UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
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| Preliminary Proxy Statement |
| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| Definitive Proxy Statement |
| Definitive Additional Materials |
| Soliciting Material under §240.14a-12 |
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INSTRUCTURE HOLDINGS, INC.
(Name of registrantRegistrant as specified in its charter)Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)all boxes that apply):
| No fee |
| Fee paid previously with preliminary materials |
| Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
Dear Fellow Stockholders,
On behalf of Instructure Holdings, Inc.’s Board of Directors, it is our pleasure to invite you to our 20222024 Annual Meeting of Stockholders to be held on Thursday, May 26, 202223, 2024 at 10:00 a.m. Mountain Time. This year’s Annual Meeting will be held at our principal executive offices, located at 6330 South 3000 East, Suite 700, Salt Lake City, Utah 84121.
The Annual Meeting will be conducted for the following purposes, which are more fully described in the accompanying proxy statement:Proxy Statement:
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Our Board of Directors has set the record date as April 8, 2022.4, 2024. Only stockholders that owned shares of the Company’s common stock as of the close of business on that day are entitled to notice of and may vote at this Annual Meeting, or any adjournment or postponement thereof.
Your vote is important. Whether or not you plan to attend the Annual Meeting, we urge you to vote. You may vote by proxy over the Internet or by mail by following the instructions on the proxy card.card or voting instructions form. Voting by proxy will ensure your representation at the Annual Meeting regardless of whether you attend.
Thank you for your continued support and confidence of Instructure Holdings, Inc. We hope you will join us for our 20222024 Annual Meeting on Thursday, May 26, 2022.Meeting.
Sincerely,
/s/ Charles Goodman
Charles Goodman
Chair of the Board
NOTICE OF 20222024 ANNUAL MEETING OF STOCKHOLDERS
The 20222024 Annual Meeting of Stockholders of Instructure Holdings, Inc. will be held at our principal executive offices, located at 6330 South 3000 East, Suite 700, Salt Lake City, Utah 84121 on Thursday, May 26, 2022,23, 2024, at 10:00 a.m. Mountain Time for the following purposes:
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Our Board of Directors (the “Board”) has set the record date as of April 8, 2022.4, 2024. Only stockholders that owned shares of the Company’s common stock as of the close of business on that day are entitled to notice of and may vote at this Annual Meeting, or any adjournment or postponement thereof. A list of the Company’s stockholders of record will be available for examination by any stockholder for any purpose relevant to the meeting during ordinary business hours for at least ten days prior to May 26, 2022,23, 2024, at 6330 South 3000 East, Suite 700, Salt Lake City, Utah 84121, and on the date of the Annual Meeting.
The proxy statementProxy Statement is first being delivered to the Company’s stockholders of record on or about April 26, 2022.22, 2024.
By Order of the Board of Directors,
/s/ Mathew A. Kaminer
Matthew A. Kaminer
Matthew A. Kaminer
Chief People and Legal Officer and Secretary
TABLE OF CONTENTS
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COMMONLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
Q: Why did I receive these materials?
The Board of Directors of the Company (the “Board”) of Instructure Holdings, Inc. (the “Company”) is soliciting your proxy to vote at our 20222024 Annual Meeting of Stockholders (or at any postponementadjournment or adjournmentpostponement thereof). Stockholders who own shares of our common stock as of the close of business on the record date, April 8, 20224, 2024 (the “Record Date”), are entitled to vote at the Annual Meeting. You should review these proxy materials carefully as they give important information about the proposals that will be voted on at the Annual Meeting, as well as other important information about the Company.
Householding. The Securities and Exchange Commission (“SEC”) rules permit us to print an individual’s multiple accounts on a single set of annual meeting materials. To take advantage of this opportunity, we have summarized on one set of annual meeting materials all of the accounts registered with the same tax identification number or duplicate name and address, unless we received contrary instructions from the impacted stockholder prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the Annual Meetingproxy materials, as requested, to any stockholder to which a single copy of those documents was delivered. If you prefer to receive separate copies of the Annual Meetingproxy materials, contact Broadridge Financial Solutions, Inc. at 1-866-540-7095 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. A number of brokerage firms have instituted householding. They will have their own procedures for stockholders who wish to receive individual copies of the proxy materials.
Q: Who will be entitled to vote?
Stockholders who own shares of our common stock as of the Record Date, are entitled to vote at the Annual Meeting. As of the Record Date, the Company had 141,347,146145,927,863 shares of common stock outstanding. Holders of sharesthe Company’s common stock as of common stockthe Record Date are entitled to one vote per share. Cumulative voting is not permitted with respect to the election of directors or any other matter to be considered at the Annual Meeting.
Q: What will I be voting on?
You will be voting on:
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Q: How does the Board recommend I vote on these matters?
The Board recommends you vote:
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Q: How do I cast my vote?
You can vote either in person at the Annual Meeting or by proxy without attending the meeting.
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Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If, on April 8, 2022,as of the Record Date, your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and the Annual Meeting materials are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.
Stockholder of Record: Shares Registered in Your Name
If, on April 8, 2022,as of the Record Date, your shares were registered directly in your name with the Company’s transfer agent, American Stock Transfer & Trust Company, LLC, then you are a stockholder of record. As a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy before the Annual Meeting in the following ways:
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Proxies submitted via the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on May 25, 2022.22, 2024.
Whether or not you plan to attend the meeting, we urge you to fill out and return the enclosed proxy card or vote by proxy over the telephone or on the internet as instructed below to ensure your vote is counted.
Q: Can I access the proxy materials electronically?
Yes. Our proxy materials are available at www.proxyvote.com. In addition, instead of receiving future copies of our proxy statement and annual report by mail, stockholders of record and most beneficial owners can
elect to receive an email that will provide an electronic link to these documents. If you would like to instruct us to send electronic copies of our proxy materials, you should follow the instructions available at www.proxyvote.com. Your election to receive future proxy materials by email will remain in effect until you revoke it.
Q: How may I change or revoke my proxy?
Beneficial Owner: Shares Registered in the Name of Broker or Bank. Beneficial stockholders should contact their broker, trustee or nominee for instructions on how to change their proxy vote.
Stockholder of Record: Shares Registered in Your Name. Registered stockholders may change a properly executed proxy at any time before its exercise:
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Q: How can I attend and participate in the Annual Meeting?
The Annual Meeting is being held in person at the Company’s principal executive offices located at 6330 South 3000 East, Suite 700, Salt Lake City, UT, 84121. If you were a stockholder as of the Record Date you may attend the Annual Meeting. AAt the entrance to the meeting, you must present a valid form of personal identification, must be presented in ordersuch as a driver’s license or passport. In addition, stockholders holding their shares through a broker, bank, trustee, or nominee will need to bring proof of beneficial ownership as of the Record Date, such as their most recent account statement reflecting their stock ownership prior to April 4, 2024, a copy of the voting instruction form provided by their broker, bank, trustee or nominee or similar evidence of ownership.
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If you do not provide valid photo identification or comply with the other procedures outlined above, you will not be admitted to the Annual Meeting. For directions to the Company’s executive offices, you may call us at (800) 203-6755 or email investors@instructure.com. Information on how to vote at the Annual Meeting is discussed above.
Q: How many shares must be present to transact business at the Annual Meeting?
A quorum of our shareholders must be present at the Annual Meeting for any business to be conducted. Under our Amended and Restated Bylaws (the “Bylaws”), the holders of a majority in voting power of the outstanding capital stock entitled to vote at the Annual Meeting, present in person or represented by proxy, constitute a quorum. If you authorize a proxy to vote electronically or telephonically, or you sign and return a paper proxy or voting instruction form, your shares will be counted to determine whether a quorum has been established even if you “withhold” your vote or fail to vote on a particular item of business. Abstentions and “broker non-votes” will also be considered present for the purpose of determining whether there is a quorum for the Annual Meeting.
Q: What is the voting requirement to approve each of the proposals, and how are the votes counted?
PROPOSAL 1—ELECTION OF DIRECTORS
A plurality of the votes cast by the shares of common stock present in person or represented by proxy at the meeting and entitled to vote thereon is required to elect each nominee named herein. This means that the three nominees receiving the highest number of “FOR” votes at the Annual Meeting will be elected, even if those votes do not constitute a majority of the votes cast. AbstentionsVotes that are “WITHHELD” with respect to one or more director nominees will result in the respective nominee receiving fewer votes, but they will not count as votes against a nominee and broker will have no effect on the outcome of the election of those nominees. Broker non-votes will not impact the election of the nominees.
PROPOSALS 2, 3 AND 4—PROPOSAL 2—NON-BINDING ADVISORY VOTES, TO: RETAIN THE CLASSIFIED STRUCTURE OF THE BOARD OF DIRECTORS; RETAIN THE SUPER-MAJORITY VOTING STANDARDS IN THE COMPANY’S CHARTER AND BYLAWS; AND APPROVEVOTE APPROVING THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS INCLUDED IN THIS PROXY STATEMENT
The affirmative vote of a majority of the voting power of the capital stock present in person or represented by proxy at the meeting and entitled to vote thereon is required to approve Proposals 2, 3 and 4. Abstentions will be counted as present and entitled to vote on these proposals and will therefore have the effect of a negative vote. Broker non-votes will have no effect on these proposals. Although the results of these proposals will not be binding on the Board, the Board will consider the results of the stockholder vote when making future decisions regarding these matters.
PROPOSAL 5—NON-BINDING ADVISORY APPROVAL OF SAY-ON-PAY FREQUENCY
In the case of Proposal 5, the frequency that receives the highest number of votes cast will be deemed to be the frequency selected by stockholders. Abstention and broker non-votes will not count in the determination of
which alternative receives the highest number of votes cast. Although the results will not be binding on the Board, the Board will consider the results of the stockholder vote when making future decisions regarding the frequency with which it will submit the Company’s executive compensation program for stockholder approval.
PROPOSAL 6—RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED ACCOUNTING FIRM
The affirmative vote of a majority of the voting power of the capital stock present in person or represented by proxy at the meeting and entitled to vote thereon is required to approve Proposal 6.2. Abstentions will be counted as present and entitled to vote on this proposal and will therefore have the effect of a negative vote. Broker non-votes will have no effect on this proposal. Although the result of this proposal will be non-binding on the Boardand the Compensation and Nominating Committee thereof, the Board and the Compensation and Nominating Committee will consider the results of the stockholder vote when making future decisions regarding compensation of the Company’s named executive officers.
PROPOSAL 3—RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED ACCOUNTING FIRM
The affirmative vote of a majority of the voting power of the capital stock present in person or represented by proxy at the meeting and entitled to vote thereon is required to approve Proposal 3. Abstentions will be counted as present and entitled to vote on this proposal and will therefore have the effect of a negative vote. There will not be broker non-votes with respect to the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2022.2024.
Q: When will the results of the vote be announced?
The preliminary voting results will be announced at the Annual Meeting. The final voting results will be published in a Current Report on Form 8-K filed with the SEC within four business days of the Annual Meeting.
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Q: What is the deadline for submitting a stockholder proposal or director nomination for the 20232024 Annual Meeting?
Stockholder proposals pursuant to SEC Rule 14a-8 for inclusion in the Company’s proxy statement and form of proxy for the Company’s annual meeting of stockholders to be held in 2023,2025, must be received by the Company at our principal executive offices at 6330 South 3000 East, Suite 700, Salt Lake City, UT, 84121, Attn: Corporate Secretary, no later than the close of business on December 27, 2022.23, 2024. Stockholders wishing to make a director nomination or bring a proposal before the 20232025 Annual Meeting (but not include it in the Company’s proxy materials)(other than pursuant to SEC Rule 14a-8) must provide written notice of such proposal to the Company’s Corporate Secretary at our principal executive offices no later than the close of business on February 25, 202321, 2025 and not earlier than the close of business on January 26, 2023, assuming23, 2025. However, if the Company doesdate of our 2025 Annual Meeting is not changescheduled to be held within a period that commences 30 days before the anniversary date of this Annual Meeting and ends 70 days after the anniversary of the date of this Annual Meeting, then our Corporate Secretary must receive the notice no earlier than the close of business on the 120th day prior to the date of the 20232025 Annual Meeting and not later than the close of Stockholders by more than 70 days before or afterbusiness on the anniversary of this Annual Meeting. If so, the Company will release an updated time frame for stockholder proposals. Any stockholder proposal or director nomination must comply with the other provisionslater of the Company’s Bylaws and be submitted in writing90th day prior to the Corporate Secretary atdate of the Company’s principal executive offices.2025 Annual Meeting and the 10th day following the day on which public announcement of the date of the 2025 Annual Meeting is first made by us.
In addition to satisfying the requirements under the Company's Bylaws, to comply with the requirements set forth in Rule 14a-19 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (the universal proxy rules (once applicable)rules), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must also provide written notice to the Corporate Secretary that sets forth all the information required by Rule 14a-19 under14a-19(b) of the Exchange ActAct. Such notice must be postmarked or transmitted electronically to the Company at the Company’s principal executive offices no later than March 27, 2023.24, 2025.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our business and affairs are managed under the direction of our Board, which is composed of eight directors. Our CharterSecond Amended and Restated Certificate of Incorporation (our "Charter") provides that the authorized number of directors may be changed only by resolution of our Board. Our Charter also provides that our Board will be divided into three classes of directors, with the classes as nearly equal in number as possible. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the class whose term is then expiring.
