the fourth quarter of 2019. Each2022. The Company reimburses each outside director’s reasonable, customary and properly documented travel expenses to attend
board meetings is reimbursed by the company.Name | Fees Earned or Paid in Cash($)(1) | Option Awards ($)(2) | Stock Awards ($)(2) | Total ($) |
Jason Babcoke | | 5,326 | | | — | | | 92,512 | (3) | | 97,838 | |
John Brennan | | 7,457 | | | — | | | 92,512 | (3) | | 99,969 | |
William Griffith(4) | | — | | | — | | | — | | | — | |
Owen Ryan(5) | | 58,374 | | | — | | | 184,982 | (7) | | 243,356 | |
Graham Smith(6) | | 54,813 | | | — | | | 184,982 | (7) | | 239,795 | |
Kevin Thompson(9) | | 53,000 | | | — | | | 184,982 | (7) | | 237,982 | |
Thomas Unterman(10) | | 54,055 | | | — | | | 184,982 | (7) | | 239,037 | |
Mika Yamamoto(11) | | 33,750 | (12) | | 15,431 | | | 200,379 | (7)(8) | | 249,560 | |
Board meetings.Owen Ryan(4) | | | 83,121 | | | — | | | 184,980(3) | | | 268,101 |
Graham Smith(5) | | | 32,154 | | | — | | | — | | | 32,154 |
Kevin Thompson(6) | | | 57,500 | | | — | | | 184,980(3) | | | 242,480 |
Thomas Unterman(7) | | | 54,220 | | | — | | | 184,980(3) | | | 239,200 |
Sophia Velastegui(8) | | | 57,500 | | | — | | | 184,980(3) | | | 242,480 |
Barbara Whye(8) | | | 46,549 | | | — | | | 184,980(3) | | | 231,529 |
Mika Yamamoto(9) | | | 52,280 | | | — | | | 184,980(3) | | | 237,260 |
| (1)
| The amount shown reflects an annual cash retainer for such director’s service as a member of our board of directorsBoard and, if applicable, chairLead Independent Director, Chair of our audit committee, compensation committeeAudit Committee, Compensation Committee or nominatingNominating and corporate governance committee,Corporate Governance Committee, or membership on our audit committee, compensation committee,Audit Committee, Compensation Committee, or nominatingNominating and corporate governance committee.Corporate Governance Committee. |
(2)
| (2) | Stock option awards and RSUs are shown at their aggregate grant date fair value in accordance with authoritative accounting guidance on stock compensation. The fair value of each stock option grant is estimated based on the fair market value on the date of grant using the Black-Scholes option pricing model. The fair value of each RSU is measured based on the closing price of our common stock on the date of grant. For more detailed discussion on the valuation model and assumptions used to calculate the fair value of our options, refer to Note 2 of the “Notes to Financial Statements” included in our Annual Report on Form 10-K for the year ended December 31, 2019. |
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| (3)
| Messrs. BabcokeRyan, Thompson and BrennanUnterman and Mses. Velastegui, Whye and Yamamoto were each awarded RSUs covering 1,8333,401 shares of our common stock on November 13, 2019.May 12, 2022. 100% of the shares subject to the RSUs will vest upon the earlier of November 13, 2020May 12, 2023 or the day prior to our next annual meeting of stockholders, subject to each of their continued services with us through such date. |
| (4) | Mr. Griffith served as a member of our board of directors until February 29, 2020. |
| (5)
| As of December 31, 2019,2022, Mr. Ryan held 3,8573,401 RSUs, and stock options to purchase a total of 2,874 shares of our common stock. |
(5)
| Mr. Smith served as a member of our Board until May 12, 2022. |
(6)
| As of December 31, 2019,2022, Mr. SmithThompson held 3,8573,401 RSUs, and stock options to purchase a total of 79,3964,396 shares of our common stock. |
| (7) | Messrs. Ryan, Smith, Thompson and Unterman and Ms. Yamamoto were each awarded RSUs covering 3,857 shares of our common stock on May 8, 2019. 100% of the shares subject to the RSUs will vest upon the earlier of May 8, 2020 or the day prior to our next annual meeting of stockholders, subject to each of their continued service with us through such date. |
| (8) | Ms. Yamamoto was awarded RSUs covering 334 shares of common stock and stock options to purchase a total of 766 shares of common stock on April 1, 2019. 100% of the RSUs vested on May 7, 2019. |
| (9)
| As of December 31, 2019,2022, Mr. ThompsonUnterman held 3,8573,401 RSUs, and stock options to purchase a total of 8,0292,896 shares of our common stock. |
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| (10)(8)
| As of December 31, 2019, Mr. Unterman2022, each of Ms. Velastegui and Ms. Whye held 3,857 RSUs, and stock options to purchase a total of 16,896 shares of our common stock.3,401 RSUs. |
| (11)(9)
| As of December 31, 2019,2022, Ms. Yamamoto held 3,8573,401 RSUs, and stock options to purchase a total of 766 shares of our common stock. |
| (12) | Ms. Yamamoto became a member of our board of directors in April 2019. The amount shown reflects an annual cash retainer for Ms. Yamamoto’s service as a member of our board of directors, prorated for the portion of 2019 in which she was a member of our board of directors. |
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ELECTION OF CLASS I DIRECTORS
Our
board of directorsBoard is currently comprised of
tennine directors and is divided into three staggered classes of directors. At the annual meeting, three Class I directors will be elected to our
board of directorsBoard by the holders of our common stock to succeed the same class whose term is then expiring. Each director’s term continues until the expiration of the term for which such director was elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal.
Our
nominatingNominating and
corporate governance committeeCorporate Governance Committee has recommended
director nominees for selection byto our
board of directors,Board, and
upon such recommendation, our
board of directorsBoard has nominated
Marc Huffman as a nominee for election as a Class I director, and ThereseMs. Tucker and
ThomasMessrs. Unterman
each a Class I director, as nomineesand Yoran for re-election as Class I directors at the
20202023 annual meeting of stockholders.
Mr. Yoran is standing for election by stockholders for the first time. He was initially recommended for consideration as a director by the Nominating and Corporate Governance Committee by a third-party search firm. If elected, Ms. Tucker and Messrs.
HuffmanUnterman and
UntermanYoran will serve as Class I directors until the
20232026 annual meeting and until their respective successors are duly elected and qualified, or until their earlier death, resignation or removal. For more information concerning the nominees, please see the section entitled “
Board of Directors and Corporate Governance.”
Ms. Tucker and Messrs.
HuffmanUnterman and
UntermanYoran have agreed to serve as directors if elected, and management has no reason to believe that they will be unavailable to serve.
In the eventIf a nominee is unable or declines to serve as a director at the time of the annual meeting, proxies will be voted for any nominee who may be proposed by our
nominatingNominating and
corporate governance committeeCorporate Governance Committee and designated by the present
board of directorsBoard to fill the vacancy.
The Class I directors will be elected by a plurality of the voting power of the shares present virtually or represented by proxy at the annual meeting and entitled to vote on the election of directors. In other words, the three nominees receiving the highest number of “FOR” votes will be elected as Class I directors. You may vote (i) “FOR” for each director nominee or (ii) “WITHHOLD” for each director nominee. Shares represented by executed proxies will be voted, if authority to do so is not expressly withheld, for the election of Ms. Tucker and Messrs.
HuffmanUnterman and
Unterman.Yoran. “WITHHOLD” votes and broker non-votes will have no effect on the outcome of this proposal.
Our
board of directorsBoard recommends a vote “FOR” the election to the
boardBoard of
directors of Marc Huffman, Therese Tucker, and Thomas Unterman and Amit Yoran as Class I directors.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Our
audit committeeAudit Committee has appointed PricewaterhouseCoopers LLP, or PwC, as our independent registered public accounting firm for the year ending December 31,
2020.2023. During
2019,2022, PwC served as our independent registered public accounting firm.
Notwithstanding its appointment and even if our stockholders ratify the appointment, our
audit committee,Audit Committee, in its discretion, may appoint another independent registered public accounting firm at any time during the year if the
audit committeeAudit Committee believes that such a change would be in the best interests of
our companythe Company and its stockholders. Our
audit committeeAudit Committee is submitting the appointment of PwC to our stockholders because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate governance. If the appointment is not ratified by our stockholders, our
audit committeeAudit Committee may consider whether it should appoint another independent registered public accounting firm. A representative of PwC is expected to be telephonically present at the virtual annual meeting, where he or she will be available to respond to appropriate questions and, if he or she desires, to make a statement.
Fees Paid to the Independent Registered Public Accounting Firm The following table presents the aggregate fees billed for professional audit services and other services rendered to us by PwC for our fiscal years ended December 31,
20192022 and
2018. | Fiscal Year Ended |
| 2019 | 2018 |
Audit Fees(1) | $ | 2,824,950 | | $ | 2,475,000 | |
Audit-related Fees(2) | $ | — | | $ | 55,000 | |
Tax Fees(3) | $ | 50,000 | | $ | 39,000 | |
All Other Fees | $ | 8,640 | | $ | 13,000 | |
Total Fees | $ | 2,883,590 | | $ | 2,582,000 | |
2021.
Audit Fees(1) | | | $2,794,000 | | | $2,420,000 |
Audit-related Fees(2) | | | — | | | 320,000 |
Tax Fees(3) | | | 66,500 | | | 420,332 |
All Other Fees | | | 12,900 | | | 12,900 |
Total Fees | | | $2,873,400 | | | $3,173,232 |
| (1)
| “Audit Fees” consist of professional services rendered in connection with the audit of our consolidated financial statements and review of our quarterly consolidated financial statements and services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for those fiscal years. Fees for 2018 and 20192022 also included fees billed for professional services rendered in connection with our follow-on offerings andForm S-8 registration statement in February 2023. Fees for 2021 also included fees billed for professional services rendered in connection with our Form S-8 registration statements filedstatement in March 2018, August 2018, and February 2019.2022, as well as equity evaluation for certain of our foreign employees. |
| (2)
| For 2018, “Audit-related2021, “Audit related Fees” include time incurred to assess the impact of ASC 842, Leases, in the period priorfees related to the yearacquisition of adoption.FourQ Systems, Inc. |
| (3)
| “Tax Fees” consist of fees for professional services for tax compliance, tax advice and tax planning. |
Auditor Independence
In
2019,2022, there were no other professional services provided by PwC that would have required our
audit committeeAudit Committee to consider their compatibility with maintaining the independence of PwC.
Audit and Non-Audit Services Pre-Approval Policy Our
audit committeeAudit Committee has established a policy governing our use of the services of our independent registered public accounting firm. Under this policy, our
audit committeeAudit Committee (or its delegate) may pre-approve services to be performed by our independent registered public accounting firm without consideration of specific case-by-case services or may require the specific pre-approval of the committee, in either case, in order to ensure that the provision of such services does not impair the public accountants’ independence. All fees paid to PwC for our fiscal years ended December 31,
20192022 and
20182021 were pre-approved by our
audit committee.Audit Committee.
Ratification of the appointment of PwC as our independent registered public accounting firm for the year ending December 31, 20202023 requires the affirmative “FOR” vote of a majority of the voting power of the shares present virtually or represented by proxy at the annual meeting and entitled to vote on the proposal. You may
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vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions have the same effect as a vote against the proposal. Broker non-votes will not affect the outcome of voting on this proposal.
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Our
board of directorsBoard recommends a vote “FOR” the ratification of the appointment of
PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2020.2023.
BlackLine’s management is responsible for (i) establishing and maintaining internal controls and (ii) preparing BlackLine’s consolidated financial statements. BlackLine’s independent registered public accounting firm, PwC, is responsible for performing an independent audit of BlackLine’s consolidated financial statements and BlackLine’s internal control over financial reporting in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States), or the PCAOB, and to issue a report thereon. It is the responsibility of the audit committeeAudit Committee to oversee these activities. It is not the responsibility of the audit committeeAudit Committee to prepare BlackLine’s financial statements. These are the fundamental responsibilities of management. In the performance of its oversight function, the audit committeeAudit Committee has:
reviewed and discussed the audited financial statements for fiscal year 20192022 with the management of BlackLine and PwC;
discussed with PwC the matters required to be discussed by the applicable requirements of the PCAOB; and
received the written disclosures and the letter from PwC as required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the audit committeeAudit Committee concerning independence, and has discussed with PwC that firm’s independence.
Based on the audit committee’sAudit Committee’s review of the audited financial statements and the various discussions with management and PwC, the audit committeeAudit Committee recommended to the board of directorsBoard that the audited financial statements be included in our annual report on Form 10-K for the fiscal year ended December 31, 20192022 for filing with the SEC. The audit committeeAudit Committee has also appointed PwC as the company’sCompany’s independent registered public accounting firm for the year ending December 31, 2020.
2023.
Brunilda Rios (Chair)
Kevin Thompson
Sophia Velastegui
Owen Ryan
(Chair)Graham SmithKevin Thompson7
This audit committeeAudit Committee report shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A promulgated by the SEC or to the liabilities of Section 18 of the Exchange Act, and shall not be deemed incorporated by reference into any prior or subsequent filing by BlackLine under the Securities Act of 1933, as amended, or the Securities Act, or the Exchange Act, except to the extent BlackLine specifically requests that the information be treated as “soliciting material” or specifically incorporates it by reference.
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ADVISORY NON-BINDING VOTE TO APPROVE THE COMPENSATION OF
Our
board of directorsBoard is asking
companyCompany stockholders to cast an advisory, non-binding vote to approve the compensation of our named executive officers during
20192022 as disclosed in this
Proxy Statementproxy statement in accordance with the requirements of Section 14A of the Exchange Act. This Proposal gives our stockholders the opportunity to express their views on the design and effectiveness of our executive compensation program.
Advisory Vote on Compensation of Named Executive Officers We believe that BlackLine’s compensation philosophy and program, as described below in the “Compensation Discussion and Analysis” section of this proxy statement, are effective in achieving our goals, and that the executive compensation reported in this proxy statement is appropriate, competitive, and aligned with our
20192022 results. The compensation program for our named executive officers is focused on pay-for-performance principles. The program is designed to attract, motivate, and retain executive officers in a competitive market for executive talent, reward them with more than base salary if and to the extent BlackLine achieves challenging financial performance goals, and align the officers’ interests with the interests of our stockholders to create long-term shareholder value, while at the same time avoiding the encouragement of excessive risk-taking.
For a more detailed discussion of our compensation philosophy, objectives, principles, and programs, we strongly encourage our stockholders to review this proxy statement, and in particular the information contained in the “Compensation Discussion and Analysis” section below and in the compensation tables and narrative that follow it in the “Executive Compensation” section of this proxy statement.
The vote on executive compensation is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers described in this proxy statement.
Our
board of directorsBoard believes that it is in the best interests of the
companyCompany and our stockholders to approve the
20192022 compensation of our named executive officers, thereby encouraging them to remain in the
company’sCompany’s employ and more closely align their interests with those of our stockholders.
The vote is advisory, which means that the vote is not binding on BlackLine, our
compensation committee,Compensation Committee, or our
board.Board. Abstentions are considered votes cast, and thus, will have the same effect as votes “against” the proposal. Broker non-votes will have no effect on the outcome of this proposal. Although the vote is non-binding, our
compensation committeeCompensation Committee and
boardBoard value your opinion and will consider the outcome of the vote in making future compensation decisions.
Our
board of directorsBoard recommends an advisory non-binding vote “FOR” the proposal to approve the
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The following table provides information regarding our executive officers as of March 9, 2020:17, 2023:
Executive Officers: Owen Ryan
| | | 60 | | | Co-Chief Executive Officer and Chair of the Board |
Therese Tucker | | | 5861
| | | ChiefCo-Chief Executive Officer and Director
|
Marc Huffman
| 49
| President and Chief Operating Officer
|
Mark Partin | | | 5255
| | | Chief Financial Officer |
Peter Hirsch | | | 62 | | | Chief Technology Officer |
Karole Morgan-Prager | | | 5760
| | | Chief Legal and Administrative Officer |
Pete HirschMark Woodhams
| | | 5960
| | | Chief TechnologyRevenue Officer |
For Mr. Huffman’sRyan's biography, see “Continuing Directors” and for Ms. Tucker’s biographies,biography, see “Nominees for Director.”
Mark Partin
has served as our Chief Financial Officer since January 2015 and as our Treasurer since February 2015. Prior to joining us, Mr. Partin served as the Chief Financial Officer for Fiberlink Communications Corporation (now MaaS360, an IBM Company), an Enterprise Mobility Management company, from 2005 to 2014. From 1995 to 2005, Mr. Partin served in various senior financial roles for companies such as Headhunter.net, Inc. (now Careerbuilder.com), Contour Medical, Inc. (acquired by Sun Healthcare Group, Inc.), American Health Imaging, and Williams Group International. From 1991 to 1995, Mr. Partin was a CPA and auditor with Arthur Andersen & Co. in Atlanta, Ga. Mr. Partin holds an M.B.A. from Harvard Business School and a B.S. in business administrationBusiness Administration from the University of Tennessee.
Peter Hirsch has served as our Chief Technology Officer since February 2019. Prior to joining us, he served as Executive Vice President of Technology & Operations at Ellie Mae, a cloud-based mortgage application platform provider, from June 2015 to January 2019. From April 2014 to June 2015, Mr. Hirsch served as Senior Vice President, Ariba Cloud Engineering & Technology, at SAP SE. From 1994 to 2014, Mr. Hirsch served in various senior engineering roles for companies such as IBM, Valchemy, Inc., Alphablox Corp., and Informix Software, Inc. From 1989 to 1994, Mr. Hirsch was Founder & Chief Executive Officer of 3-D Visions Corp. Mr. Hirsch holds an M.S. in Communication Systems and a B.S. in Electrical Engineering from the University of Southern California.
Karole Morgan-Prager
has served as our Chief Legal and Administrative Officer since May 2015 andOctober 2016, as our Secretary since August 2015, and was namedas our Chief Legal and Administrative Officer in October 2016.since May 2015. Prior to joining us, Ms. Morgan-Prager served as General Counsel and Corporate Secretary of The McClatchy Company, a newspaper and internet publisher, from July 1995 to May 2015. She was named Vice President of The McClatchy Company in May 1998 and Vice President, Corporate Development in May 2012. From November 1992 to June 1995, Ms. Morgan-Prager served as Associate General Counsel for The Times Mirror Company, a newspaper publishing company that was acquired by Tribune Co. From October 1987 to October 1992, Ms. Morgan-Prager was an Associate with the law firm Morrison & Foerster LLP, working on corporate securities matters. Ms. Morgan-Prager holds a J.D. from the University of California, Los Angeles and a B.A. in Journalism and Political Science from University of Nevada.Pete Hirsch
Mark Woodhams has served as our Chief TechnologyRevenue Officer since February 2019.January 2021 and as our Senior Vice President of Global Sales from July 2018 to January 2021. Prior to joining us, heMr. Woodhams served as Executive Vice President of Technology & Operationsin various roles at Ellie Mae, a cloud-based mortgage application platform provider,NetSuite, including managing director from June 2015 to January 2019. From AprilAugust 2014 to June 2015,2018 and EMEA Sales director from February 2012 to August 2014. Mr. HirschWoodhams has more than 35 years of experience with leading cloud and financial and professional services companies including NetSuite, Oracle, Hyperion, CapGemini and Citicorp.
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The following table provides information regarding our other executives as of March 17, 2023:
Andres Botero | | | 52 | | | Chief Marketing and Strategy Officer |
Lisa Schreiber | | | 62 | | | Chief Customer Officer |
Andres Botero has served as Senior Vice President, Ariba Cloud Engineering & Technology, at SAP.our Chief Marketing Officer since September 2018, and has served as our Chief Marketing and Strategy Officer since August 2022. Prior to joining us, Mr. Botero served as Chief Marketing Officer for Callidus Software, Inc., a cloud-based sales and marketing solutions provider, from May 2017 to August 2018. From 1994November 2015 to 2014,May 2017, Mr. HirschBotero served as Chief Marketing Officer for Aria Systems, Inc., a cloud-based monetization solution provider. Prior to Aria Systems, Mr. Botero served in various senior engineeringmarketing roles for companies such as IBM, Valchemy, Inc., Alphablox Corp., and InformixSteelwedge Software Inc. From 1989 to 1994,and SAP SE. Mr. Hirsch was Founder & CEO of 3-D Visions Corp. Mr. HirschBotero holds an M.S. in communication systems and a B.S. in electrical engineeringIndustrial Engineering from Universidad de Los Andes, and a Master of Business Administration and Certificate in Public Management from the Stanford University Graduate School of Business.
Lisa Schreiber has served as our Chief Customer Officer since February 2021. Prior to joining us, Ms. Schreiber served as Chief Customer Success Officer for Forcepoint LLC., a SaaS cybersecurity company, from December 2019 to February 2021. From December 2009 to December 2019, Ms. Schreiber served in various customer support leadership roles for Oracle Corporation, a global cloud technology company, most recently as its Vice President North America Customer Success and Support Services. Ms. Schreiber holds a B.S. in Computer Science from the University of Southern California.Pittsburgh.
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Compensation Discussion and Analysis The following Compensation Discussion and Analysis describes our executive compensation program and the material elements of our
20192022 compensation program applicable to our named executive officers, or NEOs.
The purpose of this section is to provide a detailed discussion of our executive compensation program, policies, practices, and related corporate governance. This section is designed to assist our stockholders in understanding the approach we take to executive compensation, including how our program is designed and linked to our financial performance, and how our executive compensation practices align with the evolution of our business and organizational culture.
