Quorum Requirement | The Annual Meeting will be held virtually via a live webcast, which can be accessed on the Internet by visiting www.virtualshareholdermeeting.com/APPF2023. To access the Annual Meeting, you will need a 16-digit control number. The control number is provided on the Notice you received in the mail, on your proxy card (if you requested to receive printed proxy materials), or through your broker or other nominee if you hold your shares in "street name." Stockholders will be able to attend, vote and submit questions virtually during the Annual Meeting. Quorum Requirement A quorum exists when at least a majority of the combined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock entitled to vote as of the Record Date is present virtually or represented by proxy at the Annual Meeting. Shares Outstanding and Entitled to Vote at the Annual Meeting 20,766,610 shares of Class A Common Stock and 14,719,225 shares of Class B Common Stock outstanding as of the Record Date. Notice of Internet Availability of Proxy Materials In accordance with SEC rules and regulations, we have elected to furnish our proxy materials, including this Proxy Statement and our 2022 Annual Report, primarily via the Internet. Accordingly, on or about April 27, 2023, we mailed to our stockholders the Notice, which contains instructions on how to access our proxy materials on the Internet, how to vote on the proposals to be voted upon at the Annual Meeting, and how to request paper copies of this Proxy Statement and the 2022 Annual Report. Stockholders may request to receive all future proxy materials from us in printed form by mail or electronically by e-mail by following the instructions contained in the Notice. We encourage stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of our Annual Meeting.
Proposals to be Voted Upon | | | | | | | | | | | | | | | | Proposal | Board Vote Recommendation | Page Reference | | | | | | | 1 | To elect two Class II directors, Olivia Nottebohm and Alex Wolf, to a three-year term to hold office until our 2026 annual meeting of stockholders, or until the date on which their successors are duly elected and qualified. | FOR | | | 2 | To ratify the appointment of PricewaterhouseCoopers LLP ("PwC") as our independent registered public accounting firm for the fiscal year ending December 31, 2023. | FOR | | | 3 | To approve, on a non-binding, advisory basis, the compensation of our named executive officers. | FOR | |
Voting our Common Stock Each share of our Class A Common Stock outstanding on the Record Date is entitled to one vote on any proposal presented at the Annual Meeting. Each share of our Class B Common Stock outstanding on the Record Date is entitled to ten votes on any proposal presented at the Annual Meeting. Votes Required to Adopt Proposals | | | Proposal 1: Class II directors will be elected by a plurality of the combined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock entitled to vote as of the Record Date is present in person or represented by proxy at the Annual Meeting. | | | | Shares Outstanding | 15,063,107 shares of Class A Common Stock and 19,055,667 shares of Class B Common Stock outstanding as of the Record Date. | | | | Notice of Internet Availability of Proxy Materials | In accordance with SEC rules and regulations, we have elected to furnish our proxy materials, including this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, or the 2017 Annual Report, primarily via the Internet. Accordingly, on or about April 2, 2018, we mailed to our stockholders a “Notice of Internet Availability of Proxy Materials," or the Notice, that contains instructions on how to access our proxy materials on the Internet, how to vote on the proposals to be voted upon at the Annual Meeting, and how to request paper copies of this Proxy Statement and the 2017 Annual Report. Stockholders may request to receive all future proxy materials from us in printed form by mail or electronically by e-mail by following the instructions contained in the Notice. We encourage stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of our annual stockholder meetings. | | | | Proposals to be Voted Upon | Proposal 1 - To elect two Class III directors, Timothy Bliss and Jason Randall, to a three-year term to hold office until our 2021 annual meeting of stockholders, or until the date on which their successors are duly elected and qualified. |
| | | | | Proposal 2 - To ratify the appointment of PricewaterhouseCoopers LLP, or PwC, as our independent registered public accounting firm for the fiscal year ending December 31, 2018. | | | | Voting our Common Stock | Each share of our Class A Common Stock outstanding on the Record Date is entitled to one vote on any proposal presented at the Annual Meeting. Each share of our Class B Common Stock outstanding on the Record Date is entitled to ten votes on any proposal presented at the Annual Meeting. | | | Votes Required to Adopt Proposals | Proposal 1: Class III directors will be elected by a plurality of the votes of the shares of our Class A Common Stock and Class B Common Stock present in personvirtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. This means that the director nominees for Class IIIII director who receive the most FOR votes (among votes properly cast in person or represented by proxy) will be elected as directors.
| | Proposal 2: The ratification of the appointment of PwC requires the affirmative vote of a majority of the combined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock present in personvirtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting. | Proposal 3: The approval, on a non-binding, advisory basis, of the compensation of our named executive officers requires the affirmative vote of a majority of the combined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting. |
Definitions of Stockholder of Record and Beneficial Owner You are considered to be a stockholder of record if your shares were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company LLC, on the record date. If, however, your shares are held in a brokerage account or by a bank, broker or other nominee, and not in your name, you are considered to be the "beneficial owner" of shares held in "street name." Voting Methods - Stockholder of Record If you are a stockholder of record, you can vote your shares using any of the following methods: | | | | | | | | | | | | | | | | | | | | | Voting Methods - Stockholders of RecordBy Internet | If you are a stockholder of record, you can vote your shares using any of the following methods: | By Toll-free Telephone | | By Mail | | By Webcast | | (1) | By Internet | | | | | at www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. Eastern time on May 17, 2018June 15, 2023 (please have the Notice in hand when you visit the website); | | (2) | By toll-free telephone at 1-800-690-6903, 24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on May 17, 2018June 15, 2023 (please have the Notice in hand when you call); | | (3) | If you requested to receive a paper copy of thethis Proxy Statement, by completing and mailing the proxy card provided with this Proxy Statement in the Proxy Statement;postage-paid envelope we have provided, or
| | return it to Vote Processing c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717; or | (4) | By written ballotElectronically via live webcast at the Annual Meeting. | | | | | In order to be counted, proxies submitted by Internet or telephone must be received by 11:59 p.m. Eastern Time on May 17, 2018. Proxy cards submitted by U.S. mail must be received before the start of the Annual Meeting. | Voting Methods - Beneficial Owner | If you are the beneficial owner of shares held in “street name” through a broker, trustee or other nominee, please follow the voting instructions provided to you by that firm in order to vote your shares. | | | | Revoking Your Proxy | If you are a stockholder of record, you may revoke your proxy by (i) voting again using the Internet or telephone before the cutoff time (your latest Internet or telephone proxy is the one that will be counted), (ii) attending the Annual Meeting and voting in person, or (iii) sending a written notice that you are revoking your proxy to AppFolio, Inc., 50 Castilian Drive, Santa Barbara, California 93117, Attn: Chief Financial Officer, and/or by sending an email to cfo@appfolio.com. If you send a written notice of revocation, please make sure to do so with enough time for it to arrive by mail prior to the Annual Meeting. | | If you are a beneficial owner, please follow the instructions provided to you by your nominee in order to revoke your proxy. | | | | Broker Non-Votes | Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker, trustee or other nominee holding the shares as to how to vote on matters that are deemed to be “non-routine” under applicable rules. Generally speaking, the beneficial owner of the shares is entitled to give voting instructions to the nominee holding the shares, and the nominee will vote those shares in accordance with the instructions. If the beneficial owner does not provide voting instructions, the nominee can still vote the shares with respect to matters that are considered to be “routine,” but cannot vote the shares with respect to matters that are considered “non-routine.” In the event that a nominee votes shares on the “routine” matters, but is not provided with voting instructions with respect to the “non-routine” matters, those shares will be treated as broker non-votes with respect to the “non-routine” matters. |
Voting Methods - Beneficial Owner If you are the beneficial owner of shares held in “street name” through a broker, trustee or other nominee, please follow the voting instructions provided to you by that nominee in order to vote your shares. Revoking Your Proxy If you are a stockholder of record, you may revoke your proxy by (i) voting again using the Internet or telephone before the cutoff time (your latest Internet or telephone proxy is the one that will be counted), (ii) attending the Annual Meeting and voting electronically via live webcast, or (iii) sending a written notice that you are revoking your proxy to AppFolio, Inc., 70 Castilian Drive, Santa Barbara, California 93117, Attn: Chief Legal Officer, and/or by sending an email to stockholdervoting@appfolio.com. If you send a written notice of revocation, please make sure to do so with enough time for it to arrive by mail prior to the Annual Meeting. If you are a beneficial owner, please follow the instructions provided to you by your broker, trustee or other nominee in order to revoke your proxy. Broker Non-Votes Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker, trustee or other nominee holding the shares as to how to vote on matters that are deemed to be “non-routine” under applicable rules. Generally speaking, the beneficial owner of the shares is entitled to give voting instructions to the broker, trustee or other nominee holding the shares, and the nominee will vote those shares in accordance with the instructions. If the beneficial owner does not provide voting instructions, the broker, trustee or other nominee can still vote the shares with respect to matters that are considered to be “routine,” but cannot vote the shares with respect to matters that are considered “non-routine.” In the event that a broker, trustee or other nominee votes shares on the “routine” matters, but is not provided with voting instructions with respect to the “non-routine” matters, those shares will be treated as broker non-votes with respect to the “non-routine” matters. | | | | Proposal 1 is considered to be a “non-routine”"non-routine" matter under applicable rules. Accordingly, any shares held in "street name" through a broker, trustee or other nominee will not be voted on Proposal 1 unless the beneficial owner affirmatively provides the nominee instructions for how to vote. | | Proposal 2 is considered to be a “routine”"routine" matter under applicable rules. Accordingly, any shares held in "street name" through a broker, trustee or other nominee may be voted by the nominee on Proposal 2 even if the beneficial owner does not provide the nominee with instructions for how to vote. | | If you are the beneficial owner ofProposal 3 is considered to be a "non-routine" matter under applicable rules. Accordingly, any shares held in "street name" through a broker, trustee or other nominee please be sure to instruct your nominee regarding how to vote your shares to ensure that your vote is counted with respect to each of the proposals. | | | | Effect of Broker Non-Votes | Broker non-votes will be counted for purposes of calculating whether a quorum is present at the Annual Meeting, but will not be voted on Proposal 3 unless the beneficial owner affirmatively provides the nominee instructions for how to vote. |
If you are the beneficial owner of shares held in "street name" through a broker, trustee or other nominee, please be sure to instruct your nominee regarding how to vote your shares to ensure that your vote is counted with respect to each of the proposals. Effect of Broker Non-Votes Broker non-votes will be counted for purposes of calculating whether a quorum is present at the Annual Meeting, but will not be treated as shares present and entitled to vote on any proposal. | | | | Broker non-votes will not affect the outcome of the vote on Proposal 1 since the proposal will be determined by a plurality of the votescombined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock present in personvirtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. | | Proposal 2 is considered to be a “routine" matter under applicable rules. Accordingly, a broker, trustee or othernominee may generally vote on routine matters without instruction, and therefore broker non-votes are not expected to result in connection with this proposal. | | | | Effect of Abstentions | An abstention represents a stockholder’s affirmative election to decline to vote on a proposal. If a stockholder of record indicates that it wishes to abstain from voting its shares, or if a broker, bank or other nominee holding shares in "street name" causes abstentions to be recorded for shares, these sharesBroker non-votes will be considered present and entitled to vote at the Annual Meeting. As a result, abstentions will be counted for purposes of determining the presence or absence of a quorum. Becausenot affect the outcome of Proposal No. 1 will be determined by a plurality of the votes of the shares of our Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote on Proposal 3 since the election of directors at the Annual Meeting, abstentions will have no impact on the outcome of this proposal. In addition, because Proposal No. 2proposal will be determined by the affirmative vote of a majority of the combined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock present in personvirtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting, abstentions will be counted as a vote against this proposal. | | | | Voting Instructions | If you complete and submit your proxy voting instructions, the persons named as proxies will follow your instructions. If you submit proxy voting instructions, but do not direct how your shares should be voted on each item, the persons named as proxies will vote FOR the election of each of the nominees for director and FOR the ratification of the appointment of PwC as our independent registered public accounting firm.
| | | Discretion of Proxies | Our Board does not presently know of any other business, other than that described in this Proxy Statement, that will be presented for consideration by our stockholders at the Annual Meeting. However, if any other business is properly brought before the Annual Meeting, it is intended that the shares of our Class A Common Stock and Class B Common Stock represented by proxies will be voted in respect thereof in accordance with the judgment of the persons named as proxies.