The following table sets forth the director class, name, age as of April 15, 2022,4, 2024, and other information for each member of our Board:
Name |
| Class |
| Age |
| Position |
| Year Elected |
| Year |
| Expiration |
Charles Goodman |
| I |
| 63 |
| Chair of the Board |
| 2020 |
| 2025 |
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Ossa Fisher |
| I |
| 47 |
| Director |
| 2021 |
| 2025 |
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Paul Holden Spaht, Jr. |
| I |
| 49 |
| Director |
| 2020 |
| 2025 |
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Erik Akopiantz |
| II |
| 59 |
| Director |
| 2020 |
| 2026 |
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James Hutter |
| II |
| 34 |
| Director |
| 2021 |
| 2026 |
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Steve Daly |
| III |
| 59 |
| CEO and Director |
| 2020 |
| 2024 |
| 2027 |
Brian Jaffee |
| III |
| 38 |
| Director |
| 2020 |
| 2024 |
| 2027 |
Lloyd “Buzz” Waterhouse |
| III |
| 72 |
| Director |
| 2021 |
| 2024 |
| 2027 |
Name | Class | Age | Position | Year Elected | Year Current Term Expires | Expiration Year of Term For Which Nominated | ||||||||||||||||
Charles Goodman | I | 61 | Chair of the Board | 2020 | 2022 | 2025 | ||||||||||||||||
Ossa Fisher | I | 45 | Director | 2021 | 2022 | 2025 | ||||||||||||||||
Paul Holden Spaht, Jr. | I | 47 | Director | 2020 | 2022 | 2025 | ||||||||||||||||
Erik Akopiantz | II | 57 | Director | 2020 | 2023 | |||||||||||||||||
James Hutter | II | 32 | Director | 2021 | 2023 | |||||||||||||||||
Steve Daly | III | 57 | CEO and Director | 2020 | 2024 | |||||||||||||||||
Brian Jaffee. | III | 36 | Director | 2020 | 2024 | |||||||||||||||||
Lloyd “Buzz” Waterhouse | III | 70 | Director | 2021 | 2024 |
The Board believes that in order for our Board to effectively guide us to long-term sustainable, dependable performance, it should be composed of individuals with sophistication and experience in the many disciplines that impact our business. In order to best serve our stockholders, our Board seeks to, as a whole, be competent in key corporate disciplines, including risk management, crisis management, leadership, regulatory issues, reputational issues, accounting and financial acumen, business judgment, governance, social responsibility, strategy and strategic planning. Additionally, we desire that the Board have specific knowledge related to our industry. The Compensation and Nominating Committee of the Board (the “Compensation and Nominating Committee”) believes that all directors must, at a minimum, meet the criteria set forth in the Company’s Code of Ethics and the Corporate Governance Guidelines, which specify, among other things, that the Compensation and Nominating Committee will consider criteria such as independence, diversity, skills, and qualifications in the context of the needs of the Board. In addressing issues of diversity in particular, the Compensation and Nominating Committee considers a nominee’s differences in gender, race, ethnicity and tenure. The Compensation and Nominating Committee believes that diversity of backgrounds and viewpoints is a key attribute for a director nominee. While we do not have a formal policy on diversity, when considering the selection of director nominees, the Compensation and Nominating Committee considers individuals with diverse viewpoints, accomplishments, cultural background, professional expertise, and diversity in gender, ethnicity, race, skills and geographic representation, that, when considered as a group, provide a sufficient mix of perspectives to allow the Board to best fulfill its responsibilities to the long-term interests of our stockholders. The Compensation and Nominating Committee also will consider a combination of factors for each director, including (a) the nominee’s good reputation and character to conduct themselves in accordance with the Company’s Code of Ethics, (b) whether the nominee has any conflict of interest that would impair his or her ability to fulfill the responsibilities of a member of the Board, (c) whether the nominee will be considered independent under the standards of the NYSENew York Stock Exchange (the "NYSE") and heightened standards for audit and compensation committees, (d) the nominee’s educational background, experience, qualifications and skills relevant for effective management and oversight of the Company’s management, (e) whether the nominee has the time and willingness to carry out their duties and responsibilities effectively and (f) the diverse attributes of the nominee, such as differences in background, qualifications and personal characteristics.
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The Compensation and Nominating Committee has determined that all of our directors meet the criteria and qualifications set forth in the Company’s Code of Ethics, the Corporate Governance Guidelines and the criteria set forth above for director nominees. Moreover, each director possesses the following critical personal qualities and attributes that we believe are essential for the proper functioning of the Board to allow it to fulfill its duties for our stockholders: accountability, ethical leadership, governance, integrity, risk management, and sound business judgment. In addition, our directors have the confidence to assess and challenge the way things are done and recommend alternative solutions, a keen awareness of our business and regulatory and social realities of the environment in which we operate, the independence and high performance standards necessary to fulfill the Board’s oversight function, and the humility, professional maturity, and style to interface openly and constructively with other directors. Finally, the director biographies below include a non-exclusive list of other key experiences and qualifications that further qualify the individual to serve on the Board. These collective qualities, skills, experiences and attributes are essential to our Board’s ability to exercise its oversight function for the Company and its stockholders, and guide the long-term sustainable, dependable performance of the Company.
Subject to any earlier resignation or removal in accordance with the terms of our Charter, our Bylaws and the Director Nomination Agreement (as defined and discussed below), our Class IIII directors will serve until this Annual Meeting, our Class III directors will serve until the 20232025 Annual Meeting of Stockholders, and our Class IIIII directors will serve until the 20242026 Annual Meeting of Stockholders. In addition, our Charter provides that our directors may be removed with or without cause by the affirmative vote of at least a majority of the voting power of our outstanding shares of stock entitled to vote, voting together as a single class, for so long as our Principal Stockholder (as defined below) owns 40% or more of the total number of shares of our common stock then-outstanding. If our Principal Stockholder’s beneficial ownership falls below 40% of the total number of shares of our common stock outstanding, then our directors may be removed only for cause upon the affirmative vote of at least 662⁄3% of the voting power of our outstanding shares of stock entitled to vote thereon.
Director Nomination Agreement
In connection with our initial public offering (“IPO”) that took place in July 2021, we entered intoWe are party to a Director Nomination Agreement (the “Director Nomination Agreement”) by and among the Company and Thoma Bravo Fund XIII, L.P., a Delaware limited partnership, Thoma Bravo Fund XIII-A, L.P., a Delaware limited partnership, Thoma Bravo Executive Fund XIII, L.P., a Delaware limited partnership, Thoma Bravo Partners XIII, L.P., and Thoma Bravo UGP, LLC, a Delaware limited liability company (collectively, “Thoma Bravo” or our “Principal Stockholder”). The Director Nomination Agreement provides our Principal Stockholder the right to designate (i) all of the nominees for election to the Company’s Board for so long as our Principal Stockholder controls, in the aggregate, 40% or more of the total number of the Company’s shares of common stock beneficially owned by our Principal Stockholder upon completion of our IPO, as adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or similar changes in our capitalization, or such amount of shares, as adjusted (the “Original Amount”); (ii) a number of directors (founded up to the nearest whole number) equal to 40% of the total directors for so long as our Principal Stockholder beneficially owns at least 30% and less than 40% of the Original Amount; (iii) a number of directors (rounded up to the nearest whole number) equal to 30% of the total directors for so long as our Principal Stockholder beneficially at least 20% and less than 30% of the Original Amount; (iv) a number of directors (rounded up to the nearest whole number) equal to 20% of the total directors for so long as our Principal Stockholder beneficially owns at least 10% and less than 20% of the Original Amount; and (v) one director for so long as our Principal Stockholder beneficially owns at least 5% of the Original Amount. In each case, our Principal Stockholder’s nominees must comply with applicable law and stock exchange rules. In addition, our Principal Stockholder is entitled to designate the replacement for any of its board designees whose service terminates prior to the end of the director’s term regardless of our Principal Stockholder’s beneficial ownership at such time. Our Principal Stockholder also has the right to have its designees participate on committees of our Board proportionate to its stock ownership, subject to compliance with applicable law and stock exchange rules. The Director Nomination
Agreement also prohibits us from increasing or decreasing the size of our Board without the prior written consent of our Principal Stockholder. The Director Nomination Agreement will terminate at such time as our Principal Stockholder owns less than 5% of the Original Amount. Our Principal Stockholder may assign its designation rights under the Director Nomination Agreement to an affiliate.
Charles Goodman, Ossa FisherSteve Daly, Brian Jaffee and Paul Holden Spaht, Jr.,Lloyd "Buzz" Waterhouse, the Class I directors that are nominated for election at the Annual Meeting,III nominees, were nominated by Thoma Bravo pursuant to the Director Nomination Agreement.Agreement for evaluation and consideration by the Compensation and Nominating Committee and the Board.
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Stockholder Recommendations for Director Nominees
Subject to the requirements of the Director Nomination Agreement, the Compensation and Nominating Committee will consider stockholder nominations for membership on the Board. ForSee “Commonly Asked Questions and Answers About the 2023 Annual Meeting, nominations may be submitted to 6330 South 3000 East, Suite 700, Salt Lake City, UT, 84121, Attn: Corporate Secretary, and such nominations will then be forwarded toMeeting—What is the Chair ofdeadline for submitting a stockholder proposal or director nomination for the Compensation and Nominating Committee. Recommendations must be in writing and we must receive the recommendation no later than the close of business on February 25, 2023 and not earlier than the close of business on January 26, 2023. Recommendations must also include certain other procedural requirements as specified in our Bylaws. In addition, to comply with the universal proxy rules (once applicable), stockholders who intend to solicit proxies in support of director nominees, other than the Company’s nominees, must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 27, 2023.2025 Annual Meeting?” above.
When filling a vacancy on the Board, the Compensation and Nominating Committee will identify the desired skills and experience of a new director and will nominate individuals who it believes can strengthen the Board’s capabilities and further diversify the collective experience represented by the then-current directors. The Compensation and Nominating Committee may engage third parties to assist in the search and provide recommendations. Also, directors are generally asked to recommend candidates for the position. The candidates will then be evaluated based on the process outlined in our Corporate Governance Guidelines and the Compensation and Nominating Committee charter, and the same process will be used for all candidates, including candidates recommended by stockholders.
Our Board is committed to diversity and, going forward, intends to seek qualified women and individuals from underrepresented minority groups to include in the pool from which new candidates are selected. Currently, of the eight directors on our Board, one is a woman.
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PROPOSAL 1 — ELECTION OF DIRECTORS
Our Board recommends that the nominees below be elected as members of the Board at the Annual Meeting.
Name |
| Class |
| Age(1) |
| Position |
| Year Elected |
| Year |
| Expiration |
Steve Daly |
| III |
| 59 |
| CEO and Director |
| 2020 |
| 2024 |
| 2027 |
Brian Jaffee |
| III |
| 38 |
| Director |
| 2020 |
| 2024 |
| 2027 |
Lloyd “Buzz” Waterhouse |
| III |
| 72 |
| Director |
| 2021 |
| 2024 |
| 2027 |
Name | Class | Age(1) | Position | Year Elected | Year Current Term Expires | Expiration Year of Term For Which Nominated | ||||||||||||||||
Charles Goodman | I | 61 | Chair of the Board | 2020 | 2022 | 2025 | ||||||||||||||||
Ossa Fisher | I | 45 | Director | 2021 | 2022 | 2025 | ||||||||||||||||
Paul Holden Spaht, Jr. | I | 47 | Director | 2020 | 2022 | 2025 |
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Each above-named director nominee was recommended for electionnomination by the Compensation and Nominating Committee for considerationand by the Board andfor consideration by our stockholders and has agreed to serve as a director, if elected. If, before the Annual Meeting, any nominee becomes unable to serve, or chooses not to serve, the Board may nominate a substitute. If that happens, the persons named as proxies on the proxy card will vote for the substitute. Alternatively, the Board may either let the vacancy stay unfilled until an appropriate candidate is identified or reduce the size of the Board to eliminate the unfilled seat.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE DIRECTOR NOMINEES.
Director Nominees to Serve for a Three-Year Term Expiring at the 2027 Annual Meeting of Stockholders.
Steve Daly has served as our Chief Executive Officer since July 2020. Mr. Daly has also been a member of our Board since March 2020. Prior to this, Mr. Daly was the Chief Executive Officer of LANDESK/Ivanti, an IT management and security software company from 2008 to 2020. Mr. Daly holds a bachelor’s degree in Mechanical Engineering and a master’s degree in Business Administration, both from Brigham Young University.
We believe Mr. Daly is qualified to serve as a member of our Board due to his experience as our Chief Executive Officer and his executive experience at other software companies.
Brian Jaffee has served on our Board since March 2020. Mr. Jaffee has been serving as a Partner at Thoma Bravo since 2021. Mr. Jaffee joined Thoma Bravo in 2014 as a Vice President. Prior to joining Thoma Bravo, Mr. Jaffee served as an Associate and Senior Associate at Veritas Capital. Prior to joining Veritas in 2009, he worked as an Investment Banking Analyst in the Leveraged Finance Group at Merrill Lynch, where he originated structured and executed leveraged loan and high yield bond financings for leveraged buyouts, strategic acquisitions, and recapitalizations across a wide range of industries. Mr. Jaffee currently serves on the board of directors of several software and technology service companies in which certain investment funds advised by Thoma Bravo hold an investment. Mr. Jaffee holds a bachelor’s degree, magna cum laude, in Finance from Miami University and an MBA from University of Chicago.
We believe Mr. Jaffee’s business and director experience at technology and software companies makes him a valuable member of our Board.
Lloyd “Buzz” Waterhouse has served on our Board since September 2021. Mr. Waterhouse has also worked a senior advisor to New Mountain Capital since 2015. Mr. Waterhouse was previously the Chief Executive Officer of McGraw-Hill Education from 2012 to 2014, and before that served as Chief Executive Officer and President of Harcourt Education Group, a global education company from 2006 to 2008. From 2001 to 2004, Mr. Waterhouse served as Chief Executive Officer and Chairman of Reynolds and Reynolds Co., a leading provider of integrated solutions to automotive retailers. From May 2010 to February 2016, Mr. Waterhouse served on the board of directors of SolarWinds, Inc. Mr. Waterhouse holds a B.S. in finance from Pennsylvania State University and an M.B.A. from Youngstown State University.
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We believe Mr. Waterhouse’s leadership positions and experience as a Chief Executive Officer in organizations in the education industry as well as prior board experience makes him a valuable member of our Board.
Continuing Directors
Class I Directors (terms expiring at the 2025 Annual Meeting of Stockholders.Stockholders)
Charles Goodman has served as Chair of the Board since March 2020. Mr. Goodman ishas been an Operating Partner at Thoma Bravo. Prior to Thoma Bravo, Mr. Goodman served as Chief Executive Officer of PowerPlan, a Thoma Bravo portfolio company that sold to Roper Technologies in 2018. Prior to joining PowerPlan in 2015, Mr. Goodman was Chief Executive Officer of P2 Energy Solutions. Prior to joining P2 Energy Solutions, Mr. Goodman served as Chief Operating Officer of Ventyx and as EVP, Corporate Operations of Atmos Energy. Mr. Goodman currently serves as chair ofon the board for Adenza Group, Inc., Stamps.com Inc. (dba Auctane), Flexera, Frontline Technologies Group LLC (dba Frontline Education), Imperva, Imprivata, Quorum Software, QADof directors of several software and RealPage Inc. and as a director for Apttus Corporation (dba Conga) and Hyland.technology service companies in which certain investment funds advised by Thoma Bravo hold an investment. Mr. Goodman holds a bachelor’s degree in Petroleum Engineering from Texas Tech University.
We believe Mr. Goodman’s extensive software and technology experience as well as his experience serving as chair of the board for other education, technology and software companies, makes him a valuable member of our Board.