Our NEOs for
20192022 are:
Therese Tucker, current Co-Chief Executive Officer (“Co-CEO”) and former Executive Chair
Marc Huffman, former President and former Chief Executive Officer (“CEO”)
Mark Partin
, Chief Financial OfficerMarc Huffman, President and Chief Operating Officer
(“CFO”)
Karole Morgan-Prager
, Chief Legal and Administrative Officer (“CLAO”)
Mark Woodhams, Chief Revenue Officer (“CRO”)
Management Changes
Effective as of January 1, 2023, Ms. Tucker, our founder and former Chief Executive Officer, transitioned from her role as Executive Chair of the Board, and Mr. Ryan, who had been serving as Lead Independent Director, assumed the role of Chair of the Board. At that time, Ms. Tucker continued to serve as a member of the Board and as an employee of the Company. Effective as of March 6, 2023, Mr. Huffman ceased to serve as our President and Chief Executive Officer, and Ms. Tucker and Mr. Ryan were appointed as our Co-CEOs. Following this transition, Ms. Tucker and Mr. Ryan continue to serve as members of our Board, and Mr. Ryan continues to serve as Chair of the Board.
Fiscal Year
20192022 Business Highlights
In fiscal year 2019,2022, we delivered strong results from a financial and operational standpoint, as highlighted by the following:
Total GAAP Revenue grew to $289 million, representing an increase of $61.2 million or 27% year-over-year.
Non-GAAP net income grew to $22$522.9 million, an increase of $16.5 million or 299%23% over the prior year.
GAAP net loss was $29.4 million, or $0.49 per basic and diluted share.
Non-GAAP net income attributable to BlackLine was $46.2 million, or $0.64 per diluted share.
Operating cash flow grew to $29.7was $56.0 million, an increasea decrease of $13.6 million or 84%30% over the prior year.
Free cash flow grew to $19.6was $25.7 million, an increasea decrease of $15.4 million or 369%54% over the prior year.
On January 26, 2022, we completed our acquisition of FourQ Systems, Inc., a leader in intercompany financial management technology.
Please see Appendix A to this
Proxy Statementproxy statement for a reconciliation of GAAP and non-GAAP net income and free cash flow.
Our mission is to transform how finance and accounting departments operate by modernizing accounting through unifying data and processes, automating repetitive work, and driving accountability through visibility. We have created a comprehensive cloud-based software platform designed to automate, centralize, and streamline financial close operations and other key Finance & Accounting processes for large and midsize organizations.
Our Compensation Philosophy
We are committed to developing a compensation program that rewards our executives in direct alignment with the achievement of both near- and long-term business and strategic objectives (i.e., pay-for-performance). In furtherance of this objective, our compensation committeeCompensation Committee routinely considers appropriate adjustments to the
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design of our compensation program to reflect our strategic direction and evolving needs of our business. Additionally, our
compensation committeeCompensation Committee seeks to set compensation levels for our executive officers at competitive levels so that we can attract, retain, and motivate highly qualified executives to contribute to our success. In assessing the overall compensation for executive officers, the
compensation committeeCompensation Committee generally considers our financial performance, stockholder returns and position vs. selected peers, market compensation data, executive’s performance, awards given in previous years, and recommendations of our independent consultant.
When making executive compensation decisions, the compensation committeeCompensation Committee is guided by the following principles:
• | Attracting and retaining senior executives with the right expertise necessary to achieve our strategic objectives and grow our organization |
• | Paying for performance to ensure that a significant portion of executives’ compensation is realized when the organization meets its financial results |
• | Aligning interests of our executives with stockholders to ensure that executives’ compensation payouts align with the achievement of results that are correlated with long-term value and stock price appreciation |
• | Rewarding achievement by providing appropriate levels of awards for attaining both short-term and long-term financial results |
Attracting and retaining senior executives with the right expertise necessary to achieve our strategic objectives and grow our organization
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Paying for performance to ensure that a significant portion of executives’ compensation is realized when the organization meets its financial results
Aligning interests of our executives with stockholders to ensure that executives’ compensation payouts align with the achievement of results that are correlated with long-term value and stock price appreciation
Rewarding achievement by providing appropriate levels of awards for attaining both short-term and long-term financial results
Compensation Elements and Mix
Our 20192022 executive compensation program consisted of the following core elements:
Basebase salary;
Annualannual cash bonuses;
Long-termlong-term equity compensation (RSUs and stock options); and
Retirementretirement and health benefits on the same terms as for similarly situated non-executive employees.
20192022 Executive Compensation Highlights
| Pay for performancePay-for-performance alignment
| | | • | | | We strive to maintain a pay for performancepay-for-performance alignment by allocating a meaningful portion of the overall compensation opportunity for our NEOs in the form of performance-based compensation that is at risk and directly tied to specific financial objectives. | |
| | | | • | | | Our performance-based compensation philosophy seeks to align the interests of our NEOs to the interests of our stockholders. | |
| Alignment of performance metrics with key strategic objectives | | | • | | | Identifying and selecting the right performance metrics for our performance-based compensation is key to incentivizing our executives to achieve our strategic plan, which promotes the interest of our stockholders. | |
| | | | • | | | In 2019,2022, our strategic focus was to grow our top-line toward profitability. With this in mind, we selected three key performance metrics for the 20192022 annual cash bonus plan to drive top-line performance: free cash flow, revenue and non-GAAP net income, and changed the mix our equity awards to our NEOs to eliminate stock options and to include performance-based RSU awards vesting on satisfaction of revenue, annualized recurring revenue and non-GAAP net income. | |
| LimitedMarket-based base salary increases
| | | • | | | No changes were made toWe adjusted the base salaries forof each of our NEOs in 2019 apart from Ms. Morgan-Prager, who received a 2.9% increase2022, in each case to better align hertheir base salarysalaries with currentour competitive market practices and their expected contributions to reflect her expanded role.our business.
| |
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| Continued focus on executive recruitment and retention | | | • | | | While we seek to develop our executive compensation program so that it closely aligns with our pay-for-performance philosophy and rewards achievement of performance goals, this objective must complement other important objectives, including the hiring and retention of executives. | |
| | | | • | | | In order toTo improve recruitment and strengthen retention, we continued our practice in 2019, we granted2022 of granting each NEO a portion of their annual equity awards in RSUs that vest solely over a time-based schedule and are not tied to company performance.performance with the remaining portion of their annual equity awards granted in PSUs as discussed below.
| |
|
| | | • | | | The significant decrease in market prices throughout the industry, including at the Company, resulted in the value of our NEOs’ unvested equity awards having decreased retention value. With the advice of the Compensation Committee’s independent compensation consultants, we made additional retention grants in December 2022 to each of our NEOs (in January 2023 for Ms. Tucker). These consisted of RSUs that vest over a time-based schedule for all NEOs other than Mr. Huffman, and PSUs that vest over a time-based schedule but subject to satisfaction of long-term performance conditions that are aligned to our long-range plan for Mr. Huffman. The grant to Mr. Huffman was entirely performance-based and was based on longer-term performance goals, responding to some concern that our prior PSU only had performance targets for one-year goals. The entirely performance-based grant makes up substantially all of the difference between Mr. Huffman’s 2021 and 2022 equity grant value. | |
| Strong Stockholder Support for our Executive Compensation Programsexecutive compensation programs | | | • | | | At the 20192022 annual meeting, over 94% of advisory votes cast by our stockholders overwhelmingly voted, on an advisory basis,were in favor of our NEOs’ compensation with 99% approval.2021 compensation. We believe that the results of this vote affirm our stockholders’ support of our approach to executive compensation. | |
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Pay-for-Performance Discussion
Our executive compensation program is reasonable, competitive, and
appropriatelyrigorously balances the goals of attracting, motivating, rewarding, and retaining our NEOs. To ensure our NEOs’ interests are aligned with those of our stockholders and to motivate and reward individual initiative and effort, a substantial portion of their annual target total direct compensation opportunity is “at-risk” and the actual amounts payable to our NEOs will vary above or below target levels commensurate with our performance.
We emphasize performance-based compensation that appropriately rewards our NEOs for delivering financial, operational, and strategic results that meet or exceed pre-established goals through our cash bonus plan and equity awards.
For SEC-mandated disclosure on pay versus performance for our CEO and other NEOs, please see the “Pay Versus Performance” section below.
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The
graphicgraphics below
illustratesillustrate at-risk pay versus fixed and time-based pay for
Mr. Huffman, our
then-CEO, and other NEOs for fiscal year
2019.
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Executive Compensation Policies and Practices
We maintain sound governance standards consistent with our executive compensation policies and practices. The
compensation committeeCompensation Committee evaluates our executive compensation program regularly to ensure that it supports our short-term and long-term goals given the dynamic nature of our business and the market in which we compete for executive talent. These policies and practices were in effect during
2019:2022:
What we do
✔
| ✔ | Independent Compensation Committee Advisor. The compensation committeeCompensation Committee engaged its own independent compensation consultant to assist with the design of the 20192022 executive compensation program. |
✔
| ✔ | Annual Executive Compensation Review. Review. The compensation committeeCompensation Committee conducts an annual review of compensation for our NEOs and a review of compensation-related risks. |
✔
| ✔ | Compensation At-Risk. The executive compensation program is designed so that a significant portion of executive annual compensation is “at risk” to align the interests of our NEOs and our stockholders. The 20192022 Bonus Plan achievement for our NEOs was 111.27%82.00% of target based on the challenging goals set by the compensation committeeCompensation Committee and its review of our performance. |
✔
| ✔ | Multi-Year Vesting Requirements. The equity awards granted to our NEOs vest over fourmultiple years and generally no portion of the awardthese awards vests until approximately 12 months after the grant date, consistent with current market practice and our retention objectives. |
✔
| ✔ | Limited Perquisites. We provide minimal perquisites and other personal benefits to our NEOs, except where they serve a legitimate business purpose. |
✔
| ✔ | Stock Ownership Guidelines. We have robust stock ownership guidelines in order to encourage stock ownership among our directors and executive officers. |
✗
| ✘ | No “Golden Parachute” Tax Reimbursements. We do not provide any tax reimbursement payments (including “gross-ups”) on any tax liability that our NEOs might owe as a result of the application of Sections 280G or 4999 of the Internal Revenue Code (the “Code”). |
✗
| ✘ | No Stock Options Granted with an Exercise Price Less Than Fair Market Value. All stock options are granted with an exercise price at the closing market price on the grant date. |
✗
| ✘ | No Special Retirement Plans. We do not offer, nor do we have plans to provide, pension arrangements, retirement plans or nonqualified deferred compensation plans or arrangements exclusively to our NEOs. |
✗
| ✘ | No Special Health and Welfare Benefits. Our NEOs participate in the same company-sponsoredCompany-sponsored health and welfare benefits programs as our other full-time, salaried employees. |
✗
| ✘ | No “Single Trigger” Change of Control Arrangements. No change of control payments or benefits are triggered simply by the occurrence of a change of control. All change-of-control payments and benefits are based on a “double-trigger” arrangement (that is, they either require both a change of control of the companyCompany plus a qualifying termination of employment before payments and benefits are paid or, in the case of certain performance awards, require a change of control of the companyCompany and the award is not assumed in the acquisition). |
✗
| ✘ | No Hedging or Pledging. We have a policy that restricts employees from hedging our securities or pledging our securities as collateral. |
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Governance of Executive Compensation Program
Role of the Compensation Committee
The
compensation committeeCompensation Committee discharges the responsibilities of our
board of directorsBoard relating to the compensation of our NEOs. With respect to our NEOs, the
compensation committeeCompensation Committee reviews and approves at the beginning of the year, or more frequently as warranted, their annual base salaries; cash bonus opportunities and cash bonus payments; long-term equity incentive compensation; employment offers (including post-employment compensation arrangements); and other compensation, perquisites, and other personal benefits, if any.
The
compensation committee’sCompensation Committee’s practice of developing and maintaining compensation arrangements that are competitive includes a balance between hiring and retaining the best possible talent and maintaining a reasonable and responsible cost structure.
Compensation-Setting Process
We do not establish a specific target for setting the target total direct compensation opportunity of our NEOs. When determining and setting the amount of each compensation element, the compensation committeeCompensation Committee considers the following factors:
our performance against the financial and operational objectives established by the compensation committeeCompensation Committee and our board of directors;
Board;
each individual NEO’s skills, experience, and qualifications relative to other similarly situated executives at the companies in our compensation peer group;
the scope of each NEO’s role compared to other similarly situated executives at the companies in our compensation peer group;
the performance of each individual NEO, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function, and work as part of a team, all of which reflect our core values;
compensation parity among our NEOs;
with respect to NEOs other than our CEO and Ms. Tucker, our Executive Chair, the recommendations of ourthe CEO; and
the compensation practices of our compensation peer group and the positioning of each NEO’s compensation in a ranking of peer company compensation levels.
These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunities for each NEO.
The
compensation committeeCompensation Committee believes each of our CEO, CFO and CLAO has valuable insight into the
day-to-day contributions of our NEOs and solicits
the advice and input from each with respect to performance objectives under our annual bonus plan.
In addition, our CFO provides input with respect to the establishment of metrics and targets for our annual incentive plan and our performance-based equity awards. Our CEO also provides input with respect to adjustments to annual base salaries, annual cash bonus opportunities, long-term equity incentive compensation opportunities, program structures, and other compensation-related matters for our NEOs (other than with respect to
her own compensation)compensation for our CEO and our Executive Chair). The
compensation committeeCompensation Committee reviews and discusses
these recommendationsthis advice and
proposalsinput, along with the information, analysis and other advice it receives from its external compensation consultant, with our CEO
(other than with respect to compensation for our CEO and our Executive Chair) and uses them as
one factorfactors in determining and approving the compensation for our NEOs.
Our CEO recuses herself from all discussions and recommendationsNone of our officers is involved in decisions regarding
hertheir own compensation.
Role of Compensation Consultant
The compensation committeeCompensation Committee engages an external compensation consultant to assist it by providing information, analysis, and other advice relating to our executive compensation program and the decisions
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resulting from its annual executive compensation review. For
2019,2022, the
compensation committeeCompensation Committee retained Compensia to serve as its compensation advisor. This compensation consultant serves at the discretion of the
compensation committee.Compensation Committee.TABLE OF CONTENTS
During 2019,2022, Compensia regularly attended the meetings of the compensation committeeCompensation Committee and provided the following services:
consulting with the compensation committee chairCompensation Committee Chair and other members between compensation committeeCompensation Committee meetings;
providing competitive market data based in part on the compensation peer group for our NEO positions and evaluating how the compensation we pay our NEOs compares both to our performance and to how the companies in our compensation peer group compensate their executives;
assessing executive compensation trends within our industry, and updating on corporate governance and regulatory issues and developments;
providing competitive market data based on the compensation peer group for our board of directorsBoard and evaluating how the compensation we pay the non-employee members of our board of directorsBoard compares to how the companies in our compensation peer group compensate their boards of directors; and
reviewing market equity compensation practices, including “burn rate” and “overhang.”
In 2019,2022, Compensia did not provide any services to us other than the consulting services provided to the compensation committee.Compensation Committee. The compensation committeeCompensation Committee regularly reviews the objectivity and independence of the advice provided by its compensation consultant on executive compensation. The compensation committeeCompensation Committee has considered the six specific independence factors adopted by the SEC and reflected in the listing standards of Nasdaq and determined that the work of Compensia did not raise any conflicts of interest.
To compare our executive compensation against the competitive market, the compensation committeeCompensation Committee reviews and considers the compensation levels and practices of a group of comparable technology companies. The companies in this compensation peer group were selected on the basis of their similarity to us in size and industry focus, and geographic location.focus. For 20192022 pay decisions, the compensation committeeCompensation Committee used compensation data derived from the most recent update of the compensation peer group.group as updated in August 2021. The companies in this compensation peer group were selected on the basis of their similarity to us, based on these criteria:
similar revenue size - ~0.5x to ~2.0x our last four fiscal quarter revenue of approximately $224$368 million (at the time(for Q4 of the peer group review in August 2018)2021);
similar market capitalization - ~0.3x to ~3.0x our market capitalization of $2.4approximately $6.2 billion (at(around the time of the peer group review in August 2018)2021);
similar revenue growth and market-capitalization to revenue ratio;
industry –- application software, internet softwareservices and services companies,infrastructure, and systems software;
executive positions similar in breadth, complexity, and/or scope of responsibility; and
competitors for executive talent.
After consultation with Compensia, the compensation committeeCompensation Committee approved the following compensation peer group for 2019 executive2022 compensation decisions:
Alarm.com HoldingsAlteryx
| | | HubSpotEverbridge
| | | Qualys |
AlteryxAnaplan
| | | InstructureLivePerson
| | | Rapid7 |
Appfolio | | | MINDBODYnCino
| | | The Trade DeskSmartsheet
|
BoxAppian
| | | New Relic | | | Varonis Systems |
Cornerstone OnDemandAvalara
| | | OktaPager Duty
| | | Workiva |
Bill.com Holdings | | | Paylocity Holding | | | |
Coupa Software | | | Paycom SoftwareQ2 Holdings
| Zendesk
|
Hortonworks | Paylocity Holding | |
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To analyze the executive compensation practices of the companies in our compensation peer group, Compensia gathered data from public filings. This information is supplemented with survey data from the Radford Global
TechnologyCompensation Survey database of companies that are similar to us in revenue, market capitalization
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and industry for purposes of providing additional perspective in the case of executive positions where the compensation peer group offered a limited number of relevant data points. This market data was then used as a reference point for the compensation committeeCompensation Committee to assess our current executive compensation levels in its deliberations on compensation forms and amounts.
The
compensation committeeCompensation Committee reviews our compensation peer group at least annually and adjusts its composition, taking into account changes in both our business and the businesses of the companies in the peer group.
Stockholder Advisory Votes on Named Executive Officer Compensation
Our stockholders have an opportunity to cast an advisory vote to approve
(1)(i) our NEOs’ compensation and
(2)(ii) the frequency of the vote to approve the NEOs’
compensation.compensation (“Say-on-Frequency”). We hold the advisory vote on our NEOs' compensation annually and the Say-on-Frequency vote every six years. Our next Say-on-Frequency vote will be held in 2025.
At the
20192022 annual meeting,
our stockholders voted in favorover 94% of
annualthe advisory votes
cast on
theour NEOs’
2021 compensation
and approximately 99% of the votes cast voted to approve
our NEOs’ compensation.and there was no vote on the frequency of this advisory vote. We believe that the results of this vote affirm our stockholders’ support of our approach to executive compensation, and therefore we have not made any significant changes to our executive compensation program. We will consider the results from this year’s and future years’ stockholder advisory votes on NEO compensation when making decisions about our executive compensation program.
Individual Compensation Elements In
2019,2022, the primary elements of our executive compensation program consisted of base salary, an annual cash bonus opportunity, and long-term equity incentive compensation in the form of time-based RSU and option awards.
Base salary represents the fixed portion of the compensation of our NEOs and is an important element of compensation intended to attract and retain highly talented individuals. Generally, we establish the initial base salaries of our NEOs through arm’s-length negotiation at the time we hire the individual NEO, taking into account
competitive market data, his or her position, qualifications, experience, prior salary level, and the base salaries of our other NEOs. Thereafter, the
compensation committeeCompensation Committee reviews the base salaries of our NEOs annually and makes adjustments to base salaries as it determines to be necessary or appropriate.
In February 2019,March 2022, effective as of April 1, 2022, the compensation committeeCompensation Committee reviewed and approved an increase to the base salariessalary of each of our NEOs taking into considerationother than Mr. Woodhams. In determining these adjustments, the Compensation Committee considered a competitive market data analysis preparedprovided by Compensia, and the recommendations of our CEO (except(other than with respect to her own base salary),salaries for our CEO and our Executive Chair).
In June 2022, effective as of June 1, 2022, the other factors described above. Following this review, the compensation committeeCompensation Committee reviewed and approved an increase of approximately 2.9% to Ms. Morgan-Prager’s base salary in recognition of her contributions related to our Europe expansion, and did not make any changes to the base salariessalary of Mr. Woodhams. In determining this adjustment, the Compensation Committee considered a competitive market data analysis provided by Compensia, and the recommendations of our other NEOs. CEO.
The 2019 annualizedannual base salaries for our NEOs that were in effect as of the end of 2021 and 2022, respectively, are set forth below.below:
Therese Tucker | | | $328,000 | | | $344,000 | | | 4.9% |
Marc Huffman | | | $475,000 | | | $500,000 | | | 5.3% |
Mark Partin | | | $390,000 | | | $410,000 | | | 5.1% |
Karole Morgan-Prager | | | $370,000 | | | $390,000 | | | 5.4% |
Mark Woodhams | | | $380,000 | | | $400,000 | | | 5.3% |
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NEO | 2019 Base Salary |
Therese Tucker | $ | 380,000 | |
Mark Partin | $ | 365,000 | |
Marc Huffman | $ | 350,000 | |
Karole Morgan-Prager | $ | 350,000 | |
Target Annual Cash
BonusesBonus Opportunities
Each NEO participated in the
20192021 Bonus Plan, which was designed to motivate our NEOs to drive “top line” growth (using a revenue goal) as well as “bottom line” profitability (using a
FCF andnon-GAAP net income
goals)goal).
IfAdditionally, the
FCF goal was achieved,Compensation Committee has the
2019 Bonus Plan would fund based on our actualdiscretion to determine achievement
against a financial component (weighted 80%) andof a discretionary component (weighted 20%), as described below.
Target Annual Cash Bonus Opportunities
Each NEO was assigned a target annual cash bonus opportunity the amount of which was calculated asfor 2022, representing a percentage of his or her 2019 annual base salary.
In
February 2019,March 2022, the
compensation committeeCompensation Committee reviewed the
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target annual cash bonus opportunities of our NEOs for 2022, taking into consideration a competitive market analysis prepared by Compensia, and the recommendations of our CEO (except with respect(for all NEOs other than our CEO and our Executive Chair).