| | | |
Effect of Abstentions
An abstention represents a stockholder’s affirmative election to decline to vote on a proposal. If a stockholder of record indicates an intention to abstain from voting its shares, or if a broker, trustee or other nominee holding shares in "street name" causes abstentions to be recorded for shares, these shares will be considered present and entitled to vote at the Annual Meeting. As a result, abstentions will be counted for purposes of determining the presence or absence of a quorum. Because the outcome of Proposal 1 will be determined by a plurality of the combined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock present virtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting, abstentions will have no impact on the outcome of this proposal. Because the
| | | | | | | | | Proxy Solicitation/Costs | We are paying for the distribution of the proxy materials and the solicitation of proxies in connection with the Annual Meeting. As part of this process, we expect to reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to our stockholders. Proxy solicitation expenses that we will pay include those for preparation of the Proxy Statement, preparing and mailing the Notice, printing and mailing the Proxy Statement (to the extent requested by stockholders) and tabulating proxies. Our directors, officers and employees may solicit proxies on our behalf, including in person, or by telephone, email or facsimile, but they will not receive additional compensation for providing those services.
| | | | Emerging Growth Company Status | We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise applicable generally to public companies. These provisions include:
| | (1) | reduced disclosure about our executive compensation arrangements; and | | (2) | exemptions from the requirements to obtain a non-binding advisory vote on executive compensation or a stockholder approval of any golden parachute arrangements. | | We will remain an emerging growth company until the earliest to occur of: (i) the last day of the fiscal year in which we have more than $1.0 billion in annual revenue; (ii) the end of the fiscal year in which the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the second quarter of that fiscal year; (iii) the issuance, in any three-year period, by us of more than $1.0 billion in non-convertible debt securities; and (vi) December 31, 2020. You should review this Proxy Statement with the understanding that the information contained herein may be different than the information you receive from other public companies in which you have made or are considering making an investment.
| | | | Voting Results | In accordance with SEC rules, final voting results for the proposals to be voted upon at the Annual Meeting will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time, in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once they are known by us. | | | | Request for AdditionalGeneral Information | If you have additional questions about this Proxy Statement or the Annual Meeting, please contact: AppFolio, Inc., 50 Castilian Drive, Santa Barbara, California 93117, Attn: Chief Financial Officer, and/or send an email to cfo@appfolio.com. |
outcome of Proposals 2 and 3 will be determined by the affirmative vote of a majority of the combined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting, abstentions will be counted as a vote against Proposals 2 and 3.
Submission of Questions
This year’s stockholders question and answer session will include questions submitted live during the Annual Meeting. An online pre-meeting forum will be available to our stockholders at www.proxyvote.com prior to the date of the Annual Meeting. By accessing this online forum, our stockholders will be able to vote, view the Annual Meeting procedures, and obtain copies of proxy materials and our 2022 Annual Report.
As part of the Annual Meeting, we will hold a live question and answer session during which we intend to answer questions submitted during the meeting in accordance with the Annual Meeting procedures that are pertinent to the Company and the meeting matters, as time permits. Questions may be submitted during the Annual Meeting through www.virtualshareholdermeeting.com/APPF2023. Questions and answers will be grouped by topic and substantially similar questions will be grouped and answered once. PROPOSAL ONE:We encourage you to access the Annual Meeting before it begins. Online check-in will start shortly before the meeting on June 16, 2023. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Annual Meeting log in page.
ELECTION OF DIRECTORSVoting Instructions
If you complete and submit your proxy voting instructions, the persons named as proxies will follow your instructions. If you submit proxy voting instructions, but do not direct how your shares should be voted on each item, the persons named as proxies will vote FOR the election of each of the director nominees; FOR the ratification of the appointment of PwC as our independent registered public accounting firm; and FOR the advisory approval of the compensation of our named executive officers. Discretion of Proxies Our Board does not presently know of any other business, other than that described in this Proxy Statement, that will be presented for consideration by our stockholders at the Annual Meeting. However, if any other business is properly brought before the Annual Meeting, it is intended that the shares of our Class A Common Stock and Class B Common Stock represented by proxies will be voted in respect thereof in accordance with the judgment of the persons named as proxies. Proxy Solicitation Costs We are paying for the distribution of the proxy materials and the solicitation of proxies in connection with the Annual Meeting. As part of this process, we expect to reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to our stockholders. Proxy solicitation expenses that we will pay include those for preparation of this Proxy Statement, preparing and mailing the Notice, printing and mailing this Proxy Statement (to the extent requested by stockholders) and tabulating proxies. Our directors, officers and employees may solicit proxies on our behalf, including in person, or by telephone, email or facsimile, but they will not receive additional compensation for providing those services. Voting Results In accordance with SEC rules, final voting results for the proposals to be voted upon at the Annual Meeting will be published in a Current Report on Form 8-K within four business days following the Annual Meeting, unless final results are not known at that time, in which case preliminary voting results will be published within four business days of the Annual Meeting and final voting results will be published once they are known by us. Request for Additional Information If you have additional questions about this Proxy Statement or the Annual Meeting, please contact: AppFolio, Inc., 70 Castilian Drive, Santa Barbara, California 93117, Attn: Chief Legal Officer, and/or send an email to stockholdervoting@appfolio.com.
| | | | | | | | | | | | | | | Proposal One: | | | Election of Directors |
Board Structure The number of our directors is fixed by our Board, subject to the terms of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, as each document may be amended and restated certificate of incorporation and amended and restated bylaws, which we refer to as our Governing Documents.(our "Governing Documents"). We have a classified Board consisting of three classes of directors, each serving staggered three-year terms. Our directors are divided among the three classes as follows: | | | ▪ | Class I consists of Janet Kerr and Andreas von Blottnitz, Agnes Bundy Scanlan, and Janet Kerr, whose terms will expire at our annual meeting of stockholders to be held in 2019; |
| 2025; | ▪ | Class II consists of James Peters, William RauthOlivia Nottebohm and Klaus Schauser,Alex Wolf, whose terms will expire at our Annual Meeting; and | Class III consists of Timothy Bliss, Shane Trigg and Winifred Webb, whose terms will expire at our annual meeting of stockholders to be held in 2020; and2024. |
| | ▪ | Class III consists of Timothy Bliss and Jason Randall, whose terms will expire at our Annual Meeting. |
Directors in a particular class will be elected for a three-year term at the annual meeting of stockholders in the year in which the term of that class expires. As a result, only one class of directors will be elected at each annual meeting of stockholders, with the other classes continuing for the remainder of their respective three-year terms. Each director’s term continues until the election and qualification of his or her successor, or until his or her earlier death, resignation or removal. Any newly created directorships resulting from an increase in the number of directors or a vacancy may be filled by a majority vote of the directors then in office. Directors may only be removed for cause by the affirmative vote of a majority of the combined voting power of the then outstanding shares of our Class A Common Stock and Class B Common Stock.Stock entitled to vote on the election of directors. Because only approximately one-third of our directors will be elected at each annual meeting of stockholders, two consecutive annual meetings could be required for stockholders to change a majority of the members of our Board. At the Annual Meeting, our stockholders are being asked to vote for Ms. Nottebohm and Mr. Wolf, the two Class II director nominees listed above, to serve a three-year term on our Board until our annual meeting of stockholders to be held in 2026 and until the election and qualification of his or her successor, or until his or her earlier death, resignation or removal. Each of these director nominees is a current member of our Board, and their respective terms expire at the Annual Meeting. Each of these director nominees has consented to serve if elected. Director Nominees and Continuing Directors The following table sets forth certain summary information concerning our director nominees and continuing directors as of April 2, 2018:27, 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Class | | Age | | Position | | Director Since | | Current Term Expires | | Nominees: | | | | | | | | | | | | Olivia Nottebohm | | II | | 45 | | Director | | 2023 | | 2023 | | Alex Wolf(3) | | II | | 34 | | Director | | 2022 | | 2023 | | Continuing Directors: | | | | | | | | | | | | Andreas von Blottnitz(1)(2)(3) | | I | | 57 | | Chairperson of the Board of Directors and Chairperson of the Compensation Committee | | 2007 | | 2025 | | Agnes Bundy Scanlan(1)(2) | | I | | 65 | | Chairperson of the Risk and Compliance Oversight Committee | | 2020 | | 2025 | | Janet Kerr(1)(3)(4) | | I | | 68 | | Chairperson of the Nominating and Corporate Governance Committee | | 2015 | | 2025 | | Timothy Bliss(4) | | III | | 70 | | Director | | 2008 | | 2024 | | Shane Trigg | | III | | 47 | | President, Chief Executive Officer and Director | | 2023 | | 2024 | | Winifred Webb(1)(2)(4) | | III | | 65 | | Chairperson of the Audit Committee | | 2019 | | 2024 |
| | | | | | | | | | | | | Name | | Class | | Age | | Position | | Director Since | | Current Term Expires | | Nominees: | | | | | | | | | | | Timothy Bliss(3) | | III | | 65 | | Director | | 2008 | | 2018 | | Jason Randall | | III | | 45 | | President, Chief Executive Officer and Director | | 2017 | | 2018 | | Continuing Directors: | | | | | | | | | | | James Peters(1)(3) | | II | | 71 | | Chairperson of the Audit Committee | | 2015 | | 2020 | William Rauth(2) | | II | | 74 | | Chairperson of the Compensation Committee | | 2015 | | 2020 | | Klaus Schauser | | II | | 55 | | Chief Strategist, Founder and Director | | 2007 | | 2020 | Janet Kerr(1)(2)(3) | | I | | 63 | | Chairperson of the Nominating and Corporate Governance Committee | | 2015 | | 2019 | Andreas von Blottnitz(1)(2) | | I | | 52 | | Chairperson of the Board of Directors | | 2007 | | 2019 |
(1)Serves as a member of our audit committee.Audit Committee.
| | | | | | | | | | Proposal One: Election of Directors |
(2)Serves as a member of our compensation committee.Risk and Compliance Oversight Committee. (3)Serves as a member of our nominatingCompensation Committee. (4)Serves as a member of our Nominating and corporate governance committee.Corporate Governance Committee.
The biographies of each of the director nominees and continuing directors below contain information regarding each such person’s (i) service as a director, (ii) relevant business experience, and (iii) public company director positions held currently or at any time during the last five years. The information provided below also addresses the specific experiences, qualifications, attributes or skills that each director nominee or continuing director possesses that caused our Board to determine that the person should serve as a director.
In addition to the information presented below regarding each director nominee’snominees' and continuing director’sdirectors' specific experience, qualifications, attributes and skills, we believe each of our directors has a reputation for integrity, honesty and adherence to high ethical standards. We also believe each of our directorsstandards, and has demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment to serve AppFolio, our stockholders, and our Board. Although the Board does not have a specific diversity policy, we believe that the diversity in professional experience, race, ethnicity, gender identity, age, cultural background, LGBTQ+ identity, and personal background among our directors and the differing experiences and viewpoints stemming therefrom enhance the overall performance of our Board and position us for success, including in understanding opportunities, anticipating challenges and assessing risks. The Board demographic tables and matrix below provide certain highlights of the composition of our Board members and nominees. Board Demographics | | | | | | | | | | | | | | | | | | | Board Diversity Matrix (as of April 27, 2023) | | Total Number of Directors | 8 | | Gender Identity | Female | Male | Non-Binary | Gender Undisclosed | | Directors | 4 | 4 | — | — | | Demographic Background | | African American or Black | 1 | — | — | — | | Hispanic or Latinx | 1 | — | — | — | | White | 2 | 4 | — | — |
| | | | | | | | | | Proposal One: Election of Directors |
Director Nominees: Nominees for Election at the Annual Meeting for a Three-Year Term Expiring at the 20212026 Annual Meeting of Stockholders (Class IIIII Directors) Timothy Bliss has served as a member of our Board since 2008. Mr. Bliss has been a partner of Investment Group of Santa Barbara, or IGSB, which is one of our principal stockholders, for over 30 years. He received a B.A. from Harvard College and an M.B.A. from the Stanford Graduate School of Business. | | | | | | | | | | | | | | | | | Olivia Nottebohm has served as a member of our Board since 2023. Ms. Nottebohm has over 20 years of experience in online software and has served in a number of executive leadership positions overseeing sales, marketing, support, partnerships, strategy, human resources and operations. Ms. Nottebohm most recently served as the Chief Revenue Officer and Advisor to the CEO of Notion Labs. Prior to this, she was the Chief Operating Officer of Dropbox. Before joining Dropbox, Ms. Nottebohm was the Vice President of the SMB Google Cloud business and GTM Operations. Previous to that, she was Senior Director, GTM Operations for Google Ads. Ms. Nottebohm joined Google from McKinsey where she was a Partner and had spent 13 years. She currently serves on the board of Lightmatter, a privately-held corporation. Ms. Nottebohm received a B.A. in Economics from Harvard University and an M.B.A. from the Stanford Graduate School of Business. We believe Ms. Nottebohm's background in the SaaS industry, as well as her robust management and consulting experience, qualify her to serve on our Board. | | | | | Olivia Nottebohm | | | | | Age: 45
Director Since: 2023
Class: II |
We believe Mr. Bliss’s ten years of experience with AppFolio | | | | | | | | | | | | | | | | | Alex Wolf has served as a member of our Board since January 2022. Mr. Wolf is currently a partner of Partners Fund Capital ("PFC"), a position he has held since 2022, and serves on the Board of Directors of several privately held software companies. Prior to joining PFC, Mr. Wolf was a partner of Investment Group of Santa Barbara, a position he held for eight years from 2015 through 2022, and before that, he served in finance and investment roles at The Carlyle Group and Blackstone Inc. He earned a B.A. from Yale University and an M.B.A. from the Stanford Graduate School of Business. We believe Mr. Wolf's experience working with technology companies in various industries and in different stages of the corporate lifecycle, along with his experience in finance and his long history of investing, in and building technology companies qualify him to serve on our Board. Jason Randall has served as our President and Chief Executive Officer and as a director since August 2017. Previously, Mr. Randall served at AppFolio for over nine years, including in key leadership roles within both of our verticals. Mr. Randall most recently served as Senior Vice President, AppFolio Property Manager, our software solution for the property management industry. From 2014 to early 2016, he served as Senior Vice President, MyCase, our practice management software that serves the legal industry. From 2008 to 2014 he served as Vice President, Product, for AppFolio Property Manager. Prior to joining AppFolio, Mr. Randall served in various leadership and product development positions, including Senior Director, Product Management, at ExpertCity, Inc., which was acquired by Citrix Systems, Inc. in 2004 and subsequently merged with LogMeIn, Inc. (NASDAQ: LOGM). Mr. Randall received a B.S. in Environmental Studies from the University of California, Santa Barbara.