Ossa Fisher has served on our Board since July 2021. Ms. Fisher has served as the President of Aurora Innovation (Nasdaq: AUR) since February 2023. Previously, Ms. Fisher served as the President and Chief Operating Officer of Istation, Inc. sincefrom 2019 to January 2023 and previously served as Istation’s Chief Operating Officer from 2017 to 2018 and Chief Marketing Officer from 2015 to 2017. Prior to joining Istation, Ms. Fisher was the Senior Vice President of Strategy and Analytics at global dating leader, Match.com, where she served since May 2013. Swedish-born Fisher has a career history spanning growth strategy, customer analytics and marketing, all within competitive business industries. Ms. Fisher has a broad range of expertise in technology and media, including more than 10 years in the Technology, Media and Telecom practices of both Bain & Company from 2004 to 2013 and Goldman, Sachs & Co. from 1999 to 2002. Ms. Fisher also worked for the World Bank Group in the information technology investment division in 2003. Ms. Fisher holds a bachelor’s degree in Economics from Yale University, an M.A. in Education from Stanford University and an MBA from Stanford Graduate School of Business.
We believe Ms. Fisher’s expertise in technology and media, including more than 10 years in the Technology, Media and Telecom practices of both Bain & Company and Goldman, Sachs & Co, and in the IT investment division of the World Bank Group, and strategic and customer service expertise from her experience at Match.com makes her a valuable member of our Board.
Paul Holden Spaht, Jr. has served on our Board since March 2020. Mr. Spaht has served as a Managing Partner at Thoma Bravo since November 2013. Mr. Spaht joined Thoma Bravo as a Vice President in 2005, became a Principal in 2008 and became a Partner in 2011. Prior to joining Thoma Bravo, he worked for several years at Morgan Stanley in both its investment banking and private equity divisions, and served as part of Thomas H. Lee Partners’ investment team. Mr. Spaht currently serves on the board of directors of several software and technology service companies in which certain investment funds advised by Thoma Bravo hold an investment, including Apttus Corporation (dba Conga), Adenza Group, Inc., Frontline Technologies Group, LLC (dba Frontline Education), and Trader Corporation.investment. Mr. Spaht was a Fulbright Scholar. Mr. Spaht holds a bachelor’s degree of Arts, Economics from Dartmouth College and an MBA from Harvard Business School.
We believe Mr. Spaht’s business and director experience at technology and software companies makes him a valuable member of our Board.
Continuing Directors
Class II Directors (terms expiring at the 20232026 Annual Meeting of Stockholders)
Erik Akopiantz has served on our Board since March 2020. Mr. Akopiantz has served as an Operating Partner at Thoma Bravo since April 2014. Mr. Akopiantz’s prior experience includes serving as the Chief Financial Officer of Roadnet Technologies, Inc. from 2011 to 2014, the Chief Operating Officer of Paranet Solutions, LLC from 2008 to 2011, the Chief Executive Officer of Digital Reach from 2006 to 2008, and various executive finance roles for The SABRE Group from 2002 to 2006. Mr. Akopiantz currently serves on the board of directors of several
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software and technology service companies in which certain investment funds advised by Thoma Bravo hold an investment including Apttus Corporation (dba Conga), Barracuda Networks, Inc., Frontline Technologies Group LLC (dba Frontline Education), Imperva, Inc., Kofax Inc., Quorum Business Solutions, Inc., Proofpoint, Inc., RealPage Inc., Sophos Ltd., Stamps.com Inc. (dba Auctane) and Veracode Software, Inc. Mr. Akopiantz alsohas previously served on the board of directors of a number ofseveral former Thoma Bravo portfolio companies, including iPipeline, Inc., Ellie Mae, Inc. and Planview, Inc. and an operating advisor to several Thoma Bravo portfolio companies. Mr. Akopiantz earned degrees in a Bachelor of Science, Finance from the University of Vermont and an MBA from the Rice University.
We believe Mr. Akopiantz’s extensive operating, board and industry experience and overall knowledge of our business makes him a valuable member of our Board.
James “Jaimie”“Jamie” Hutter has served on our Board since March 2020. Mr. Hutter joined Thoma Bravo in 2014 as an Associate and was promoted to Senior Associate in 2016, Vice President in 2018, and Senior Vice President in 2022.2022 and Principal in 2023. Mr. Hutter focuses primarily on application software investments. Prior to joining Thoma Bravo, he worked in investment banking at Morgan Stanley. Mr. Hutter currently serves on the board of directors of Apttus Corporation (dba Conga), Adenza Group, Inc.several software and Stamps.com Inc. (dba Auctane).technology service companies in which certain investment funds advised by Thoma Bravo hold an investment. Mr. Hutter earned his bachelor’s degree with Honors in Science, Technology, & Society at Stanford University.
We believe Mr. Hutter’s business and director experience at technology and software companies makes him a valuable member of our Board.
Class III Directors (terms expiring at the 2024 Annual Meeting of Stockholders)
Steve Daly has served as our Chief Executive Officer since July 2020. Mr. Daly has also been a member of our Board since March 2020. Prior to this, Mr. Daly was the Chief Executive Officer of LANDESK/Ivanti, an IT
management and security software company from 2008 to 2021. Mr. Daly holds a bachelor’s degree in Mechanical Engineering and a master’s degree in Business Administration, both from Brigham Young University.
We believe Mr. Daly is qualified to serve as a member of our Board due to his experience as our Chief Executive Officer and his executive experience at other software companies.
Brian Jaffee has served on our Board since March 2020. Mr. Jaffee has been serving as a Partner at Thoma Bravo since 2021. Mr. Jaffee joined Thoma Bravo in 2014 as a Vice President. Prior to joining Thoma Bravo, Mr. Jaffee served as an Associate and Senior Associate at Veritas Capital. Prior to joining Veritas in 2009, he worked as an Investment Banking Analyst in the Leveraged Finance Group at Merrill Lynch, where he originated structured and executed leveraged loan and high yield bond financings for leveraged buyouts, strategic acquisitions, and recapitalizations across a wide range of industries. Mr. Jaffee currently serves on the board of directors of Apttus Corporation (dba Conga), Adenza Group, Inc., Stamps.com Inc. (dba Auctane) and Frontline Technologies Group, LLC (dba Frontline Education). Mr. Jaffee holds a bachelor’s degree, magna cum laude, in Finance from Miami University and an MBA from University of Chicago.
We believe Mr. Jaffee’s business and director experience at technology and software companies makes him a valuable member of our Board.
Lloyd “Buzz” Waterhouse has served on our Board since September 2021. Mr. Waterhouse has also worked a senior advisor to New Mountain Capital since 2015. Mr. Waterhouse was previously the Chief Executive Officer of McGraw-Hill Education from 2012 to 2014, and before that served as Chief Executive Officer and President of Harcourt Education Group, a global education company from 2006 to 2008. From 2001 to 2004, Mr. Waterhouse served as Chief Executive Officer and Chairman of Reynolds and Reynolds Co., a leading provider of integrated solutions to automotive retailers. From May 2010 to February 2016, Mr. Waterhouse served on the board of directors of SolarWinds, Inc. Mr. Waterhouse holds a B.S. in finance from Pennsylvania State University and an M.B.A. from Youngstown State University.
We believe Mr. Waterhouse’s leadership positions and experience as a Chief Executive Officer in organizations in the education industry as well as prior board experience makes him a valuable member of our Board.
Controlled Company; Independence Status
Our Principal Stockholder controls a majority of our outstanding common stock. As a result, we are a “controlled company.” Under The New York Stock Exchange (“NYSE”)NYSE rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain NYSE corporate governance requirements, including the requirements that, within one year of the date of the listing of our common stock:
that:
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We currently have a majority of independent directors on our Board. See “Board Leadership Structure—Independence” below. In addition, our Audit Committee consists entirely of independent directors. Our Compensation and Nominating Committee, however, may not consist of independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.
Board Meetings and Committees
Our Board has an Audit Committee and a Compensation and Nominating Committee. The composition, duties and responsibilities of these committees are as set forth below. In the future, our Board may establish other committees, as it deems appropriate, to assist it with its responsibilities.
We became a public company upon the completion Each of our IPOstanding committees has a written charter, which is available on the Investor Relations page of our website at https://ir.instructure.com. Our website is not incorporated by reference in, July 2021. or is part of, this Proxy Statement.
For the year ended December 31, 2021,2023, our Board held 13 meetings. Our Audit Committee and our Compensation and Nominating Committee were each formed in connection with the closing of our IPO. During 2021,thirteen meetings, the Audit Committee held 7eight meetings and the Compensation and Nominating Committee held 7six meetings. Directors are expected to attend the annual meeting of stockholders and all or substantially all of the Board meetings and meetings of committees on which they serve. In 2021,2023, each director attended at least 75% of the meetings of the Board during such director’s tenure and the total number of meetings held by any of the committees of the Board on which the director served. One director then in office attended the annual meeting of stockholders held on May 25, 2023. Our Company encourages our board members to attend annual meetings.
Additionally, the rules of the NYSE require that non-management directors of a listed company meet periodically in executive sessions and that independent directors meet inhold an executive session at least once a year. TheAlternatively, companies may instead choose to hold regularly scheduled executive sessions of the independent
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directors only. During 2023, the Company’s non-management directors met periodically in executive sessions and the Company’s independent directors met separately in executive session at least one time during 2021.time. Mr. Charles Goodman, Chair of the Board, presided over the executive sessions of the independent directors.
Each of our standing committees has a written charter which is available on the Investor Relations page of our website at https://ir.instructure.com. Our website is not part of this notice and proxy statement.
The table below sets forth the composition of our Board committees:
Board Member | Audit Committee | Compensation and Nominating Committee | ||
| X (Chair) | |||
| X | |||
| ||||
Paul Holden Spaht, Jr | X | |||
Erik Akopiantz | X (Chair) | |||
James Hutter | ||||
Steve Daly | ||||
Brian Jaffee | X | |||
Lloyd “Buzz” Waterhouse | X |
Audit Committee
Our Audit Committee is composed of Erik Akopiantz, Ossa Fisher, and Lloyd “Buzz” Waterhouse, with Erik Akopiantz serving as chair of the committee. We comply with the audit committee requirements of the SEC and NYSE, which require that the Audit Committee be composed of all independent directors within one year following the IPO.directors. Our Board has determined that Mr. Akopiantz, Ms. Fisher and Mr. Waterhouse meet the heightened independence requirements of Rule 10A-3 under the Exchange Act and the applicable listing standards of NYSE. Our Board has determined that Mr. Akopiantz is an “audit committee financial expert” within the meaning of SEC regulations and applicable listing standards of NYSE. The Audit Committee’s responsibilities include:
•
pre-approving audit and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;
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Compensation and Nominating Committee
Our Compensation and Nominating Committee is composed of Charles Goodman, Brian Jaffee and Paul Holden Spaht, Jr., with Charles Goodman serving as chair of the committee. As a controlled company, we rely upon the exemption for the requirement that we have a Compensation and Nominating Committee comprised entirely of independent directors. The Compensation and Nominating Committee’s responsibilities include:
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•
•
•
•
•
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overseeing and administering our compensation and similar plans;
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Board Leadership Structure
The following section describes our Board leadership structure, the reasons our Board considers that this structure is appropriate at this time, the roles of various positions, and related key governance practices. Our Board believes that the mix of experienced independent directors, including those directors affiliated with our Principal Stockholder, and our Chief Executive Officer, that currently make up our Board, our Board committee composition and the separation of the roles of Chair and Chief Executive Officer benefit the Company and its stockholders.
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Independence
Independence
The Board has affirmatively determined that, with the exception of Mr. Daly, our Chief Executive Officer, all other members of the Board meet the NYSE requirements to be independent directors. In making this determination, our Board considered the relationships that each such non-employee director has with the Company and all other facts and circumstances that our Board deemed relevant in determining their independence, including beneficial ownership of our common stock.
Chair and Chief Executive Officer
With respect to the roles of Chair and Chief Executive Officer, the Corporate Governance Guidelines provide that the roles may be separated or combined, and the Board will exercise its discretion in combining or separating these positions as it deems appropriate in light of prevailing circumstances. Since the IPO, the roles of Chair and Chief Executive Officer have been separated. The Board believes that this structure clarifies the individual roles and responsibilities of Chief Executive Officer and Chair, streamlines decision-making, and enhances accountability.
Our Chief Executive Officer, Mr. Steve Daly, is a member of the Board, but has not been appointed as Chair. The Board believes that, at this time, separating the roles of Chair and Chief Executive Officer is the most effective leadership structure because it allows Mr. Daly to focus on the management of the Company, and day-to-day operations and allowsengaging with external stakeholders. Specifically, Mr. Daly has been crucial in our ability to meet the continuing increased demand for our products and increased adoption of cloud-based software generally and focus on our new and existing customers.
Our Chair, Mr. Goodman, our Chair, to leveragean independent member of the Board, focuses his strong backgroundattention on the broad strategic issues considered by the Board leveraging his extensive software and technology experience, as well as his experience serving as chair of the board for other education, technology and software companies, to provide strategic guidance and effective oversight of management.management, engaging with the Chief Executive Officer between Board meetings and providing overall guidance to our Chief Executive Officer as to the Board’s views and perspectives. Mr. Goodman has valuable experience on the issues, challenges, and opportunities we face, positioning him well to develop agendas and ensure that the Board’s time and attention are focused on the most critical matters.
Self-Evaluation
Our Compensation and Nominating Committee was established uponCorporate Governance Guidelines are available on the completionInvestor Relations page of our IPOwebsite at https://ir.instructure.com. Our website is not incorporated by reference in, July 2021. Going forward, our Compensationor is part of this Proxy Statement.
Self-Evaluation
The Board recognizes that a thorough, constructive evaluation process enhances the Board’s effectiveness and Nominating Committee willis an essential element of good corporate governance. Our Board and its committees each conduct an annual performance evaluation to determine whether the Board, its committees and management are functioning effectively. We expect that this will includeThis includes survey materials as well as individual conversations between each directorsoliciting feedback on a range of issues, including, among other things, Board and the Chair. The evaluation will focus on the Board’scommittee structure and the committees’ contributions to the Company,composition, meeting process and dynamics, execution of key responsibilities, interaction with management, auditors, advisors and other parties, and information and resources, with an enhanced focus on areas in which the Board, its committees or management believes that the Board and its committees could improve.
The Board will reviewreviews the results of the annual board evaluation to determine whether the current leadership structure continues to be appropriate for the Company and its stockholders, and that the Board and its committees are functioning effectively. Our Corporate Governance Guidelines provide the flexibility for our Board to modify our leadership structure in the future as appropriate.
Management Succession
The Compensation and Nominating Committee reviews and approves corporate goals and objectives relevant to Chief Executive Officer compensation and evaluates the Chief Executive Officer’s performance in light of these goals and objectives. The Compensation and Nominating Committee recommends to the Board the Chief Executive Officer’s compensation level or changes to such level based on this evaluation and any other factors the committee deems relevant. In determining the long-term incentive component of Chief Executive Officer compensation, the Compensation and Nominating Committee may consider the Company’s performance and relative stockholder return, the value of similar incentive awards given to chief executive officers at comparable companies and the awards given to the Company’s Chief Executive Officer in past years. In evaluating and recommending Chief Executive Officer compensation, the Compensation and Nominating Committee will consider the results of the most recent stockholder advisory vote on executive compensation required by Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), if applicable.