Following this review, the Compensation Committee determined to
her ownincrease the target annual cash bonus
opportunity), andopportunity percentage for Mr. Partin from 60% to 70% in consideration of the
other factors described above.Following this review, the compensation committee approved changes to Ms. Morgan-Prager’s bonus target from 40% to 50%, and topositioning of Mr. Partin’s bonus target from 50% to 60%, in each case, in recognition of their outstanding contributions and to bring each executive’s target total cash compensation opportunityin relation to the market competitive levels.analysis. The compensation committeeCompensation Committee did not make any changes to the target annual cash bonus opportunity percentages of our other NEOs.
The
20192022 target annual cash bonus opportunities of the NEOs were as follows:
Target Annual Cash Bonus Opportunities
NEO | 2019 Target Annual Cash Bonus Opportunity (as a percentage of base salary) | 2019 Target Annual Cash Bonus Opportunity ($) |
Therese Tucker | | 100 | % | $ | 380,000 | |
Mark Partin | | 60 | % | $ | 219,000 | |
Marc Huffman | | 100 | % | $ | 350,000 | |
Karole Morgan-Prager | | 50 | % | $ | 175,000 | |
Therese Tucker | | | 75% | | | $258,000 |
Marc Huffman | | | 100% | | | $500,000 |
Mark Partin | | | 70% | | | $287,000 |
Karole Morgan-Prager | | | 50% | | | $195,000 |
Mark Woodhams | | | 100% | | | $400,000 |
Each
NEO participant in the
20192022 Bonus Plan was eligible to earn
from 0% to up to 125%a payment with respect to the financial portion applicable to his or her target annual cash bonus opportunity depending on our actual performance for the year as measured against the financial performance components, and additional amounts under the discretionary component of the
20192022 Bonus Plan.
2019 As described in the section “2022 Bonus Plan Performance Matrix” below, overperformance against the bonus plan components could result in payments in excess of each NEO's target opportunity, while underperformance would result in payments below that target opportunity, or in no payment being earned with respect to one or more components.
2022 Bonus Plan Performance Matrix
In
February 2019,March 2022, the
compensation committee,Compensation Committee, with input from management, approved
FCF as the threshold “performance measure”revenue and
revenue andnon-GAAP net income as the performance measures for the financial component under the
20192022 Bonus Plan. The
compensation committeeCompensation Committee selected these performance measures because it believed that they were appropriate drivers for our business as they provided a balance between growing our business, and managing our expenses, which enhance stockholder value over the short term.
Under the 2019 Bonus Plan, if we failed to at least achieve the FCF target of $12.0 million in 2019, then the 2019 Bonus Plan would not fund.
If we achieved FCF of at least $12 million in 2019, the 2019
The 2022 Bonus Plan was to fundbe funded based on (1)(i) the extent of our achievement against the target level of each of the financial metrics and (2)(ii) the discretion exercised by the compensation committeeCompensation Committee under the discretionary component, all as set forth below:
Revenue | | | Financial Component | | | $286.4536.0 million | | | 50% |
Net Income | | | Financial Component | | | $13.012.4 million | | | 30% |
Discretionary | | | Discretionary Component | | | $— | | | 20% |
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The revenue measure funded with respect to that performance measure as follows:
Percentage Achievement of 2019 Revenue target* | Payment Percentage of Revenue Measure* |
97% | | 60.0 | % |
99% | | 99.0 | % |
100% | | 100.0 | % |
101% | | 128.0 | % |
102% | | 150.0 | % |
97.5% | | | 60% |
100.0% | | | 100% |
102.0% | | | 150% |
104.0% | | | 200% |
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The non-GAAP net income measure funded with respect to that performance measure as follows:
Percentage Achievement of 2019 Net Income target* | Payment Percentage of Net Income Measure* |
80% | | 50 | % |
100% | | 100 | % |
85.5% | | | 50% |
100.0% | | | 100% |
132.3% | | | 125% |
| *
| If Revenue and Net Income achievement during 20192022 is between the percentage levels identified above, then the payment percentage with respect to the applicable performance metric is calculated based on a linear interpolation between those levels (rounded to one decimal). |
For purposes of the 20192022 Bonus Plan, the financial performance measures had the following meanings:
FCF | A measure of financial performance calculated as operating cash flow minus capital expenditures.
|
Revenue | | | The company’s“Revenue” is defined as the Company’s total subscription, support, and professional services revenue forrecognized under Generally Accepted Accounting Principles (“GAAP”) during the 2019 fiscal year as determindedPerformance Period, excluding revenues from acquisitions completed in accordance2022 with GAAP.the exception of FourQ.
| |
| Net Income | | | The company’s “non-GAAP“Net Income” is defined as the Company’s non-GAAP net income (loss)” for the company’s 2019 fiscal yearPerformance Period as determined in accordance with how such term is defined in the company’s annual reportCompany’s Earnings Release filed on itsFebruary 10, 2022 on Form 10-K on February 28, 2019, including any adjustments for acquisition-related8-K. The Net Income performance measure shall exclude expenses similarrelated to expense adjustments in connectionacquisitions completed during the Company’s 2022 fiscal year with the Runbook Acquisition, relatedexception of FourQ. Please see Appendix A to any acquisition occurring during the company’s 2019 fiscal year.this proxy statement for a reconciliation of GAAP and non-GAAP net income (loss).
| |
The discretionary component was included to provide the compensation committeeCompensation Committee with flexibility to incent achievement of business goals and objectives that may evolve after the beginning of the year. The compensation committeeCompensation Committee believed that retaining discretion to fund a portion of the 20192022 Bonus Plan irrespective of achievement of the financial component was important to reward our NEOs for achievement ofachievements not directly captured by these goals.
2019financial performance measures.
2022 Bonus Plan Decisions
In February 2020,2023, the compensation committeeCompensation Committee reviewed our overall performance for 2019,2022, including performance against the performance measures established under the 20192022 Bonus Plan. Using the 20192022 Bonus Plan performance measures, the discretion it reserved under the discretionary component, the target performance, actual performance and relative weighting were as follows:
FCF | $12.0 millionWeighted
| $19.6 millionPayment
| AchievedPercentage
|
Revenue | | | $286.4536.0 million | | | $289.0522.9 million | | | 122.5%61%
|
Net Income | | | $13.012.4 million | | | $22.046.3 million | | | 100.0%125%
|
Discretionary | | | $— | | | $— | | | 100.0%70%
|
The compensation committeeCompensation Committee determined the payment percentage under the discretionary component after assessing the outstanding contributions of our NEOs in 20192022 toward our execution on key initiatives that we expect to have long-term benefits on our business and to drive stockholder value over the long-term, including strong achievements in bookings, and execution on key sales and marketing initiatives.
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achievements in bookings, execution on expense control, opening the India Development Center, product roadmap and integration, our BeyondTheBlack user conference and increasing the number of our premier customers.
Based on this level of achievement, the
20192022 Bonus Plan funded at
111.27%82% of the target
amount.amount for each of our NEOs.
The target annual cash bonus opportunities and the actual cash bonus payments made to the NEOs for
20192022 are as follows:
NEO | Target Annual Cash Bonus Opportunity | Total Actual 2019 Cash Bonus Payment |
Therese Tucker | $ | 380,000 | | $ | 422,826 | |
Mark Partin | $ | 219,000 | | $ | 243,681 | |
Marc Huffman | $ | 350,000 | | $ | 389,445 | |
Karole Morgan-Prager | $ | 175,000 | | $ | 194,723 | |
Therese Tucker | | | $258,000 | | | $211,570 |
Marc Huffman | | | $500,000 | | | $410,020 |
Mark Partin | | | $287,000 | | | $235,351 |
Karole Morgan-Prager | | | $195,000 | | | $159,908 |
Mark Woodhams | | | $400,000 | | | $328,016 |
Long-Term Equity Compensation
The
compensation committeeCompensation Committee believes long-term equity compensation is an effective means for focusing our NEOs on driving increased stockholder value over a multi-year period, providing a meaningful reward for appreciation in our stock price and long-term value creation, and motivating them to remain employed with us.
Annual Long-Term Equity Awards
In 2019,March 2022, the compensation committee granted equity awards to our NEOs in the formCompensation Committee reviewed its past practice of 50%granting a mix of time-based RSUrestricted stock unit awards that are settled in shares of our common stock (RSUs) and 50% stock options to our executive officers in light of an analysis of long-term equity compensation granted by its peers that was created by its compensation consultant, Compensia. Based on this analysis, the Compensation Committee determined that awards of long-term equity compensation to our executive officers for 2022 would be made in a mix of RSUs and performance-based restricted stock units that are exercisable forsettled in shares of our common stock.stock (PSUs).
In March and April 2022, the Compensation Committee determined the sizes of the 2022 equity awards for our NEOs and granted equity awards to all our NEOs other than Ms. Tucker in the form of 50% time-based RSU awards and 50% performance-based PSUs. In consideration of Ms. Tucker’s role as Executive Chair in 2022, we granted her equity awards for 2022 in the form of time-based RSU awards only. The
compensation committeeCompensation Committee believed that providing
aan equal mix of
optionstime-based RSUs and
RSUsperformance-based PSUs for NEOs other than Ms. Tucker was important to remain competitive with our compensation peer companies, many of whom use a similar
mix. RSUsmix and to provide a performance-based element to more directly align such NEOs’ compensation with stockholder value creation. RSU awards provide retention incentives for our NEOs and reward them for long-term stock price appreciation while at the same time providing some value even if the market price of our common stock declines.
Stock optionsPSU awards provide
these same benefits, along incentives for our NEOs
to achieve performance milestones intended to grow our business and drive value for our stockholders.
As with their other elements of compensation, the compensation committeeCompensation Committee determined the amount of long-term incentive compensation for our NEOs for 2022 as part of its annual compensation review and after taking into consideration a competitive market analysis, the recommendations of our CEO (except with respect to her own long-term equity compensation)compensation for our CEO and our Executive Chair), each NEO’s skills, experience, and role within the organization, the outstanding equity holdings of each NEO (including the vested and unvested status of such equity holdings), the proportion of our total shares outstanding used for annual employee long-term equity compensation awards (our “burn rate”) in relation to the companies in our compensation peer group, the potential voting power dilution to our stockholders (our “overhang”) in relation to the companies in our compensation peer group, and the other factors described above.
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In
2019,April 2022, the
compensation committeeCompensation Committee granted
annual equity awards to our NEOs, the material terms of which are described below:
NEO | RSUs (number of shares) | Stock Options (number of shares) | Equity Awards (Aggregate Grant Date Fair Value) |
Therese Tucker | | 47,240 | | | 99,270 | | $ | 4,587,372 | |
Mark Partin | | 30,910 | | | 64,950 | | $ | 3,001,506 | |
Marc Huffman | | 26,340 | | | 55,350 | | $ | 2,557,801 | |
Karole Morgan-Prager | | 12,180 | | | 25,600 | | $ | 1,182,888 | |
Therese Tucker | | | 65,230 | | | — | | | $5,000,000 |
Marc Huffman | | | 65,230 | | | 65,230 | | | $10,000,000 |
Mark Partin | | | 32,620 | | | 32,620 | | | $5,000,000 |
Karole Morgan-Prager | | | 16,960 | | | 16,960 | | | $2,600,000 |
Mark Woodhams | | | 19,570 | | | 19,570 | | | $3,000,000 |
(1)
| The number of shares was determined by dividing 50% (100% for Ms. Tucker) of the targeted grant value by the 30 trading day average price ended on March 15, 2022 and rounding up to the nearest 10 shares. |
(2)
| The number of shares was determined by dividing 50% of the targeted grant value by the 30 trading day average price ended on March 15, 2022 and rounding up to the nearest 10 shares. |
The RSU award listed in the table above for Ms. Tucker vests as to 50% of the shares underlying the award on each of February 20, 2023 and February 20, 2024, subject to her continued service with us through the applicable date.
Each of the
RSU awards listed in the table above
for our other NEOs vests as to 25% of the shares underlying the award on February 20,
20202023 and as to 1/16
th of the shares underlying the award each quarter thereafter, subject to the NEO’s continued service with
us.us through the applicable date.
Each of the PSU awards listed in the table above vests as to one-third of the shares underlying the award on each of February 20, 2023, 2024 and 2025, in each case subject to the NEO’s continued service with us through the applicable date, and in each case subject to our satisfaction of applicable performance-based conditions for the calendar year preceding the vesting date. These performance goals will be determined on an annual basis. The performance goals for vesting of the PSU awards which were eligible to vest on February 20, 2023 were determined at the time of grant, relate to our performance in 2022, and are detailed in the section “2022 Performance-Based Restricted Stock Unit Performance Matrix” below.
Ms. Tucker’s annual equity grant was made entirely in time-based RSUs, and not performance-based PSUs, taking into account corporate governance considerations in light of Ms. Tucker’s role as Executive Chair of our Board, with responsibility for oversight of the Company.
All of these awards are subject to additional vesting acceleration as described in the “Potential Payments Upon Termination or
Upon Termination or Change of Control” section below.
We also set
2022 Performance-Based Restricted Stock Unit Performance Matrix
In March 2022, the 2019 cash flow targetCompensation Committee, with input from management, approved revenue, annualized recurring revenue (ARR), and non-GAAP net income as the performance measures for 2022 as the performance metrics for the portion of the 2022 performance-based RSUs scheduled to vest on February 20, 2023. The Compensation Committee selected these performance measures because it believed that they were appropriate drivers for our CEO’sbusiness as they provided a balance between growing our business, and managing our expenses, which enhance stockholder value over the short term.
The portion of the 2022 performance-based option thatRSUs scheduled to vest on February 20, 2023 was granted in 2016. When that cash flowto be available for vesting based on the extent of our achievement against the target waslevel of each of the financial metrics, as set the fair value of this grant was determined. See “Summary Compensation Table” and “2016 CEO Performance-Based Equity Award” for additional details.forth below:
Revenue | | | $536 million | | | 40% |
ARR | | | $569 million | | | 30% |
Non-GAAP net income | | | $12.4 million | | | 30% |
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The portion of the 2022 performance-based RSUs scheduled to vest on February 20, 2023 that is subject to the revenue metric will be available for vesting based on attainment of that performance measure as follows:
97.57% | | | 50% |
100.0% | | | 100% |
102.0% | | | 125% |
104.0% and above | | | 150% |
The portion of the 2022 performance-based RSUs scheduled to vest on February 20, 2023 that is subject to the ARR metric will be available for vesting based on attainment of that performance measure as follows:
93.67% | | | 50% |
100.0% | | | 100% |
104.9% | | | 125% |
110.0% and above | | | 150% |
The portion of the 2022 performance-based RSUs scheduled to vest on February 20, 2023 that is subject to the non-GAAP net income metric will be available for vesting based on attainment of that performance measure as follows:
85.5% | | | 50% |
100.0% | | | 100% |
164.5% | | | 125% |
229.0% | | | 150% |
*
| If Revenue and non-GAAP net income achievement during 2022 is between the percentage levels identified above, then the payment percentage with respect to the applicable performance metric is calculated based on a linear interpolation between those levels (rounded to the nearest hundred thousand dollars). |
For purposes of the portion of the 2022 performance-based RSUs scheduled to vest on February 20, 2023, the financial performance measures had the following meanings:
| Revenue | | | “Revenue” is defined as the Company’s total subscription, support, and professional services revenue recognized under Generally Accepted Accounting Principles (“GAAP”) during the Performance Period, excluding revenues from acquisitions completed in 2022 with the exception of FourQ. | |
| ARR | | | “ARR” is defined as the Company’s contracted annualized recurring subscription and support revenue. ARR shall exclude the impact of any acquisitions completed during the company’s 2022 fiscal year with the exception of FourQ. | |
| Net Income | | | The Company’s “non-GAAP net income (loss)” for the Company’s 2022 fiscal year as determined in accordance with how such term is defined in the Company’s annual report filed on its Form 10-K for the Company’s 2022 fiscal year, excluding expenses related to acquisitions completed during 2022 with the exception of FourQ. Please see Appendix A to this proxy statement for a reconciliation of GAAP and non-GAAP net income (loss). | |
2022 Performance-Based Restricted Stock Unit Performance Decisions
In February 2023, the Compensation Committee reviewed our overall performance for 2022, including performance against the performance measures established under the 2022 performance-based PSU awards for
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shares eligible to vest on February 20, 2023. Considering the performance measures established for those awards, the target performance, actual performance, and percent available for vesting before relative weighting were as follows:
Revenue | | | $536.0 million | | | $522.9 million | | | 0% |
ARR | | | $569.0 million | | | $533.4 million | | | 50.6% |
Non-GAAP net income | | | $12.4 million | | | $46.2 million | | | 150% |
For context, we believe the target for non-GAAP net income was the appropriate goal for that metric despite it being lower than the Company’s fiscal 2021 non-GAAP net income. When the target was set in early 2022, we believed that integration costs and dilution associated with our FourQ acquisition, increased hosting costs associated with our continued migration to the public cloud, and additional investments to accelerate our go-to-market strategy made the achievement of $12.4 million in non-GAAP net income a rigorous goal. Our overachievement in 2022 with respect to non-GAAP net income was the result of focused work and leadership related to our cost structure as we addressed the challenging macroeconomic environment that developed during the year. Based on this level of achievement, the Compensation Committee determined that, with respect to the shares eligible to vest on February 20, 2023 under the 2022 performance-based PSU awards, 60.2% of the target amount for each of our NEOs were eligible to vest.
The numbers of shares available for vesting on February 20, 2023 under the 2022 performance-based PSUs for each of our NEOs are as follows:
Therese Tucker | | | — | | | — |
Marc Huffman | | | 21,743 | | | 13,082 |
Mark Partin | | | 10,873 | | | 6,541 |
Karole Morgan-Prager | | | 5,653 | | | 3,401 |
Mark Woodhams | | | 6,523 | | | 3,924 |
Retention Long-Term Equity Awards
In the fall and winter of 2022, the Compensation Committee considered an additional grant of long-term equity awards to our executive officers in light of an analysis of the retentive value of long-term equity compensation granted by the Company’s peers that was created by its compensation consultant, Compensia. Based on this analysis and concerns over the retentive value the then current outstanding long-term equity awards for our executive officers, the Compensation Committee determined to grant additional awards of performance-based PSUs for Mr. Huffman and of time-based RSUs for our other executive officers. Ms. Tucker’s award was granted in connection with her assumption of an operating role at the Company as she transitioned away from service as Executive Chair of the Board while continuing to serve on our Board.
In December 2022, the Compensation Committee approved retention equity awards to our NEOs, the material terms of which are described below:
Therese Tucker | | | 23,680 | | | $1,500,000 |
Marc Huffman | | | 189,400 | | | $12,000,000 |
Mark Partin | | | 55,240 | | | $3,500,000 |
Karole Morgan-Prager | | | 39,460 | | | $2,500,000 |
Mark Woodhams | | | 28,410 | | | $1,800,000 |
(1)
| The number of shares was determined by dividing the targeted grant value by the 30 trading day average price ended on December 15, 2022 and rounding to the nearest 10 shares. |
(2)
| The award for Ms. Tucker was made effective as of January 1, 2023. All other awards listed here were made effective as of December 30, 2022. |
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The retention RSU award for Ms. Tucker listed in the table above vests as to 1/8th of the shares underlying the award on a quarterly basis, beginning on February 20, 2023, in each case subject to Ms. Tucker’s continued service with us through the applicable date.
Each of the retention RSU awards for our NEOs other than Ms. Tucker and Mr. Huffman listed in the table above vests as to 2/3rd of the shares underlying the award on November 20, 2024, and as to 1/3rd of the shares underlying the award on November 20, 2025, in each case subject to the NEO’s continued service with us through the applicable date.
The retention performance-based PSU award for Mr. Huffman listed in the table above was eligible to vest as to up to 200% of the shares available for vesting under the award on February 20, 2026, or, if not then vested, on February 20, 2027, in each case subject to Mr. Huffman’s continued service with us through the applicable date, and subject to our satisfaction of applicable performance-based conditions, as described in the following section. Because Mr. Huffman’s employment terminated prior to February 20, 2026, he forfeited all of this award.
Retention Performance-Based Restricted Stock Unit Performance Matrix
In December 2022, the Compensation Committee, with input from management, approved performance metrics for the retention performance-based PSU award granted to Mr. Huffman, relating to the Company’s revenue growth, operating margin, and relative total shareholder return (relative TSR). The Compensation Committee selected these performance measures because it believed that they were aligned with our long-range plan and provided appropriate drivers for our business as they provide a balance between growing our business and managing our expenses, which enhance stockholder value, and directly address our stock performance relative to our peers.
The percentage of retention performance-based RSUs for Mr. Huffman that would have been eligible to vest on February 20, 2026 will equal the product of (i) the revenue growth plus operating margin multiplier for 2025 determined under the first table below, multiplied by (ii) the relative TSR multiplier determined under the second table below.
If the revenue growth plus operating margin multiplier for 2025 was less than 100%, then an additional percentage of the retention performance-based RSUs for Mr. Huffman would become eligible to vest under this award on February 20, 2027, which will equal the excess, if any, of (A) the revenue growth plus operating margin multiplier for 2026 (or if lower, 100%) over (B) the revenue growth plus operating margin multiplier for 2025, in each case determined under the first table below.