We believe Mr. Randall's ten years of experience serving in leadership positions within AppFolio, his considerable experience in the software industry, his significant contributions to our success, and his extensive leadership and strategic planning skills qualify him to serve on our Board.
| | | | Alex
Wolf | | | | | Age: 34
Director Since: 2022
Class: II |
| | | | | | | | | | Proposal One: Election of Directors |
Continuing Directors: Continuing in Office with a Term Expiring at the 20192024 Annual Meeting of Stockholders (Class IIII Directors) Janet Kerr has served as a member of our Board since June 2015. Ms. Kerr is the Vice Chancellor of Pepperdine University and former Professor Emeritus, founder and Executive Director of the Geoffrey H. Palmer Center for Entrepreneurship and the Law at Pepperdine University School of Law. She is a well-known author in the areas of securities, corporate law and corporate governance, having published several articles and a book on the subjects. Ms. Kerr has founded or co-founded several technology companies, including X-Labs. She is currently a member of the National Association of Corporate Directors, and of counsel to Nave & Cortell LLP. Ms. Kerr is a member of the Board of Directors, nominating and corporate governance committee and the compensation committee of La-Z-Boy, Inc. (NYSE: LZB), a furniture retailer and manufacturer. Ms. Kerr is also a member of the Board of Directors and chair of the nominating and corporate governance committee of Tilly’s, Inc. (NYSE: TLYS), a retailer of action sports inspired apparel, footwear and accessories. Additionally, she is a member of the Board of Directors of Fidelity National Financial (NYSE: FNF). | | | | | | | | | | | | | | | | | Timothy Bliss has served as a member of our Board since 2008 and as a member of the Nominating and Corporate Governance Committee since 2015. He is a partner of Partners Fund Capital, a position he has held since 2022, and a partner of Investment Group of Santa Barbara, a position he has held for over 40 years. Mr. Bliss received a B.A. from Harvard College and an M.B.A. from the Stanford Graduate School of Business. We believe Mr. Bliss’ 14 years of experience with AppFolio and his long history of investing in and building technology companies qualify him to serve on our Board. | | | | Timothy
Bliss | | | | | Age: 70
Director Since: 2008
Class: III | |
We believe Ms. Kerr’s extensive corporate governance experience, together with her experience serving as a director of other public companies, qualify her to serve on our Board. | | | | | | | | | | | | | | | | | Shane Trigg has served as AppFolio's President and Chief Executive Officer and as a member of our Board since March 2023. Prior to that Mr. Trigg served as AppFolio's President and General Manager, Real Estate, and served as the Company’s General Manager, Real Estate from April 2020 to February 2023. From 2012 to 2020, Mr. Trigg served as a Senior Vice President, Commerce Cloud and Senior Vice President, Marketing Cloud for Salesforce, Inc., a cloud-based customer relationship management provider. From 2004 to 2011, Mr. Trigg held various positions with MRI Software (formerly Intuit Real Estate Solutions, Inc), a provider of real estate and investment management software, last serving as VP, Global Sales and Marketing. Mr. Trigg is a member of the Forbes Business Council and a Limited Partner at Stage 2 Capital. He received a B.S. from The Ohio State University and an M.B.A. from the University of Notre Dame. We believe Mr. Trigg's considerable experience in the software industry, his significant contributions to our success, and his extensive leadership and strategic planning skills qualify him to serve on our Board. | | | | Shane
Trigg | | | | | Age: 47
Director Since: 2023
Class: III | |
Andreas von Blottnitz has served as a member of our Board since 2007. Mr. von Blottnitz is a former venture partner of BV Capital Management, LLC, or BV Capital, which he joined in 2005. He currently serves on the Boards of Directors of a number of private companies. From 1999 to 2004, he served as the Chief Executive Officer of ExpertCity, Inc., which was acquired by Citrix Systems, Inc. in 2004 and subsequently merged with LogMeIn, Inc. (NASDAQ: LOGM). Mr. von Blottnitz received a B.A. in Business Sciences from Wirtschaftsakademie in Hamburg, Germany.We believe Mr. von Blottnitz’s background as a director and officer of multiple companies in the technology industry, his extensive investing experience, and his leadership and strategic planning skills qualify him to serve on our Board.
| | | | | | | | | | Proposal One: Election of Directors |
| | | | | | | | | | | | | | | | | Winifred Webb has served as a member of our Board since 2019. Ms. Webb is the founder of Kestrel Corporate Advisors. Prior to that, Ms. Webb was Managing Director at Tennenbaum Capital Partners and, before that, a member of the senior executive team at Ticketmaster Entertainment, Inc. Prior to joining Ticketmaster, Ms. Webb served for 20 years with The Walt Disney Company in various senior positions, including as corporate Senior Vice President of Investor Relations and Shareholder Services, and in governance outreach, corporate treasury, and as Executive Director of The Walt Disney Company Foundation. Before Disney, she held roles in investment banking. Ms. Webb is a National Association of Corporate Directors Board Leadership Fellow. She currently serves on the Board of Directors of ABM Industries Incorporated (NYSE: ABM) and Wynn Resorts, Limited (NASDAQ: WYNN), and on the Board of Trustees of AMH (NYSE: AMH), a real estate investment trust. Ms. Webb has served on several other public company boards including TiVo and Jack in the Box. Ms. Webb received her M.B.A. from Harvard University and her B.A. (with honors) from Smith College. In addition, she earned the CERT Certificate in Cybersecurity Oversight from Carnegie Mellon and the National Association of Corporate Directors. We believe Ms. Webb's extensive experience as a senior finance and investor relations executive, her involvement in real estate-related and digital companies, and her service as a public company director qualify her to serve on our Board. | | | | | Winifred Webb | | | | | Age: 65
Director Since: 2019
Class: III | | | | |
Continuing Directors: Continuing in Office with a Term Expiring at the 20202025 Annual Meeting of Stockholders (Class III Directors) James Peters | | | | | | | | | | | | | | | | | Andreas von Blottnitzhas served as a member of our Board since June 2015. Mr. Peters served as a member of our Board since 2007. Mr. von Blottnitz is a former venture partner of BV Capital Management, LLC, which he joined in 2005. From 1999 to 2004, he served as the Chief Executive Officer of ExpertCity, Inc., which was acquired by Citrix Online and later merged into GoTo. He currently serves on the Board of Directors of a number of private companies. He received a B.A. in Business Sciences from Wirtschaftsakademie in Hamburg, Germany. We believe Mr. von Blottnitz’s background as a director and officer of multiple companies in the audit practice of Ernst & Young for 24 years, during which time he also held a number of administrative positions, including Pacific Southwest Area Resource & Production Management Partner and being a member of the Pacific Southwest Area Assurance and Advisory
Business Services Leadership Committee. From 2007 until 2014, he served as a member of the Board of Directors and chair of the audit committee of Conversant, Inc. (NASDAQ: CNVR), until it was acquired by Alliance Data Systems Corporation (NYSE: ADS), and from 2006 until 2007, he served as a member of the Board of Directors and chair of the audit committee of Natrol, Inc. (NASDAQ: NTOL), which was acquired by Plethico Pharmaceutical Limited, a company that is publicly-traded on the National Stock Exchange of India Ltd. He is a member of the National Association of Corporate Directors and also completed the Director’s Training Program at the UCLA Anderson School of Management, where he was also an instructor of the Program. Mr. Peters received a Certificate of Management Accounting from the Institute of Management Accountants and earned his CPA license (inactive) from the State of California.
We believe Mr. Peters’ extensive accounting and auditing experience, together with his experience serving on the Boards of Directors of multiple public companies, qualify him to serve on our Board.
William Rauth has served as a member of our Board since June 2015. Mr. Rauth has been a partner of IGSB, for over 40 years. He was a founder of the law firm Stradling Yocca Carlson & Rauth, P.C., where his practice focused on corporate and securities transactions for over 20 years until his retirement from the legal profession. Mr. Rauth has consulted with, and served on, the Boards of Directors of numerous public and private companies. He received a B.A. in Economics from the University of California, Santa Barbara, and a J.D. from the University of California, Berkeley.
We believe Mr. Rauth’s significant experience working with companies in various industries and different stages of the corporate lifecycle, as well as his extensive legal experience, qualify him to serve on our Board.
Klaus Schauser co-founded AppFolio in 2006 and has served as our Chief Strategist and a director since 2007. Mr. Schauser was a co-founder and, from 1999 to 2005, the Chief Technology Officer of Expertcity, Inc., which was acquired by Citrix Systems, Inc. in 2004 and subsequently merged with LogMeIn, Inc. (NASDAQ: LOGM). He has also served as a Professor of Computer Science at the University of California, Santa Barbara. Mr. Schauser received a Ph.D. in Computer Science from the University of California, Berkeley.
We believe Mr. Schauser’s background as the founder of two cloud-based solution providers, as well as his deep industry and technology industry, his extensive investing experience, and his leadership and strategic planning skills qualify him to serve on our Board.
| | | | | | Andreas von Blottnitz | | | | | | Age: 57
Director Since: 2007
Class: I | | |
| | | | | | | | | | Proposal One: Election of Directors |
| | | | | | | | | | | | | | | | | Agnes Bundy Scanlan has served as a member of our Board since 2020. Ms. Bundy Scanlan is the President of The Cambridge Group LLC, a strategy and risk management advisory firm. Prior to that, she was senior advisor for Treliant, where she counseled financial services firms on various challenges, including strategy, governance, regulatory, compliance, and risk management matters. From 2015 to 2017, she served as the Northeast Regional Director of Supervision Examinations for the Consumer Financial Protection Bureau. Previously, she also served as Chief Regulatory Officer, Chief Compliance Officer, Chief Privacy Officer, Regulatory Relations Executive, and Director of Corporate Community Development for, and as legal counsel to, a number of banks and financial services firms, and as legal counsel to the United States Senate Budget Committee. She currently serves on the Board of Directors of Truist Financial Corporation (NYSE: TFC), R1 RCM Inc. (NASDAQ: RCM), and privately-held iCapital. Ms. Bundy Scanlan holds a J.D. from Georgetown University Law Center and several Bar memberships, and has earned the CERT Certificate from the Universities of Cambridge and Oxford Programs in Digital Transformation and Disruptive Technologies; the Certificate in Artificial Intelligence from MIT; and the Certificate in Cybersecurity Oversight from Harvard University and Carnegie Mellon. We believe Ms. Bundy Scanlan's extensive risk management, regulatory, compliance, legal, banking, executive management, and government affairs experience, together with her serving as a director of other public companies, qualify her to serve on our Board. | | | | | Agnes Bundy Scanlan | | | | | | | | Age: 65
Director Since: 2020
Class: I | | | | |
| | | | | | | | | | | | | | | | | Janet Kerr has served as a member of our Board since 2015. Ms. Kerr is the Vice Chancellor of Pepperdine University and Professor Emeritus, founder and Executive Director of the Geoffrey H. Palmer Center for Entrepreneurship and the Law at Pepperdine University School of Law and Laure Sudreau Chair Emeritus. She is a well-known author in the areas of securities, corporate law and corporate governance, having published several articles and a book on the subjects. Ms. Kerr has founded or co-founded several technology companies, including X-Labs and a data analytics company acquired by Bloomberg. She currently serves on the Board of Directors of La-Z-Boy, Inc. (NYSE: LZB) and Tilly’s, Inc. (NYSE: TLYS). Since 2004, Ms. Kerr has served on several other public company boards including Carl’s Jr./Hardee’s, TSI, Inc., and Fidelity National Financial. She is currently a member of the National Association of Corporate Directors and has earned the CERT Certificate in Cybersecurity Oversight from Carnegie Mellon, the Certificate from the University of Cambridge Program in Disruptive Technologies, and the Certificate in Artificial Intelligence from MIT. Ms. Kerr is also a certified mediator. We believe Ms. Kerr’s extensive corporate governance experience, together with her experience serving as a director of other public companies, qualify her to serve on our Board. | | | | Janet Kerr | | | | | | | | Age: 68
Director Since: 2015
Class: I | |
Election of Director Nominees At the Annual Meeting, our stockholders are being asked to vote for Messrs. Bliss and Randall, the two Class III director nominees listed above, to serve on our Board until our annual meeting of stockholders to be held in 2021 and until each of their successors has been elected and qualified, or until such director’s earlier death, resignation or removal. Each of these nominees is a current member of our Board, and their respective terms expire at the Annual Meeting. Each of these nominees has consented to serve if elected.