The entire Board works with the Compensation and Nominating Committee to evaluate potential successors to the Chief Executive Officer and other officers (the “Succession Plan”). The Compensation and Nominating Committee is responsible for periodically reviewing the Succession Plan, developing and evaluating potential candidates for officer positions and recommending to the Board any changes to and any candidates for succession under the Succession PlanPlan.
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Hedging Transactions
Pursuant to our Insider Trading Policy, we prohibit our employees, directors and officers from engaging in any speculative or hedging transactions or any other transactions that are designed to offset any decrease in the value of our securities. Such hedging transactions may permit a director, officer or employee to continue to own Company securities obtained through employee benefit plans or otherwise, but without the full risks and rewards of ownership. When that occurs, the director, officer or employee may no longer have the same objectives as the Company’s other stockholders. Additionally, directors, officers
Risk Oversight
Our Board as a whole, and other employees are prohibited from holding our securities in a margin account or otherwise pledging our securities as collateralthrough its committees, has responsibility for a loan.
Risk Oversight
Ourthe oversight of risk management. In this role, the Board oversees the risk management activitiesprocesses designed and implemented by our management. Ourmanagement to ensure such processes are adequate and functioning as designed. Additionally, the Board executes its oversight responsibility forsets the tone at the top as it relates to the approach to enterprise-wide risk management, both directlydesigned to support the achievement of organizational objectives, including capital structure and through its committees.strategic objectives to improve long-term organizational performance and enhance stockholder value. A fundamental part of risk management is not only understanding the most significant risks a company faces and what steps management is taking to monitor and control those risks, but also understanding what level of risk is appropriate for any given company. The involvement of the full Board also considers specificin reviewing our business and related risk topics, including risks associated with our strategic plan, business operationsexposures is an integral aspect of its assessment of the Company’s risk profile and capital structure.appropriate level of risk. In addition, our Board receivesis actively involved in overseeing our management of enterprise risk by receiving detailed regular reports fromand engaging in discussions with members of our senior management and other personnel that include assessments and potential mitigation of the risks and exposures involved with their respective areas of responsibility.
OurWhile our full Board has overall responsibility for risk oversight, it has delegated to the Audit Committee oversight of our risk management process.process, in partnership and coordination with the Compensation and Nominating Committee. Our other committeesAudit Committee is committed to regularly reviewing major financial risk exposures, as well as advising and overseeing the effectiveness of our cybersecurity and data protection programs and practices, including controls, policies and guidelines, security strategy and technology planning, compliance, and preparedness and incident response planning, as well as identifying, assessing and mitigating such risks across the Company’s products, services and business operations. The Audit Committee reports to the Board when a cybersecurity matter rises to the level of a material or enterprise level risk. Information security is the responsibility of our Information Security and Compliance department, overseen by our Chief Information Officer (“CIO”) and Chief Information Security Officer. The CIO presents updates to our Audit Committee as needed and, also consideras necessary, to our Board. These reports include detailed updates on our performance preparing for, preventing, detecting, responding to and addressrecovering from cyber incidents. The CIO also promptly informs and updates our Board about any information security incidents that may pose significant risk asto the Company. Our Nominating and Governance Committee oversees the design and implementation of our compensation policies and practices to determine whether they perform their respective committee responsibilities. Allencourage excessive risk taking, and evaluating policies and practices that could mitigate any such risk. As with senior management, all committees report to the full Board as appropriate, including when a matter rises to the level of a material or enterprise level risk.
Code of Ethics
We have adopted a Code of Ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. Our Code of Ethics is available on the Investor Relations page of our website at https://ir.instructure.com. We intend to disclose any amendments to the Code of Ethics, or any waivers of its requirements, on our website. Our website is not incorporated by reference in, or in public filings.is part of, this Proxy Statement.
Compensation Committee Interlocks and Insider Participation
The directors that served as members of the Compensation and Nominating Committee during the fiscal year ended December 31, 2023 were Charles Goodman, Brian Jaffee and Paul Holden Spaht, Jr. None of these individuals has at any time been an officer or employee of the Company. None of our executive officers currently
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serves, or in the past fiscal year has served, as a member of the Boardboard of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation and Nominating Committee.
Communications by Stockholders and Other Interested Parties with the Board
Stockholders and other interested parties may contact an individual director, the Board as a group, or a specified Board committee or group, including the independent directors as a group, by sending regular mail to:
Instructure Holdings, Inc.
6330 South 3000 East, Suite 700
Salt Lake City, UT 84121
Telephone: (800) 203-6755
Attention: Board of Directors
c/o Chief People Officer and Legal Officer
Each communication should specify which director or directors the communication is addressed to, as well as the general topic of the communication. The Company will receive the communications and process them before forwarding them to the addressee. The Company may also refer communications to other departments within the Company. The Company generally will not forward to the directors a communication that is primarily commercial in nature, relates to an improper or irrelevant topic, or requests general information regarding the Company.
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EXECUTIVE OFFICERS
Below is a list of the names, ages, positions, and a brief account of the business experience of the individuals who serve as executive officers of the Company as of April 15, 2022:
4, 2024:
Name | Age | Position | ||||||
Steve Daly | 59 | Chief Executive Officer and Director | ||||||
| 54 | President and Chief | ||||||
| 51 | Chief Financial Officer | ||||||
Mitch Benson | 50 | Chief Strategy Officer | ||||||
Matthew A. Kaminer | 50 | Chief People and Legal Officer | ||||||
| ||||||||
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Steve Daly is our Chief Executive Officer. Mr. Daly’s biographical information is included in the section titled “Proposal 1—1 — Election of Directors”Directors—Director Nominees to Serve for a Three-Year Term Expiring at the 2027 Annual Meeting of Stockholders” of this Proxy Statement.
Chris Ball has served as our President and Chief Operating Officer since January 2023. Prior to his role at Instructure, Mr. Ball served as General Manager, Americas Enterprise of Adobe Systems Inc., a computer software company, from September 2017 to January 2020, when he left such company to pursue other interests. From September 2014 to August 2017, Mr. Ball served as the Entrepreneur In Residence of Lightspeed Venture Partners, a global venture capital firm focused on multi-stage investments in the enterprise, consumer, and health sectors. Prior to his time at Lightspeed Venture Partners, Mr. Ball held leadership positions at SAP Americas, Inc., Infolio, Liquid Software, and Webhire. Mr. Ball holds a Bachelor of Arts degree in political science from the College of the Holy Cross and a Juris Doctorate degree from Suffolk University Law School.
Peter Walker has served as our Executive Vice President and Chief Financial Officer since November 2023. Prior to his role at Instructure, Mr. Walker served as the Executive Vice President and Chief Financial Officer of Sterling Check Corp. from July 2019 to November 2023, leading the company's initial public offering and debt refinancing. Prior to joining Sterling Check Corp., Mr. Walker served as the Chief Financial Officer of Jackson Hewitt from June 2017 to June 2019, leading the company’s sale to a new financial sponsor and refinancing the company’s debt. Prior to joining Jackson Hewitt, Mr. Walker spent over 15 years at Assurant, Inc. in senior finance strategy and risk management roles, most recently in the role of Chief Strategy Officer. Mr. Walker began his professional career in consulting with Ernst & Young LLP. Mr. Walker earned a Bachelor of Science degree in Accounting from Miami University of Ohio and a Master’s degree in Business Administration from New York University’s Stern School of Business. Mr. Walker is a Certified Public Accountant.
Mitch Benson has served as our as our Chief Strategy Officer since May 2022 and previously served as our Chief Product Officer sincefrom August 2019 and previously servedto May 2022, as Senior Vice President, Product from August 2017 to August 2019, as Vice President, Canvas Product from May 2016 to August 2017, and Vice President, K-12 Markets from 2014 to May 2016. Prior to joining Instructure in 2014, Mr. Benson was the Senior Vice President and Chief Learning Technology Officer of Pearson from 2009 to 2013 and a Senior Director of Microsoft from 2006 to 2009. Mr. Benson has also worked in the not-for-profit and public sectors in Washington State. Mr. Benson holds a bachelor’sBachelor’s degree in Comparative U.S. studies from the University of Washington, completed a fellowship in Not-for-Profit Leadership at the Stanford University Graduate School of Business, and holds a master’sMaster’s degree in Information Systems from Capella University.
Dale Bowen has served as our Chief Financial Officer since April 2020. Prior to his role at Instructure, Mr. Bowen served as the Chief Financial Officer of Consilio, a technology enabled eDiscovery service provider from 2013 to 2020, and prior to that, as the Vice President of Finance of GridPoint from 2006 to 2013. Mr. Bowen holds a bachelor’s degree in Business Management from the University of Utah, and a master’s degree in Financial Economics for Public Policy from American University.
Matthew A. Kaminer has served as our Chief Legal Officer since 2015.2015 and as our Chief People Officer since February 2022. Prior to this, Mr. Kaminer served as General Counsel of Collective, Inc., a video and mobile advertising company, from 2013 to 2015. Mr. Kaminer has also previously served as General Counsel of Epocrates, Inc. and MediMedia USA, Inc., and Assistant General Counsel and Chief Privacy Officer at WebMD Health Corp. Mr. Kaminer holds a bachelor’sBachelor’s degree in Computer Science from Pennsylvania State University and a Juris Doctorate from George Washington University.
Melissa Loble has served as our Chief Customer Experience Officer since January 2020, and previously served as Senior Vice President of Customer Success and Partnerships from October 2018 to April 2020, Vice President of Platform, Partnerships and Professional Services from April 2017 to October 2018, and Vice President of Platform and Partnerships from December 2013 to April 2017. Ms. Loble teaches leadership courses on managing technology for education change at University of California, Irvine. Ms. Loble holds a bachelor’s degree in Political Science and in History from University of California, Los Angeles, a master’s degree in educational policy from Teacher’s College, Columbia University, and a master’s degree in Business Administration from Columbia Business School.
Frank Maylett has served as our Chief Revenue Officer since April 2020, and previously served as Global Head of Sales from 2019 to 2020. Prior to joining Instructure in 2019, Mr. Maylett served as President and Chief Executive Officer of RizePoint, Inc. from September 2015 to August 2019 and, prior to that, as Executive Vice President for Global Sales, Services, and Alliances at Workfront from 2012 to 2015. Mr. Maylett holds a bachelor’s degree in Business from the University of Phoenix and studied Business Administration and Management at the University of Utah.16
COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation
The purpose of this compensation discussion and analysis section is to discuss the material components of the executive compensation program for our Chief Executive Officer, our Chief Financial Officer and our three other most highly compensated officers, who we refer to as our “Named Executive Officers” or “NEOs.” For the year ended December 31, 2021,2023, our NEOs and their positions were as follows:
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Dale Bowen,•
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Frank Maylett,•
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Compensation Philosophy and Objectives
Our Compensation and Nominating Committee reviews and approves the compensation of our NEOs and oversees and administers our executive compensation programs and initiatives. As we gain experience as a public company, we expect that the specific direction, emphasis and components of our executive compensation program will continue to evolve. For example, since our IPO, we have reduced our reliance upon subjective determinations made by our Compensation and Nominating Committee in favor of a more empirically-based approach that involves benchmarking against peer companies. Accordingly, the compensation paid to our NEOs for fiscal year 2021 is not necessarily indicative of how we will compensate our NEOs after this fiscal year.
Our executive compensation program is designed to provide our Named Executive OfficersNEOs with meaningful incentives and rewards, while effectively balancing the short-term and long-term interests of our stockholders with our ability to attract and retain talented executives.
The Compensation and Nominating Committee has the primary responsibility for establishing our executive compensation philosophy and determining the specific components and levels of each Named Executive Officer’sNEO’s compensation (or recommending to our Board for approval, with respect to our CEO). Our executive compensation program is based on four guiding principles, as set forth by the Compensation and Nominating Committee. We have createdfollow a compensation program that combines short-term and long-term components, cash and equity and fixed and performance-based contingent payments, in the proportions we believe achieve these four guiding principles:
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To achieve these objectives, our Compensation and Nominating Committee expects to implement new compensation plans and maintainhas designed our current compensation plans, in orderand implements changes to our compensation plans as needed, to tie a substantial portion of the executives’ overall compensation to key strategic financial and operational goals such as profitability and revenue growth.
An important element of our compensation philosophy is to provide our Named Executive OfficersNEOs with compensation packages that are competitive with the compensation offered to the executives in comparable positions in technology companies of similar sizesizes and industries in order to attract dynamic and innovative
executives to lead our strategic initiatives. As such, the Compensation and Nominating Committee utilizes and relies significantly on a competitive
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market analysis when determining (or recommending to our Board, in the case of our CEO) the size, components and mix of our Named Executive Officers’NEOs’ compensation packages.
Historically, our Named Executive Officers’NEOs’ target annual compensation has consisted of three principal components: (a) base salary, (b) a performance-based cash bonus or sales commission and (c) long-term equity incentive compensation. The base salary component has primarily been designed to provide a predictable level of financial stability. The performance-based cash bonus has been designed to reward the achievement of the short-term goals contained in our operating plan. The base salary and performance-based cash bonus have been referred to as the cash component of the compensation plan. Thelong-term equity compensation component is primarily designed to incentivize and retain our executives and to reward the achievement of our long-term financial and strategic objectives.
Compensation and Nominating Committee Procedures
In order to ensure that we continue to remunerate our executives appropriately, the Compensation and Nominating Committee retained Compensia as its independent compensation consultant to review its policies and procedures with respect to executive compensation. Compensia assists the Compensation and Nominating Committee by providing comparative market data on compensation practices and programs based on an analysis of peer competitors and by providing guidance on industry best practices. The Compensation and Nominating Committee retains the right to modify or terminate its relationship with Compensia or select other outside advisors to assist the Compensation and Nominating Committee in carrying out its responsibilities. In connection with its engagement of Compensia and based on the information presented to it, the Compensation and Nominating Committee assessed the independence of Compensia pursuant to applicable SEC and NYSE rules and concluded that Compensia’s work for the Compensation and Nominating Committee did not raise any conflict of interest for 2021.2023. Outside of providing executive and director advisory services to our Compensation and Nominating Committee, Compensia provided no other services to the Company or its affiliates.
Mitigation of Risk
The Company has determined that any risks arising from its compensation programs and policies are not reasonably likely to have a material adverse effect on the Company. The Company’s compensation programs and policies mitigate risk by combining performance-based, long-term compensation elements with payouts that are highly correlated to the value delivered to stockholders. The combination of performance measures for annual bonuses and the equity compensation programs, as well as the multiyear vesting schedules for equity awards encourage employees to maintain both a short and a long-term view with respect to Company performance.
Elements of Compensation
Our current executive compensation program, which was set by our Compensation and Nominating Committee, consists of the following components:
•
•
•
Merger Awards (as defined below);
other executive benefits and perquisites; and
•
We combine these elements in order to formulate compensation packages that provide competitive pay, reward the achievement of financial, operational and strategic objectives and align the interests of our executive officers and other senior personnel with those of our stockholders.