For purposes of these awards, the revenue growth plus operating margin multiplier for a given year will be determined based on the sum of the Company’s revenue growth for that year, and the Company’s operating margin for that year, as provided in the following table:
40% | | | 160% |
39% | | | 125% |
38% | | | 100% |
36% | | | 75% |
32% | | | 50% |
Below 32% (or in any case, if revenue growth is below 20%) | | | 0% |
*
| For performance falling between two adjacent “bands” in the first column, the multiplier will be calculated by linear interpolation between (a) the two adjacent bands represented as percentages of growth plus margin and (b) the two achievement percentages set forth in the multiplier column that correspond to the two adjacent bands of percentages of growth plus margin. |
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For purposes of these awards, the relative TSR multiplier will be determined based on the Company’s total shareholder return for the period beginning on December 31, 2022 (measured based on the average closing price for the 20 trading days ending on that date) and ending on December 31, 2025 (measured based on the average closing price for the 20 trading days ending on that date) relative to the corresponding TSRs of the members of the S&P Software and Services Select Industry Index, expressed as a percentile, as provided in the following table:
75th or higher | | | 125% |
50th | | | 100% |
25th or below | | | 75% |
*
| For performance falling between two adjacent “bands” in the first column, the multiplier will be calculated by linear interpolation between (a) the two adjacent bands represented as percentiles of relative TSR and (b) the two achievement percentages set forth in the multiplier column that correspond to the two adjacent bands of percentages of growth plus margin. |
For purposes of the retention performance-based PSU awards granted to Mr. Huffman, the financial performance measures had the following meanings:
| Revenue growth | | | The sum of Company’s subscription revenue plus services revenue for the given fiscal year, divided by the sum of the Company’s subscription revenue plus services revenue for the Company’s immediately prior fiscal year; all as determined under GAAP, but excluding revenue related to acquisitions during the performance period to the extent that any such acquisition is of an entity with greater than $50M in trailing twelve-month revenue at the time of the acquisition. | |
| Non-GAAP operating margin | | | The Company’s non-GAAP income from operations divided by its total revenues, as determined under GAAP. | |
| Non-GAAP income from operations | | | The Company's non-GAAP income from operations means the Company’s GAAP income (loss) from operations, adjusted for: amortization of intangible assets, stock-based compensation, the change in the fair value of contingent consideration, transaction-related costs, legal settlement gains and costs, restructuring charges, impairment charges related to goodwill, impairment charges related to tangible and intangible assets, and the costs of natural disasters. To the extent the Company completes an acquisition of an entity with greater than $50 million in trailing twelve-month revenue, the revenue and transaction costs associated with that transaction shall be removed from the calculation of Revenue Growth and Non-GAAP income from operations for the purposes of calculated achievement. | |
Our NEOs are eligible to participate in our employee benefit programs on the same basis as our other full-time, salaried employees. We sponsor a Section 401(k) profit-sharing plan, which is intended to qualify for favorable tax treatment under Section 401(a) of the Code. Our eligible U.S. employees, including the NEOs, are entitled to participate on the first day of the month following the date of hire. The Section 401(k) plan includes a salary deferral arrangement under which participants may elect to defer up to 100% of their current eligible compensation up to the statutorily prescribed limit. All participants’ interests in their deferrals are 100% vested when contributed. The Section 401(k) plan permits us to make matching contributions and profit-sharing contributions to eligible participants. In
2019,2022, we paid discretionary matching contributions that
vest over a three-year period.are fully vested.
In addition, our NEOs are eligible to participate in our employee benefit programs on the same basis as all of our employees. These benefits include medical, dental and vision benefits, disability insurance, basic life insurance coverage, health savings accounts, and accidental death and dismemberment insurance, as well as theinsurance. All NEOs, except for Ms. Tucker, are also eligible to participate in our employee stock purchase plan (ESPP) that we adopted last year. Ms. Tucker is not eligible to participate in our ESPP..
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We design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market.
Perquisites, Special Bonuses and Other Personal Benefits
Currently, we do not view perquisites, special bonuses, or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide perquisites, special bonuses, or other personal benefits to our NEOs, except in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make our NEOs more efficient and effective, and for recruitment and retention purposes.
In 2019, we made a one-time payment to our CEO to cover the cost associated with a filing required to be made by her under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. This one-time payment was grossed up for taxes. The total amount of payment is set forth in the “All Other Compensation” column of the Summary Compensation Table below.
In June 2018, Ms. Morgan-Prager accepted a temporary assignment to work out of our London offices to lead our efforts in expanding and growing our business in the EMEA region. As part of that temporary assignment, the compensation committee approved a package that provided her with housing and travel expense reimbursements, including for family or guests between the United States and London, tax equalization and tax preparation expense reimbursements, and a one-time cash bonus of $35,000 in recognition of her willingness to participate in this assignment and her expected additional contributions during the assignment. This temporary assignment extended into 2019, and the compensation committee approved providing her with the same package.
In addition, in December 2019, certain of our named executive officers received a payout of his or her accrued but unused paid time off (PTO) balance as we continued our transition to an unlimited PTO policy for our employees. The payout of the accrued but unused PTO was on the same terms as our other employees with outstanding accrued but unused PTO balances. The actual PTO payouts for these named executives officers are included in the “All Other Compensation” column of the Summary Compensation Table below.
We
have entered into written employment offer letters with each of our NEOs, other than
our CEO,Mr. Ryan and Ms. Tucker, and an employment agreement with
our CEO.each of Mr. Ryan and Ms. Tucker. Each of these employment arrangements was approved on our behalf by the
compensation committeeCompensation Committee or, in certain instances, by our
board of directors.Board. Each of these employment arrangements provides for “at will” employment and set forth the compensation arrangements for the NEO, including base salary and an annual cash bonus opportunity.
On March 5, 2023, in connection with Ms. Tucker’s transition to become Co-CEO, we entered into an employment agreement with Ms. Tucker, which supersedes her prior employment agreement. We entered into an employment agreement with Mr. Ryan at the same time on substantially the same terms. In connection with this transition, the Compensation Committee approved an increase to Ms. Tucker’s base salary in connection with her transition from Executive Chair to co-CEO. In determining this adjustment, the Compensation Committee considered a competitive market data analysis provided by Compensia.
In filling each of our executive positions, our
board of directorsBoard or the
compensation committee,Compensation Committee, as applicable, recognized that it would need to develop competitive compensation packages to attract qualified candidates in a dynamic labor market. At the same time, our
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Compensation Committee were sensitive to the need to integrate new executive officers into the executive compensation structure that we were seeking to develop, balancing both competitive and internal equity considerations.
For information on the specific terms and conditions of the employment arrangements of the
NEO,NEOs, see the discussion of “Executive Employment Arrangements” below.
Post-Employment Compensation
We entered into written participation agreements under our Change of Control and Severance Policy, or the Policy, with each of our NEOs (other than
our CEO)Ms. Tucker) and a written employment agreement with
our CEO that providesMs. Tucker, providing for change of control and severance payments and benefits.
On March 5, 2023, in connection with Ms. Tucker’s transition to become Co-CEO, we entered into an employment agreement providing for post-employment compensation with Ms. Tucker, which supersedes her prior employment agreement.
We believe that having in place reasonable and competitive post-employment compensation arrangements are essential to attracting and retaining highly qualified executive officers. Our post-employment compensation arrangements are designed to provide reasonable compensation to executive officers who leave our
companyCompany under certain circumstances to facilitate their transition to new employment. Further, we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing executive officer to sign a separation and release agreement acceptable to us as a condition to receiving post-employment compensation payments or benefits.
We do not consider specific amounts payable under these post-employment compensation arrangements when establishing annual compensation. We do believe, however, that these arrangements are necessary to offer compensation packages that are competitive.
We believe that these arrangements are designed to align the interests of management and stockholders when considering the long-term future for the company.Company. The primary purpose of these arrangements is to keep
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our most senior executive officers focused on pursuing all corporate transaction activity that is in the best interests of stockholders regardless of whether those transactions may result in their own job loss. Reasonable post-acquisition payments and benefits should serve the interests of both the executive and our investors.
All payments and benefits in the event of a change of control of the
companyCompany are payable only if there is a subsequent loss of employment by an executive officer (a so-called “double-trigger” arrangement). In the case of the acceleration of vesting of outstanding equity awards, we use this double-trigger arrangement to protect against the loss of retention power following a change of control and to avoid windfalls, both of which could occur if vesting accelerated automatically as a result of the transaction.
We do not use excise tax payments (or “gross-ups”) relating to a change of control of the
companyCompany and have no such obligations in place with respect to any of our NEOs.
For information on the change of control and severance agreements for the NEOs, as well as an estimate of the potential payments and benefits payable under these agreements as of the end of
2019,2022, see “Executive Employment Arrangements” and “Potential Payments Upon Termination or Change of Control” below.
Other Compensation Policies and Practices
Policy Prohibiting Hedging or Pledging of Our Equity Securities
Our Insider Trading Compliance Policy prohibits all our employees, including our NEOs, and the members of our
board of directorsBoard from engaging in derivative securities transactions, including hedging, with respect to our common stock and from pledging our securities as collateral or holding our securities in a margin account.
Executive Stock Ownership Guidelines
In February 2020, the
compensation committeeCompensation Committee and the
nominatingNominating and
corporate governance committeeCorporate Governance Committee recommended, and our
board of directorsBoard approved, stock ownership guidelines for our executive officers. Under these guidelines, each executive officer is expected to attain minimum levels of stock ownership equal to 1x (or 5x, in the case of the
chief executive officer)CEO and Executive Chair, if applicable) the executive officer’s annual base salary. For purposes of this requirement, shares counted toward these guidelines include any shares owned outright and in-the-money value of vested but unexercised stock options. The value for purposes of satisfying this requirement is the 90-day trailing average of the closing price of our common stock as of the last trading day of the fiscal year prior to the compliance date. Executive officers have until the later of February 2025 or, if applicable, the fifth anniversary
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of the date they become an executive officer or are appointed to their position to comply with these guidelines. If an executive officer does not achieve the minimum level of ownership by the executive officer’s compliance date, then 50% of the after-tax value of the executive officer’s exercised options or vested RSUs will be retained until the minimum level of ownership for the executive officer is met.
As of December 31, 2022, all of our executive officers had exceeded the current guidelines.
Tax and Accounting Considerations
Deductibility of Executive Compensation
Section 162(m) of the Code generally limits the amount we may deduct from our federal income taxes for compensation paid to our CEO and certain other current and former executive officers that are “covered employees” within the meaning of Section 162(m) of the Code to $1 million per individual per year, subject to certain exceptions. The regulations promulgated under Section 162(m) of the Code contain a transition rule that applies to companies, such as ours, that become subject to Section 162(m) of the Code by reason of becoming publicly held. Pursuant to this rule, certain compensation granted during a transition period
(which ended on the 2020 annual meeting for us) currently is not counted toward the deduction limitations of Section 162(m) of the Code if the compensation is paid under a compensation arrangement that was in existence before the effective date of the initial public offering and certain other requirements are met. While certain of our equity awards may be eligible to be excluded from our deductibility limitation of Section 162(m) of the Code pursuant to this transition rule, the
compensation committeeCompensation Committee has not adopted a policy that all equity or other compensation must be deductible.
We currently expect our transition period to expire at our annual meeting of stockholders to be held in 2020, although it could expire earlier in certain circumstances.
In approving the amount and form of compensation for our NEOs in the future, the compensation committeeCompensation Committee generally considers all elements of the cost to us of providing such compensation, including the
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potential impact of Section 162(m) of the Code, as well as our need to maintain flexibility in compensating executive officers in a manner designed to promote our goals. The
compensation committeeCompensation Committee may, in its judgment, authorize compensation payments that will or may not be deductible when it believes that such payments are appropriate to attract, retain or motivate executive talent.
Accounting for Stock-Based Compensation
We follow the Financial Accounting Standard Board’s Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”) for our stock-based compensation awards. FASB ASC Topic 718 requires us to measure the compensation expense for all share-based payment awards made to our employees and members of our
board of directors,Board, including options to purchase shares of our common stock and other stock awards, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the executive compensation tables required by the federal securities laws, even though the recipient of the awards may never realize any value from their awards.
The
compensation committee,Compensation Committee, in cooperation with management, reviewed our
20192022 compensation programs. Our
compensation committeeCompensation Committee believes that the mix and design of the elements of such programs do not encourage our employees to assume excessive risks and accordingly are not reasonably likely to have a material adverse effect on our
company.Company. We have designed our compensation programs to be balanced so that our employees are focused on both short and long-term financial and operational performance. In particular, the weighting towards long-term incentive compensation discourages short-term risk taking. Goals are appropriately set with targets that encourage growth in the business, while doing so in a manner that encourages profitability.
Executive Employment Arrangements
Therese Tucker.
On August 24, 2016, we entered into an employment agreement with Ms. Tucker.Tucker, which remained in effect through March 5, 2023. The employment agreement hashad an initial term of three years from January 1, 2016 and iswas expected to automatically renew on each year thereafter, unless we or Ms. Tucker provideseither party provided the other partywith at least 30 days written notice. The employment agreement automatically renewed for a one-year term on January 1, 2020.2022. In the event of a “change in control” (as defined in Ms. Tucker’s agreement), the term willwould extend for an additional two years from the date of such change in control.The employment agreement
providesprovided Ms. Tucker with an initial annual base salary of $350,000 and an on-target bonus opportunity equal to 100% of her base salary, based upon achievement of performance objectives
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to be determined by our compensation committee. Since then,Compensation Committee. Effective January 2021, in connection with her transition to Executive Chair, Ms. Tucker’s annual base salary haswas reduced to $328,000 and her on-target bonus opportunity was reduced to 75% of her base salary. Effective April 1, 2022, Ms. Tucker’s annual base salary was increased to $380,000 as of December 31, 2019. $344,000.
Ms. Tucker’s employment agreement also
providesprovided that if her employment
iswas terminated by us without “cause” (excluding by death or disability), we
decidedecided to not renew Ms. Tucker’s agreement, or Ms. Tucker
resignsresigned for “good reason” (as such terms
arewere defined in Ms. Tucker’s agreement), Ms. Tucker
willwould receive (i) a lump sum payment equal to 18 months of Ms. Tucker’s base salary then in effect; (ii) a lump sum payment equal to the premium costs for Ms. Tucker and her eligible dependents to continue health insurance coverage under COBRA for 18 months; (iii) a lump sum amount equal to the prorated portion of Ms. Tucker’s annual bonus for the year of termination that would have been paid to Ms. Tucker had Ms. Tucker been employed by us for the entire fiscal year of termination, based on actual performance for the year (and assuming any individual performance goals would have been met at target levels); and (iv) a lump sum amount equal to the earned but unpaid bonus for the prior fiscal year, if any.
Ms. Tucker’s employment agreement also providesprovided that if Ms. Tucker’sher employment iswas terminated by us without “cause” (excluding by death or disability), we decidedecided to not renew Ms. Tucker’s agreement, or Ms. Tucker resignsresigned for “good reason” and such termination occurs in connection with, or within three months before or 24 months after a “change of control” (as such term is expected to be defined in Ms. Tucker’s agreement), Ms. Tucker willwould receive (i) a lump sum payment equal to 12 months of Ms. Tucker’s base salary then in effect, or, if greater, as in effect immediately prior to the change of control; (ii) a lump sum payment equal to the
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premium costs for Ms. Tucker and her eligible dependents to continue health insurance coverage under COBRA for 12 months; (iii) a lump sum amount equal to the earned but unpaid bonus for the prior fiscal year, if any; and (iv) 100% of the shares subject to Ms. Tucker’s outstanding company equity awards
willwould vest and, to the extent applicable, become exercisable.
Ms. Tucker’s employment agreement also providesprovided that if her employment iswas terminated due to her death or disability, Ms. Tucker willwould receive (i) a lump sum amount equal to the earned but unpaid bonus for the prior fiscal year, if any and (ii) a lump sum amount equal to the Ms. Tucker’s target bonus, pro-rated to reflect time served in the year of termination.
Any receipt of severance benefits by Ms. Tucker
willwas be contingent upon her execution and non-revocation of a separation agreement and release of claims against us. In the event any of the payments provided for under Ms. Tucker’s employment agreement or otherwise payable to Ms. Tucker would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, or the Code, could be subject to the related excise tax under Section 4999 of the Code, she would be entitled to receive either full payment of benefits or such lesser amount which would result in no portion of the benefits being subject to the excise tax, whichever
resultsresulted in the greater amount of after-tax benefits to her. Ms. Tucker’s employment agreement
doesdid not require us to provide any tax gross-up payments.
Mark Partin. We
On March 5, 2023, in connection with Ms. Tucker’s transition to Co-CEO, effective as of March 6, 2023, we entered into a confirmatoryan employment letteragreement with Mr. Partin. The confirmatoryMs. Tucker, which supersedes her prior employment letter has no specific term and provides for “at-will” employment. As of December 31, 2019, Mr. Partin’sagreement. Under this new employment agreement, as Co-CEO, Ms. Tucker will earn an annual base salary was $365,000of $485,000 and hishave a target bonus of 100% of her salary. Ms. Tucker’s March 2023 employment agreement also provides for equity awards [that have been granted] with a value of $10,000,000 which are made up of 50% restricted stock units that will vest over four years, subject to Ms. Tucker’s continued full-time employment, and 50% restricted stock units that will vest on the same performance terms as awards granted to our other executives in 2023, as determined by the Compensation Committee.
Ms. Tucker’s March 2023 employment agreement provides that if her employment is terminated by us without “cause” (as such term is defined in that employment agreement) other than for death or disability, outside of the period beginning 3 months prior to a “change of control” (as such term is defined in that employment agreement) and ending 12 months following the change of control, Ms. Tucker will be eligible to receive: (i) a lump sum cash payment equal to 100% of her annual on-targetsalary and (ii) reimbursement by the Company for COBRA premiums Ms. Tucker pays to maintain group health insurance benefits for herself and her dependents under COBRA for up to 12 months following the date of termination and (iii) approximately 25% of the original shares subject to each of her then-outstanding equity awards that are eligible to vest solely on the basis of continued employment will become vested and fully exercisable (if the number of unvested shares is less than the calculated number, she will only vest in the then-unvested portion).
Ms. Tucker’s March 2023 employment agreement also provides that if her employment is terminated by us during the period beginning 3 months prior to a change of control and ending 12 months following the change of control without cause other than for death or disability or she resigns for “good reason” (as defined in the that employment agreement), then she will be eligible to receive (i) a lump sum cash payment equal to 150% of her annual salary, (ii) a lump sum cash payment equal to a prorated portion of her target annual bonus
opportunity was 60%for the year of
his annual base salary.termination and (iii) reimbursement by the Company for COBRA premiums she pays to maintain group health insurance benefits for herself and her dependents under COBRA for up to 18 months following the termination date, and (iv) 100% of all of her outstanding equity awards will become vested and fully exercisable effective as of the later of the date of termination or the date of the consummation of the change of control (and with respect to any Company performance-based equity awards, for which the applicable performance period has (x) been completed as of her termination date, based on actual achievement of the applicable performance objectives or (y) not been completed as of her termination date, assuming achievement of the applicable performance objectives at target).
Marc Huffman. We entered into an employment letter with Mr. Huffman in connection with his commencement of employment with us in 2018. The employment letter hashad no specific term and providesprovided for “at will” employment.As of December 31, 2019,2022, Mr. Huffman’s annual base salary was $350,000$500,000 and his annual on-target bonus opportunity was 100% of his annual base salary. TheThis employment letteragreement also providesprovided Mr. Huffman with equity awards that have been previously granted and severance and change of
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control payments and benefits under the Policy (described below). Mr. Huffman is also reimbursed for travel in compliance with the
company’sCompany’s travel policy.
Karole Morgan-Prager. Mr. Huffman received severance benefits under the Policy in connection with the termination of his employment, effective March 6, 2023 (described below).
Mark Partin. We entered into a confirmatoryan employment letter with Ms. Morgan-Prager.Mr. Partin. The confirmatory employment letter has no specific term and provides for “at-will” employment. As of December 31, 2019,2022, Mr. Partin’s annual base salary was $410,000 and his annual on-target bonus opportunity was 70% of his annual base salary.
Karole Morgan-Prager. We entered into an employment letter with Ms. Morgan-Prager. The employment letter has no specific term and provides for “at-will” employment. As of December 31, 2022, Ms. Morgan-Prager’s annual base salary was $350,000$390,000 and her annual on-target bonus opportunity was 50% of her annual base salary. Mark Woodhams. We entered into an employment letter with Mr. Woodhams. The employment letter has no specific term and provides for “at-will” employment. As of December 31, 2022, Mr. Woodhams' annual base salary was $400,000 and his annual on-target bonus opportunity was 100% of his annual base salary.
Compensation Committee Report The
compensation committeeCompensation Committee has reviewed and discussed with management the section titled “Executive Compensation” (the “Executive Compensation Disclosure”), including, without limitation, the disclosure under the heading “Compensation Discussion and Analysis,” summary executive compensation tables and related narrative information included in this proxy statement. Based on such review and discussion, the
compensationTABLE OF CONTENTS
committeeCompensation Committee has recommended to the board of directorsBoard that the section titled “Executive Compensation Disclosure” be included in this proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
2022.