Provided that a quorum of stockholders is present at the Annual Meeting, directorsDirectors will be elected by a plurality of the votescombined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock present in personvirtually or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. This means that the director nominees for Class IIIII director who receive the most FOR votes (among votes properly cast in person or represented by proxy) will be elected as directors. Broker non-votes abstentions and votes against the proposalabstentions will not be treated as votes cast for this purpose and, therefore, will not affect the outcome of the election.
Unless you direct otherwise through your proxy voting instructions, the persons named as proxies will vote all proxies received FOR the election of each of the director nominees. If eitherany director nominee is unable or unwilling to serve at the time of the Annual Meeting, the persons named as proxies may vote for a substitute director nominee chosen by our Board. In the alternative, the proxies may vote only for any remaining director nominees, leaving one or more vacancies on our Board. Recommendation of our Board | | | OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR "FOR" THE ELECTION OF EACH OF THE DIRECTOR NOMINEES. |
| | | | | | | | | | | | | | | Proposal Two: | | | Ratification of the Appointment of Our Independent Registered Public Accounting Firm |
Our Audit Committee has appointed PwC as our independent registered public accounting firm to perform the audit of our consolidated financial statements for the fiscal year ending December 31, 2023. PwC has served as our independent registered public accounting firm since 2011. Our Audit Committee annually reviews the independent registered public accounting firm’s independence, including reviewing all relationships between the firm and us and any disclosed relationships or services that may impact the objectivity and independence of the firm, as well as the firm’s performance. As a matter of good corporate governance, our Board is submitting the appointment of PwC to our stockholders for ratification. We expect a representative of PwC will attend the Annual Meeting. The representative will have an opportunity to make a statement if he or she so chooses. Fees Paid to the Independent Registered Public Accounting Firm The following table sets forth the fees billed or expected to be billed by PwC for audit, audit-related, tax and all other services rendered for 2022 and 2021 (in thousands): | | | | | | | | | | | | | 2022 | | 2021 | | Audit Fees | $1,961 | | $1,830 | | Audit-Related Fees | — | | — | | Tax Fees | 26 | | 118 | | All Other Fees | 1 | | 1 | | Total | $1,988 | | $1,949 |
Audit Fees. Represent fees billed or expected to be billed for professional services provided in connection with the audits of our annual financial statements and internal control over financial reporting associated with compliance with Section 404(b) of the Sarbanes-Oxley Act, reviews of our quarterly financial statements, and consultations on accounting matters directly related to the audit of our annual financial statements. Audit-Related Fees. There were no fees billed by PwC for professional services under "Audit-Related Fees." Tax Fees. Represents fees billed for tax studies and tax compliance services. All Other Fees. Represents license fees for accounting research software. Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services We have adopted a policy under which our Audit Committee must pre-approve all audit and permissible non-audit services to be provided by our independent registered public accounting firm. As part of this review, our Audit Committee also considers whether the categories of pre-approved services are consistent with the rules on accountant independence of the SEC and the Public Company Accounting Oversight Board ("PCAOB"). Our Audit Committee has pre-approved all services performed since the pre-approval policy was adopted. In addition, in the event time constraints require pre-approval prior to our Audit Committee's next scheduled meeting, our Audit Committee has authorized its Chairperson to pre-approve services. Engagements pre-approved by the Chairperson of our Audit Committee are to be reported to the Audit Committee at its next scheduled meeting.
| | | | | | | | | | Proposal Two: Ratification of the Appointment of Our Independent Registered Public Accounting Firm |
Ratification of the Appointment of PwC The affirmative vote of a majority of the combined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting will be required to ratify the appointment of PwC. Abstentions will have the same effect as a vote against the proposal. Broker non-votes are not expected to result in connection with this proposal. Unless you direct otherwise through your proxy voting instructions, the persons named as proxies will vote all proxies received FOR the ratification of the appointment of PwC. If our stockholders fail to ratify the appointment of PwC, our Audit Committee will reconsider whether to retain the firm. Even if the selection is ratified, our Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our best interests and the best interests of our stockholders. Recommendation of our Board | | | | | | | | | | OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF PWC AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023. | |
| | | | | | | | | | | | | | | Proposal Three: | | | Advisory Vote On Named Executive Officer Compensation |
Background We are providing our stockholders with the opportunity to cast a non-binding, advisory vote on named executive officer compensation, also known as a "say on pay" advisory vote, as described below. The Board recommended, and the stockholders approved at our 2019 annual meeting of stockholders, that such advisory vote would be conducted every year. The primary objective of our executive compensation program is to provide a total compensation package designed to attract, motivate, and retain executive officers with the skills, energy, and commitment required to achieve our short-term and long-term strategic objectives, which we believe will positively impact long-term value. As described in this Proxy Statement, we seek to reward (i) achievement through performance-based cash bonuses and performance-based restricted stock unit grants, and (ii) commitment through time-based restricted stock unit grants. We balance such rewards with certain guaranteed elements of compensation, including base salary and employee benefits. Our executive compensation program promotes strong alignment between the interests of our executives and those of our stockholders by tying a significant portion of compensation to the achievement of key strategic objectives. Overall, we seek to ensure that the total compensation opportunity available to our executive officers is appropriate for each executive given their respective scope of responsibilities and ability to impact our results. For additional information about our named executive officer compensation program, please refer to the section titled "Compensation Discussion and Analysis" and the related compensation tables and footnotes. Proposal In accordance with Section 14A of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), we are asking our stockholders to vote "FOR" the approval of the following resolution at the Annual Meeting: "RESOLVED, that our stockholders approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K and as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative discussion in this Proxy Statement for our 2023 Annual Meeting of Stockholders." Effect of Proposal The resolution above is non-binding. The approval or disapproval of this proposal by stockholders will not require our Board or our Compensation Committee to take any action regarding our named executive officer compensation practices. The final decision on the compensation and benefits of our named executive officers and on whether, and if so, how, to address stockholder disapproval remains with our Board and our Compensation Committee. Our Board, however, values the opinions of our stockholders as expressed through their votes and other communications. Although the resolution is non-binding, our Board and our Compensation Committee will carefully consider the outcome of the advisory vote and stockholder opinions received from other communications when making future named executive officer compensation decisions. Approval of Proposal The affirmative vote of a majority of the combined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting will be required to approve, on a non-binding, advisory basis, the compensation of our named executive officers. Abstentions will have the same effect as a vote against the proposal. Broker non-votes will not affect the outcome of the vote on this proposal. Unless you direct otherwise through your proxy voting instructions, the persons named as proxies will vote all proxies received FOR the advisory approval of the compensation of our named executive officers. Recommendation of our Board | | | OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ADVISORY APPROVAL OF THE NAMED EXECUTIVE OFFICER COMPENSATION. |
| | | | | | | | | | | | | | | Directors and Corporate Governance |
CORPORATE GOVERNANCE
Director Independence Our Board has undertaken a review of the independence of each of our continuing directors and director nominees and has affirmatively determined that Messrs. Bliss, Peters, Rauth and von Blottnitz, and Ms.Wolf, and Mses. Bundy Scanlan, Kerr, Nottebohm, and Webb, do not have relationships that would interfere with thetheir exercise of independent judgment in carrying out the responsibilities of a director, and that each of these directorsMessrs. Bliss, von Blottnitz, and Wolf, and Mses. Bundy Scanlan, Kerr, Nottebohm and Webb meets the definition of “independent director” under the applicable NASDAQ listing standards. In making these determinations, our Board considered the current and prior relationships that each continuing director and director nominee has with our companythe Company and all other facts and circumstances our Board deemed relevant. Messrs. Randall and Schauser doMr. Trigg does not meet the definition of “independent director” as they are currently our executive officers. Family Relationships
There are no family relationships between any director,Mr. Trigg is a current executive officer or person nominated to become a director or executive director.
Agreements with Directors and Executive Officers
None of the directors, executive officers, or director nominees was selected pursuant to any arrangement or understanding, other than with such persons acting within their capacity as such.Company.
Legal Proceedings with Directors and Executive Officers
There are no legal proceedings related to any of our directors, executive officers, or director nominees that require disclosure pursuant to SEC rules and regulations.
Board Leadership Structure The positions of Chairperson of our Board and Chief Executive Officer are presently separated. We believe separating these positions allows our Chief Executive Officer to focus on our day-to-day business, while allowing the Chairperson of our ChairpersonBoard to lead our Board in its fundamental role of providing advice to and independent oversight of management. Our Board recognizes the time, effort and energy that our Chief Executive Officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our Chairperson, particularly as our Board’s oversight responsibilities continue to grow. While our Governing Documents and corporate governance guidelines do not require that the Chairperson of our ChairpersonBoard and Chief Executive Officer positions be separate,separate; however, our Board believes that having separate positions is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance. Recent Board Composition Changes On March 1, 2023, Klaus Schauser and Jason Randall each notified the Board of his decision to resign from his position as a member of the Board. Subsequently, also on March 1, 2023, the Board unanimously appointed (i) Ms. Nottebohm to serve as a Class II director, filling the vacancy caused by Mr. Schauser's resignation, and (ii) Mr. Trigg to serve as a Class III director, filling the vacancy caused by Mr. Randall's resignation.
| | | | | | | | | | Directors and Corporate Governance |
Board Role in Risk Oversight Our The Board has an active role, as a whole and also at the committee level, in overseeingits committees work closely with and regularly receive reports from management to understand and oversee the management of existing and emerging risks. In addition, our risks. Our Board is responsible for general oversight of risksdirectors have unrestricted access to Company personnel and regular review ofdocuments, and may seek any information regarding our risks, including financial, strategicthey require from employees, officers, or external parties. They also have discretion to engage and operational risks. Our audit committee is responsible for overseeing the management of risks relatingobtain advice, reports or opinions from legal counsel and other advisors to accounting matters and financial reporting, as well as implementing our related party transaction policy. Our compensation committee is responsible for overseeing the management of risks relatingcarry out their responsibilities. We have a Chief Compliance Officer that reports to our executive compensation plansChief Legal Officer, and arrangements, including whether our compensation policiesboth individuals routinely provide reports to the Board and programs have the potential to encourage excessive risk taking. Our nominating and corporate governance committee is responsible for overseeing our corporate governance practices and policies, including assessing the independence of our Board. Although each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through discussions from committee members about such risks.its committees. Our Board believes its leadership structure is consistent with and supports the administration of its risk oversight function.