18
Base Salary
The base salary established for each of our NEOs is intended to reflect each individual’s responsibilities, experience, prior performance and other discretionary factors deemed relevant by our Compensation and Nominating Committee. Base salary is also designed to provide our NEOs with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in our corporate performance. Our Compensation and Nominating Committee determines market level compensation for base salaries based on our NEOs’ experience in the industry with reference to the base salaries of similarly situated executives in other companies of similar size and stage of development operating in our industry. This determination is informal and based primarily on the general knowledge of our Compensation and Nominating Committee of practices within our industry and such base salaries have been periodically reviewed and adjusted by our Compensation and Nominating Committee. The table below sets forth the base salaries of each of our NEOs who was employed by us as of December 31, 2021.2023.
Name | Base Salary ($) | |||
Steve Daly | 486,675 | |||
| 475,000 | |||
Chris Ball | 400,000 | |||
Matthew A. Kaminer | 360,000 | |||
| 350,000 | |||
| 365,000 |
Performance-Based Cash Bonuses
Each of our NEOs (other than Mr. Maylett) is eligible to receive a performance-based annual bonus, subject to employment on the date of payment. The Compensation and Nominating Committee approved the 20212023 executive bonus objectives in April 2021on March 15, 2023 (such objectives, the “2021“2023 Bonus Plan”). Under the 20212023 Bonus Plan, performance-based cash bonuses were to be earned based on our actual performance as measured against a target Cash EBITDA amount equal to $177.7 million (the “Cash EBITDA Target”). Eacheach of our NEOs (other than Mr. Maylett) was eligible to earn hisa percentage of such NEO’s annual performance-based cash bonus target (which is a set percentage of the NEO’s base salary, as shown below) (the “Incentive Target”) based on the Company’s achievement levelperformance measured against an EBITDA target (“EBITDA Target”) and an annual recurring revenue (“ARR”) target (“ARR Target”) for the year ended December 31, 2023. The EBITDA and ARR components of the Cash EBITDA Target. Mr. Maylett did not participate in the 20212023 Bonus Plan but instead hadare weighted equally.
EBITDA and ARR are internal metrics used by management to evaluate the potentialhealth of the business on a cash basis. EBITDA generally reflects our earnings prior to earn sales commissions based on the achievementmaking adjustments for debt-related costs, including interest expense, taxes, depreciation, and amortization, as well as other items of sales targets.a significant or unusual nature. ARR represents annualized recurring revenue from subscription and support under contract at a point in time.
Our 20212023 Bonus Plan provided each NEO (except Mr. Maylett) with eligibility to earn between 50% andup to 150% of the NEO’s Incentive Target. Actual bonus amounts under our 20212023 Bonus Plan were based on the level of achievement of the Cash EBITDA Target and the ARR Target based on the schedule shown in the table below, with straight line interpolation for the achievement of an actual Cash EBITDA and ARR between percentagesthreshold and maximum performance levels. In addition, if actual EBITDA was below 97% of Cash EBITDA Target, shown below.payout with respect to the ARR component would have been capped at target level of achievement, even if actual ARR exceeded ARR Target achievement level.
19
EBITDA |
|
| ARR(1) | ||||||
Achievement of Target |
|
| EBITDA Component of Incentive Target Earned (%) |
|
| Achievement of Target |
|
| ARR Component of Incentive Target Earned (%) |
120% or greater than Target (Maximum) |
|
| 150 |
|
| 103% or greater than Target (Maximum) |
|
| 150 |
100% of Target (Target) |
|
| 100 |
|
| 100% of Target (Target) |
|
| 100 |
90% of Target (Threshold) |
|
| 50 |
|
| 98% of Target (Threshold) |
|
| 50 |
Below 90% of Target |
|
| 0 |
|
| Below 97% of Target |
|
| 0 |
| ||||
| ||||
| ||||
| ||||
|
In general, we consider our Cash EBITDA Target and ARR Target for 20212023 to have been challenging but achievable. Our actual Cash EBITDA amount for 20212023 was approximately 108.8%100.1% of the Cash EBITDA Target and asour actual ARR amount for 2023 was approximately 97.2% of the ARR Target. As a result, on February 28, 2022,29, 2024, each of our NEOs received a payment equal to 122%54.1% of hissuch NEO’s Incentive Target. The table below sets forth the Incentive Target (as both a percentage of base salary and a dollar amount based on the NEO’s base salary as of December 31, 2021)2023) and actual bonus payment amounts for each of our NEOs who was employed on the bonus payment date.
Name |
| Incentive |
|
| Incentive |
|
| Bonus |
| |||
Steve Daly |
|
| 100 | % |
|
| 486,675 |
|
|
| 263,291 |
|
Peter Walker(1) |
|
| 100 | % |
|
| 62,466 |
|
|
| 33,794 |
|
Chris Ball(2) |
|
| 75 | % |
|
| 292,603 |
|
|
| 158,298 |
|
Matthew A. Kaminer |
|
| 50 | % |
|
| 180,000 |
|
|
| 97,380 |
|
Mitch Benson |
|
| 50 | % |
|
| 175,000 |
|
|
| 94,675 |
|
Dale Bowen(3) |
|
| 50 | % |
|
| 182,500 |
|
|
| — |
|
Cash EBITDA is an internal metric used by management to evaluate(1)
Name | Incentive Target (%) | Incentive Target ($) | Bonus Amount Earned ($) | |||||||||
Steve Daly | 100 | 450,000 | 549,000 | |||||||||
Dale Bowen | 50 | 165,000 | 201,300 | |||||||||
Matthew A. Kaminer | 45 | 148,950 | 181,719 | |||||||||
Frank Maylett(1) | — | — | — | |||||||||
Mitch Benson | 50 | 150,000 | 183,000 |
|
Long-Term Equity-Based Compensation
Prior to our IPO, we awarded equity-based compensation in the form of Class B Units of TopCo pursuant to the Second Amended and Restated Instructure Parent, LP Incentive Equity Plan and the Amended and Restated Limited Partnership Agreement of TopCo that are intended to constitute “profits interests” for U.S. federal income tax purposes (“Management Incentive Units”), which represent the right to share in any increase in the equity value of the company that exceeds a specified threshold. In connection with our IPO, our NEOs’ unvested Management Incentive Units were exchanged for restricted stock units (“IPO RSUs”) underAnnual Long-Term Equity-Based Compensation Awards
We maintain the Instructure Holdings, Inc. 2021 Omnibus Incentive Plan (the “2021 Plan”)., pursuant to which we grant annual equity awards to certain members of management, including our NEOs.
In general, when determining the size of annual equity award grants to our NEOs, our Compensation and Nominating Committee previously consideredconsiders an NEO’s current position with our Company, the size of the NEO’s total compensation package and the amount of existing vested and unvested equity awards, if any, then held by the NEO. PriorFor equity awards granted to the Take-Private Transaction,our NEOs in 2023, our Compensation and Nominating Committee determined the size of equity award grants after considering the following factors:
•
•
•
•
•
20
•
•
For Messrs. Kaminer, Maylett and Benson,
In January 2023, our Compensation and Nominating Committee with respectapproved and recommended to the sizeBoard for approval for our CEO) annual grants of equity grants madeawards of restricted stock units (“RSUs”) to each of our NEOs as set forth in the table below under the 2021 plan, and Mr. Walker was awarded an annual grant of RSUs upon commencement of his employment in general,November 2023. The RSUs generally vest over a four-year period subject to the determination process was very informal. Historically, ourNEO’s continued employment through the applicable vesting date, with (i) the RSUs granted to Messrs. Daly, Benson and Kaminer vesting in 16 equal installments with 1/16th of the RSUs vesting on the first 3-month anniversary of March 1, 2023 and the remaining portion of the RSUs vesting each subsequent 3-month anniversary thereafter, (ii) the RSUs granted to Mr. Bowen vesting in equal quarterly installments over a two-year period beginning on March 1, 2025, and (iii) the RSUs granted to Messrs. Ball and Walker vesting 25% on the first anniversary of March 1, 2023 and December 1, 2023, respectively, and the remaining 75% vesting on a quarterly basis thereafter. The RSUs are subject to forfeiture provisions as described below under “—Potential Payments upon Termination and Change in Control.” The Compensation and Nominating Committee made allbelieves that the time-based service requirements of these RSUs assist in retaining our NEOs and aligning their interests with those of shareholders.
Name | Grant Date | Number of RSUs Granted | ||||||
Steve Daly | 1/24/2023 | 214,008 | ||||||
Peter Walker(1) | 11/13/2023 | 305,998 | ||||||
Chris Ball | 1/24/2023 | 194,553 | ||||||
Matthew A. Kaminer | 1/24/2023 | 68,599 | ||||||
Mitch Benson | 1/24/2023 | 71,012 | ||||||
Dale Bowen | 1/24/2023 | 97,276 |
Sign-On and Retention Bonuses
Pursuant to our executive officers,Mr. Ball’s employment agreement entered into on January 1, 2023, Mr. Ball received a one-time sign-on and going forward,retention cash award of $200,000 in January 2023. In the Compensation and Nominating Committee will, subjectevent Mr. Ball resigns from the Company or the Company terminates his employment for cause, in each case, within a year of his January 9, 2023 start date, he would have been required to approval byrepay us the Board as deemed necessary by the Compensation and Nominating Committee, determine the size and terms and conditions of equity grants to our executive officers in accordance with the termsfull amount of the applicable incentive equity programsign-on and will approve them on an individual basis.
Prior toretention bonus. Because Mr. Ball’s sign-on and retention bonus was not earned until fiscal 2024, this bonus is not reported in the Take-Private Transaction, certain of our NEOs held equity awards that were cancelled and converted into cash consideration, which consideration was subject to generally the same terms as the corresponding, cancelled equity award, including vesting conditions (each such cash award being a “Merger Award”). For a discussion of the vesting and other material terms of the Management Incentive Units and Merger Awards, see “Narrative to Summary Compensation Table for fiscal 2023 and 2021 Grantswill instead be reported in the Summary Compensation Table for fiscal 2024.
Pursuant to Mr. Walker’s employment agreement entered into on September 27, 2023, Mr. Walker received a one-time initial sign-on and retention cash award of Plan-Based Awards Table.”
Effective upon$350,000, which was paid out in January 1, 2024 (the “Walker Advance Bonus”), and an additional sign-on and retention cash award of $200,000 with a tax gross-up, which was paid out in the completionfirst pay period following his November 13, 2023 start date (the “Walker Additional Bonus” and, together with the Walker Advance Bonus, the “Walker Bonuses”). In the event that Mr. Walker’s employment with the Company terminates for any reason (either voluntarily or involuntarily) within a year of our public offering, we implemented the 2021 Plan which is administered by our Compensation and Nominating Committee. Our 2021 Plan allows for the grant of equity incentives, such as grants of stock options, restricted stock, restricted stock units and stock appreciation rights. In lighthis November 13, 2023 start date, he will be required to repay us a percentage of the retentive valueWalker Bonuses (less the tax gross-up on the Walker Additional Bonus) proportionate to the time remaining in the 12-month period. For example, if he were to terminate employment with the Company after completing 70% of his initial 12-month period, he would be responsible for repaying us 30% of the IPO RSUsamount of the Walker Bonuses. Because Mr. Walker had only earned 13% of the Walker
21
Additional Bonus as of December 31, 2023 (based on the number of days elapsed between his November 13, 2023 start date and December 31, 2023) and will not earn the remaining 87% of the Walker Additional Bonus or any portion of the Walker Advance until 2024, only 13% of the Walker Additional Bonus is reported in the Summary Compensation Table for 2023, and the Merger Awards, the Compensation and Nominating Committee did not award any additional grants to our NEOs in 2021 following our initial public offering.
Effective upon the completion of our public offering, we also implemented the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which authorizes the grant of options to employees that are intended to qualify for favorable U.S. federal tax treatment under Section 423remaining 87% of the Code.Walker Additional Bonus and the full amount of the Walker Advance, to the extent earned, will be reported in the Summary Compensation Table for 2024.
Other Executive Benefits and Perquisites
We provide the following benefits to our executive officers, including our NEOs, on the same basis as other eligible employees:
•
•
•
•
•
•
We believe these benefits are generally consistent with those offered by other companies and specifically with those companies with which we compete for employees.
Employment Agreements and Severance Benefits
We are party to executive agreements with our NEOs, which provide eligibility for severance payments and benefits in connection with certain qualifying terminations of employment. The terms of the executive agreements with our NEOs are described in the sections captioned “Narrative to Summary Compensation Table and 20212023 Grants of Plan-Based Awards Table” and “Potential Payments upon a Termination of Employment or a Change in Control.”
Clawback Policy
Effective July 19, 2023, our Board adopted the Clawback Policy of Instructure Holdings, Inc. (the “Clawback Policy”), in compliance with the final clawback rules adopted by the SEC to implement Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Clawback Rules”) and the related NYSE listing standards. In accordance with the terms of the Clawback Policy, in the event the Company is required to prepare an accounting restatement, the Compensation Committee will require recoupment of any overpayment of applicable incentive-based compensation “received” (as such term is defined under the Clawback Rules) by a covered executive during the three completed fiscal years immediately preceding the accounting restatement date. The Clawback Policy provides the Compensation Committee with discretion to determine the method or methods for recouping any overpayment, including through reimbursement, recovery of gains, offset, cancellation of equity awards, or taking other remedial or recovery actions permitted by law.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code.Code
We focus on long-term stockholder value when determining all elements of compensation. As a result, tax deductibility is not our only consideration in awarding compensation. Section 162(m) of the Internal Revenue Code (the “Code”) generally limits the tax deductibility of compensation paid by public companies to covered employees, such that a public company generally can take a tax deduction for up to $1 million worth of compensation paid to any given covered employee in any calendar year. Although our Compensation and Nominating Committee is mindful of the benefits of tax deductibility when determining executive compensation, our Compensation and Nominating Committee may approve compensation that will not be fully-deductible in order to ensure competitive levels of total compensation for our executive officers and will retain flexibility to design compensation programs
22
that are in the long-term interests of the Company and our stockholders, with deductibility of compensation being one of a variety of considerations taken into account.
Section 280G of the Internal Revenue Code
Section 280G of the Code disallows a tax deduction with respect to “excess parachute payments” to certain executive officers of companies that undergo a change in control. In addition, Section 4999 of the Code imposes a 20% excise tax penalty on the individual receiving the “excess parachute payment”. Parachute payments are compensation that is linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans or programs and other equity-based compensation. “Excess parachute payments” are parachute payments that exceed a threshold determined under Section 280G of the Code based on an executive officer’s prior compensation. In approving compensation arrangements for our NEOs in the future, we expect that the Board will consider all elements of the cost to us of providing such compensation, including the potential impact of Section 280G of the Code. However, the Board may, in its judgment, authorize compensation arrangements that could give rise to loss of deductibility of Section 280G of the Code and the imposition of excise taxes under Section 4999 of the Code when it believes that such arrangements are appropriate to attract and retain executive talent.