Respectfully submitted by the members of the
compensation committeeCompensation Committee of
our board of directors:John Brennanthe Board:
Mika Yamamoto (Chair)
Kevin Thompson
Thomas Unterman
Mika Yamamoto
Amit Yoran
This
compensation committeeCompensation Committee report shall not be deemed to be “soliciting material” or to be “filed” with
the SEC or subject to Regulation 14A promulgated by the SEC or to the liabilities of Section 18 of the Exchange Act, and shall not be deemed incorporated by reference into any prior or subsequent filing by BlackLine under the Securities Act of 1933, as amended, or the Securities Act, or the Exchange Act, except to the extent BlackLine specifically requests that the information be treated as “soliciting material” or specifically incorporates it by reference.TABLE OF CONTENTS
Summary Compensation Table The following table presents information concerning the total compensation of our NEOs for services rendered to us in all capacities during the years ended December 31,
2019, 2018,2022, 2021, and
2017.Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Option Awards ($)(2) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | Alternate Total ($)(5) |
Therese Tucker Chief Executive Officer | | 2019 | | | 380,000 | | | — | | | 19,203,288 | | | 2,298,226 | | | 422,826 | | | 247,818 | | | 22,552,158 | | | 5,638,016 | |
| 2018 | | | 380,000 | | | — | | | 2,010,166 | | | 2,028,294 | | | 330,600 | | | — | | | 4,749,060 | | | 4,749,060 | |
| 2017 | | | 375,000 | | | — | | | — | | | — | | | 187,500 | | | — | | | 562,500 | | | 562,500 | |
Mark Partin Chief Financial Officer | | 2019 | | | 365,000 | | | — | | | 1,497,734 | | | 1,503,772 | | | 243,681 | | | 28,988 | | | 3,639,175 | | | 3,639,175 | |
| 2018 | | | 365,000 | | | — | | | 1,200,011 | | | 1,211,150 | | | 158,775 | | | 11,000 | | | 2,945,936 | | | 2,945,936 | |
| 2017 | | | 350,833 | | | — | | | — | | | — | | | 87,708 | | | 10,800 | | | 449,341 | | | 449,341 | |
Marc Huffman President and Chief Operating Officer | | 2019 | | | 350,000 | | | — | | | 1,276,360 | | | 1,281,441 | | | 389,445 | | | 11,200 | | | 3,308,446 | | | 3,308,446 | |
| 2018 | | | 310,288 | | | — | | | 3,185,112 | | | 6,626,000 | | | 268,627 | | | 10,688 | | | 10,400,715 | | | 10,400,715 | |
Karole Morgan-Prager Chief Legal and Administrative Officer | | 2019 | | | 348,333 | | | 35,000 | | | 590,331 | | | 592,557 | | | 194,723 | | | 294,423 | | | 2,055,367 | | | 2,055,367 | |
| 2018 | | | 340,000 | | | 35,000 | | | 598,314 | | | 603,621 | | | 118,320 | | | 152,791 | | | 1,848,046 | | | 1,848,046 | |
| 2017 | | | 340,000 | | | 25,000 | | | — | | | — | | | 68,000 | | | 10,800 | | | 443,800 | | | 443,800 | |
2020.
Therese Tucker
Co-CEO and Former Executive Chair | | | 2022 | | | 340,000 | | | 4,935,302 | | | — | | | — | | | 211,570 | | | — | | | 5,486,872 |
| 2021 | | | 328,000 | | | 2,087,842 | | | — | | | 2,006,179 | | | 283,555 | | | 1,567 | | | 4,707,143 |
| 2020 | | | 401,250 | | | 3,831,510 | | | — | | | 3,837,376 | | | 366,559 | | | 1,000 | | | 8,437,695 |
Marc Huffman
Former President and Former Chief Executive Officer | | | 2022 | | | 493,750 | | | 4,935,302 | | | 16,020,535 | | | — | | | 410,020 | | | 12,300 | | | 21,871,907 |
| 2021 | | | 475,000 | | | 2,504,964 | | | — | | | 2,505,522 | | | 547,514 | | | 13,686 | | | 6,046,686 |
| 2020 | | | 374,792 | | | 1,565,385 | | | — | | | 1,567,601 | | | 344,208 | | | 12,400 | | | 3,864,386 |
Mark Partin
Chief Financial Officer | | | 2022 | | | 405,000 | | | 6,184,024 | | | 822,651 | | | — | | | 235,351 | | | 12,200 | | | 7,659,226 |
| 2021 | | | 387,500 | | | 1,252,482 | | | — | | | 1,252,761 | | | 269,723 | | | 13,889 | | | 3,176,355 |
| 2020 | | | 375,625 | | | 3,005,128 | | | — | | | 3,009,542 | | | 203,842 | | | 12,400 | | | 6,606,537 |
Karole Morgan-Prager
Chief Legal and Administrative Officer | | | 2022 | | | 385,000 | | | 3,937,668 | | | 427,706 | | | — | | | 159,908 | | | 32,552 | | | 4,942,834 |
| 2021 | | | 367,500 | | | 710,446 | | | — | | | 710,086 | | | 213,242 | | | 495,437 | | | 2,496,711 |
| 2020 | | | 357,083 | | | 1,001,709 | | | — | | | 1,003,181 | | | 160,928 | | | 387,913 | | | 2,910,814 |
Mark Woodhams
Chief Revenue Officer | | | 2022 | | | 391,667 | | | 3,391,807 | | | 493,530 | | | — | | | 328,016 | | | 12,200 | | | 4,617,220 |
| 2021 | | | 380,000 | | | 835,360 | | | — | | | 835,515 | | | 438,012 | | | 33,723 | | | 2,522,610 |
| (1) | For Ms. Morgan-Prager, the amounts in this column represent a cash bonus for her temporary assignment to London and additional responsibilities in overseeing the facilities and procurement functions. |
| (2)
| The amounts in these columnsthis column represent the aggregate grant date fair value of stock and option awards as computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718 or ASC 718. The assumptions used in calculating the grant date fair value of the awards reported in this columnthese columns are set forth in Note 2 to our financial statements appearing at the end of our Annual Report on Form 10-K for the year ended December 31, 2019.2022. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Ms. Tucker’s 2019 Option |
(2)
| The amounts reported in the Stock Awards include a value of $2,289,146 related to a stock option granted in 2019 and a value of $16,914,142 related to a performance-based option to purchase 482,800 shares of our common stock (the “Performance-Based Option”) granted in 2016. Althoughcolumn reflect the Performance-Based Option was legally granted in 2016, there was no accounting measurementaggregate grant date and therefore no fair value to be included in this table until the 2019 cash flow target was set in 2019. When that cash flow target was set, the fair value of $16,914,142 was determined, although itthe RSUs granted to our NEOs in fiscal 2020, 2021, and 2022. |
(3)
| The amounts reported in the Performance Stock Awards Column reflect the aggregate grant date fair value of the PSUs granted to our NEOs in fiscal 2022, including a second award of PSUs granted to Mr. Huffman in fiscal 2022, as computed in accordance with ASC Topic 718. For fiscal 2022, the estimated fair value of PSUs is likely thatcalculated based on the targets will not be met and that Ms. Tucker will not earn anyprobable outcome of this Performance-Based Option and that this Performance-Based Option will be forfeited in 2020. Accordingly,the performance measures for the applicable performance period as of the date on which the PSUs were granted for accounting purposes. PSUs vest upon achievement of this proxy filing, we do not expect to recognize anycorporate performance goals. The assumptions used in the valuation of this non-cash expense associatedthese awards are consistent with the Performance-Based Option. See “2016 CEO Performance-Based Equity Award” belowvaluation methodologies specified in the notes to our consolidated financial statements included in our Annual Report on Form 10-K for additional details on the terms of this award.fiscal year ended December 31, 2022. |
The grant date fair value of the fiscal 2022 PSUs assuming that the highest level of performance is achieved under the applicable performance measures is presented below. For Mr. Huffman, the maximum value assumes the highest level of performance under all performance awards granted in fiscal 2022. The estimated grant date fair value for these PSUs presented in the table above is different from (and lower than) the maximum value set forth below. These amounts do not necessarily correspond to the actual value recognized by our NEOs.
Therese Tucker | | | N/A |
Marc Huffman | | | $31,218,533
(aggregate value of all PSU awards) |
Mark Partin | | | $1,233,977 |
Karole Morgan-Prager | | | $641,559 |
Mark Woodhams | | | $740,295 |
(4)
| The amounts in this column represent annual incentives earned under our bonus plans for the applicable fiscal year. |
(5)
| (4) | Consists ofIn 2022, this amount consists of: (a) for Messrs. Huffman, Partin and Woodhams and Ms. Morgan-Prager, 401(k) plan matching contributions for Messrs. Partin and Huffman in the amount of $11,200 each$12,200 each; (b) for Ms. Morgan-Prager, $11,855 in 2019. In 2019, this amount also includes the following: (i)tax equalization payments related to her service in the case of Ms. Tucker, $125,000 related to the costs to cover her HSR filing fees, plus $61,436 relating to theUnited Kingdom at our request and $8,497 tax gross up onassociated with such amount, as well as $61,382 paid for earnedtax equalization costs; and unused days of PTO and (ii)(c) for Mr. Partin, $17,788 paid for earned and unused days of PTO. In the case of Ms. Morgan-Prager, this amount includes the following for 2018 and 2019:Huffman, $100 in taxable fringe benefits. |
| 401(k) Plan Matching Contributions | Earned and Unused Days of PTO Paid | Housing Costs in London | Tax Gross Up on Housing Costs | Travel Expense Reimbursements for Family Between the US and London | Tax Gross Up on Travel Expense Reimbursements | Fees for Tax Preparation Services | Tax Gross Up on Fees for Tax Preparation Services | Total |
2019 | | 11,200 | | | 8,669 | | | 110,361 | | | 108,522 | | | 25,369 | | | 24,947 | | | 2,700 | | | 2,655 | | | 294,423 | |
2018 | | 11,000 | | | — | | | 55,465 | | | 54,541 | | | 16,026 | | | 15,759 | | | — | | | — | | | 152,791 | |
| (5) | The Total column shows the aggregate compensation for Ms. Tucker under the SEC rules. As discussed in footnote 2, a significant portion of this total relates to a performance-based option grant made in 2016. Although the SEC rules require the grant date fair value of this award be included in the Summary Compensation Table for 2019, at the time the accounting fair value was determined, we also determined that the Performance-Based Option is highly unlikely to be earned. Accordingly, we believe that a more representative view of Ms. Tucker’s 2019 compensation should not include the accounting value of an award made in 2016 that is highly unlikely to be earned as reflected in this “Alternate Total” column. |
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Grants of Plan-Based Awards During 20192022
The following table presents information regarding grants of plan-based awards made to our NEOs during
2019: | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($)(1) | Equity Grants(2) | |
Name | Grant Date | Threshold | Target | Maximum | Number of Securities Underlying Restricted Stock Units (#) | Number of Securities Underlying Options (#) | Exercise Price of Option Awards ($) | Grant Date Fair Value of Stock and Option Awards ($)(3) |
Therese Tucker | 5/15/2019 | | | | | | | | | | | | | | 99,270 | | | 48.65 | | | 2,289,146 | |
5/15/2019 | | | | | | | | | | | 47,240 | | | | | | | | | 2,298,226 | |
N/A | | 171,000 | | | 380,000 | | | 475,000 | | | | | | | | | | | | | |
Mark Partin | 5/15/2019 | | | | | | | | | | | | | | 64,950 | | | 48.65 | | | 1,497,734 | |
5/15/2019 | | | | | | | | | | | 30,910 | | | | | | | | | 1,503,772 | |
N/A | | 98,550 | | | 219,000 | | | 273,750 | | | | | | | | | | | | | |
Marc Huffman | 5/15/2019 | | | | | | | | | | | | | | 55,350 | | | 48.65 | | | 1,276,360 | |
5/15/2019 | | | | | | | | | | | 26,340 | | | | | | | | | 1,281,441 | |
N/A | | 157,500 | | | 350,000 | | | 472,500 | | | | | | | | | | | | | |
Karole Morgan-Prager | |
5/15/2019 | | | | | | | | | | | | | | 25,600 | | | 48.65 | | | 590,331 | |
5/15/2019 | | | | | | | | | | | 12,180 | | | | | | | | | 592,557 | |
| NA | | 78,750 | | | 175,000 | | | 218,750 | | | | | | | | | | | | | |
2022:
Therese Tucker | | | N/A | | | | | | 258,000 | | | | | | | | | | | | | | | | | | |
| | | 4/4/2022(3) | | | | | | | | | | | | | | | | | | | | | 65,230 | | | 4,935,302 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Marc Huffman | | | N/A | | | | | | 500,000 | | | | | | | | | | | | | | | | | | |
| | | 4/4/2022(3) | | | | | | | | | | | | | | | | | | | | | 65,230 | | | 4,935,302 |
| | | 4/4/2022(4) | | | | | | | | | | | | | | | 21,743 | | | 32,615 | | | | | | 1,645,075 |
| | | 12/30/2022(5) | | | | | | | | | | | | | | | 189,400 | | | 378,800 | | | | | | 14,375,460 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mark Partin | | | N/A | | | | | | 287,000 | | | | | | | | | | | | | | | | | | |
| | | 4/4/2022(3) | | | | | | | | | | | | | | | | | | | | | 32,620 | | | 2,468,029 |
| | | 4/4/2022(4) | | | | | | | | | | | | | | | 10,873 | | | 16,310 | | | | | | 822,651 |
| | | 12/30/2022(6) | | | | | | | | | | | | | | | | | | | | | 55,240 | | | 3,715,995 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Karole
Morgan-Prager | | | N/A | | | | | | 195,000 | | | | | | | | | | | | | | | | | | |
| | | 4/4/2022(3) | | | | | | | | | | | | | | | | | | | | | 16,960 | | | 1,283,194 |
| | | 4/4/2022(4) | | | | | | | | | | | | | | | 5,653 | | | 8,480 | | | | | | 427,706 |
| | | 12/30/2022(6) | | | | | | | | | | | | | | | | | | | | | 39,460 | | | 2,654,474 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mark Woodhams | | | N/A | | | | | | 400,000 | | | | | | | | | | | | | | | | | | |
| | | 4/4/2022(3) | | | | | | | | | | | | | | | | | | | | | 19,570 | | | 1,480,666 |
| | | 4/4/2022(4) | | | | | | | | | | | | | | | 6,523 | | | 9,785 | | | | | | 493,530 |
| | | 12/30/2022(6) | | | | | | | | | | | | | | | | | | | | | 28,410 | | | 1,911,141 |
(1)
| (1) | Each of these grants was made pursuantAmounts in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” columns relate to the 2019 Annualcash incentive compensation opportunities under our 2022 Bonus Plan, as described above.in the section titled “Executive Compensation—Compensation Discussion and Analysis—Individual Compensation Elements – 2022 Bonus Plan Performance Matrix” and “—2002 Bonus Plan Decisions.” |
| (2) | Each of these grants was made pursuant to the 2016 Plan, as defined above. |
| (3)
| The amount in this column represents the aggregate grant date fair value of stock and option awards as computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718, or ASC 718. The fair value value of the PSUs is calculated based on target shares. The assumptions used in calculating the grant date fair value of the awards reported in this column are set forth in Note 2 to our financial statements appearing at the end of our Annual Report on Form 10-K for the year ended December 31, 2019.2022. |
(3)
| Reflects the award of Time-Based RSUs for such NEOs as described in the section titled “Executive Compensation—Compensation Discussion and Analysis—Individual Compensation Elements – Annual Long Term Incentive Awards.” |
(4)
| Reflects the award of performance-based RSUs at the threshold, target and maximum award levels for the 2022 performance-based RSUs scheduled to vest on February 20, 2023 as described in the section titled “Executive Compensation—Compensation Discussion and Analysis—Individual Compensation Elements—2022 Performance-Based Restricted Stock Unit Performance Matrix”. Further information on the threshold, target, maximum, and actual award level achievement of this PRSU award as well as descriptions of the performance goals for this PRSU award is available in such section and the section “Executive Compensation—Compensation Discussion and Analysis—Individual Compensation Elements—2022 Performance-Based Restricted Stock Unit Performance Decisions.” |
(5)
| Reflects the award of performance-based RSUs at the threshold, target and maximum award levels for the Retention Long Term Equity Awards granted to Mr. Huffman as described in the section titled “Executive Compensation—Compensation Discussion and Analysis—Individual Compensation Elements—Retention Long-Term Equity Awards” and “—Retention Performance-Based Restricted Stock Unit Performance Matrix.” Further descriptions of the performance goals for this performance-based RSU award is available in such section. |
(6)
| Reflects the award of RSUs for such NEOs as described in the section titled “Executive Compensation—Compensation Discussion and Analysis—Individual Compensation Elements – Retention Long-Term Equity Awards.” |
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Outstanding Equity Awards at Year-End
The following table presents information concerning all outstanding equity awards held by each of our NEOs as of December 31,
2019: | | Option Awards | | Stock Awards |
Named Executive Officer | Grant Date(1) | Number of Securities Underlying Unexercised Options # Exercisable | Number of Securities Underlying Unexercised Options # Unexercisable | Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units That Have Not Vested ($)(6) |
Therese Tucker | | 10/17/16 | (2) | | — | | | — | | | 482,800 | | | 14.00 | | | 10/16/26 | | | | | | | |
| 10/17/16 | (3) | | 72,420 | | | 24,140 | | | — | | | 14.00 | | | 10/16/26 | | | | | | | |
| 3/6/18 | (4) | | 41,597 | | | 53,483 | | | — | | | 44.41 | | | 3/5/28 | | | | | | | |
| 3/6/18 | (5) | | | | | | | | | | | | | | | | | 25,691 | | | 1,324,628 | |
| 5/15/19 | (7) | | — | | | 99,270 | | | — | | | 48.65 | | | 5/15/29 | | | | | | | |
| 5/15/19 | (8) | | | | | | | | | | | | | | | | | 47,240 | | | 2,435,694 | |
Mark Partin | | 3/30/15 | (9) | | 360,176 | | | — | | | — | | | 14.00 | | | 3/29/25 | | | | | | | |
| 10/17/16 | (10) | | 36,210 | | | 12,070 | | | — | | | 14.00 | | | 10/16/26 | | | | | | | |
| 3/6/18 | (4) | | 24,832 | | | 31,928 | | | — | | | 44.41 | | | 3/5/28 | | | | | | | |
| 3/6/18 | (5) | | | | | | | | | | | | | | | | | 15,341 | | | 790,982 | |
| 5/15/19 | (7) | | — | | | 64,950 | | | — | | | 48.65 | | | 5/15/29 | | | | | | | |
| 5/15/19 | (8) | | | | | | | | | | | | | | | | | 30,910 | | | 1,593,720 | |
Marc Huffman | | 2/13/18 | (11) | | 50,000 | | | 150,000 | | | — | | | 33.13 | | | 2/12/28 | | | | | | | |
| 2/13/18 | (12) | | | | | | | | | | | | | | | | | 150,000 | | | 7,734,000 | |
| 5/15/19 | (7) | | — | | | 55,350 | | | — | | | 48.65 | | | 5/15/29 | | | | | | | |
| 5/15/19 | (8) | | | | | | | | | | | | | | | | | 26,340 | | | 1,358,090 | |
2022:
TABLE OF CONTENTS
| | Option Awards | | Stock Awards |
Named Executive Officer | Grant Date(1) | Number of Securities Underlying Unexercised Options # Exercisable | Number of Securities Underlying Unexercised Options # Unexercisable | Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units That Have Not Vested ($)(6) |
Karole Morgan-Prager | | 5/30/15 | (13) | | 55,870 | | | — | | | — | | | 14.50 | | | 5/29/25 | | | | | | | |
| 10/17/16 | (14) | | 162,945 | | | 54,315 | | | — | | | 14.00 | | | 10/16/26 | | | | | | | |
| 3/6/18 | (4) | | 12,381 | | | 15,919 | | | — | | | 44.41 | | | 3/5/28 | | | | | | | |
| 3/6/18 | (5) | | | | | | | | | | | | | | | | | 7,646 | | | 394,228 | |
| 5/15/19 | (7) | | — | | | 25,600 | | | — | | | 48.65 | | | 5/15/29 | | | | | | | |
| 5/15/19 | (8) | | | | | | | | | | | | | | | | | 12,180 | | | 628,001 | |
Therese Tucker | | | 10/17/2016(3) | | | 96,560 | | | — | | | 14.00 | | | 10/16/2026 | | | | | | |
| 3/6/2018(4) | | | 95,080 | | | — | | | 44.41 | | | 3/5/2028 | | | | | | |
| 5/15/2019(5) | | | 93,065 | | | 6,205 | | | 48.65 | | | 5/15/2029 | | | | | | |
| 5/15/2019(6) | | | | | | | | | | | | | | | 2,953 | | | 198,648 |
| 4/15/2020(7) | | | 91,230 | | | 54,740 | | | 57.11 | | | 4/15/2030 | | | | | | |
| 4/15/2020(8) | | | | | | | | | | | | | | | 25,160 | | | 1,692,513 |
| 3/6/2021(9) | | | 20,395 | | | 20,395 | | | 111.53 | | | 3/6/2031 | | | | | | |
| 3/6/2021(10) | | | | | | | | | | | | | | | 9,360 | | | 629,647 |
| 4/4/2022(11) | | | | | | | | | | | | | | | 65,230 | | | 4,388,022 |
Marc Huffman | | | 2/13/2018(12) | | | 187,100 | | | — | | | 33.13 | | | 2/12/2028 | | | | | | |
| 5/15/2019(5) | | | 31,135 | | | 3,460 | | | 48.65 | | | 5/15/2029 | | | | | | |
| 5/15/2019(6) | | | | | | | | | | | | | | | 1,647 | | | 110,794 |
| 4/15/2020(7) | | | 37,268 | | | 22,362 | | | 57.11 | | | 4/15/2030 | | | | | | |
| 4/15/2020(8) | | | | | | | | | | | | | | | 10,280 | | | 691,536 |
| 3/6/2021(13) | | | 21,411 | | | 27,529 | | | 111.53 | | | 3/6/2031 | | | | | | |
| 3/6/2021(14) | | | | | | | | | | | | | | | 12,634 | | | 849,889 |
| 4/4/2022(15) | | | | | | | | | | | | | | | 65,230 | | | 4,388,022 |
| 4/4/2022(16) | | | | | | | | | | | | | | | 21,743 | | | 1,462,652 |
| 12/30/2022(17) | | | | | | | | | | | | | | | 189,400 | | | 12,740,938 |
Mark Partin | | | 3/30/2015(18) | | | 137,676 | | | — | | | 14.00 | | | 3/29/2025 | | | | | | |
| 10/17/2016(19) | | | 48,280 | | | — | | | 14.00 | | | 10/16/2026 | | | | | | |
| 3/6/2018(4) | | | 56,760 | | | — | | | 44.41 | | | 3/5/2028 | | | | | | |
| 5/15/2019(5) | | | 60,890 | | | 4,060 | | | 48.65 | | | 5/15/2029 | | | | | | |
| 5/15/2019(6) | | | | | | | | | | | | | | | 1,933 | | | 130,033 |
| 4/15/2020(7) | | | 71,550 | | | 42,930 | | | 57.11 | | | 4/15/2030 | | | | | | |
| 4/15/2020(8) | | | | | | | | | | | | | | | 19,733 | | | 1,327,439 |
| 3/6/2021(13) | | | 10,705 | | | 13,765 | | | 111.53 | | | 3/6/2031 | | | | | | |
| 3/6/2021(14) | | | | | | | | | | | | | | | 6,318 | | | 425,012 |
| 4/4/2022(15) | | | | | | | | | | | | | | | 32,620 | | | 2,194,347 |
| 4/4/2022(16) | | | | | | | | | | | | | | | 10,873 | | | 731,427 |
| 12/30/2022(20) | | | | | | | | | | | | | | | 55,240 | | | 3,715,995 |
Karole Morgan-Prager | | | 10/17/2016(19) | | | 117,260 | | | — | | | 14.00 | | | 10/16/2026 | | | | | | |
| 3/6/2018(4) | | | 28,300 | | | — | | | 44.41 | | | 3/5/2028 | | | | | | |
| 5/15/2019(5) | | | 24,000 | | | 1,600 | | | 48.65 | | | 5/15/2029 | | | | | | |
| 5/15/2019(6) | | | | | | | | | | | | | | | 762 | | | 51,260 |
| 4/15/2020(7) | | | 23,850 | | | 14,310 | | | 57.11 | | | 4/15/2030 | | | | | | |
| 4/15/2020(8) | | | | | | | | | | | | | | | 6,578 | | | 442,502 |
| 3/6/2021(13) | | | 6,067 | | | 7,803 | | | 111.53 | | | 3/6/2031 | | | | | | |
| 3/6/2021(14) | | | | | | | | | | | | | | | 3,584 | | | 241,096 |
| 4/4/2022(15) | | | | | | | | | | | | | | | 16,960 | | | 1,140,899 |
| 4/4/2022(16) | | | | | | | | | | | | | | | 5,653 | | | 380,277 |
| 12/30/2022(20) | | | | | | | | | | | | | | | 39,460 | | | 2,654,474 |
Mark Woodhams | | | 8/7/2018(21) | | | 89,093 | | | | | | 49.04 | | | 8/7/2028 | | | | | | |
| 5/15/2019(5) | | | 31,781 | | | 2,119 | | | 48.65 | | | 5/15/2029 | | | | | | |
| 5/15/2019(6) | | | | | | | | | | | | | | | 1,009 | | | 67,875 |
| 4/15/2020(7) | | | 23,850 | | | 14,310 | | | 57.11 | | | 4/15/2030 | | | | | | |
| 4/15/2020(8) | | | | | | | | | | | | | | | 6,578 | | | 442,502 |
| 3/6/2021(13) | | | 7,140 | | | 9,180 | | | 111.53 | | | 3/6/2031 | | | | | | |
| 3/6/2021(14) | | | | | | | | | | | | | | | 4,214 | | | 283,476 |