The Board and its committees routinely consider the Company's risk environment. The ERM Program is reviewed periodically by management and any material changes to the ERM Program are reported to and approved by the Risk and Compliance Oversight Committee. In addition, each committee annually reviews the adequacy of its respective charter in light of the current risk environment.
| | | | | | | | | | Directors and Corporate Governance |
Meetings of the Board Meetingsof Directors During 2017,2022, our Board held sixseven meetings and acted by written consent one time. Each director attended at least 75% of the aggregate of the total number of meetings of our Board held during the period in which each such director served and at least 75% of the total number of meetings held by any of the committees of our Board on which such director served during such period. Director’s Attendance at Annual Stockholder Meetings
Although we do not have a formal policy requiring our directors to attend our annual meetings of stockholders, our directors are encouraged to attend these meetings. All directors, who were active at the time, attended our 2022 annual meeting of stockholders. Executive Sessions In accordance with the applicable NASDAQ listing standards, our independent directors meet in regularly scheduled executive sessions at which only independent directors are present. Agreements with Directors and Third Parties Ms. Nottebohm is a consultant to IGSB, Inc. (“IGSB”) on strategy and related matters across IGSB’s operations. Maurice J. Duca controls IGSB and, through various investment vehicles, is the Company’s largest stockholder. Mr. Duca has agreed to pay Ms. Nottebohm 35 percent of the net gain on the equivalent of 35,714 shares of the Company’s Class A common stock each year for the next eight years, which amount may be paid in cash or shares of the Company’s Class A common stock. The net gain will be based on a $100 per share starting value and the 10-day average of the final closing price of the shares prior to the date of payment, as reported by The Nasdaq Global Market. The first payment is scheduled to be made on the one-year anniversary of Ms. Nottebohm’s appointment to the Board. No part of such payment will come from the Company.
| | | | | | | | | | Directors and Corporate Governance |
Committees of our Board Our Board has established threefour permanent committees: our audit committee; our compensation committee;Audit Committee; Compensation Committee; Nominating and our nominatingCorporate Governance Committee; and corporate governance committee.Risk and Compliance Oversight Committee. Our Board has adopted written charters for each of these committees, all of which satisfy the applicable NASDAQ listing standards and are available on our website at http://ir.appfolioinc.com. The information included on or accessed through our website does not constitute part of this Proxy Statement and shall not be deemed to be “soliciting material” for purposes of the Securities and Exchange Act of 1934, as amended, or the Exchange Act. You should not consider such information in determining how to vote your shares. References in this Proxy Statement to our website addressaddresses are inactive textual references only. The composition and responsibilities of each of our permanent committees are described and reflected below. Note that directors that do not currently serve on a permanent committee are not included in the below table. | | | | | | | | | | | | | | | | | | | | | | | | | Name | | | Audit Committee | Compensation
Committee | Nominating and Corporate Governance Committee | Risk and
Compliance Oversight Committee | | Tim Bliss | | | | | | | | Agnes Bundy Scanlan | | | | | | | Janet Kerr | | | | | | | | Andreas von Blottnitz | | | | | | | Wendy Webb | | | | | | | | Alex Wolf | | | | | | |
 Chairman of the Board  Financial Expert  Chairperson  Committee Member | | | | | | | | | | | | | Audit Committee | | Independence: Each of the members has been determined to satisfy the independence and financial literacy requirements under applicable SEC rules and regulations and applicable NASDAQ listing standards. Financial Expertise: Ms. Webb is an “Audit Committee financial expert” within the meaning of Item 407(d) of Regulation S-K under the Securities Act of 1933, as amended (the "Securities Act"). Our Audit Committee is responsible for, among other things, the oversight of: ▪the auditing, accounting, and financial reporting processes, and systems of internal control that are conducted by our independent auditor, our internal audit function, and our financial and senior management; ▪the qualifications, independence, and performance of our independent auditor; and ▪public disclosure and SEC filing requirements. | | | | | | | Meetings in 2022: 5 Members: Winifred Webb (Chair) Andreas von Blottnitz Agnes Bundy Scanlan Janet Kerr | |
| | | | | | | | | | Directors and Corporate Governance |
| | | | | | | | | | | | | Compensation Committee | | Independence: Each of the members has been determined to be an independent director under applicable SEC rules and regulations and applicable NASDAQ listing standards. Each member of our Compensation Committee is also a non-employee director, as defined by Rule 16b-3 promulgated under the Exchange Act. Our Compensation Committee is responsible for, among other things: ▪developing and reviewing the compensation programs and strategy applicable to our directors and senior executives, and overseeing our overall compensation philosophy; ▪evaluating our Chief Executive Officer's performance in light of the corporate goals and objectives applicable to such individual's compensation. ▪recommending to our Board for approval each component of compensation paid to our directors and Chief Executive Officer; ▪approving each component of compensation paid to our senior executives; ▪administering our cash and equity-based compensation plans applicable to all of our directors, senior executives and employees in accordance with the terms of our Compensation Committee’s charter; and ▪reviewing and discussing with management the disclosures regarding executive officer and director compensation to be included in our public filings, including our annual proxy statement. | | | | | | | Meetings in 2022: 4 Members: Andreas von Blottnitz (Chair) Janet Kerr Alex Wolf | |
| | | | | | | | | | | | | Nominating and Corporate Governance Committee | | Independence: Each of the members has been determined to be an independent director under applicable NASDAQ listing standards. Our Nominating and Corporate Governance Committee is responsible for, among other things: ▪assisting our Board in identifying individuals qualified to become members of our Board, consistent with criteria approved by our Board; ▪recommending to the Board director nominees for each committee of the Board; ▪developing and recommending to our Board such corporate governance guidelines and procedures as the committee determines is appropriate from time to time; ▪generally overseeing the Company's Environmental, Social and Governance activities; ▪developing and recommending to our Board a Chief Executive Officer succession plan; ▪overseeing the evaluation of our Board and of each committee of our Board; and ▪conducting and/or advising on Board education. | | | | | | | Meetings in 2022: 5 Members: Janet Kerr (Chair) Timothy Bliss Winifred Webb | |
| | | | | | | | | | Directors and Corporate Governance |
| | | | | | | | | | | | | Risk and Compliance Oversight Committee | | Independence: Each of the members has been determined to be an independent director under applicable NASDAQ listing standards. Our Risk and Compliance Oversight Committee is responsible for, among other things: ▪reviewing, understanding and monitoring the Company's applicable risk management and legal compliance frameworks (the "frameworks"); ▪monitoring the performance of management with respect to adhering to the frameworks; ▪reviewing the means by which the Company monitors compliance with applicable legal and regulatory requirements and the Company's material legal and regulatory compliance risk exposures and the steps taken by management to monitor or mitigate such exposures; ▪reviewing the Company's privacy program and material privacy and data use risk exposures and the steps taken by the Company to monitor or mitigate such exposures; ▪reviewing the Company's cybersecurity program and cybersecurity risk exposures and the steps taken by the Company to monitor or mitigate such exposures; and ▪helping to set the tone and develop a culture within the Company regarding the importance and value of risk management and legal compliance. | | | | | | | Meetings in 2022: 4 Members: Agnes Bundy Scanlan (Chair) Andreas von Blottnitz Winifred Webb | |
In addition, from time to time, special committees may be established under the direction of our Board when necessary to address specific issues. Members will serve on these committees until their resignation or until otherwise determined by our Board. The composition and responsibilities of each of our three permanent committees are described below:
Audit Committee
Our audit committee, which met four times during 2017 and did not act by written consent, currently consists of Messrs. Peters and von Blottnitz, and Ms. Kerr, each of whom has been determined to satisfy the independence and financial literacy requirements under applicable SEC rules and regulations and applicable NASDAQ listing standards. Mr. Peters serves as the Chairperson of our audit committee. Our Board has affirmatively determined that Mr. Peters is an “audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K under the Securities Act of 1933, as amended, or the Securities Act.
Our audit committee is responsible for, among other things:
| | ▪ | appointing, terminating, compensating and overseeing the work of any independent registered public accounting firm engaged to prepare or issue an audit report or other audit, review or attest services; |
| | ▪ | monitoring and evaluating the independent registered public accounting firm’s qualifications, performance and independence on an ongoing basis; |
| | ▪ | reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements; |
| | ▪ | reviewing and discussing the adequacy and effectiveness of our auditing, accounting and financial reporting processes and systems of internal control that are followed by the independent registered public accounting firm, our internal audit function and our financial and senior management; |
| | ▪ | establishing and overseeing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential, anonymous submission by our employees regarding questionable accounting or auditing matters; |
| | ▪ | investigating any matter within the scope of its duties brought to its attention and engaging independent counsel and other advisors as our audit committee deems necessary; |
| | ▪ | reviewing and approving related party transactions for potential conflict of interest situations on an ongoing basis; |
| | ▪ | reviewing and assessing the adequacy of its written charter on an annual basis; and |
| | ▪ | overseeing such other matters as are specifically delegated to our audit committee by our Board from time to time. |
Compensation Committee
Our compensation committee, which met thirteen times during 2017 and did not act by written consent, currently consists of Messrs. Rauth and von Blottnitz, and Ms. Kerr, each of whom has been determined to be an independent director under applicable SEC rules and regulations and applicable NASDAQ listing standards. Each member of our compensation committee is also a non-employee director, as defined by Rule 16b-3 promulgated under the Exchange Act, and an outside director, as defined by Section 162(m) of the Internal Revenue Code. Mr. Rauth serves as Chairperson of our compensation committee.
Our compensation committee is responsible for, among other things:
| | ▪ | assisting our Board in developing and reviewing the compensation programs and strategy applicable to our directors and senior management, and overseeing our overall compensation philosophy; |
| | ▪ | reviewing and recommending to our Board for approval our cash and equity incentive plans, including individual grants or awards thereunder; |
| | ▪ | reviewing and recommending to our Board for approval the terms of any employment agreement, severance or change-in-control arrangement, or other compensatory arrangement with any executive officers or other key employees; |
| | ▪ | reviewing and discussing with management the tables and narrative discussion regarding executive officer and director compensation to be included in our annual proxy statement including such information included in this Proxy Statement; |
| | ▪ | reviewing and assessing the adequacy of its written charter on an annual basis; and |
| | ▪ | overseeing such other matters as are specifically delegated to our compensation committee by our Board from time to time. |
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee, which met four times during 2017 and did not act by written consent, consists of Ms. Kerr and Messrs. Bliss and Peters, each of whom has been determined to be an independent director under applicable NASDAQ listing standards. Ms. Kerr serves as Chairperson of our nominating and corporate governance committee.