Section 409A Considerations
Another section of the Code, Section 409A, affects the manner by which deferred compensation opportunities are offered to our employees because Section 409A requires, among other things, that “non-qualified“non-qualified deferred compensation” be structured in a manner that limits employees’ abilities to accelerate or further defer certain kinds of deferred compensation. To the extent any of our existing compensation arrangements are subject to Section 409A of the Code, we intend to operate them in accordance with the applicable rules thereunder, and we will continue to review and amend our compensation arrangements if necessary to comply with Section 409A. We do not provide for excise tax gross-ups under Section 409, Section 280G or otherwise to our executive officers and do not expect to do so in the future.
Accounting for Stock-Based Compensation
We follow Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC 718, for our equity-based compensation awards. ASC 718 requires companies to calculate the grant date “fair value” of their equity-based awards using a variety of assumptions. ASC 718 also requires companies to recognize the compensation cost of their equity-based awards in their income statements over the period that an associate is required to render service in exchange for the award. Future grants of stock options, restricted stock, restricted stock units and other equity-based awards under our equity incentive award plans will be accounted for under ASC 718. The Compensation and Nominating Committee regularly considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.
Stockholder Say-on-Frequency and Say-on-Pay Advisory Vote
We held an advisory vote on the frequency of future “Say-on-Pay” advisory votes (referred to as the “Say-on-Frequency” vote) at our 2022 annual meeting of stockholders, pursuant to which the majority of the advisory votes cast voted to hold our “Say-on-Pay” votes every year. The Board considered the outcome of this advisory vote and determined that future “Say-on-Pay” votes will be conducted every year. The Board will re-evaluate this determination after the next stockholder advisory “Say-on-Frequency” vote (which will be at the Company’s 2028 annual meeting of stockholders unless presented earlier).
In the advisory vote held at our 2023 annual meeting of stockholders, approximately 99.2% of the votes cast were in favor of our 2023 executive compensation programs. Pursuant to the “Say-on-Pay Proposal” included in this Proxy Statement, our stockholders will be voting again to approve the compensation of our NEOs. See “Proposal 2 - Advisory Vote Regarding Named Executive Officer Compensation (“Say-on-Pay”)”.
We will continue to consider the outcome of the say-on-pay and say-on-frequency advisory votes when making compensation decisions regarding our NEOs.
23
2021
2023 Summary Compensation Table
The following table sets forth certain information with respect to compensation for the fiscal year ended December 31, 2023 earned by, awarded to or paid to our Named Executive Officers.
Name and | Fiscal Year | Salary ($) | Bonus ($) | Non-Equity Incentive Plan Compensation ($)(1) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total Compensation ($) | ||||||||||||||||||||||||
Steve Daly(2) | 2021 | 450,000 | — | 549,000 | 4,603,570 | (4) | — | 2,000 | (6) | 5,604,570 | ||||||||||||||||||||||
CEO | 2020 | 232,386 | — | 273,898 | 1,303,870 | (5) | 9,931,000 | 1,000 | 11,742,154 | |||||||||||||||||||||||
Dale Bowen(3) | 2021 | 330,000 | — | 201,300 | 1,296,050 | (4) | — | 2,000 | (6) | 1,829,350 | ||||||||||||||||||||||
CFO | 2020 | 242,917 | — | 150,370 | 12,055 | (5) | 2,863,000 | 51,000 | 3,319,342 | |||||||||||||||||||||||
Matthew A. Kaminer | 2021 | 331,000 | — | 181,719 | 648,025 | (4) | — | 809,456 | (6) | 1,970,200 | ||||||||||||||||||||||
CLO | 2020 | 319,967 | 700 | 180,825 | 24,110 | (5) | 1,431,500 | 3,168,538 | 5,125,640 | |||||||||||||||||||||||
2019 | 266,667 | — | — | 4,604,106 | — | 101,093 | 4,971,866 | |||||||||||||||||||||||||
Frank Maylett | 2021 | 330,000 | — | 431,971 | 648,025 | (4) | — | 931,236 | (6) | 2,341,232 | ||||||||||||||||||||||
CRO | 2020 | 892,854 | (7) | — | — | — | 1,431,500 | 1,162,496 | 3,486,850 | |||||||||||||||||||||||
2019 | 189,780 | (8) | — | — | 3,167,567 | — | 1,095 | 3,358,442 | ||||||||||||||||||||||||
Mitch Benson | 2021 | 300,000 | — | 183,000 | 648,025 | (4) | — | 324,616 | (6) | 1,455,641 | ||||||||||||||||||||||
CPO | 2020 | 290,000 | 700 | 145,680 | — | 1,431,500 | 349,488 | 2,217,368 | ||||||||||||||||||||||||
2019 | 241,689 | (9) | — | 74,400 | 876,104 | — | 51,093 | 1,243,286 |
|
|
|
|
|
|
Name and |
| Fiscal |
| Salary |
|
| Bonus |
|
| Stock |
|
| Non-Equity |
|
| All Other |
|
| Total |
| ||||||
Steve Daly |
| 2023 |
|
| 482,813 |
|
|
| — |
|
|
| 5,651,951 |
|
|
| 263,291 |
|
|
| 2,500 |
|
|
| 6,400,555 |
|
CEO |
| 2022 |
|
| 461,500 |
|
|
| — |
|
|
| 3,615,406 |
|
|
| 353,187 |
|
|
| 2,000 |
|
|
| 4,432,093 |
|
|
| 2021 |
|
| 450,000 |
|
|
| — |
|
|
| 4,603,570 |
|
|
| 549,000 |
|
|
| 2,000 |
|
|
| 5,604,570 |
|
Peter Walker (5) |
| 2023 |
|
| 59,375 |
|
|
| 26,301 |
|
|
| 7,536,731 |
|
|
| 33,794 |
|
|
| 34,256 |
|
|
| 7,690,457 |
|
CFO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Chris Ball(6) |
| 2023 |
|
| 386,111 |
|
|
| — |
|
|
| 5,138,145 |
|
|
| 158,298 |
|
|
| 2,500 |
|
|
| 5,685,054 |
|
President &COO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Matthew A. Kaminer |
| 2023 |
|
| 355,833 |
|
|
| — |
|
|
| 1,811,700 |
|
|
| 97,380 |
|
|
| 173,412 |
|
|
| 2,438,325 |
|
CPLO |
| 2022 |
|
| 334,583 |
|
|
| — |
|
|
| 1,205,128 |
|
|
| 127,635 |
|
|
| 707,805 |
|
|
| 2,375,151 |
|
|
| 2021 |
|
| 331,000 |
|
|
| — |
|
|
| 648,025 |
|
|
| 181,719 |
|
|
| 809,456 |
|
|
| 1,970,200 |
|
Mitch Benson |
| 2023 |
|
| 345,833 |
|
|
| — |
|
|
| 1,875,427 |
|
|
| 94,675 |
|
|
| 58,507 |
|
|
| 2,374,442 |
|
CSO |
| 2022 |
|
| 321,083 |
|
|
| 5,331 |
|
|
| 1,506,426 |
|
|
| 123,825 |
|
|
| 233,966 |
|
|
| 2,190,631 |
|
|
| 2021 |
|
| 300,000 |
|
|
| — |
|
|
| 648,025 |
|
|
| 183,000 |
|
|
| 324,616 |
|
|
| 1,455,641 |
|
Dale Bowen |
| 2023 |
|
| 320,789 |
|
|
| — |
|
|
| 2,569,059 |
|
|
| — |
|
|
| 890,169 |
|
|
| 3,780,017 |
|
Former CFO |
| 2022 |
|
| 359,417 |
|
|
| — |
|
|
| 2,008,554 |
|
|
| 139,065 |
|
|
| 2,000 |
|
|
| 2,509,036 |
|
|
| 2021 |
|
| 330,000 |
|
|
| — |
|
|
| 1,296,050 |
|
|
| 201,300 |
|
|
| 2,000 |
|
|
| 1,829,350 |
|
Name | Merger Awards ($) | 401(k) Match ($) | Total ($) | |||||||||
Steve Daly | — | 2,000 | 2,000 | |||||||||
Dale Bowen | — | 2,000 | 2,000 | |||||||||
Matthew A. Kaminer | 807,456 | 2,000 | 809,456 | |||||||||
Frank Maylett | 929,236 | 2,000 | 931,236 | |||||||||
Mitch Benson | 322,616 | 2,000 | 324,616 |
Name |
| Merger |
|
| 401(k) |
|
| Tax Gross-Up ($)(b) |
|
| Severance Benefits ($)(c) |
|
| Consideration for Consulting Services ($)(d) |
|
| Total |
| ||||||
Steve Daly |
|
| — |
|
|
| 2,500 |
|
|
|
|
|
| — |
|
|
|
|
|
| 2,500 |
| ||
Peter Walker |
|
|
|
|
|
|
|
| 34,256 |
|
|
| — |
|
|
|
|
|
| 34,256 |
| |||
Chris Ball |
|
| — |
|
|
| 2,500 |
|
|
|
|
|
| — |
|
|
|
|
|
| 2,500 |
| ||
Matthew A. Kaminer |
|
| 170,912 |
|
|
| 2,500 |
|
|
|
|
|
| — |
|
|
|
|
|
| 173,412 |
| ||
Mitch Benson |
|
| 56,007 |
|
|
| 2,500 |
|
|
|
|
|
| — |
|
|
|
|
|
| 58,507 |
| ||
Dale Bowen |
|
| — |
|
|
| 2,500 |
|
|
|
|
|
| 192,561 |
|
|
| 695,108 |
|
|
| 890,169 |
|
amounts that were paid as consideration for unvested equity awards that subsequently met the vesting conditions in 20212023 and were paid out following the Take-Private Transaction.
24
(5) Mr. Walker was appointed as the Company’s CFO, effective as of November 13, 2023.
|
|
|
2021(6) Mr. Ball was appointed as the Company’s President and COO, effective as of January 9, 2023.
2023 Grants of Plan-Based Awards
The following table sets forth certain information with respect to grants of plan-based awards for the year ended December 31, 20212023 with respect to our NEOs. Please see the “Narrative to Summary Compensation Table and 20212023 Grants of Plan-Based Awards Table” below for additional information about the vesting parameters and other material terms applicable to equity awards reflected in the table immediately below.
Estimated Future Payouts Under Non-Equity Incentive Plan(1) | All Other Stock Awards: | Grant date fair value of stock and option awards ($)(2) |
| Estimated Future Payouts Under |
| All Other |
|
| Grant date |
| ||||||||||||||||||||||||||||||||||||||||||
Name | Award Type | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Number of Shares of Stock or Units (#) |
| Award Type |
| Grant Date |
| Threshold |
|
| Target |
|
| Maximum |
|
| Number of |
|
| fair value |
| |||||||||||||||||||||||||||
Steve Daly | 2021 Bonus Plan | — | 225,000 | 450,000 | 675,000 | — | — |
| 2023 Bonus Plan |
|
|
|
| 243,338 |
|
|
| 486,675 |
|
|
| 730,013 |
|
|
|
|
|
|
| |||||||||||||||||||||||
IPO RSUs | 7/21/2021 | — | — | — | 1,075,956 | 4,603,570 |
| RSUs |
| 1/24/2023 |
|
|
|
|
|
|
|
|
|
|
| 214,008 |
|
|
| 5,651,951 |
| |||||||||||||||||||||||||
Peter Walker |
| 2023 Bonus Plan |
|
|
|
| 31,233 |
|
|
| 62,466 |
|
|
| 93,699 |
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
|
| RSUs |
| 11/13/2023 |
|
|
|
|
|
|
|
|
|
|
| 305,998 |
|
|
| 7,536,731 |
| |||||||||||||||||||||||||||||||
Chris Ball |
| 2023 Bonus Plan |
|
|
|
| 146,301 |
|
|
| 292,603 |
|
|
| 438,904 |
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
|
| RSUs |
| 1/24/2023 |
|
|
|
|
|
|
|
|
|
|
| 194,553 |
|
|
| 5,138,145 |
| |||||||||||||||||||||||||||||||
Matthew A. Kaminer |
| 2023 Bonus Plan |
|
|
|
| 90,000 |
|
|
| 180,000 |
|
|
| 270,000 |
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
|
| RSUs |
| 1/24/2023 |
|
|
|
|
|
|
|
|
|
|
| 68,599 |
|
|
| 1,811,700 |
| |||||||||||||||||||||||||||||||
Mitch Benson |
| 2023 Bonus Plan |
|
|
|
| 87,500 |
|
|
| 175,000 |
|
|
| 262,500 |
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
| RSUs |
| 1/24/2023 |
|
|
|
|
|
|
|
|
|
|
| 71,012 |
|
|
| 1,875,427 |
| ||||||||||||||||||||||||||||||||
Dale Bowen | 2021 Bonus Plan | — | 82,500 | 165,000 | 247,500 | — | — |
| 2023 Bonus Plan |
|
|
|
| 91,250 |
|
|
| 182,500 |
|
|
| 273,750 |
|
|
|
|
|
|
| |||||||||||||||||||||||
IPO RSUs | 7/21/2021 | — | — | — | 289,197 | 1,296,050 |
| RSUs |
| 1/24/2023 |
|
|
|
|
|
|
|
|
|
|
| 97,276 |
|
|
| 2,569,059 |
| |||||||||||||||||||||||||
Matthew A. Kaminer | 2021 Bonus Plan | — | 74,475 | 148,950 | 223,425 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
IPO RSUs | 7/21/2021 | — | — | — | 144,598 | 648,025 | ||||||||||||||||||||||||||||||||||||||||||||||
Frank Maylett | 2021 Bonus Plan | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
IPO RSUs | 7/21/2021 | — | — | — | 144,598 | 648,025 | ||||||||||||||||||||||||||||||||||||||||||||||
Mitch Benson | 2021 Bonus Plan | — | 75,000 | 150,000 | 225,000 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
IPO RSUs | 7/21/2021 | — | — | — | 144,598 | 648,025 |
|
|
Narrative to Summary Compensation Table and 20212023 Grants of Plan-Based Awards Table
Executive Agreements with NEOs
In June 2021, we entered into executive agreements with all of our NEOs,Messrs. Daly, Benson, Kaminer and Bowen, which became effective on July 26, 2021 (collectively, the “Executive Agreements”). The Executive Agreementsand superseded the offer letters
or executive agreements, as applicable, previously in place with each of Messrs. Daly, Benson, and Bowen, and thesuch NEO. The executive agreements previously in place with each of Messrs. Kaminer and Maylett. The Executive Agreements generally provide for at-will employment and eligibility for severance payments and benefits upon a qualifying termination of employment. For additional
25
information with respect to such severance payments and benefits, see “Potential Payments upon a Termination of Employment or a Change in Control.”