| 4/4/2022(15) | | | | | | | | | | | | | | | 19,570 | | | 1,316,474 |
| 4/4/2022(16) | | | | | | | | | | | | | | | 6,523 | | | 438,802 |
| 12/30/2022(20) | | | | | | | | | | | | | | | 28,410 | | | 1,911,141 |
| (1)
| Each of the outstanding equity awards was granted pursuant to our 2014 Equity Incentive Plan, or 2014 Plan or 2016 Plan, as applicable. |
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(2)
| (2) | The shares vest based on achievement of certain performance metrics and Ms. Tucker’s continued service with us through the date on which achievement isThese market values are determined by our boardmultiplying the number of directorsshares by the fair market value per share of common stock on December 31, 2022 (the last trading day of 2022), or its authorized committee. See “2016CEO Performance-Based Equity Award” below for additional details on the terms of this award.$67.27. |
| (3)
| Twenty-five percent (25%) of the shares (rounded down to the nearest whole number of shares) vest on each of the first four anniversaries of the vesting commencement date (January 1, 2016), subject to continued service with us through each applicable vesting date. At December 31, 2022, all shares were vested. |
(4)
| (4) | Twenty-five percent (25%) of the shares underlying this option vest on the first anniversary of the vesting commencement date (February 20, 2018), and 1/16th of the shares subject to the option vest every three months thereafter on the same day of the month as the vesting commencement date, subject to continued service with us through each vesting date. At December 31, 2022, all shares were vested. |
(5)
| (5) | Twenty-five percent (25%) of the shares underlying this RSU award vest on the first anniversary of the vesting commencement date (February 20, 2018) and 1/16th of the shares underlying this RSU award will vest every three months thereafter on the same day of the month as the vesting commencement date, subject to continued service with us through each vesting date. |
| (6) | These market values are determined by multiplying the number of shares by the fair market value per share of common stock on December 30, 2019 (the last trading day of 2019), or $51.56. |
| (7) | Twenty-five percent (25%) of the shares underlying this option vest on the first anniversary of the vesting commencement date (February 20, 2019), and 1/16th of the shares subject to the option vest every three months thereafter on the same day of the month as the vesting commencement date, subject to continued service with us through each vesting date. |
(6)
| (8) | Twenty-five percent (25%) of the shares underlying this RSU award vest on the first anniversary of the vesting commencement date (February 20, 2019) and 1/16th of the shares underlying this RSU award will vest every three months thereafter on the same day of the month as the vesting commencement date, subject to continued service with us through each vesting date. |
(7)
| Twenty-five percent (25%) of the shares underlying this option vest on the first anniversary of the vesting commencement date (May 20, 2020), and 1/16th of the shares subject to the option vest every three months thereafter on the same day of the month as the vesting commencement date, subject to continued service with us through each vesting date. |
(8)
| Twenty-five percent (25%) of the shares underlying this RSU award vest on the first anniversary of the vesting commencement date (May 20, 2020) and 1/16th of the shares underlying this RSU award will vest every three months thereafter on the same day of the month as the vesting commencement date, subject to continued service with us through each vesting date. |
(9)
| Fifty percent (50%) of the shares underlying this option vest on each of February 20, 2022 and February 20, 2023, subject to continued service with us through each vesting date. |
(10)
| Fifty percent (50%) of the shares underlying this RSU award vest on each of February 20, 2022 and February 20, 2023, subject to continued service with us through each vesting date. |
(11)
| Fifty percent (50%) of the shares underlying this RSU award vest February 20, 2023 and February 20, 2024, subject to continued service with us through each vesting date. |
(12)
| Twenty-five percent (25%) of the shares vest on each of the first four anniversaries of the vesting commencement date (February 13, 2018), subject to Mr. Huffman’s continued service with us through each vesting date. At December 31, 2022, all shares were vested. |
(13)
| Twenty-five percent (25%) of the shares underlying this option vest on the first anniversary of the vesting commencement date (February 20, 2021), and 1/16th of the shares subject to the option vest every three months thereafter on the same day of the month as the vesting commencement date, subject to continued service with us through each vesting date. |
(14)
| Twenty-five percent (25%) of the shares underlying this RSU award vest on the first anniversary of the vesting commencement date (February 20, 2021) and 1/16th of the shares underlying this RSU award will vest every three months thereafter on the same day of the month as the vesting commencement date, subject to continued service with us through each vesting date. |
(15)
| Twenty-five percent (25%) of the shares underlying this RSU award vest on the first anniversary of the vesting commencement date (February 20, 2022), and 1/16th of the shares underlying this RSU award will vest every three months thereafter on the same day of the month as the vesting commencement date, subject to continued service with us through each applicable vesting date. |
(16)
| Reflects one-third of the total number of shares underlying this PSU award. One-third of the total number of shares will vest on each of February 20, 2023, February 20, 2024 and February 20, 2025, in each case subject to the satisfaction of applicable performance-based conditions for the calendar year preceding the vesting date, which performance based conditions will be determined on an annual basis, and in each case subject to continued service with us through each applicable vesting date. Please refer to the section titled “2022 Performance-Based Restricted Stock Unit Performance Matrix” above. The grant date and performance-based conditions for calendar year 2023 and calendar year 2025 have not yet been established. If the full amount was granted on April 4, 2022 for each of Mr. Huffman, Mr. Partin, Ms. Morgan-Prager and Mr. Woodhams, the value of such awards at December 31, 2022 would be, $4,388,022, $2,194,347, $1,140,899, and $1,316,474, for Mr. Huffman, Mr. Partin, Ms. Morgan-Prager and Mr. Woodhams, respectively. |
(17)
| Subject to the terms of the underlying award agreement, this RSU award is eligible to vest as to zero to 200% of the shares underlying this PSU award on February 20, 2026 based on the results of performance against specified performance criteria and subject to continued service with us through each applicable vesting date. |
(18)
| Twenty-five percent (25%) of the shares (rounded down to the nearest whole number of shares) vest on each of the first four anniversaries of the vesting commencement date (January 20, 2015), subject to continued service with us through each applicable vesting date. At December 31, 2022, all shares were vested. |
| (10)(19)
| Twenty-five percent (25%) of the shares (rounded down to the nearest whole number of shares) vest on each of the first four anniversaries of the vesting commencement date (September 27, 2016), subject to continued service with us through each applicable vesting date. At December 31, 2022, all shares were vested. |
(20)
| (11) | Twenty-five percent (25%) of the shares vest on each of the first four anniversaries of the vesting commencement date (February 13, 2018), subject to Mr. Huffman’s continued role as a service provider to us through each vesting date. |
| (12) | Twenty-five percent (25%)Two-thirds of the shares underlying this RSU award vest on each of the first four anniversariestwo-year anniversary of the vesting commencement date (February 13, 2018), subject to Mr. Huffman’s continued role as a service provider to us through each vesting date. |
| (13) | Twenty-five percent (25%)(November 20, 2022) and one-third of the shares (rounded down to the nearest whole number of shares)underlying this RSU award will vest on each of the first four anniversariesthird anniversary of the vesting commencement date, (May 30, 2015), subject to continued service with us through each applicable vesting date. At December 31, 2019, all shares were vested. |
| (14)(21)
| Twenty-five percent (25%) of the shares (rounded down to the nearest whole number of shares) vest on each of the first four anniversaries of the vesting commencement date (September 27, 2016), subject to continued service with us through each applicable vesting date. At December 31, 2022, all shares were vested. |
2016 CEO Performance-Based Equity Award
Performance-Based Option. The Performance-Based Option covers 482,800 shares of our common stock. The shares subject to the Performance-Based Option vest based on achievement of certain performance metrics and Ms. Tucker’s continued service with us through the date on which achievement is determined by our board of directors or its authorized committee. For the period beginning on January 1, 2016 and ending on December 31, 2019, or the Performance Period, if we achieve yearly cash flow targets as determined by our board of directors concurrently with the annual budget process for each of our fiscal years, or the Cash Flow Metric, then the Performance-Based Option vests based on the extent of our achievement of cumulative annual recurring revenue targets during the Performance Period. If our board of directors determines that the Cash Flow
(22)
| Twenty-five percent (25%) of the shares underlying this option vest on the first anniversary of the vesting commencement date (August 20, 2018) and 1/16th of the shares subject to this option vest every three months thereafter on the same day of the month as the vesting commencement date, subject to continued service with us through each vesting date. |
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Metric was met during the Performance Period but we did not achieve the full cumulative annual recurring revenue targets during the Performance Period (which was the result as of December 31, 2019), then the portion of the Performance-Based Option that becomes eligible to vest and become exercisable but failed to vest during the Performance Period may be eligible to vest and become exercisable based on the extent of our achievement of an additional cash flow target for 2020 and a cumulative annual recurring revenue target during the period beginning on January 1, 2016 and ending on December 31, 2020. In 2019, our board of directors set the 2019 cash flow target for the Performance-Based Option, and, as a result, the fair value of this grant was determined in 2019. As of the date of this proxy filing, it is expected that the targets will not be met and that Ms. Tucker will not earn any of this Performance-Based Option and that this Performance-Based Option will be forfeited in 2020. See “Summary Compensation Table” for additional details.
If, upon a “change of control” (as defined in Ms. Tucker’s employment agreement), the Performance-Based Option is not vested and exercisable and is not assumed or substituted for, then it is intended that, immediately prior to such change of control, the Performance-Based Option will vest as to 100% of the shares subject to the Performance-Based Option. If, upon a change of control, the Performance-Based Option is assumed and substituted for and cumulative annual recurring revenue thresholds are met (which are based on the year in which the change of control occurs), then, immediately prior to the change of control, the Performance-Based Option will vest and become exercisable as to the number of shares subject to the Performance-Based Option equal to 1/48th of the number of shares subject to the Performance-Based Option multiplied by the total number of completed months between the date the Performance-Based Option is granted and the consummation of the change of control, rounded down to the nearest whole share, and the remaining shares will become vested and exercisable at a rate of 1/48th of the number of shares subject to the Performance-Based Option per month through the four year anniversary of the date the Performance-Based Option is granted, subject to Ms. Tucker’s continued service with us through each such vesting date.
The Performance-Based Option was granted subject to the terms and conditions of our 2014 Plan and the option agreement thereunder.
Stock Option Exercises and Stock Awards Vested During 20192022
The following table sets forth the number of shares acquired and the value realized upon exercise of stock options during
20192022 by each of our NEOs. The value realized on exercise of stock options is calculated based on the difference between the market price of our common stock upon exercise and the exercise price of the stock options.
| Option Awards | Stock Awards |
Named Executive Officer | Number of Shares Acquired on Exercise (#)(1) | Value Realized on Exercise ($)(2) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
Therese Tucker | | — | | | — | | | 19,981 | | | 970,076 | |
Mark Partin | | 80,000 | | | 3,053,676 | | | 11,931 | | | 613,270 | |
Marc Huffman | | — | | | — | | | 50,000 | | | 2,422,500 | |
Karole Morgan-Prager | | 44,130 | | | 1,677,862 | | | 5,946 | | | 305,632 | |
Therese Tucker | | | — | | | — | | | 40,797 | | | 2,853,824 |
Marc Huffman | | | — | | | — | | | 73,263 | | | 5,455,262 |
Mark Partin | | | — | | | — | | | 27,499 | | | 1,909,902 |
Karole Morgan-Prager | | | — | | | — | | | 11,066 | | | 770,163 |
Mark Woodhams | | | — | | | — | | | 23,940 | | | 1,691,515 |
| (1)
| Reflects the aggregate number of shares of common stock underlying the stock options that were exercised in 2019.2022. |
| (2)
| Calculated by multiplying (i) the difference between (x) the sale price for shares of common stock sold concurrently with the exercise of an option, and if not, the fair market value of common stock on the option exercise date, which was determined using the closing price on the NASDAQ Stock Market of a share of common stock on the option exercise date, and (y) the exercise price of the option, by (ii) the number of shares of common stock acquired upon exercise. |
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Potential Payments Upon Termination or Change of Control
The following table provides information concerning the estimated payments and benefits that would be provided in the circumstances described below, assuming that the triggering event took place on December 31,
2019,2022, the last day of our fiscal
year.Named Executive Officer | Qualifying Termination Not in connection with a Change of Control($) | Termination due to death or Disability | Qualifying Termination in connection with a Change of Control($)(1) |
Therese Tucker
| | | | | | | | | |
Cash severance | $ | 950,000 | | $ | 380,000 | | $ | 380,000 | |
Continued health coverage | $ | 29,784 | | $ | — | | $ | 44,676 | |
Accelerated equity vesting(2) | $ | — | | $ | — | | $ | 23,472,268 | (3) |
| | | | | | | | | |
Mark Partin
| | | | | | | | | |
Cash severance | $ | 182,500 | | $ | — | | $ | 182,500 | |
Continued health coverage | $ | 14,892 | | $ | — | | $ | 14,892 | |
Accelerated equity vesting(2) | $ | — | | $ | — | | $ | 3,255,340 | |
| | | | | | | | | |
Marc Huffman
| | | | | | | | | |
Cash severance | $ | 175,000 | | $ | — | | $ | 175,000 | |
Continued health coverage | $ | 14,892 | | $ | — | | $ | 14,892 | |
Accelerated equity vesting(2) | $ | — | | $ | — | | $ | 12,017,659 | |
| | | | | | | | | |
Karole Morgan-Prager
| | | | | | | | | |
Cash severance | $ | 175,000 | | $ | — | | $ | 175,000 | |
Continued health coverage | $ | 3,768 | | $ | — | | $ | 3,768 | |
Accelerated equity vesting(2) | $ | — | | $ | — | | $ | 3,250,617 | |
year .
Therese Tucker
| | | | | | | | | |
Cash severance(2) | | | 757,469 | | | 258,000 | | | 363,932 |
Continued health coverage | | | — | | | — | | | — |
Accelerated equity vesting(3) | | | — | | | — | | | 7,580,526 |
Marc Huffman
| | | | | | | | | |
Cash severance(4) | | | 500,000 | | | — | | | 750,000 |
Continued health coverage(5) | | | 16,287 | | | — | | | 24,147 |
Accelerated equity vesting(3) | | | — | | | — | | | 23,460,824 |
Mark Partin
| | | | | | | | | |
Cash severance(6) | | | 205,000 | | | — | | | 410,000 |
Continued health coverage(5) | | | 13,524 | | | — | | | 26,733 |
Accelerated equity vesting(3) | | | — | | | — | | | 10,498,939 |
Karole Morgan-Prager
| | | | | | | | | |
Cash severance(6) | | | 195,000 | | | — | | | 390,000 |
Continued health coverage(5) | | | 4,053 | | | — | | | 8,012 |
Accelerated equity vesting(3) | | | — | | | — | | | 5,846,312 |
Mark Woodhams
| | | | | | | | | |
Cash severance(6) | | | 200,000 | | | — | | | 400,000 |
Continued health coverage(5) | | | 11,745 | | | — | | | 23,216 |
Accelerated equity vesting(3) | | | — | | | — | | | 5,522,787 |
| (1)
| A qualifying termination of employment is considered “in connection with a change of control” if such termination occurs within the period commencing three (3) months before and ending twelve (12) months (or twenty-four (24) months for Ms. Tucker) after a “change of control”. |
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(2)
| (2)These estimates of cash severance payable to Ms. Tucker include: for termination upon a qualifying termination not in connection with a change of control, lump sum payments of 18 months of base salary and COBRA premium costs and prorated annual bonus for the year of termination; for termination due to death or disability, a prorated annual bonus for the year of termination; and for a qualifying termination in connection with a change of control, lump sum payments of 12 months of base salary and COBRA premium costs. |
(3)
| For purposes of valuing accelerated vesting, the values indicated in the table are calculated, with respect to stock options, as the aggregate difference between $51.56,$67.27, the closing price of a share of our common stock on December 30, 201931, 2022 (the last trading day of 2019)2022), and the exercise price of the applicable option, multiplied by the number of unvested shares accelerated, and, with respect to time-based RSUs, $51.56$67.27 multiplied by the number of unvested RSUs accelerated, and, with repsect to performance-based PSUs, $67.27 multiplied by the number of PSUs for which performance conditions would be satisfied, or for which time-based vesting requirements would be accelerated. |
(4)
| (3) | PursuantThese estimates of cash severance payable to the terms of the Performance-Based Option: (1)Mr. Huffman include: for termination upon a qualifying termination not in connection with a change of control, if the Performance Option is not assumed or substituteda lump sum payment of 12 months of base salary; and for $18,133,968 of the Performance-Based Option will vest and accelerate or (2) upon a change of control if the Performance Option is assumed and substituted for and cumulative annual recurring revenue thresholds are achieved as described in the “2016 CEO Performance-Based Equity Award” section above, $17,756,177 of the Performance-Based Option will accelerate vesting on such change of control and $377,791 of the Performance-Based Option will accelerate vesting upon a qualifying termination in connection with sucha change of control. For purposescontrol, a lump sum payment of valuing accelerated vesting,18 months of base salary. |
(5)
| These estimates of continued health coverage reflect the values indicated in this footnote (3) are calculated as the aggregate difference between $51.56, the closing pricepresent value of a share of our common stock on December 31, 2019 (the last trading day of 2019), and the exercise price ofmonthly COBRA premium payments for the applicable option, multiplied by the numberseverance period. |
(6)
| These estimates of unvested shares accelerated under each circumstance.cash severance payable to Mr. Partin, Ms. Morgan-Prager and Mr. Woodhams include: for termination upon a qualifying termination not in connection with a change of control, a lump sum payment of 6 months of base salary; and for a qualifying termination in connection with a change of control, a lump sum payment of 12 months of base salary. |
Therese Tucker
We entered into an employment agreement with Ms. Tucker that provides for change of control and severance benefits under certain circumstances. See “Executive Employment Arrangements—
Therese Tucker” for further details.
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Marc Huffman, Mark Partin, MarcKarole Morgan-Prager, and Mark Woodhams
On May 12, 2022, our Compensation Committee conducted a periodic review of the severance and change in control protections provided to our NEOs other than Ms. Tucker under the Change of Control and Severance Policy. Based on such review, conducted with Compensia, the committee made certain modifications to such protections to align them with protections provided at compensation peer companies.
For Mr. Huffman,
upon a qualifying termination in connection with a change of control, his cash severance would increase from six months of base salary to 18 months of base salary and
Karole Morgan-PragerOur boardhis benefits continuation protection would increase from six months to 18 months. In addition, the change of directors approvedcontrol protection period for Mr. Huffman was extended to include a three-month period prior to the change of control. Upon a qualifying termination outside of the change of control period, his cash severance would increase from six months of his base salary to 12 months of his base salary and his benefits continuation protection period would increase from six months to 12 months. No changes were made to provide increased equity acceleration.
For the Company's NEOs other than Ms. Tucker and Mr. Huffman, upon a qualifying termination in connection with a change of control, the NEO's cash severance will increase from six months of base salary to 12 months of base salary, and benefits continuation protection will increase from six months to 12 months. No changes were made to benefits for a qualifying termination outside of the change of control period, and no changes were made to provide increased equity acceleration.