Our nominating and corporate governance committee is responsible for, among other things:
| | ▪ | assisting our Board in identifying individuals qualified to become Board members, consistent with criteria approved by our Board; |
| | ▪ | recommending that our Board select the director nominees for election at each annual meeting of stockholders or filling newly created directorships and vacancies on our Board in accordance with our Governing Documents; |
| | ▪ | developing and recommending to our Board such corporate governance guidelines and procedures as the committee determines is appropriate from time to time; |
| | ▪ | overseeing the evaluation of our Board and of each committee of our Board; |
| | ▪ | generally advising our Board on corporate governance and related matters; |
| | ▪ | reviewing and assessing the adequacy of its written charter on an annual basis; and |
| | ▪ | overseeing such other matters as are specifically delegated to our nominating and corporate governance committee by our Board from time to time. |
Stockholder Nomination of Directors Stockholders may submit recommendations for director candidates to our nominatingNominating and corporate governance committeeCorporate Governance Committee by sending the name and qualifications of the candidate(s) to AppFolio, Inc., 5070 Castilian Drive, Santa Barbara, California 93117, Attn: Chief FinancialLegal Officer, or by email to cfo@appfolio.com.stockholdervoting@appfolio.com. Our Chief FinancialLegal Officer will forward all recommendations to our nominatingNominating and corporate governance committee.Corporate Governance Committee. Our nominatingNominating and corporate governance committeeCorporate Governance Committee will review and consider any director candidate(s) recommended by our stockholders against the same criteria and pursuant to the same policies and procedures applicable to the evaluation of candidates proposed by directors, management, or any other party, so long as such directors have been nominated in accordance with the procedures set forth in our Governing Documents. We did not receive any director candidate recommendations from our stockholders in anticipation of the Annual Meeting. See the section of this Proxy Statement entitledtitled “Additional Information - Procedures for Submitting Stockholder Proposals” for additional information. Ratification of the Appointment of PwC The affirmative vote of a majority of the combined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting will be required to ratify the appointment of PwC. Abstentions will have the same effect as a vote against the proposal. Broker non-votes are not expected to result in connection with this proposal. Unless you direct otherwise through your proxy voting instructions, the persons named as proxies will vote all proxies received FOR the ratification of the appointment of PwC. If our stockholders fail to ratify the appointment of PwC, our Audit Committee will reconsider whether to retain the firm. Even if the selection is ratified, our Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our best interests and the best interests of our stockholders. Recommendation of our Board | | | | | | | | | | OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF PWC AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023. | |
| | | | | | | | | | | | | | | Proposal Three: | | | Advisory Vote On Named Executive Officer Compensation |
Background We are providing our stockholders with the opportunity to cast a non-binding, advisory vote on named executive officer compensation, also known as a "say on pay" advisory vote, as described below. The Board recommended, and the stockholders approved at our 2019 annual meeting of stockholders, that such advisory vote would be conducted every year. The primary objective of our executive compensation program is to provide a total compensation package designed to attract, motivate, and retain executive officers with the skills, energy, and commitment required to achieve our short-term and long-term strategic objectives, which we believe will positively impact long-term value. As described in this Proxy Statement, we seek to reward (i) achievement through performance-based cash bonuses and performance-based restricted stock unit grants, and (ii) commitment through time-based restricted stock unit grants. We balance such rewards with certain guaranteed elements of compensation, including base salary and employee benefits. Our executive compensation program promotes strong alignment between the interests of our executives and those of our stockholders by tying a significant portion of compensation to the achievement of key strategic objectives. Overall, we seek to ensure that the total compensation opportunity available to our executive officers is appropriate for each executive given their respective scope of responsibilities and ability to impact our results. For additional information about our named executive officer compensation program, please refer to the section titled "Compensation Discussion and Analysis" and the related compensation tables and footnotes. Proposal In accordance with Section 14A of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), we are asking our stockholders to vote "FOR" the approval of the following resolution at the Annual Meeting: "RESOLVED, that our stockholders approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K and as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative discussion in this Proxy Statement for our 2023 Annual Meeting of Stockholders." Effect of Proposal The resolution above is non-binding. The approval or disapproval of this proposal by stockholders will not require our Board or our Compensation Committee to take any action regarding our named executive officer compensation practices. The final decision on the compensation and benefits of our named executive officers and on whether, and if so, how, to address stockholder disapproval remains with our Board and our Compensation Committee. Our Board, however, values the opinions of our stockholders as expressed through their votes and other communications. Although the resolution is non-binding, our Board and our Compensation Committee will carefully consider the outcome of the advisory vote and stockholder opinions received from other communications when making future named executive officer compensation decisions. Approval of Proposal The affirmative vote of a majority of the combined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting will be required to approve, on a non-binding, advisory basis, the compensation of our named executive officers. Abstentions will have the same effect as a vote against the proposal. Broker non-votes will not affect the outcome of the vote on this proposal. Unless you direct otherwise through your proxy voting instructions, the persons named as proxies will vote all proxies received FOR the advisory approval of the compensation of our named executive officers. Recommendation of our Board | | | OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ADVISORY APPROVAL OF THE NAMED EXECUTIVE OFFICER COMPENSATION. |
| | | | | | | | | | | | | | | Directors and Corporate Governance |
Director QualificationsIndependence Our nominatingBoard has undertaken a review of the independence of each of our continuing directors and corporate governance committee consultsdirector nominees and has affirmatively determined that Messrs. Bliss, von Blottnitz, and Wolf, and Mses. Bundy Scanlan, Kerr, Nottebohm, and Webb, do not have relationships that would interfere with their exercise of independent judgment in carrying out the responsibilities of a director, and that each of Messrs. Bliss, von Blottnitz, and Wolf, and Mses. Bundy Scanlan, Kerr, Nottebohm and Webb meets the definition of “independent director” under the applicable NASDAQ listing standards. In making these determinations, our Board considered the current and prior relationships that each continuing director and director nominee has with the Company and all other membersfacts and circumstances our Board deemed relevant. Mr. Trigg does not meet the definition of “independent director” as Mr. Trigg is a current executive officer of the Company. Board Leadership Structure The positions of Chairperson of our Board and managementChief Executive Officer are presently separated. We believe separating these positions allows our Chief Executive Officer to focus on our day-to-day business, while allowing the Chairperson of our Board to lead our Board in identifyingits fundamental role of providing advice to and evaluating candidates for director.independent oversight of management. Our nominatingGoverning Documents and corporate governance committee and our Board believe candidates for director should have certain minimum qualifications. Consistent withguidelines do not require that the terms of our Corporate Governance Guidelines, the current minimum selection criteria established by our nominating and corporate governance committee include, without limitation: | | ▪ | each director should be committed to enhancing long-term stockholder value and must possess a high level of integrity, personal and professional ethics, and sound business judgment; |
| | ▪ | each director should be free of any conflicts of interest which would violate applicable laws, rules, regulations or listing standards, conflict with any of our corporate governance policies or procedures, or interfere with the proper performance of his or her responsibilities; |
| | ▪ | each director should possess experience, skills and attributes which enhance his or her ability to perform duties on our behalf. In assessing these qualities, the nominating and corporate governance committee will consider such factors as (i) personal qualities, skills and attributes, (ii) expertise in specific business areas, including accounting, marketing, strategy, financial reporting or corporate governance, and (iii) professional experience in the software industry or similar industries. The nominating and corporate governance committee may also consider such other factors as it determines would reasonably be expected to contribute to the overall effectiveness of our Board; |
| | ▪ | each director should have the ability and willingness to devote the necessary time and effort to perform the duties and responsibilities of Board membership; and |
| | ▪ | each director should demonstrate an understanding that his or her primary responsibility is our stockholders, and that his or her primary goal should be to serve the best interests of those stockholders, and not his or her personal interest or the interest of a particular group or stockholder. |
Other requirements that are expected to contribute to our Board’s overall effectiveness and meet the needsChairperson of our Board and Chief Executive Officer positions be separate; however, our Board believes that having separate positions is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance.
Recent Board Composition Changes On March 1, 2023, Klaus Schauser and Jason Randall each notified the Board of his decision to resign from his position as a member of the Board. Subsequently, also on March 1, 2023, the Board unanimously appointed (i) Ms. Nottebohm to serve as a Class II director, filling the vacancy caused by Mr. Schauser's resignation, and (ii) Mr. Trigg to serve as a Class III director, filling the vacancy caused by Mr. Randall's resignation.
| | | | | | | | | | Directors and Corporate Governance |
Board Role in Risk Oversight The Board and its committees work closely with and regularly receive reports from management to understand and oversee the management of existing and emerging risks. In addition, our directors have unrestricted access to Company personnel and documents, and may seek any information they require from employees, officers, or external parties. They also be considered. We value diversity on a company-wide basishave discretion to engage and seekobtain advice, reports or opinions from legal counsel and other advisors to achieve a diversity of professional experiences and personal backgrounds on our Board, but have not adopted a specific policy regarding board diversity. Codes of Business Conduct and Ethics
carry out their responsibilities. We have adopted a code of business conduct and ethics relating to the conduct of our businessChief Compliance Officer that is applicable to all of our employees, officers and directors, as well as a separate code of business conduct and ethics that is applicablereports to our Chief ExecutiveLegal Officer, and senior financial officers, both individuals routinely provide reports to the Board and its committees. Our Board believes its leadership structure is consistent with and supports the administration of its risk oversight function. The Board and its committees routinely consider the Company's risk environment. The ERM Program is reviewed periodically by management and any material changes to the ERM Program are reported to and approved by the Risk and Compliance Oversight Committee. In addition, each committee annually reviews the adequacy of its respective charter in light of the current risk environment.
| | | | | | | | | | Directors and Corporate Governance |
Meetings of the Board of Directors During 2022, our Board held seven meetings and acted by written consent one time. Each director attended at least 75% of the total number of meetings of our Board held during the period in which each such director served and at least 75% of the total number of meetings held by any of the committees of our Board on which such director served during such period. Although we do not have a formal policy requiring our directors to attend our annual meetings of stockholders, our directors are encouraged to attend these meetings. All directors, who were active at the time, attended our 2022 annual meeting of stockholders. Executive Sessions In accordance with the applicable NASDAQ listing standards, our independent directors meet in regularly scheduled executive sessions at which only independent directors are present. Agreements with Directors and Third Parties Ms. Nottebohm is a consultant to IGSB, Inc. (“IGSB”) on strategy and related matters across IGSB’s operations. Maurice J. Duca controls IGSB and, through various investment vehicles, is the Company’s largest stockholder. Mr. Duca has agreed to pay Ms. Nottebohm 35 percent of the net gain on the equivalent of 35,714 shares of the Company’s Class A common stock each year for the next eight years, which amount may be paid in cash or shares of the Company’s Class A common stock. The net gain will be based on a $100 per share starting value and the 10-day average of the final closing price of the shares prior to the date of payment, as reported by The Nasdaq Global Market. The first payment is scheduled to be made on the one-year anniversary of Ms. Nottebohm’s appointment to the Board. No part of such payment will come from the Company.
| | | | | | | | | | Directors and Corporate Governance |
Committees of our Board Our Board has established four permanent committees: our Audit Committee; Compensation Committee; Nominating and Corporate Governance Committee; and Risk and Compliance Oversight Committee. Our Board has adopted written charters for each of these committees, all of which satisfy applicable NASDAQ listing standards and are available on our website at http://ir.appfolioinc.com. We expect any amendmentThe information included on or accessed through our website does not constitute part of this Proxy Statement and shall not be deemed to either codebe “soliciting material” for purposes of business conduct and ethics, or any waivers of their respective requirements that are applicablethe Exchange Act. You should not consider such information in determining how to vote your shares. References in this Proxy Statement to our executive officers orwebsite addresses are inactive textual references only. The composition and responsibilities of each of our permanent committees are described and reflected below. Note that directors willthat do not currently serve on a permanent committee are not included in the below table. | | | | | | | | | | | | | | | | | | | | | | | | | Name | | | Audit Committee | Compensation
Committee | Nominating and Corporate Governance Committee | Risk and
Compliance Oversight Committee | | Tim Bliss | | | | | | | | Agnes Bundy Scanlan | | | | | | | Janet Kerr | | | | | | | | Andreas von Blottnitz | | | | | | | Wendy Webb | | | | | | | | Alex Wolf | | | | | | |
Chairman of the Board Financial Expert Chairperson Committee Member | | | | | | | | | | | | | Audit Committee | | Independence: Each of the members has been determined to satisfy the independence and financial literacy requirements under applicable SEC rules and regulations and applicable NASDAQ listing standards. Financial Expertise: Ms. Webb is an “Audit Committee financial expert” within the meaning of Item 407(d) of Regulation S-K under the Securities Act of 1933, as amended (the "Securities Act"). Our Audit Committee is responsible for, among other things, the oversight of: ▪the auditing, accounting, and financial reporting processes, and systems of internal control that are conducted by our independent auditor, our internal audit function, and our financial and senior management; ▪the qualifications, independence, and performance of our independent auditor; and ▪public disclosure and SEC filing requirements. | | | | | | | Meetings in 2022: 5 Members: Winifred Webb (Chair) Andreas von Blottnitz Agnes Bundy Scanlan Janet Kerr | |
| | | | | | | | | | Directors and Corporate Governance |
| | | | | | | | | | | | | Compensation Committee | | Independence: Each of the members has been determined to be an independent director under applicable SEC rules and regulations and applicable NASDAQ listing standards. Each member of our Compensation Committee is also a non-employee director, as defined by Rule 16b-3 promulgated under the Exchange Act. Our Compensation Committee is responsible for, among other things: ▪developing and reviewing the compensation programs and strategy applicable to our directors and senior executives, and overseeing our overall compensation philosophy; ▪evaluating our Chief Executive Officer's performance in light of the corporate goals and objectives applicable to such individual's compensation. ▪recommending to our Board for approval each component of compensation paid to our directors and Chief Executive Officer; ▪approving each component of compensation paid to our senior executives; ▪administering our cash and equity-based compensation plans applicable to all of our directors, senior executives and employees in accordance with the terms of our Compensation Committee’s charter; and ▪reviewing and discussing with management the disclosures regarding executive officer and director compensation to be included in our public filings, including our annual proxy statement. | | | | | | | Meetings in 2022: 4 Members: Andreas von Blottnitz (Chair) Janet Kerr Alex Wolf | |
| | | | | | | | | | | | | Nominating and Corporate Governance Committee | | Independence: Each of the members has been determined to be an independent director under applicable NASDAQ listing standards. Our Nominating and Corporate Governance Committee is responsible for, among other things: ▪assisting our Board in identifying individuals qualified to become members of our Board, consistent with criteria approved by our Board; ▪recommending to the Board director nominees for each committee of the Board; ▪developing and recommending to our Board such corporate governance guidelines and procedures as the committee determines is appropriate from time to time; ▪generally overseeing the Company's Environmental, Social and Governance activities; ▪developing and recommending to our Board a Chief Executive Officer succession plan; ▪overseeing the evaluation of our Board and of each committee of our Board; and ▪conducting and/or advising on Board education. | | | | | | | Meetings in 2022: 5 Members: Janet Kerr (Chair) Timothy Bliss Winifred Webb | |
| | | | | | | | | | Directors and Corporate Governance |
| | | | | | | | | | | | | Risk and Compliance Oversight Committee | | Independence: Each of the members has been determined to be an independent director under applicable NASDAQ listing standards. Our Risk and Compliance Oversight Committee is responsible for, among other things: ▪reviewing, understanding and monitoring the Company's applicable risk management and legal compliance frameworks (the "frameworks"); ▪monitoring the performance of management with respect to adhering to the frameworks; ▪reviewing the means by which the Company monitors compliance with applicable legal and regulatory requirements and the Company's material legal and regulatory compliance risk exposures and the steps taken by management to monitor or mitigate such exposures; ▪reviewing the Company's privacy program and material privacy and data use risk exposures and the steps taken by the Company to monitor or mitigate such exposures; ▪reviewing the Company's cybersecurity program and cybersecurity risk exposures and the steps taken by the Company to monitor or mitigate such exposures; and ▪helping to set the tone and develop a culture within the Company regarding the importance and value of risk management and legal compliance. | | | | | | | Meetings in 2022: 4 Members: Agnes Bundy Scanlan (Chair) Andreas von Blottnitz Winifred Webb | |
In addition, from time to time, special committees may be disclosed on our website or in our future filings withestablished under the SEC. Stockholder Communications with our Board
Our Board provides our stockholders the ability to communicate with our Board as a whole, and with our individual directors through an established process for stockholder communication. For a stockholder communication directed to our Board as a whole, stockholders and other interested parties may send such communication to the attentiondirection of our Board at cfo@appfolio.comwhen necessary to address specific issues. Members will serve on these committees until their resignation or via U.S. Mail or Expedited Delivery Serviceuntil otherwise determined by our Board.