On January 3, 2023, the Board appointed Chris Ball as President and Chief Operating Officer of the Company, effective as of January 9, 2023. In connection with his appointment, Mr. Ball entered into an employment agreement with the Company, dated as of January 3, 2023. Mr. Ball’s employment agreement provides for at-will employment and eligibility for severance payments and benefits upon a qualifying termination of employment. For additional information with respect to such severance payments and benefits, see “Potential Payments upon a Termination of Employment or a Change in Control.”
Merger AwardsOn September 27, 2023, the Board appointed Peter Walker as Chief Financial Officer of the Company, effective November 13, 2023. In connection with his appointment, Mr. Walker entered into an employment agreement with the Company, dated as of September 27, 2023. Mr. Walker’s employment agreement provides for at-will employment and eligibility for severance payments and benefits upon a qualifying termination of employment. For additional information with respect to such severance payments and benefits, see “Potential Payments upon a Termination of Employment or a Change in Control.”
PriorOn September 27, 2023, the Company and Dale Bowen, the Company’s Chief Financial Officer, agreed that Mr. Bowen will step down from his role as Chief Financial Officer effective November 12, 2023. In connection with Mr. Bowen’s departure, Mr. Bowen received certain payments and benefits pursuant to his employment agreement. For additional information with respect to payments and benefits associated with Mr. Bowen’s resignation, see “Potential Payments upon a Termination of Employment or a Change in Control.” The Company and Mr. Bowen entered into a consulting agreement dated September 27, 2023 (the “Consulting Agreement”), pursuant to which Mr. Bowen continued to provide consulting services to the Take-Private Transaction, eachCompany during the period commencing on November 13, 2023 and ending on March 2, 2024 (the “Consulting Term”). In consideration of Messrs. Kaminer, MaylettMr. Bowen’s services during the Consulting Term, and Benson heldnotwithstanding any term in the applicable award agreement or the 2021 Plan to the contrary, the 52,580 restricted stock units and/or stock option awards underheld by Mr. Bowen as of November 12, 2023 vested in accordance with their respective vesting schedules on December 1, 2023 and March 1, 2024 (the “Services Consideration”). The Services Consideration was the Company’s then-existing equity incentive plans. In connectiononly consideration paid for the services rendered during the Consulting Term.
Each NEO is also party to a Confidentiality and Intellectual Property Agreement with the Take-Private Transaction, (a) all vestedCompany, which provides for standard confidentiality, non-disclosure, and IP assignment obligations (the “NEO Restrictive Covenants”).
26
Outstanding Equity Awards at 2023 Fiscal Year End
The following table summarizes the outstanding equity awards granted underheld as of December 31, 2023 by each of the Company’s then-existing equity incentive plans, includingNEOs, using the closing stock options and restricted stock unit awards were cancelled and converted into Merger Awards in the form of cash consideration equal to $49.00 multiplied by the number of shares subject to the vested equity award (less the applicable per share exercise price of those vested shares,$27.01.
|
|
|
| Stock Awards(1) |
| |||||
Name and Principal Position |
| Grant Date |
| Number of |
|
| Market value |
| ||
Steve Daly |
| 7/21/2021 |
|
| 177,826 |
|
|
| 4,803,080 |
|
CEO |
| 1/23/2022 |
|
| 171,184 |
|
|
| 4,623,680 |
|
|
| 1/24/2023 |
|
| 173,880 |
|
|
| 4,696,499 |
|
Peter Walker |
| 11/13/2023 |
|
| 305,998 |
|
|
| 8,265,006 |
|
CFO |
|
|
|
|
|
|
|
| ||
Chris Ball |
| 1/24/2023 |
|
| 194,553 |
|
|
| 5,254,877 |
|
COO |
|
|
|
|
|
|
|
| ||
Matthew A. Kaminer |
| 7/21/2021 |
|
| 13,145 |
|
|
| 355,046 |
|
CPLO |
| 1/23/2022 |
|
| 42,793 |
|
|
| 1,155,839 |
|
|
| 1/24/2023 |
|
| 55,735 |
|
|
| 1,505,402 |
|
Mitch Benson, |
| 7/21/2021 |
|
| 13,145 |
|
|
| 355,046 |
|
CSO |
| 1/23/2022 |
|
| 53,490 |
|
|
| 1,444,765 |
|
|
| 1/24/2023 |
|
| 57,695 |
|
|
| 1,558,342 |
|
Dale Bowen(3) |
| 7/21/2021 |
|
| 26,290 |
|
|
| 710,093 |
|
Former CFO |
|
|
|
|
|
|
|
|
IPO RSUs
On July 21, 2021 are Management Incentive Units that were converted intoto RSUs upon our IPO. All other amounts are RSUs as defined in the IPOPlan.
Outstanding Equity Awards at 2021 Fiscal Year End
Mr. Kaminer and Mr. Benson vest 10% in equal quarterly installments during the first year beginning June 1, 2022, 20% in equal quarterly installments during the second year beginning June 1, 2023, 40% in equal quarterly installments during the third year beginning June 1, 2024, and 30% in equal quarterly installments during the fourth year beginning June 1, 2025. The followingRSUs with a grant date of January 23, 2022 to Mr. Daly vest 50% in equal quarterly installments during the third year beginning June 1, 2024 and 50% in equal quarterly installments during the fourth year beginning June 1, 2025. The RSUs with a grant date of January 24, 2023 to Mr. Daly, Mr. Kaminer and Mr. Benson vest in 16 equal quarterly installments commencing June 1, 2023. The RSUs with a grant date of January 24, 2023 to Mr. Ball vest 25% on the first anniversary of March 1, 2023 and quarterly in equal installments for 12 quarters. The RSUs with a grant date of November 13, 2023 vest 25% on the first anniversary of December 1, 2023 and quarterly in in equal installments for 12 quarters.
Stock Awards(1) | ||||||||||||
Name and Principal Position | Grant Date | Number of shares or units of stock that have not vested (#)(2) | Market value of shares or units of stock that have not vested ($) | |||||||||
Steve Daly | 7/21/2021 | 896,329 | 21,493,969 | |||||||||
CEO | ||||||||||||
Dale Bowen | 7/21/2021 | 236,614 | 5,674,004 | |||||||||
CFO | ||||||||||||
Matthew A. Kaminer | 7/21/2021 | 118,307 | 2,837,002 | |||||||||
CLO | ||||||||||||
Frank Maylett | 7/21/2021 | 118,307 | 2,837,002 | |||||||||
CRO | ||||||||||||
Mitch Benson, | 7/21/2021 | 118,307 | 2,837,002 | |||||||||
CPO |
|
|
20212023 Options Exercised and Stock Vested
The Company does not issue stock options to any of its employees. The following table summarizes the value received from stock grants vested during 2021.2023.
27
Stock Awards | ||||||||
Name | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | ||||||
Steve Daly | 179,627 | 4,014,663 | ||||||
Dale Bowen | 52,583 | 1,175,229 | ||||||
Matthew Kaminer | 26,291 | 587,603 | ||||||
Frank Maylett | 26,291 | 587,603 | ||||||
Mitch Benson | 26,291 | 587,603 |
|
|
2021
|
| Stock Awards |
| |||||
Name |
| Number of |
|
| Value |
| ||
Steve Daly |
|
| 399,378 |
|
|
| 10,220,674 |
|
Peter Walker |
|
| — |
|
|
| — |
|
Chris Ball |
|
| — |
|
|
| — |
|
Matthew Kaminer |
|
| 75,431 |
|
|
| 1,931,721 |
|
Mitch Benson |
|
| 78,382 |
|
|
| 2,007,413 |
|
Dale Bowen |
|
| 105,160 |
|
|
| 2,689,730 |
|
2023 Pension Benefits
Our NEOs did not participate in, or otherwise receive any benefits under, any pension plan sponsored by the Company during the 20212023 fiscal year. For a description of the Company’s 401(k) plan, see the description in Note 1514 to our financial statement included in our Annual Report on Form 10-K for the year ended December 31, 2021.2023.
20212032 Nonqualified Deferred Compensation
Our NEOs did not participate in or have account balances in nonqualified defined contribution plans or other nonqualified deferred compensation plans maintained by us.
Potential Payments upon a Termination of Employment or a Change in Control
Executive Agreements
Termination in Connection with a Change in Control
Each of the Executive Agreementsemployment agreements entered into with our NEOs (collectively, the “Executive Agreements”) provide that, upon a termination of the Named Executive OfficerNEO by the Company without “cause” or a resignation by the Named Executive OfficerNEO for “good reason” (each as defined in the Executive Agreements) (each such termination, a “Qualifying Termination”), the NEO is entitled to certain severance benefits, as well as enhanced severance benefits in either casethe event of a Qualifying Termination that occurs within three months prior to (and contingent upon the consummation of a “change in control” (as defined in the Executive Agreements)), in connection with, or within 12 months following the effective date of a “change in control” (a “CIC Termination”, and such benefits, “CIC Severance”)),. These payments are, in each case, subject to and conditioned upon (i) the NamedNEO’s timely execution and non-revocation of a general release of claims in favor of the Company, (ii) the NEO continuing to comply with the NEO Restrictive Covenants under our standard Confidentiality and Intellectual Property Agreement and (iii) the NEO’s resignation from all positions with the Company, any subsidiaries and affiliates, and the Board (if applicable).
Termination in Connection with a Change in Control
Pursuant to the Executive Officer isAgreements, upon a CIC Termination, our NEOs are eligible to receive severance consisting of (a) continued installments of the NEO’s then current base salary for (i) in the case of Mr.Messrs. Daly and Benson, 18 months, and (ii) in the case of Messers.Messrs. Ball, Bowen, Kaminer, Maylett and Benson,Walker, 12 months, following the Named Executive Officer’sNEO’s separation in accordance with the Company’s regular payroll schedule; (b) reimbursement of COBRA premiums for up to (i) in the case of Mr.Messrs. Daly and Benson, 18 months and (ii) in the case of Messers.Messrs. Ball, Bowen, Kaminer Maylett and Benson,Walker, 12 months, following the separation date; and (c) (i) in the case of Messrs. Daly, Bowen, Kaminer and Benson, full vesting of all outstanding unvested stock awards then held by the NEO
28
immediately prior to the date of separation.
Messrs. Bowen Kaminer and Benson’sKaminer’s Executive Agreements also provide that if the CIC Termination occurs on or after March 31 in a calendar year, the Named Executive OfficerNEO is eligible for a lump sum amount equal to 80% of their then current target bonus, pro-rated based on the number of full months employed in the year of separation.
Termination without a Change in Control
Upon a Qualifying Termination that is not a CIC Termination, the NEOs are eligible for severance (“Non-CIC Severance”) of (a) six months (or, in the case of Messrs. Daly and Benson, 12 months and in the case of Mr. Walker, 9 months) of the NEO’s then current base salary in accordance with the regular payroll schedule and (b) a reimbursement of COBRA premiums for up to six months (or, in the case of Messrs. Daly and Benson, 12 months and in the case of Mr. Walker, 9 months) following the separation date.
Additionally, in connection with the Take-Private Transaction, Mr. Kaminer’s Executive Agreement also statesprovides that upon any Qualifying Termination (whether or not a CIC Termination) he is eligible to receive full acceleration of all of his unvested Merger Awards, with any such amounts becoming payable in a lump sum no later than March 15 of the year following any such termination.
These payments are, in each case, subject to the NEO’s timely execution and non-revocation of a general release of claims in favor of the Company.
Termination without a Change in Control
Upon a termination of the Named Executive Officer by the Company without “cause” or a resignation by the Named Executive Officer for “good reason” that is not a CIC Termination, the Named Executive Officers are eligible for severance (“Non-CIC Severance”) of (a) six months (or, in the case of Mr. Daly, 12 months) of the NEO’s then current base salary in accordance with the regular payroll schedule and (b) a reimbursement of COBRA premiums for up to six months (or, in the case of Mr. Daly, 12 months) following the separation date; in each case subject to the timely execution and non-revocation of a general release of claims in favor of the Company. Additionally, in connection with the Take-Private Transaction, Mr. Kaminer’s Executive Agreement provides that he is eligible to receive full acceleration of all of his unvested Merger Awards, with any such amounts becoming payable in a lump sum no later than March 15 of the year following any such termination, subject to his timely execution and non-revocation of a general release of claims in favor of the Company.
These payments are, in each case, subject to the NEO’s timely execution and non-revocation of a general release of claims in favor of the Company.
Payment of any of the CIC Severance or Non-CIC Severance is conditioned upon (i) the Named Executive Officer continuing to comply with the Named Executive Officer’s obligations under our standard Confidentiality and Intellectual Property Agreement and (ii) the Named Executive Officer’s resignation from all positions with the Company, any subsidiaries and affiliates, and the Board (if applicable).
As defined in the Executive Agreements, “good reason” means the occurrence of any of the following without the NEO’s written consent: (i) a material reduction in job duties, responsibilities, title or authority inconsistent with the NEO’s position with the Company (provided, however, that any such reduction or change (including a change in title) after a change in control will not constitute “good reason” if the executive retains reasonably comparable duties, position and responsibilities with respect to the Company’s business within the successor entity following a change of control); (ii) a material reduction of the NEO’s then current base salary, representing a reduction of more than 10% of the NEOs’sNEO’s then current base salary (provided, that an across-the-board reduction in the salary level of all executive officers of the Company by the same percentage amount as part of a general salary level reduction implemented prior to a change in control will not constitute such a material salary reduction); or (iii) the relocation of the NEO’s principal place of employment to a place that increases the NEO’s one-way commute by more than 35 miles as compared to the NEO’s then current principal place of employment immediately prior to such relocation; provided, that the NEO gives written notice to the Company of the event forming the basis of the termination for “good reason” within 60 days after the date on which the Company gives the NEO written notice of the Company’s affirmative decision to take an action set forth in clause (i), (ii),or (iii) above, the Company fails to cure such basis for the “good reason” resignation within 30 days after receipt of the NEO’s written notice and the NEO terminates the NEO’s employment within 30 days following the expiration of the cure period.
As defined in the Executive Agreements, “cause” means that the NEO is terminated by the Company due to the NEO’s (i) commission of any material act of dishonesty; (ii) conviction of a felony or any crime involving moral turpitude; (iii) commission of any action that that has caused or is reasonably expected to result in material harm
to the business or the reputation of the Company (excluding any action taken in good faith); (iv) material violation of any duty or obligation owed by that NEO to the Company which causes or is reasonably expected to cause material injury to the Company; (v) material breach of any of the NEO’s obligations under any written agreement or covenant with the Company; or (vi) repeated refusal to substantially perform the NEO’s assigned duties.