After the modifications to the Policy on May 12, 2022, the Policy provides for the following change of control and severance benefits for our
executive officers (including Messrs. Huffman and Partin and Ms. Morgan-Prager)NEOs and other key employees, other than Ms.
Tucker, that are set forth in our Policy:Tucker:
If we terminate an executive officer’s employment other than for “cause,” death or “disability” or such participant resigns for “good reason” during the period from the period beginning on (or for Mr. Huffman, three months prior to) a “change of control” (as such terms are defined in the Policy) and ending 12 months following a change of control (the “change of control period”), such executive officer will be eligible to receive the following severance benefits (less applicable tax withholdings):
100% of the executive officer’s then-outstanding and unvested equity awards granted in 2018 and 20192020 through 2022 or in connection with his or her hiring or promotion, as applicable, will become fully vested and exercisable and any applicable performance goals will be deemed achieved at 100% of target levels;
A lump sum cash amount equal to six monthsone year (or for Mr. Huffman, 18 months) of the executive officer’s base salary in effect immediately prior to the termination (or if the termination is due to a resignation for good reason based on a material reduction in base salary, then the executive officer’s annual base salary in effect immediately prior to such reduction) or the change of control, whichever is greater; and
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Payment or reimbursement of continued health coverage for the executive officer and the executive officer’s eligible dependents under COBRA for a period of up to 12 months (or for Mr. Huffman, 18 months) or a taxable lump sum payment in lieu of payment or reimbursement, as applicable.
If we terminate an executive officer’s employment other than for “cause,” death, or “disability” outside of the applicable change of control period, such executive officer will be eligible to receive the following severance benefits (less applicable tax withholdings):
A lump sum cash amount equal to six months (or for Mr. Huffman, 12 months) of the executive officer’s base salary in effect immediately prior to the termination; and
Payment or reimbursement of continued health coverage for the executive officer and the executive officer’s eligible dependents under COBRA for a period of up to six months (or for Mr. Huffman, 12 months) or a taxable lump sum payment in lieu of payment or reimbursement, as applicable.
If we terminate an executive officer’s employment other than for “cause,” death, or “disability” outside of the change of control period, such executive officer will be eligible to receive the following severance benefits (less applicable tax withholdings):
A lump sum cash amount equal to six months of the executive officer’s base salary in effect immediately prior to the termination; and
Payment or reimbursement of continued health coverage for the executive officer and the executive officer’s eligible dependents under COBRA for a period of up to six months or a taxable lump sum payment in lieu of payment or reimbursement, as applicable.
To receive the severance benefits upon a qualifying termination, an executive officer must sign and not revoke our standard separation agreement and release of claims within the timeframe set forth in the Policy. If any of the payments provided for under the Policy or otherwise payable to an executive officer would constitute “parachute payments” within the meaning of Section 280G of the Code and would be subject to the related excise tax under Section 4999 of the Code, then the executive officer will be entitled to receive either full payment of benefits or such lesser amount which would result in no portion of the benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to him or her. The Policy does not require us to provide any tax gross-up payments to any executive officer.
On March 5, 2023, we entered into a separation agreement and release with Mr. Huffman in connection with his separation from the Company, effective as of March 6, 2023. Because Mr. Huffman’s separation was a termination without cause under the Policy, in accordance with Mr. Huffman’s existing rights under the Policy for a termination without cause, that separation agreement provides for payment of 12 months of salary and continuation of benefits for 12 months, as well as accrued compensation through the date of Mr. Huffman’s departure. In addition, pursuant to that separation agreement, Mr. Huffman has agreed to provide certain consulting services for 12 months following the end of his employment with the Company during which time his time-based equity awards will continue to vest based on the original terms of such awards and he will be paid $80,000 in consulting fees. TABLE OF CONTENTS
Equity Compensation Plan Information
The following table summarizes information about our equity compensation plans as of December 31,
2019.2022. Information is included for equity compensation plans approved by our stockholders. We do not have any non-stockholder approved equity compensation plans.
Plan Category | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | (b) Weighted- average Exercise Price of Outstanding Options, Warrants and Rights | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) |
Equity compensation plans approved by security holders | | 3,486,352 | (1) | $ | 26.92 | (2) | | 12,172,192 | (3) |
Equity compensation plans not approved by security holders | | — | | | — | | | — | |
Total | | 3,486,352 | | $ | 26.92 | | | 12,172,192 | |
Equity compensation plans approved by security holders | | | 5,029,489(1) | | | $44.98(2) | | | 17,348,731(3) |
Equity compensation plans not approved by security holders | | | — | | | — | | | — |
Total | | | 5,029,489 | | | $44.98 | | | 17,348,731 |
| (1)
| The amount consists of (i) 2,431,255 options to purchase shares of our common stock under our 2016 Plan and 2014 Plan that contain service-only vesting conditions. The amount excludes options grantedconditions; (ii) 2,201,594 shares subject to purchase 682,800outstanding RSUs; (iii) 207,240 shares of common stock at an exercise price of $14.00 per sharesubject to two executive officers during fiscal 2016 that vest upon meeting certainoutstanding RSUs with service and performance conditionsconditions; and continued service.(iv) 189,400 shares subject to outstanding RSUs with service, performance, and market conditions. |
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| (2)
| Indicates a weighted average price for outstanding options to purchase 3,486,3522,431,255 shares of our common stock under our 2016 Plan and 2014 Plan that contain service-only vesting conditions.conditions and does not reflect the shares that will be issued upon the vesting of outstanding awards of RSUs, which have no exercise price. |
| (3)
| Consists of 10,823,64716,421,759 shares of our common stock reserved for issuance under our 2016 Plan and 1,348,545926,972 shares of our common stock reserved for issuance under our 2018 Employee Stock Purchase Plan. Our 2016 Plan provides that on the first day of each fiscal year beginning with the 2017 fiscal year, the number of shares of our common stock available for issuance thereunder will be increased in an amount equal to the least of (i) 6,196,000 shares, (ii) 5% of the total number of shares of our common stock outstanding on the last day of the immediately preceding fiscal year or (iii) a lower number of shares determined by our board of directorsBoard or a committee thereof. On January 1, 2020,2023, the number of shares of our common stock reserved for issuance under our 2016 plan increased by 2,796,5493,000,841 shares pursuant to this provision. This increase is not reflected in the table above. |
CEO Pay Ratio
Under rules adopted pursuant to the Dodd-Frank Act, we are required to calculate and disclose the total compensation paid to our median paid employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to our Chief Executive Officer (the “CEO Pay Ratio”). The paragraphs that follow describe our methodology and the resulting CEO Pay Ratio.
We identified the median employee using our employee population on November 1,
20192022 (including all employees, whether employed on a full-time, part-time, seasonal or temporary basis).
Consistently Applied Compensation Measure (CACM)
Under the relevant rules, we are required to identify the median employee by use of a “consistently applied compensation measure,” or CACM. We chose a CACM that closely approximates the annual target total direct compensation of our employees. Specifically, we identified the median employee by aggregating, for each employee: a) annual base pay, b) annual target cash incentive opportunity, and c) the estimated grant date fair value for equity awards granted as of November 1,
2019.2022. In identifying the median employee, we converted compensation amounts paid in foreign currencies based on the applicable year-to-date average exchange rate as of November 1,
2019,2022, and annualized the compensation values of individuals that joined our
companyCompany during
2019.2022. We did not exclude workers in non-U.S. countries and did not make any cost-of-living adjustments.
Methodology and Pay Ratio
After applying our CACM methodology, we identified the median employee. Once the median employee was identified, we calculated the median employee’s annual target total direct compensation in accordance with the requirements of the Summary Compensation Table.
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Our median employee compensation as calculated using Summary Compensation Table requirements was $176,747.$187,628. Our Chief Executive Officer’s compensation as reported in the Summary Compensation Table was $22,552,158.$21,871,907. Therefore, our CEO Pay Ratio for 20192022 is approximately 128117 to 1.
This information is being provided for compliance purposes and is a reasonable estimate calculated in a manner consistent with SEC rules, based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. Neither the compensation committeeCompensation Committee nor management of the companyCompany used the CEO Pay Ratio measure in making compensation decisions.
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Alternate Pay
RatioAs discussed in footnotes 2 and 5Versus Performance
Under rules adopted pursuant to the Summary Compensation Table, a portionDodd-Frank Act, we are required to disclose certain information about the relationship between the compensation actually paid to our named executive officers and certain measures of company performance. The material that follows is provided in compliance with these rules, however, additional information regarding our compensation philosophy, the structure of our Chief Executive Officer’sperformance-based compensation programs, and compensation decisions made this year is described above in our “Compensation Discussion and Analysis”.
The following table provides information regarding compensation actually paid to our principal executive officer, or PEO, and other NEOs for each year from 2020 to 2022, compared to our total shareholder return (TSR) from December 31, 2019 through the end of each such year, and our net income and revenue for each such year.
2022 | | | $21,871,907 | | | $14,430,973 | | | $5,676,538 | | | $1,071,621 | | | $130 | | | $109 | | | $(29) | | | $523 |
2021 | | | $6,046,686 | | | $(706,678) | | | $3,169,239 | | | $(2,564,663) | | | $201 | | | $165 | | | $(115) | | | $426 |
2020 | | | $8,437,695 | | | $34,909,416 | | | $4,066,289 | | | $20,466,019 | | | $259 | | | $153 | | | $(47) | | | $352 |
(1)
| Our PEO for 2020 was Therese Tucker. Our PEO for 2021 and 2022 was Marc Huffman, who succeeded Ms. Tucker as our Chief Executive Officer as of January 1, 2021. |
(2)
| Represents the total compensation paid to our PEO in each listed year, as shown in our Summary Compensation Table for such listed year. |
(3)
| Represents the compensation actually paid to our PEO in each listed year. Compensation actually paid does not mean that our PEO was actually paid those amounts in the listed year. This dollar amount is derived from the starting point of Summary Compensation Table total compensation under the methodology prescribed under the SEC's rules, as shown in the table below. |
Summary compensation table total | | | $21,871,907 | | | $6,046,686 | | | $8,437,695 |
Subtract grant date fair value of option awards and stock awards granted in fiscal year | | | (20,955,837) | | | (5,010,486) | | | (7,668,886) |
Add fair value at fiscal year-end of outstanding and unvested option awards and stock awards granted in fiscal year | | | 20,226,134 | | | 4,627,638 | | | 22,447,884 |
Adjust for change in fair value of outstanding and unvested option awards and stock awards granted in prior fiscal years | | | (2,139,424) | | | (5,223,682) | | | 9,394,923 |
Add fair value at vesting of option awards and stock awards granted in fiscal year that vested during fiscal year | | | — | | | — | | | — |
Adjust for change in fair value as of vesting date of option awards and stock awards granted in prior fiscal years for which applicable vesting conditions were satisfied during fiscal year | | | (4,571,807) | | | (1,146,834) | | | 2,297,800 |
Subtract fair value as of prior fiscal year-end of option awards and stock awards granted in prior fiscal years that failed to meet applicable vesting conditions during fiscal year | | | — | | | — | | | — |
Compensation actually paid | | | $14,430,973 | | | $(706,678) | | | $34,909,416 |
*
| The assumptions used for determining the fair values of outstanding and unvested option awards shown in this table are different from those used to determine the fair values disclosed as of the grant date of such awards. The assumptions used for determining fair values shown in this table are: |
Expected life (in years) | | | 3.66 - 5.42 years | | | 3.73 - 5.52 years | | | 4.28 - 5.76 years |
Volatility | | | 52.17 - 59.47% | | | 51.23 - 54.18% | | | 46.73 - 55.99% |
Risk-free rate | | | 1.75 - 4.10% | | | 0.39 - 2.33% | | | 0.24 - 1.96% |
Expected dividend yield | | | 0%
| | | 0%
| | | 0%
|
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(4)
| Represents the average of the total compensation paid to each of our NEOs other than our PEO in each listed year, as shown in our Summary Compensation Table for such listed year. The names of our NEOs other than our PEO for each such year are listed in the table below. |
Therese Tucker | | | Therese Tucker | | | Marc Huffman |
Mark Partin | | | Mark Partin | | | Mark Partin |
Karole Morgan-Prager | | | Peter Hirsch | | | Karole Morgan-Prager |
Mark Woodhams | | | Mark Woodhams | | | Peter Hirsch |
(5)
| This figure is the average of compensation actually paid for our NEOs other than our PEO in each listed year. Compensation actually paid does not mean that these NEOs were actually paid those amounts in the listed year, but this is a dollar amount derived from the starting point of Summary Compensation Table total compensation under the methodology prescribed under the SEC's rules as shown in the table below. |
Summary compensation table total | | | $5,676,538 | | | $3,169,239 | | | $4,066,289 |
Subtract grant date fair value of option awards and stock awards granted in fiscal year | | | (5,048,172) | | | (2,485,254) | | | (3,377,093) |
Add fair value at fiscal year-end of outstanding and unvested option awards and stock awards granted in fiscal year | | | 4,717,965 | | | 2,314,313 | | | 9,885,146 |
Adjust for change in fair value of outstanding and unvested option awards and stock awards granted in prior fiscal years | | | (1,995,550) | | | (3,522,839) | | | 8,020,865 |
Add fair value at vesting of option awards and stock awards granted in fiscal year that vested during fiscal year | | | — | | | — | | | — |
Adjust for change in fair value as of vesting date of option awards and stock awards granted in prior fiscal years for which applicable vesting conditions were satisfied during fiscal year | | | (2,279,160) | | | (2,040,122) | | | 1,870,812 |
Subtract fair value as of prior fiscal year-end of option awards and stock awards granted in prior fiscal years that failed to meet applicable vesting conditions during fiscal year | | | — | | | — | | | — |
Compensation actually paid | | | $1,071,621 | | | $(2,564,663) | | | $20,466,019 |
*
| The assumptions used for determining the fair values of outstanding and unvested option awards shown in this table are different from those used to determine the fair values disclosed as of the grant date of such awards. The assumptions used for determining fair values shown in the table are: |
Expected life (in years) | | | 3.64 - 5.42 years | | | 3.77 - 5.52 years | | | 3.81 - 5.76 years |
Volatility | | | 52.17 - 59.47% | | | 51.23 - 54.16% | | | 46.69 - 55.99% |
Risk-free rate | | | 1.72 - 4.10% | | | 0.46 - 2.33% | | | 0.19 - 2.06% |
Expected dividend yield | | | 0%
| | | 0%
| | | 0%
|
(6)
| Total shareholder return is calculated by assuming that a $100 investment was made on the day prior to the first fiscal year reported below and reinvesting all dividends until the last day of each reported fiscal year. |
(7)
| The peer group used is the S&P Software & Services Select index, as used in the Company's performance graph in our annual report. Total shareholder return is calculated by assuming that a $100 investment was made on the day prior to the first fiscal year reported below and reinvesting all dividends until the last day of each reported fiscal year. |
(8)
| The dollar amounts reported are the Company's GAAP net income reflected in the Company's audited financial statements. |
(9)
| In the Company's assessment, GAAP revenue is the most important financial performance measure (other than stock price) used by the Company in 2022 to link compensation actually paid to performance. |
Tabular List of Performance Measures
The list below includes the financial performance measures that in our assessment represent the most important financial performance measures used to link compensation actually paid to our NEOs, for 2022, to Company performance.
Performance Measure8:
Revenue
Non-GAAP Net Income
Annualized Recurring Revenue (ARR)
Stock Price
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Description of Relationships Between Compensation Table compensationActually Paid and Performance
Compensation Actually Paid, as determined under rules adopted pursuant to the Dodd-Frank Act and reflected in the Pay Versus Performance table above (“CAP”) for our CEOs, and cumulative total shareholder return, were both lower in 2022 and 2021 relative to 2020. Our CEO CAP was relatedhigher in 2022 than in 2021, while our cumulative TSR was lower in 2022 than in 2021, but this was largely due to the year-end fair value of performance-based equity awards (including retention awards) granted to Mr. Huffman in 2022. As disclosed above under the Section titled “Compensation Discussion and Analysis – Individual Compensation Elements – Long-Term Equity Compensation,” because Mr. Huffman’s employment terminated effective March 6, 2023, he forfeited the majority of these awards (including all such retention awards).
Our average NEO CAP was also lower in 2022 and 2021 relative to 2020, but, in contrast to our CEO CAP, our average NEO CAP saw a performance-based option grant made in 2016. As explained, we thinksmaller increase from 2021 to 2022. This smaller increase is also largely due to our 2022 grants of retention awards. Our average NEO CAP figures also reflect that the performance-based option is highly unlikelyNEOs included in each year, as determined under the relevant rules, are different in each of the disclosed years.
During the three-year period covered by this disclosure, our cumulative TSR measured for each disclosed year outperformed the cumulative TSR of the S&P 500 Software & Services Select Index measured on the same basis.
Our net income was lower in 2021 relative to be earned,2020 and then increased in 2022 so that a more accurate viewnet income in 2022 was higher relative to each of her total 2019 compensation would exclude amounts related2021 and 2020. These changes are directionally aligned with changes in our CEO CAP and average NEO CAP over these years.
Our revenue increased each year from 2020 to
that 2016 performance-based option grant. Using that alternate total compensation for2022. These increases are not directionally aligned with overall decreases in our
Chief Executive Officer would resultCEO CAP and average NEO CAP from 2020 to 2022, but are directionally aligned with increases in
aour CEO
Pay Ratio calculated as follows:Our median employee compensation as calculated using Summary Compensation Table requirements was $176,747. Our Chief Executive Officer’s alternate total compensation as reported in the Summary Compensation Table was $5,638,016. Therefore, our Alternate CEO Pay Ratio for 2019 is approximately 32CAP and average NEO CAP from 2021 to 1.
2022.
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RELATED PERSON TRANSACTIONS Related Person Transactions The following is a summary of transactions since January 1,
20192022 to which we have been or will be a party, in which the amount involved exceeded or will exceed $120,000, and in which any of our executive officers, directors, nominees for director, promoters or beneficial holders of more than 5% of any class of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals or entities, had or will have a direct or indirect material interest, other than compensation arrangements which are described under the section of this proxy statement titled “
Compensation Discussion and Analysis.”
We are party to the Stockholders’ Agreement, which contains specific rights, obligations and agreements of our Stockholder Parties as owners of our common stock. In addition, the Stockholders’ Agreement contains provisions related to the composition of our
board of directors,Board, which are discussed under the section titled “
Board of Directors and Corporate Governance—CompositionGovernance-Composition of the Board.”
Voting Agreement.Agreement
Under the Stockholders’ Agreement, our Stockholder Parties have agreed to take all necessary action, including casting all votes to which such existing owners are entitled to cast at any annual or special meeting of stockholders, so as to ensure that the composition of our
board of directorsBoard and its committees complies with (and includes all of the nominees in accordance with) the provisions of the Stockholders’ Agreement related to the composition of our
board of directors,Board, which are discussed under the section titled “
Board of Directors and Corporate Governance—CompositionGovernance-Composition of the Board.”
Registration Rights Agreement
We are party to an Amended and Restated Registration Rights Agreement with our Stockholder Parties, dated as of October 27, 2016, or the Registration Rights Agreement. Under the Registration Rights Agreement
our Stockholder Parties areMs. Tucker is entitled to
certain S-3 registration rights
with respectand we will be required to
the registration of their shares under the Securities Act. We will pay the registration expenses (other than underwriting discounts and commissions and stock transfer taxes) of the
holders of the shares
registered pursuantregistered. The registration rights have terminated as to the
registrations described below.Following our secondary offering on March 9, 2019, Silver Lake Sumeru no longer owns shares of our common stock and is not entitled to registration rights. To be entitled to certain S-3 registration rights, Iconiq and Mr. Spanicciati must hold at least 3% or 5%, respectively, of our common shares issued and outstanding at the time of such request.
Ms. Tucker is entitled to certain S-3 registration rights onother parties. We filed one or more occasions. In addition, if Ms. Tucker proposes to register the offer and sale of our capital stock under the Securities Act, Iconiq and Mr. Spanicciati will be entitled to certain “piggyback” registration rights allowing the holders to include their shares in such registration, subject to certain marketing and other limitations set forth in the registration rights agreement. If we proposed to register the offer and sale of our capital stock under the Securities Act, each of Iconiq, Ms. Tucker and Mr. Spanicciati would be entitled to similar “piggyback” registration rights as well. On November 13, 2017, we filed a shelf registration statement on Form S-3 in 2017 for the sale of 33,738,329 shares of our common stock then held by our Stockholder Parties and for the sale of up $100,000,000 of any combination of our common stock, preferred stock, depositary shares, debt securities, warrants, subscription rights and units. This registration statement was declared effective by the SEC on November 17, 2017.
The registration rights described above apply to (i) shares of our common stock held by
our Stockholder PartiesMs. Tucker and
their respectiveher affiliates, and (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, or Registrable Securities. These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 of the Securities Act or repurchased by us or our subsidiaries. In addition, with the consent of the
companyCompany and holders of a majority of Registrable Securities, any Registrable Securities held by a person will cease to be Registrable Securities if they can be sold without limitation under Rule 144 of the Securities Act.
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Employment Arrangement
Isaac Tucker, who is the son of Ms. Tucker, our Chief Executive Officer, has been employed by us since 2006 and currently serves as Chief Product Officer. His 2019 total cash compensation, which is comprised of a base salary and bonus, was $466,275, and was in line with similar roles at the company and similarly situated executives in our competitive market. In 2019, Mr. Tucker was also paid $48,460 for earned and unused days of paid time off in connection with our transition to an unlimited PTO structure, and received equity awards with a total grant date fair value of $935,230, which awards vest over a four-year period subject to his continued service to us.