Stockholder Nomination of Directors Stockholders may submit recommendations for director candidates to our Nominating and Corporate Governance Committee by sending the name and qualifications of the candidate(s) to AppFolio, Inc., 5070 Castilian Drive, Santa Barbara, California 93117, Attn: BoardChief Legal Officer, or by email to stockholdervoting@appfolio.com. Our Chief Legal Officer will forward all recommendations to our Nominating and Corporate Governance Committee. Our Nominating and Corporate Governance Committee will review and consider any director candidate(s) recommended by our stockholders against the same criteria and pursuant to the same policies and procedures applicable to the evaluation of Directors c/o Chief Financial Officer. For a stockholder communication directed to an individualcandidates proposed by directors, management, or any other party, so long as such directors have been nominated in accordance with the procedures set forth in our Governing Documents. We did not receive any director candidate recommendations from our stockholders in his or her capacity as a member of our Board, stockholders and other interested parties may send such communication to the
attentionanticipation of the individual director at cfo@appfolio.com or via U.S. Mail or Expedited Delivery Service to AppFolio, Inc., 50 Castilian Drive, Santa Barbara, California 93117, Attn: [Name of Individual Director] c/o Chief Financial Officer.
We will review all incoming stockholder communications and promptly forward such communications to the director(s) to whom such communications are addressed. We will generally not forward communications that are unrelated to the duties and responsibilities of our Board, including communications that we determine to be primarily commercial in nature, product complaints or inquires, and materials that are patently offensive or otherwise inappropriate.
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee is or has ever been an officer or employee of our company or any of its subsidiaries. Except as disclosed in the section below entitled “Related Party Transactions,” none of the members of our compensation committee had any relationship with our company requiring disclosure under Item 404 of Regulation S-K, nor is any such relationship currently contemplated. None of our executive officers currently serves, or in the past year has served, as a member of the Board of Directors or compensation committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on our Board or compensation committee.
We have entered into an indemnification agreement with each of our directors, including each of the members of our compensation committee.Annual Meeting. See the section of this Proxy Statement entitled “Related Party Transactions”titled “Additional Information - Procedures for Submitting Stockholder Proposals” for additional information.
Director Compensation Policy
Under our Board approved director compensation policy, we pay our non-employee directors a cash retainer for service on our Board and for service on each committee on which the director is a member. The Chairperson of each committee receives a higher retainer for such service, although the Chairperson of our Board currently receives the same retainer as the other directors.
The fees we pay to our non-employee directors for service on our Board and for service on each committee are as follows (Chairperson annual retainers are in lieu of, and not in addition to, director annual retainers):
| | | | | | | Director Annual Retainer | | Chairperson Annual Retainer | | Board of Directors | $30,000 | | $30,000 | | Audit Committee | 7,500 | | 15,000 | | Compensation Committee | 5,000 | | 10,000 | | Nominating and Corporate Governance Committee | 5,000 | | 10,000 |
In addition, each non-employee director receives an annual restricted stock grant of our Class A Common Stock with a fair market value of $100,000. Each such restricted stock grant will vest in full on the one-year anniversary of the grant date, subject to the director’s continuous service. Restricted stock grants are expected to be made annually based on the fair market value on the grant date. All unvested shares of restricted stock granted to the non-employee directors pursuant to the policy will immediately vest in full upon a change-in-control transaction. All restricted stock grants to our non-employee directors are expected to be made pursuant to the 2015 Stock Incentive Plan, or the 2015 Plan. See the section of this Proxy Statement entitled “Executive Compensation - Stock Incentive Plans - 2015 Stock Incentive Plan” for additional information.
Notwithstanding the foregoing, our non-employee directors who beneficially own 5% or more of our outstanding shares of Class A common stock and Class B common stock will not be eligible to participate in our director compensation policy. Accordingly, Messrs. Bliss and Rauth are not currently eligible to receive compensation pursuant to our director compensation policy.
We have agreed to reimburse all of our non-employee directors for reasonable travel and out-of-pocket expenses incurred in connection with attending our Board and committee meetings.
Our directors who are also our employees receive no additional compensation for their service as directors, and none of such directors serve on any Board committees. During 2017, and as of the date of this Proxy Statement, Messrs. Randall and Schauser were our employees. See the section of this Proxy Statement entitled “Executive Compensation” for additional information.
Director Compensation Table
The following table provides information regarding the total compensation that was granted or paid to each of our directors who was neither our employee nor a beneficial owner of 5% or more of our outstanding shares of Class A common stock and Class B common stock during 2017:
| | | | | | | | | | | | | | | | | | | | | | Restricted Stock Awards | | | | Directors Eligible to Receive Compensation | | Fees Earned or Paid in Cash(1) | | Valuation(2) | | Shares(3) | | Total Compensation | | Janet Kerr | | $ | 52,500 |
| | $ | 100,000 |
| | 3,003 |
| | $ | 152,500 |
| | James Peters | | 50,000 |
| | 100,000 |
| | 3,003 |
| | 150,000 |
| | Andreas von Blottnitz | | 42,500 |
| | 100,000 |
| | 3,003 |
| | 142,500 |
|
| | (1) | Amounts in this column reflect the total cash retainer earned by each director for Board and committee service during 2017. |
| | (2) | Amounts in this column reflect the total grant date fair market value of each restricted stock grant (reflected in the column immediately to the right of this column) computed in accordance with the Financial Accounting Standards Board's (FASB) Accounting Standard Codification 718, or ASC 718. These amounts do not necessarily reflect the actual value realized or to be realized by the non-employee directors or the amount of stock-based compensation expense reported within our consolidated financial statements. Assumptions used in the calculation of these amounts are included in Note 2 of the notes to our consolidated financial statements included in our 2017 Annual Report. As required by SEC rules and regulations, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. |
| | (3) | Amounts in this column reflect the aggregate number of shares of restricted stock granted to each of the directors during 2017 pursuant to our director compensation policy. Each of these shares will vest in full on June 27, 2018, the one-year anniversary of the grant date. |
PROPOSAL TWO:
RATIFICATION OF THE APPOINTMENT OF OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our audit committee has appointed PricewaterhouseCoopers LLP, or PwC, as our independent registered public accounting firm to perform the audit of our consolidated financial statements for the fiscal year ending December 31, 2018. PwC has served as our independent registered public accounting firm since 2011.
Our audit committee annually reviews the independent registered public accounting firm’s independence, including reviewing all relationships between the firm and us and any disclosed relationships or services that may impact the objectivity and independence of the firm, as well as the firm’s performance. As a matter of good corporate governance, our Board is submitting the appointment of PwC to our stockholders for ratification.
We expect a representative of PwC will attend the Annual Meeting. The representative will have an opportunity to make a statement if he or she so chooses. The representative will also be available to respond to appropriate questions from stockholders.
Ratification of the Appointment of PwC The affirmative vote of a majority of the combined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock present in personvirtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting will be required to ratify the appointment of PwC. Abstentions will have the same effect as a vote against the proposal. Broker non-votes are not expected to result in connection with this proposal. Unless you direct otherwise through your proxy voting instructions, the persons named as proxies will vote all proxies receivedFORthe ratification of the appointment of PwC. If our stockholders fail to ratify the appointment of PwC, our audit committeeAudit Committee will reconsider whether to retain the firm. Even if the selection is ratified, our audit committee,Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our best interests and the best interests of our stockholders. Recommendation of our Board | | | | | | | | | | OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR "FOR" THE RATIFICATION OF THE APPOINTMENT OF PWC AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018.
2023. | |
| | | | | | | | | | | | | | | Proposal Three: | | | Advisory Vote On Named Executive Officer Compensation |
Background We are providing our stockholders with the opportunity to cast a non-binding, advisory vote on named executive officer compensation, also known as a "say on pay" advisory vote, as described below. The Board recommended, and the stockholders approved at our 2019 annual meeting of stockholders, that such advisory vote would be conducted every year. The primary objective of our executive compensation program is to provide a total compensation package designed to attract, motivate, and retain executive officers with the skills, energy, and commitment required to achieve our short-term and long-term strategic objectives, which we believe will positively impact long-term value. As described in this Proxy Statement, we seek to reward (i) achievement through performance-based cash bonuses and performance-based restricted stock unit grants, and (ii) commitment through time-based restricted stock unit grants. We balance such rewards with certain guaranteed elements of compensation, including base salary and employee benefits. Our executive compensation program promotes strong alignment between the interests of our executives and those of our stockholders by tying a significant portion of compensation to the achievement of key strategic objectives. Overall, we seek to ensure that the total compensation opportunity available to our executive officers is appropriate for each executive given their respective scope of responsibilities and ability to impact our results. For additional information about our named executive officer compensation program, please refer to the section titled "Compensation Discussion and Analysis" and the related compensation tables and footnotes. Proposal In accordance with Section 14A of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), we are asking our stockholders to vote "FOR" the approval of the following table sets forthresolution at the fees billedAnnual Meeting: "RESOLVED, that our stockholders approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K and as described in the Compensation Discussion and Analysis, the Summary Compensation Table, and the related compensation tables, notes and narrative discussion in this Proxy Statement for our 2023 Annual Meeting of Stockholders." Effect of Proposal The resolution above is non-binding. The approval or expecteddisapproval of this proposal by stockholders will not require our Board or our Compensation Committee to take any action regarding our named executive officer compensation practices. The final decision on the compensation and benefits of our named executive officers and on whether, and if so, how, to address stockholder disapproval remains with our Board and our Compensation Committee. Our Board, however, values the opinions of our stockholders as expressed through their votes and other communications. Although the resolution is non-binding, our Board and our Compensation Committee will carefully consider the outcome of the advisory vote and stockholder opinions received from other communications when making future named executive officer compensation decisions. Approval of Proposal The affirmative vote of a majority of the combined voting power of the outstanding shares of our Class A Common Stock and Class B Common Stock present virtually or represented by proxy and entitled to vote on the proposal at the Annual Meeting will be billed by PwC for audit, audit-related, taxrequired to approve, on a non-binding, advisory basis, the compensation of our named executive officers. Abstentions will have the same effect as a vote against the proposal. Broker non-votes will not affect the outcome of the vote on this proposal. Unless you direct otherwise through your proxy voting instructions, the persons named as proxies will vote all proxies received FOR the advisory approval of the compensation of our named executive officers. Recommendation of our Board | | | OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ADVISORY APPROVAL OF THE NAMED EXECUTIVE OFFICER COMPENSATION. |
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Director Independence Our Board has undertaken a review of the independence of each of our continuing directors and director nominees and has affirmatively determined that Messrs. Bliss, von Blottnitz, and Wolf, and Mses. Bundy Scanlan, Kerr, Nottebohm, and Webb, do not have relationships that would interfere with their exercise of independent judgment in carrying out the responsibilities of a director, and that each of Messrs. Bliss, von Blottnitz, and Wolf, and Mses. Bundy Scanlan, Kerr, Nottebohm and Webb meets the definition of “independent director” under the applicable NASDAQ listing standards. In making these determinations, our Board considered the current and prior relationships that each continuing director and director nominee has with the Company and all other services renderedfacts and circumstances our Board deemed relevant. Mr. Trigg does not meet the definition of “independent director” as Mr. Trigg is a current executive officer of the Company. Board Leadership Structure The positions of Chairperson of our Board and Chief Executive Officer are presently separated. We believe separating these positions allows our Chief Executive Officer to focus on our day-to-day business, while allowing the Chairperson of our Board to lead our Board in its fundamental role of providing advice to and independent oversight of management. Our Governing Documents and corporate governance guidelines do not require that the Chairperson of our Board and Chief Executive Officer positions be separate; however, our Board believes that having separate positions is the appropriate leadership structure for 2017us at this time and 2016 (in thousands):demonstrates our commitment to good corporate governance. Recent Board Composition Changes On March 1, 2023, Klaus Schauser and Jason Randall each notified the Board of his decision to resign from his position as a member of the Board. Subsequently, also on March 1, 2023, the Board unanimously appointed (i) Ms. Nottebohm to serve as a Class II director, filling the vacancy caused by Mr. Schauser's resignation, and (ii) Mr. Trigg to serve as a Class III director, filling the vacancy caused by Mr. Randall's resignation.
| | | | | | | | | | | 2017 | | 2016 | | Audit Fees | $ | 1,038 |
| | $ | 992 |
| | Audit Related Fees | — |
| | — |
| | Tax Fees | 136 |
| | 30 |
| | All Other Fees | 1 |
| | — |
| | | $ | 1,175 |
| | $ | 1,022 |
|
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Audit Fees. Represents fees billed for professional services providedBoard Role in connectionRisk Oversight
The Board and its committees work closely with and regularly receive reports from management to understand and oversee the management of existing and emerging risks. In addition, our directors have unrestricted access to Company personnel and documents, and may seek any information they require from employees, officers, or external parties. They also have discretion to engage and obtain advice, reports or opinions from legal counsel and other advisors to carry out their responsibilities. We have a Chief Compliance Officer that reports to our Chief Legal Officer, and both individuals routinely provide reports to the Board and its committees. Our Board believes its leadership structure is consistent with and supports the administration of its risk oversight function. The Board and its committees routinely consider the Company's risk environment. The ERM Program is reviewed periodically by management and any material changes to the ERM Program are reported to and approved by the Risk and Compliance Oversight Committee. In addition, each committee annually reviews the adequacy of its respective charter in light of the current risk environment.