Pursuant to the Executive Agreements, “change in control” has the meaning set forth in the 2021 Plan. As set forth in the 2021 Plan, “change in control” generally means (a) any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act, becoming the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities; (b) a merger, reorganization, or consolidation of the Company or in which
29
equity securities of the Company are issued; (c) during the period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new director(s) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (d) a complete liquidation or dissolution of the Company or the consummation of a sale or disposition by the Company of all or substantially all of the Company’s assets.
In connection with Mr. Bowen’s separation in November 12, 2023, pursuant to his employment and agreement, Mr. Bowen received the following payments and benefits pursuant to his employment agreement: (i) continued payment of base salary for six months following the date of termination (aggregate value of $182,500), and (ii) Company reimbursement of the cost of Mr. Bowen’s COBRA premium payments for six months following the date of termination (aggregate value of $10,061). Mr. Bowen is subject to a perpetual confidentiality covenant, a one-year non-solicitation of employees covenant, and a perpetual non-disparagement covenant.
Single-Trigger Vesting upon a Change in Control
Mr. Daly’sMessrs. Daly and Benson’s Executive Agreement providesAgreements provide for single-trigger vesting of all outstanding equity awards held by Mr. Dalysuch NEO effective immediately prior to a change in control.
IPO RSUsOutstanding Equity Awards
Pursuant to the IPO RSU agreements, in the event an NEO incurs a termination of service due to the NEO’s death or disability,Disability (as defined in the Plan), any unvested portion of the IPONEO’s RSUs outstanding as of immediately prior to such termination will automatically vest. In the event of an NEO’s Termination of Service for any reason other than due to the NEO’s death or Disability, any portion of the RSUs that is not vested will immediately and automatically be cancelled and forfeited as of the date of such termination at no cost to the Company.
In addition, in the event the NEO’s termination of service is due to Cause, (i) any portion of the RSUs, whether vested or not vested, that remains unexercised will immediately and automatically be cancelled and forfeited as of the date of such termination at no cost to the Company; and (ii) the NEO shall, within thirty (30) days following NEO’s receipt of a written notice from the Company, pay to the Company a cash amount equal to the sum of: (i) the Fair Market Value (as defined in the Plan) of any shares previously delivered to the NEO in settlement of the RSUs (with such Fair Market Value determined as of the date such shares were delivered) and (ii) the amount of any Dividend Equivalents (as defined in the Plan) previously paid to the NEO.
As described above, the Executive Agreements with Messrs. Daly, Bowen, Kaminer, Benson and Walker also provide for accelerated vesting of outstanding equity awards in the event of a CIC Termination.
30
Potential Payments upon a Termination of Employment or a Change in Control
The precise amount that each NEO below would receive cannot be determined with certainty until a qualifying termination or change in control has occurred. However, the table below provides estimates of the amounts each NEO would have received if a qualifying termination and/or a change in control had occurred on December 31, 2021.2023.
Name and Principal Position(1) | Event | Salary Continuation ($) | Pro-Rated Bonus ($) | Continued Health Benefits ($) | Acceleration of Equity Awards/ Merger Awards ($) | Total Payments ($) | ||||||||||||||||
Steve Daly CEO | Change in Control | — | — | — | 21,493,969 | (4) | 21,493,969 | |||||||||||||||
CIC Termination(2) | 675,000 | — | 27,879 | 21,493,969 | (4) | 22,196,849 | ||||||||||||||||
Non-CIC Termination(3) | 450,000 | — | 18,586 | — | 468,586 | |||||||||||||||||
Death or Disability Termination(5) | — | — | — | 21,493,969 | 21,493,969 | |||||||||||||||||
Dale Bowen CFO | Change in Control | — | — | — | — | — | ||||||||||||||||
CIC Termination(2) | 330,000 | 132,000 | 18,586 | 5,674,004 | (4) | 6,154,590 | ||||||||||||||||
Non-CIC Termination(3) | 165,000 | — | 9,293 | — | 174,293 | |||||||||||||||||
Death or Disability Termination(5) | — | — | — | 5,674,004 | 5,674,004 | |||||||||||||||||
Matthew A. Kaminer CLO | Change in Control | — | — | — | — | — | ||||||||||||||||
CIC Termination(2) | 331,000 | 119,160 | 18,586 | 3,713,768 | (4)(6) | 4,182,514 | ||||||||||||||||
Non-CIC Termination(3) | 165,500 | — | 9,293 | 876,766 | (6) | 1,051,559 | ||||||||||||||||
Death or Disability Termination(5) | — | — | — | 2,837,002 | 2,837,002 | |||||||||||||||||
Frank Maylett, CRO | Change in Control | — | — | — | — | — | ||||||||||||||||
CIC Termination(2) | 330,000 | — | 18,586 | 2,837,002 | (4) | 3,185,588 | ||||||||||||||||
Non-CIC Termination(3) | 165,000 | — | 9,293 | — | 174,293 | |||||||||||||||||
Death or Disability Termination(5) | — | — | — | 2,837,002 | 2,837,002 | |||||||||||||||||
Mitch Benson, CPO | Change in Control | — | — | — | — | — | ||||||||||||||||
CIC Termination(2) | 300,000 | 120,000 | 27,287 | 2,837,002 | (4) | 3,284,289 | ||||||||||||||||
Non-CIC Termination(3) | 150,000 | — | 13,644 | — | 163,644 | |||||||||||||||||
Death or Disability Termination(5) | — | — | — | 2,837,002 | 2,837,002 |
Name and Principal Position(1) |
| Event |
| Salary |
|
| Pro-Rated Annual |
|
| Continued |
|
| Acceleration |
|
|
| Total |
| |||||
Steve Daly |
| Change in Control |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 14,123,259 |
| (4) |
|
| 14,123,259 |
|
CEO |
| CIC Termination(2) |
|
| 730,013 |
|
|
| — |
|
|
| 30,184 |
|
|
| 14,123,259 |
| (4) |
|
| 14,883,455 |
|
|
| Non-CIC Termination(3) |
|
| 486,675 |
|
|
| — |
|
|
| 20,123 |
|
|
| — |
|
|
|
| 506,798 |
|
|
| Death or Disability Termination(5) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 14,123,259 |
|
|
|
| 14,123,259 |
|
Peter Walker |
| Change in Control |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
CFO |
| CIC Termination(2) |
|
| 475,000 |
|
|
| — |
|
|
| 21,152 |
|
|
| 4,132,503 |
| (4) |
|
| 4,628,655 |
|
|
| Non-CIC Termination(3) |
|
| 356,250 |
|
|
| — |
|
|
| 15,864 |
|
|
| — |
|
|
|
| 372,114 |
|
|
| Death or Disability Termination(5) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8,265,006 |
|
|
|
| 8,265,006 |
|
Chris Ball |
| Change in Control |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
COO |
| CIC Termination(2) |
|
| 400,000 |
|
|
| — |
|
|
| 29,566 |
|
|
| — |
|
|
|
| 429,566 |
|
|
| Non-CIC Termination(3) |
|
| 200,000 |
|
|
| — |
|
|
| 14,783 |
|
|
| — |
|
|
|
| 214,783 |
|
|
| Death or Disability Termination(5) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 5,254,877 |
|
|
|
| 5,254,877 |
|
Matthew A. Kaminer |
| Change in Control |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
CPLO |
| CIC Termination(2) |
|
| 360,000 |
|
|
| 144,000 |
|
|
| 20,123 |
|
|
| 3,016,288 |
| (4) |
|
| 3,540,410 |
|
|
| Non-CIC Termination(3) |
|
| 180,000 |
|
|
| — |
|
|
| 10,061 |
|
|
| — |
|
|
|
| 190,061 |
|
|
| Death or Disability Termination(5) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,016,288 |
|
|
|
| 3,016,288 |
|
Mitch Benson, |
| Change in Control |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
CSO |
| CIC Termination(2) |
|
| 365,000 |
|
|
| 140,000 |
|
|
| 29,566 |
|
|
| 3,358,153 |
| (4) |
|
| 3,892,719 |
|
|
| Non-CIC Termination(3) |
|
| 182,500 |
|
|
| — |
|
|
| 14,783 |
|
|
| — |
|
|
|
| 197,283 |
|
|
| Death or Disability Termination(5) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,358,153 |
|
|
|
| 3,358,153 |
|
|
|
(1) The Named Executive Officers are each party to an Executive Agreement that, in each case, provide eligibility for severance in the event of a Qualifying Termination as described in further detail above. |
|
31
|
|
2021 2023 Non-Employee Director Compensation
The following table presents the total compensation for each person who served as a non-employee member of our Board during fiscal year 2021.2023. Other than as set forth in the table and described more fully below, we did not pay any compensation, reimburse any expense of, make any equity awards or non-equity awards to, or pay any other compensation to any of the other non-employee members of our Board in fiscal year 2021.2023.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | |||||||||
Charles Goodman | 98,668 | — | 98,668 | |||||||||
Erik Akopiantz | 50,000 | — | 50,000 | |||||||||
Ossa Fredricsson Fisher | 17,717 | 450,000 | 467,717 | |||||||||
Buzz Waterhouse | 13,370 | 450,008 | 463,378 | |||||||||
James Hutter | 13,288 | — | 13,288 | |||||||||
Brian Jaffee | 15,946 | — | 15,946 | |||||||||
Paul Holden Spaht, Jr. | 15,946 | — | 15,946 |
Name |
| Total Fees | ||
Charles Goodman | 62,000 | |||
Erik Akopiantz | 50,000 | |||
Ossa Fredricsson Fisher | 40,000 | |||
Buzz Waterhouse | 40,000 | |||
James Hutter | 30,000 | |||
Brian Jaffee | 36,000 | |||
Paul Holden Spaht, Jr. | 36,000 |
Non-Employee Director Policy
Pursuant to our non-employee director compensation policy, each non-employee director receives an annual cash retainer of $30,000. In addition, the Audit Committee chair receives a cash retainer of $20,000, and the Compensation &and Nominating Committee chair receives a cash retainer of $12,000. Members of the Audit Committee and Compensation &and Nominating Committee (other than the chairpersons of such committees) receive an additional cash retainer of $10,000 and $6,000, respectively. Each non-employee director may elect to receive his or her annual cash compensation in the form of RSUs. No non-employee director elected to receive annual cash compensation in the form of RSUs in 2023.
In addition, upon their initial appointment to the Board, each non-employee director receives an initial grant of RSUs (the “Initial Appointment RSUs”) with a value of (i) $150,000, pro-rated for the number of days that the non-employee director has served on the Board (the “Pro-rated“Pro-rated Portion”), plus (ii) $300,000 (the “Annual Portion”). The Initial Appointment RSUs vest annually with (a) the Pro-rated Portion vesting on the last trading day immediately prior to the date of the first annual shareholders meeting following such appointment and (b) the Annual Portion vesting (i) 50% on the last trading day immediately prior to the date of the second annual shareholders meeting following such appointment and (ii) 50% on the last trading day immediately prior to the date of the third annual shareholders meeting following such appointment, subject in each case to continuous service through the applicable vesting date.
If a non-employee director is initially elected at an annual shareholders meeting rather than appointed, such non-employee director will automatically be granted RSUs with a value of $450,000 (an “Initial Election RSU Grant”). The Initial Election RSU Grant will vest annually with (i) 33.3% vesting on the last trading day immediately prior to the date of the annual shareholder meeting, (ii) 33.3% vesting on the last trading day immediately prior to the date of the second annual shareholder meeting following such election, and (iii) 33.4%
vesting on the last trading day immediately prior to the date of the third annual shareholder meeting following such election, subject in each case to continuous service through the applicable vesting date (the “Three Year Vesting Schedule”).
On the date of each annual shareholders meeting, each non-employee director (i) who is then continuing in office after the date of the annual shareholders meeting (and who, for the avoidance of doubt, is not elected for the first time to be a member of the Board at such annual shareholders meeting) and (ii) who has continued his or her service through the third annual shareholders meeting since our IPO or whose Initial Appointment RSU Grant, Initial Election RSU Grant or most recent Triennial RSU Grant (as defined below), as applicable, has fully vested on the last trading day immediately prior to the date of such annual shareholders meeting will automatically be granted RSUs with a value of $450,000 (the “Triennial RSU Grant”). The Triennial RSU Grant will vest in accordance with the Three Year Vesting Schedule.
32
In the event of a Change in Control (as defined in the 2021 Plan), any unvested portion of any RSU award granted pursuant to the non-employee director compensation policy will fully vest, subject to continuous service to the effective date of such transaction.
The table below shows the aggregate number of unvested and outstanding RSUs held by each non-employee director as of December 31, 2023:
Name | Total Unvested and Outstanding RSUs (#) | |||
Charles Goodman | 10,777 | |||
Erik Akopiantz | 2,874 | |||
Ossa Fredricsson Fisher | 7,500 | |||
Buzz Waterhouse | 6,550 | |||
James Hutter | — | |||
Brian Jaffee | — | |||
Paul Holden Spaht, Jr. | — |
Limitations of Liability and Indemnification Matters
We have adopted provisions in our Charter that limit the liability of our directors and officers for monetary damages for breach of their fiduciary duties, except for liability that cannot be eliminated under the Delaware General Corporation Law (the “DGCL”). Delaware law provides that directors and officers of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors and officers, as applicable, except liability for any of the following:
•
•
•
•
•
Our Charter and our Bylaws also provide that we shall indemnify our directors and executive officers and may indemnify our other officers and employees and other agents to the fullest extent permitted by law. We believe that indemnification under our Bylaws covers at least negligence and gross negligence on the part of indemnified parties. Our Bylaws also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in this capacity, regardless of whether our Bylaws would permit indemnification.
We have entered into separate indemnification agreements with our directors and executive officers, in addition to indemnification provided for in our charter documents. These agreements, among other things, provide for indemnification of our directors and executive officers for expenses, judgments, fines and settlement amounts incurred by this person in any action or proceeding arising out of this person’s services as a director or executive officer or at our request. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers.
33
Equity Compensation Plan Information
The following table sets forth information regarding the Company’s equity compensation plans as of the year ended December 31, 2021.2023.
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuances Under Equity Compensation Plans (Excluding Securities Reflected in First Column) |
| Number of |
|
|
| Weighted- |
|
|
| Number of |
|
| ||||||||||||
Equity Compensation Plans Approved by Security Holders(1) | 5,747,184 | (2) | $ | — | (2) | 14,542,188 | (3) |
|
| 4,790,155 |
| (2) |
| $ | — |
|
|
| 23,702,507 |
| (3) | ||||||
Equity Compensation Plans Not Approved by Security Holders | — | — | — |
|
|
|
|
|
|
|
|
|
| ||||||||||||||
|
|
| |||||||||||||||||||||||||
Total | 5,747,184 | $ | — | 14,542,188 |
|
| 4,790,155 |
|
| $ | — |
|
|
| 23,702,507 |
|
|
|
|