Indemnification of Officers and Directors
Our amended and restated certificate of incorporation contains provisions that eliminate, to the maximum extent permitted by the General Corporation Law of the State of Delaware, the personal liability of our directors and executive officers for monetary damages for breach of their fiduciary duties as directors or officers. Our amended and restated certificate of incorporation and amended and restated bylaws provide that we must indemnify our directors and executive officers and may indemnify our employees and other agents to the fullest extent permitted by the General Corporation Law of the State of Delaware.
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Section 145 of the General Corporation Law of the State of Delaware provides that a corporation may indemnify any person made a party to an action by reason of the fact that he or she was a director, executive officer, employee or agent of the corporation or is or was serving at the request of a corporation against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, except that, in the case of an action by or in right of the corporation, no indemnification may generally be made in respect of any claim as to which such person is adjudged to be liable to the corporation.
We have entered into indemnification agreements with our directors and executive officers, in addition to the indemnification provided for in our amended and restated certificate of incorporation and amended and restated bylaws, and intend to enter into indemnification agreements with any new directors and executive officers in the future.
We have purchased and intend to maintain insurance on behalf of each and any person who is or was one of our directors or officers against any loss arising from any claim asserted against him or her and incurred by him or her in any such capacity, subject to certain exclusions.
Policies and Procedures for Related Party Transactions In connection with our initial public offering, our
audit committeeAudit Committee and our
board of directorsBoard approved a Related Party Transactions Policy which provides that our
audit committeeAudit Committee is responsible for reviewing and approving any related party transaction, taking into account whether the transaction is on an arms-length basis, whether there are business reasons for the transaction, whether the transaction would impair a director’s independence and whether the related party transaction would present an improper conflict of interest. The Related Party Transaction Policy applies to any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we are to be a participant, the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest. Our full
board of directorsBoard (with any interested director recusing him or herself) reviewed and approved our related party transactions prior to our initial public offering and following our initial public offering, our
audit committeeAudit Committee will approve all of our related party transactions.
We believe that we have executed all the transactions described above on terms no less favorable to us than we could have obtained from unaffiliated third parties. It is our intention to ensure that all future related party transactions are approved by our
audit committee,Audit Committee, and are on terms no less favorable to us than those that we could obtain from unaffiliated third parties.
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The following table sets forth the beneficial ownership of our capital stock as of March 16, 20201, 2023 by:
each person, or group of affiliated persons, known to us to be the beneficial owner of more than 5% of our common stock;
each of our named executive officers;
each of our directors and nominees for director; and
all executive officers and directors as a group.
Applicable percentage ownership is based on 56,377,48160,335,407 shares of our common stock outstanding at March 16, 2020.1, 2023. Shares of common stock issuable upon the exercise of stock options exercisable or pursuant to RSUs that are subject to vesting conditions within 60 days of March 16, 2020,1, 2023, are deemed to be outstanding and beneficially owned by the person holding the options, or the RSUs, for the purpose of computing the percentage of beneficial ownership of that person and any group of which that person is a member, but are not deemed outstanding for the purpose of computing the percentage of beneficial ownership for any other person.
Unless otherwise indicated in the footnotes below, each stockholder named in the following table possesses sole voting and investment power over the shares listed. The information does not necessarily indicate beneficial ownership for any other purpose. Unless otherwise noted below, the address of each person listed on the table is c/o BlackLine, Inc., 21300 Victory Boulevard,
12th12th Floor, Woodland Hills, CA 91367.
| Common Stock |
Name of Beneficial Owner | Number | Percent |
Greater than 5% Stockholders:
| | | | | | |
Funds Affiliated with Vanguard(1) | | 4,103,849 | | | 7.28 | % |
Funds Affiliated with BlackRock(2) | | 3,126,886 | | | 5.55 | % |
Funds Affiliated with Kayne Anderson Rudnick Investment Management(3) | | 3,966,273 | | | 7.04 | % |
Named Executive Officers and Directors:
| | | | | | |
Jason Babcoke(4) | | 1,833 | | | | * |
John Brennan(5) | | 1,833 | | | | * |
Marc Huffman(6) | | 125,123 | | | | * |
Karole Morgan-Prager(7) | | 188,670 | | | | * |
Mark Partin(8) | | 412,955 | | | | * |
Owen Ryan(9) | | 8,030 | | | | * |
Graham Smith(10) | | 106,747 | | | | * |
Mario Spanicciati(11) | | 1,440,264 | | | 2.55 | % |
Kevin Thompson(12) | | 15,492 | | | | * |
Therese Tucker(13) | | 5,239,916 | | | 9.27 | % |
Thomas Unterman(14) | | 144,554 | | | | * |
Sophia Velastegui(15) | | 721 | | | | * |
Mika Yamamoto(16) | | 4,957 | | | | * |
All current directors and executive officers as a group (14 people)(17) | | 7,715,140 | | | 13.44 | % |
Greater than 5% Stockholders:
| | | | | | |
Funds Affiliated with Clearlake(1) | | | 5,712,300 | | | 9.60% |
Funds Affiliated with Vanguard(2) | | | 5,332,091 | | | 8.92% |
Funds Affiliated with BlackRock(3) | | | 3,965,756 | | | 6.60% |
Named Executive Officers and Directors:
| | | | | | |
Marc Huffman(4) | | | 335,849 | | | * |
Karole Morgan-Prager(5) | | | 227,648 | | | * |
Mark Partin(6) | | | 436,379 | | | * |
Brunilda Rios | | | — | | | * |
Owen Ryan(7) | | | 13,185 | | | * |
Kevin Thompson(8) | | | 13,108 | | | * |
Therese Tucker(9) | | | 4,729,330 | | | 7.78% |
Thomas Unterman(10) | | | 99,182 | | | * |
Sophia Velastegui(11) | | | 5,576 | | | * |
Barbara Whye(12) | | | 1,977 | | | * |
Mark Woodhams(13) | | | 182,239 | | | * |
Mika Yamamoto(14) | | | 8,308 | | | * |
Amit Yoran | | | — | | | * |
All current directors and executive officers as a group (14 people)(15) | | | 6,146,803 | | | 9.93% |
| *
| Represents beneficial ownership of less than 1%. |
| (1)
| Based on a Schedule 13G filed February 12, 2020,14, 2023, by Clearlake Capital Group, L.P., or Clearlake. Clearlake may be deemed to be the beneficial owner of 5,712,300 shares of common stock, over which it has (i) sole dispositive power over 0 shares, (ii) shared dispositive power of 5,712,300 shares, (iii) sole voting power over 0 shares and (iv) shared voting power over 5,712,300 shares. Pursuant to the Schedule 13G, the shares are held for the account of Clearlake Capital Partners VII Finance, L.P., a Delaware limited partnership (“Clearlake Capital Partners VII”). Clearlake Capital Group serves as the investment adviser and general partner to Clearlake Capital Partners VII. Jose Enrique Feliciano and Behdad Eghbali are Managing Partners of Clearlake Capital Group. |
(2)
| Based on a Schedule 13G filed February 9, 2023, by The Vanguard Group, or Vanguard, 100 Vanguard Blvd., Malvern, PA 19355, Vanguard may be deemed to be the beneficial owner of 4,103,8495,332,091 shares of common stock, over which it has (i) sole dispositive power over 4,007,7165,182,943 shares held by Vanguard, (ii) shared dispositive power over 96,133 shares, (iii) sole voting power over 90,497149,148 shares and (iv)(iii) shared voting power over 10,72294,442 shares. 85,411 shares are held by Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of Vanguard as a result of its serving as an investment manager of collective trust accounts and 15,808 shares are held by Vanguard Investments Australia, Ltd. as a result of its serving as investment manager of Australian investment offerings. |
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(3)
| (2) | Based on a Schedule 13G filed February 10, 2020,1, 2023, by BlackRock, Inc., or BlackRock, 55 East 52nd52nd Street, New York, NY 10055. BlackRock may be deemed to be the beneficial owner of 3,126,8863,965,756 shares of common stock, over which it has (i) sole dispositive power over 3,126,8863,965,756 shares held by BlackRock, (ii) shared dispositive power over 0 shares, (iii) sole voting power over 3,052,7343,880,391 shares and (iv) shared voting power over 0 shares. |
| (3) | Based on a Schedule 13G filed February 13, 2020, by Kayne Anderson Rudnick Investment Management LLC, or Kayne Anderson, Virtus Investment Advisors, Inc., or Virtus Investment and Virtus Equity Trust, on behalf of Virtus KAR Small Cap Growth Fund, or Virtus Equity. Kayne Anderson may be deemed to be the beneficial owner of 3,966,273 shares of common stock, over which it has (i) sole dispositive power over 770,680 shares held by Kayne Anderson, (ii) shared dispositive power of 3,195,593 shares, (iii) sole voting power over 770,680 shares and (iv) shared voting power over 3,195,593 shares. Virtus Investment has shared voting and dispositive power over 3,195,593 shares and Virtus Equity has shared voting and dispositive power over 3,134,403 shares. The address for Kayne Anderson is 1800 Avenue of the Stars, 2nd Floor, Los Angeles, CA 90067. The address for Virtus Investment is One Financial Plaza, Hartford, CT 06103. The address for Virtus Equity is 101 Munson Street, Greenfield, MA 01301. |
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| (4) | Includes 1,833 shares of common stock issuable pursuant to restricted units that are subject to vesting conditions within 60 days of March 16, 2020. |
| (5) | Includes 1,833 shares of common stock issuable pursuant to restricted units that are subject to vesting conditions within 60 days of March 16, 2020. |
| (6)
| Includes (i) 11,28648,689 shares of common stock held by Mr. Huffman and (ii) 113,837287,160 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 16, 2020.1, 2023. |
| (7)(5)
| Includes (i) 5,17523,319 shares of common stock held by Ms. Morgan-Prager and (ii) 183,495204,329 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 16, 2020.1, 2023. |
| (8)(6)
| Includes (i) 11,95262,774 shares of common stock held by Mr. Partin and (ii) 401,003373,605 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 16, 2020.1, 2023. |
| (9)(7)
| Includes (i) 1,29910,311 shares of common stock held by Mr. Ryan and (ii) 2,874 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 16, 2020, and (iii) 3,857 shares of common stock issuable pursuant to restricted units that are subject to vesting conditions within 60 days of March 16, 2020.1, 2023. |
| (10)(8)
| Includes (i) 23,4948,712 shares of common stock held by Mr. Smith,Thompson and (ii) 79,3964,396 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 16, 2020, and (iii) 3,857 shares of common stock issuable pursuant to restricted units that are subject to vesting conditions within 60 days of March 16, 2020.1, 2023. |
| (11)(9)
| Includes (i) 600,000 shares of common stock held by the Spanicciati Family 2013 Irrevocable Trust, (ii) 126,396 shares of common stock held by the Spanicciati Family 2013 Dynasty Trust, (iii) 691,267 shares of common stock held by the Spanicciati Family 2020 Irrevocable Trust, (iv) 5,323 shares of common stock held by Mr. Spanicciati, and (iv) 17,278 shares of common stock subject to options which are exercisable within 60 days of March 16, 2020. Mr. Spanicciati has shared voting and investment power over 1,417,663 shares of common stock. |
| (12) | Includes (i) 3,606 shares of common stock held by Mr. Thompson, (ii) 8,029 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 16, 2020, and (iii) 3,857 shares of common stock issuable pursuant to restricted units that are subject to vesting conditions within 60 days of March 16, 2020. |
| (13) | Includes (i) 2,698,4821,509,881 shares of common stock held by the Brian and Therese Tucker Living Trust dated 12/19/2014, (ii) 874,128 shares of common stock held by the Tucker Legacy Trust dated 12/30/2014, (iii) 577,200 shares of common stock held by the Isaac Tucker 2012 Irrevocable Gift Trust, (iv) 577,200 shares of common stock held by the Roseanna Tucker 2012 Irrevocable Gift Trust, (v) 250,916 shares of common stock held by the Tucker-Seimetz Safety Net Trust dated 09/28/2015, (vi) 54,074 shares of common stock held by the Claire Seimetz 2015 Trust dated 9/28/2015, (vii) 38,999100,178 shares of common stock held by the Tucker Family CLAT, (viii) 129,897 shares of common stock held by the Tucker Legacy Trust II, (ix) 100,178 shares of common stock held by the Brian & Therese Tucker Charitable Remainder Trust, (x) 123,625 shares of common stock held by Therese Tucker, and (viii) 168,917(xi) 432,053 shares of common stock subject to options which are exercisable within 60 days of March 16, 2020.1, 2023. Ms. Tucker has shared voting and investment power over 1,179,118 shares of common stock.1,409,193 shares. |
| (14)(10)
| Includes (i) 70,00050,000 shares of common stock held by ETU Rustic Canyon Trust of which Mr. Unterman is the trustee and (ii) 53,80149,182 shares of common stock held by Mr. Unterman, (iii) 16,896Unterman. |
(11)
| Includes 5,576 shares of common stock held by Ms. Velastegui. |
(12)
| Includes 1,977 shares of common stock held by Ms. Whye. |
(13)
| Includes (i) 24,851 shares of common stock held by Mr. Woodhams and (ii) 157,388 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 16, 2020, and (iv) 3,857 shares of common stock issuable pursuant to restricted units that are subject to vesting conditions within 60 days of March 16, 2020.1, 2023. |
| (15) | Includes 721 shares of common stock issuable pursuant to restricted stock units that are subject to vesting conditions within 60 days of March 16, 2020. |
| (16)(14)
| Includes (i) 3347,542 shares of common stock held by Ms. Yamamoto and (ii) 766 shares of common stock issuable upon the exercise of stock options exercisable within 60 days of March 16, 2020, and (iii) 3,857 shares of common stock issuable pursuant to restricted units that are subject to vesting conditions within 60 days of March 16, 2020.1, 2023. |
| (17)(15)
| Includes (i) 1,010,8361,556,593 shares of common stock subject to options which are exercisable within 60 days of March 16, 2020 and (ii) 23,672 shares of common stock issuable pursuant to restricted stock units that are subject to vesting conditions within 60 days of March 16, 2020. 1, 2023. |
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Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities (collectively, the “Reporting Persons”), to file reports of ownership and changes of ownership on Forms 3, 4 and 5 with the SEC. Such Reporting Persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely on our review of the copies of such forms we have received and written representations from certain Reporting Persons that they filed all required reports, we believe that all of our executive officers, directors and greater than 10% stockholders complied with all Section 16(a) filing requirements applicable to
them with respect to transactions during 2019, except for a late Form 4 filing for Ms. Tucker in connection with the withholding of shares to cover Ms. Tucker’s tax liability in connection with the vesting of RSUs on April 8, 2019 due to an administrative error, and a late Form 4 filing for Mr. Huffman in connection with a transfer of shares to a family member pursuant to a contractual obligation.them.
Our financial statements for our fiscal year ended December 31,
20192022 are included in our
20192022 annual report, which we will make available to stockholders at the same time as this proxy statement.
You may also obtain a copy of our 20192022 annual report, including the financial statements and the financial statement schedules, free of charge, by sending a written request to our Investor Relations department at BlackLine, Inc., 21300 Victory Boulevard, 12th12th floor, Woodland Hills, CA 91367, Attention: Investor Relations.We maintain a website at www.blackline.com. Information contained on, or that can be accessed through, our website is not intended to be incorporated by reference into this proxy statement, and references to our website address
or links to information contained on our website in this proxy statement are inactive textual references only.
A copy of our bylaws may be obtained by accessing BlackLine’s filings on the SEC’s website at www.sec.gov. You may also contact our corporate secretary at our principal executive offices for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates.
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STOCKHOLDER PROPOSAL DEADLINES FOR 20212024 ANNUAL MEETING Stockholder Proposals for Inclusion in Proxy Statement Stockholders may present proper proposals for inclusion in our proxy statement and for consideration at the next annual meeting of stockholders by submitting their proposals in writing to our corporate secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our proxy statement for our next annual meeting of stockholders, our corporate secretary must receive the written proposal at our principal executive offices not later than November
24, 2020.29, 2023. In addition, stockholder proposals must comply with the requirements of Rule 14a-8 under the Exchange Act regarding the inclusion of stockholder proposals in
company-sponsoredCompany-sponsored proxy materials. Proposals should be addressed to:
BlackLine, Inc.
Attn: Corporate Secretary
21300 Victory Boulevard, 12th12th Floor
Woodland Hills, California 91367
Stockholder Proposals and Director Nominations Not for Inclusion in Proxy Statement Our bylaws also establish an advance notice procedure for stockholders who wish to present a proposal before an annual meeting of stockholders, but do not intend for the proposal to be included in our proxy statement and for stockholders to nominate directors for election at an annual meeting of stockholders. In order to be properly brought before our 20212024 annual meeting of stockholders, the stockholder must have given timely notice of such proposal or nomination, in proper written form. To be timely for our 20212024 annual meeting of stockholders, a stockholder’s notice of a matter that the stockholder wishes to present, or the person or persons the stockholder wishes to nominate as a director, must be delivered to our corporate secretary at our principal executive offices:
not earlier than January 8, 2021,12, 2024, and
not later than the close of business on February 7, 2021.12, 2024.
In addition, stockholders who intend to solicit proxies in support of director nominees other than the Company's nominees must also comply with the additional requirements of Rule 14a-19(b). If we hold our 20212024 annual meeting of stockholders more than 30 days before or more than 60 days after the one-year anniversary date of the 20202023 annual meeting, then such written notice must be received no earlier than the close of business on the 120th120th day before the 20212024 annual meeting and no later than the close of business on the later of the following two dates:
• | the 90th day prior to our 2024 annual meeting of stockholders, or |
• | the 10th day following the day on which public announcement of the date of our 2024 annual meeting of stockholders is first made. |
the 90th day prior to our 2021 annual meeting of stockholders, or
the 10th day following the day on which public announcement of the date of our 2021 annual meeting of stockholders is first made.
If a stockholder who has notified us of his, her or its intention to present a proposal at an annual meeting does not appear to present his, her or its proposal at such annual meeting, we are not required to present the proposal for a vote at such annual meeting. To be in proper written form, a stockholder’s notice must include the specified information concerning the proposal or nominee as described in our bylaws. Notices should be addressed to:
BlackLine, Inc.
Attn: Corporate Secretary
21300 Victory Boulevard, 12th12th Floor
Woodland Hills, California 91367
For information on how to access our bylaws, please see the section entitled “
Availability of Bylaws,” and for additional information regarding stockholder recommendations for director candidates, please see the section entitled “
Board of Directors and Corporate Governance—Stockholder Recommendations for Nominations to our Board.”
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We know of no other matters to be submitted at the
20202023 annual meeting. If any other matters properly come before the
20202023 annual meeting, the persons named in the proxy will have discretion to vote the shares of our common stock they represent in accordance with their own judgment on such matters. Discretionary authority with respect to such other matters is granted by a properly submitted proxy.
It is important that your shares be represented at the
20202023 annual meeting, regardless of the number of shares that you hold. You are, therefore, urged to vote as promptly as possible to ensure your vote is recorded.
Woodland Hills, California
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Unaudited Reconciliation of Non-GAAP Financial Measures
(in thousands, except percentages)
| Year Ended December 31, |
| 2019 | 2018 |
Non-GAAP Net Income (Loss) Attributable to BlackLine, Inc.:
| | | | | | |
Net income (loss) attributable to BlackLine, Inc. | $ | (32,535 | ) | $ | (28,714 | ) |
Provision for (benefit from) income taxes | | 90 | | | (540 | ) |
Amortization of intangible assets | | 10,265 | | | 13,023 | |
Stock-based compensation | | 34,052 | | | 20,895 | |
Amortization of debt discount and issuance costs | | 8,410 | | | — | |
Change in fair value of contingent consideration | | 46 | | | 450 | |
Legal settlement gains | | (380 | ) | | — | |
Shelf offering costs | | 212 | | | 401 | |
Adjustment to redeemable non-controlling interest | | 1,833 | | | — | |
Total non-GAAP net income (loss) attributable to BlackLine, Inc. | $ | 21,993 | | $ | 5,515 | |
| Year Ended December 31, |
| 2019 | 2018 |
Free Cash Flow:
| | | | | | |
Net cash provided by (used for) operating activities | $ | 29,724 | | $ | 16,140 | |
Adjustments:
| | | | | | |
Capitalized software development costs | | (5,060 | ) | | (5,675 | ) |
Purchases of property and equipment | | (4,632 | ) | | (6,284 | ) |
Financed purchases of property and equipment | | (427 | ) | | — | |
Free cash flow | $ | 19,605 | | $ | 4,181 | |
Non-GAAP Net Income (Loss) Attributable to BlackLine, Inc.:
| | | | | | |
Net loss attributable to BlackLine, Inc. | | | $(29,391) | | | $(115,161) |
Benefit from income taxes related to acquisitions | | | (13,634) | | | (961) |
Amortization of intangible assets | | | 19,731 | | | 10,479 |
Stock-based compensation | | | 75,576 | | | 65,723 |
Amortization of debt discount and issuance costs | | | 5,511 | | | 55,538 |
Change in fair value of contingent consideration | | | (35,130) | | | (2,758) |
Transaction-related costs | | | 16,831 | | | 1,586 |
Legal settlement costs | | | 1,709 | | | — |
Impairment of cloud computing implementation costs | | | 5,330 | | | — |
Restructuring costs | | | 3,841 | | | — |
Adjustment to redeemable non-controlling interest | | | (4,131) | | | 15,077 |
Loss on extinguishment of convertible senior notes | | | — | | | 7,012 |
Total non-GAAP net income attributable to BlackLine, Inc. | | | $46,243 | | | $36,535 |
Free Cash Flow:
| | | | | | |
Net cash provided by operating activities | | | $56,013 | | | $80,093 |
Adjustments:
| | | | | | |
Capitalized software development costs | | | (19,208) | | | (14,536) |
Purchases of property and equipment | | | (10,974) | | | (8,729) |
Financed purchases of property and equipment | | | (84) | | | (549) |
Free cash flow | | | $25,747 | | | $56,279 |