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Meetings of the Board of Directors During 2022, our Board held seven meetings and acted by written consent one time. Each director attended at least 75% of the total number of meetings of our Board held during the period in which each such director served and at least 75% of the total number of meetings held by any of the committees of our Board on which such director served during such period. Although we do not have a formal policy requiring our directors to attend our annual meetings of stockholders, our directors are encouraged to attend these meetings. All directors, who were active at the time, attended our 2022 annual meeting of stockholders. Executive Sessions In accordance with the auditapplicable NASDAQ listing standards, our independent directors meet in regularly scheduled executive sessions at which only independent directors are present. Agreements with Directors and Third Parties Ms. Nottebohm is a consultant to IGSB, Inc. (“IGSB”) on strategy and related matters across IGSB’s operations. Maurice J. Duca controls IGSB and, through various investment vehicles, is the Company’s largest stockholder. Mr. Duca has agreed to pay Ms. Nottebohm 35 percent of the net gain on the equivalent of 35,714 shares of the Company’s Class A common stock each year for the next eight years, which amount may be paid in cash or shares of the Company’s Class A common stock. The net gain will be based on a $100 per share starting value and the 10-day average of the final closing price of the shares prior to the date of payment, as reported by The Nasdaq Global Market. The first payment is scheduled to be made on the one-year anniversary of Ms. Nottebohm’s appointment to the Board. No part of such payment will come from the Company.
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Committees of our annual financial statements, reviewsBoard Our Board has established four permanent committees: our Audit Committee; Compensation Committee; Nominating and Corporate Governance Committee; and Risk and Compliance Oversight Committee. Our Board has adopted written charters for each of these committees, all of which satisfy applicable NASDAQ listing standards and are available on our website at http://ir.appfolioinc.com. The information included on or accessed through our website does not constitute part of this Proxy Statement and shall not be deemed to be “soliciting material” for purposes of the Exchange Act. You should not consider such information in determining how to vote your shares. References in this Proxy Statement to our website addresses are inactive textual references only. The composition and responsibilities of each of our quarterly financial statements, servicespermanent committees are described and reflected below. Note that directors that do not currently serve on a permanent committee are not included in connectionthe below table. | | | | | | | | | | | | | | | | | | | | | | | | | Name | | | Audit Committee | Compensation
Committee | Nominating and Corporate Governance Committee | Risk and
Compliance Oversight Committee | | Tim Bliss | | | | | | | | Agnes Bundy Scanlan | | | | | | | Janet Kerr | | | | | | | | Andreas von Blottnitz | | | | | | | Wendy Webb | | | | | | | | Alex Wolf | | | | | | |
Chairman of the Board Financial Expert Chairperson Committee Member | | | | | | | | | | | | | Audit Committee | | Independence: Each of the members has been determined to satisfy the independence and financial literacy requirements under applicable SEC rules and regulations and applicable NASDAQ listing standards. Financial Expertise: Ms. Webb is an “Audit Committee financial expert” within the meaning of Item 407(d) of Regulation S-K under the Securities Act of 1933, as amended (the "Securities Act"). Our Audit Committee is responsible for, among other things, the oversight of: ▪the auditing, accounting, and financial reporting processes, and systems of internal control that are conducted by our independent auditor, our internal audit function, and our financial and senior management; ▪the qualifications, independence, and performance of our independent auditor; and ▪public disclosure and SEC filing requirements. | | | | | | | Meetings in 2022: 5 Members: Winifred Webb (Chair) Andreas von Blottnitz Agnes Bundy Scanlan Janet Kerr | |
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| | | | | | | | | | | | | Compensation Committee | | Independence: Each of the members has been determined to be an independent director under applicable SEC rules and regulations and applicable NASDAQ listing standards. Each member of our Compensation Committee is also a non-employee director, as defined by Rule 16b-3 promulgated under the Exchange Act. Our Compensation Committee is responsible for, among other things: ▪developing and reviewing the compensation programs and strategy applicable to our directors and senior executives, and overseeing our overall compensation philosophy; ▪evaluating our Chief Executive Officer's performance in light of the corporate goals and objectives applicable to such individual's compensation. ▪recommending to our Board for approval each component of compensation paid to our directors and Chief Executive Officer; ▪approving each component of compensation paid to our senior executives; ▪administering our cash and equity-based compensation plans applicable to all of our directors, senior executives and employees in accordance with the terms of our Compensation Committee’s charter; and ▪reviewing and discussing with management the disclosures regarding executive officer and director compensation to be included in our public filings, including our annual proxy statement. | | | | | | | Meetings in 2022: 4 Members: Andreas von Blottnitz (Chair) Janet Kerr Alex Wolf | |
| | | | | | | | | | | | | Nominating and Corporate Governance Committee | | Independence: Each of the members has been determined to be an independent director under applicable NASDAQ listing standards. Our Nominating and Corporate Governance Committee is responsible for, among other things: ▪assisting our Board in identifying individuals qualified to become members of our Board, consistent with criteria approved by our Board; ▪recommending to the Board director nominees for each committee of the Board; ▪developing and recommending to our Board such corporate governance guidelines and procedures as the committee determines is appropriate from time to time; ▪generally overseeing the Company's Environmental, Social and Governance activities; ▪developing and recommending to our Board a Chief Executive Officer succession plan; ▪overseeing the evaluation of our Board and of each committee of our Board; and ▪conducting and/or advising on Board education. | | | | | | | Meetings in 2022: 5 Members: Janet Kerr (Chair) Timothy Bliss Winifred Webb | |
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| | | | | | | | | | | | | Risk and Compliance Oversight Committee | | Independence: Each of the members has been determined to be an independent director under applicable NASDAQ listing standards. Our Risk and Compliance Oversight Committee is responsible for, among other things: ▪reviewing, understanding and monitoring the Company's applicable risk management and legal compliance frameworks (the "frameworks"); ▪monitoring the performance of management with respect to adhering to the frameworks; ▪reviewing the means by which the Company monitors compliance with applicable legal and regulatory requirements and the Company's material legal and regulatory compliance risk exposures and the steps taken by management to monitor or mitigate such exposures; ▪reviewing the Company's privacy program and material privacy and data use risk exposures and the steps taken by the Company to monitor or mitigate such exposures; ▪reviewing the Company's cybersecurity program and cybersecurity risk exposures and the steps taken by the Company to monitor or mitigate such exposures; and ▪helping to set the tone and develop a culture within the Company regarding the importance and value of risk management and legal compliance. | | | | | | | Meetings in 2022: 4 Members: Agnes Bundy Scanlan (Chair) Andreas von Blottnitz Winifred Webb | |
In addition, from time to time, special committees may be established under the direction of our Registration StatementsBoard when necessary to address specific issues. Members will serve on Form S-8,these committees until their resignation or until otherwise determined by our Board. Stockholder Nomination of Directors Stockholders may submit recommendations for director candidates to our Nominating and consultations on accounting matters directly relatedCorporate Governance Committee by sending the name and qualifications of the candidate(s) to AppFolio, Inc., 70 Castilian Drive, Santa Barbara, California 93117, Attn: Chief Legal Officer, or by email to stockholdervoting@appfolio.com. Our Chief Legal Officer will forward all recommendations to our Nominating and Corporate Governance Committee. Our Nominating and Corporate Governance Committee will review and consider any director candidate(s) recommended by our stockholders against the same criteria and pursuant to the audit.same policies and procedures applicable to the evaluation of candidates proposed by directors, management, or any other party, so long as such directors have been nominated in accordance with the procedures set forth in our Governing Documents. We did not receive any director candidate recommendations from our stockholders in anticipation of the Annual Meeting. See the section titled “Additional Information - Procedures for Submitting Stockholder Proposals” for additional information. Audit Related Fees. There were no fees billed
Director Qualifications Our Nominating and Corporate Governance Committee consults with other members of our Board and management in identifying and evaluating candidates for director. Our Nominating and Corporate Governance Committee and our Board believe candidates for director should have certain minimum qualifications. Consistent with the terms of our corporate governance guidelines, the current minimum selection criteria established by PwCour Nominating and Corporate Governance Committee include, without limitation: ▪each director should be committed to enhancing long-term stockholder value and must possess a high level of integrity, personal and professional ethics, and sound business judgment; ▪each director should be free of any conflicts of interest that would violate applicable laws, rules, regulations or listing standards, conflict with any of our corporate governance policies or procedures, or interfere with the proper performance of his or her responsibilities; ▪each director should possess experience, skills and attributes that enhance his or her ability to perform duties on our behalf. In assessing these qualities, the Nominating and Corporate Governance Committee will consider such factors as (i) personal qualities, skills and attributes, (ii) expertise in specific business areas, including without limitation, accounting, marketing, strategy, financial reporting or corporate governance, and (iii) professional experience in the technology industry or similar industries. The Nominating and Corporate Governance Committee may also consider such other factors as it determines would reasonably be expected to contribute to the overall effectiveness of our Board; ▪each director should have the ability and willingness to devote the necessary time and effort to perform the duties and responsibilities of membership on our Board; and
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▪each director should demonstrate an understanding that his or her primary responsibility is to serve the best interests of our stockholders, and not his or her personal interest or the interest of a particular group or stockholder. In recommending director nominees, our Nominating and Corporate Governance Committee also actively considers individual characteristics, including, but not limited to, diversity of professional experience, race, ethnicity, gender identity, age, cultural background, LGBTQ+ identity, and personal background. However, we have not adopted a formal policy regarding the consideration of specific individual characteristics, and instead prefer to rely on the judgment of our highly-qualified committee in recommending candidates with a diverse and appropriate mix of experiences, skills and expertise. Environmental, Social, and Governance at AppFolio We believe that we have a responsibility to our society, the environment, and the communities in which we live and work in. We take this responsibility seriously and engage in deliberate action to drive change for professional services under "Audit Related Fees."the better. | | | | | | | | | | | | | Environmental Commitment. | | We strive to create environmentally friendly workplaces, starting with sustainable construction and design. We maintain sustainability requirements that all contractors who work in or around our buildings are required to follow. Examples of these requirements include recycling of all demolished or removed materials whenever possible, installation of energy efficient HVAC units, low power LED lighting and fixtures, and native, drought resistant landscaping. In addition, we are working with a third-party climate technology partner to understand and develop a plan regarding the carbon footprint of our operations. We also have a "Green Team," composed of employee volunteer members that advocates for sustainable company practices and provides environmentally focused information to employees. | |
| | | | | | | | | | | | Diversity,
Equity, and Inclusion. | | We believe diversity is a driver of innovation and collective growth. Our commitment starts at the leadership level and cascades to our talented employees, to whom we look to lead and foster various initiatives. We strive to create an environment where everyone is valued for their uniqueness, while also feeling part of the larger whole. When we conducted a voluntary survey of our workforce in 2022, of those who elected to share, approximately 54% identified as men, 45% identified as women, and less than 1% identified as nonbinary. Additionally, approximately 65% identified as White, 12% identified as Asian, 11% identified as Hispanic or Latino, 5% identified as Black or African American, less than 1% identified as American Indian or Alaska Native, less than 1% identified as Native Hawaiian or Other Pacific Islander, and 6% identified as two or more races. Our recruiting practices focus on attracting and hiring employees with diverse backgrounds, experiences, and approaches at all levels of the company. We have key partnerships with universities and professional organizations and provide ongoing education to our hiring teams that are focused on closing the diversity gap as we grow our organization. We also believe in compensating our employees fairly and equitably. We review the compensation of our workforce on a periodic basis to help ensure everyone is paid equally for equal work and we strive to close any unexplained gaps. | |
Tax Fees. Represents fees billed for tax studies | | | | | | | | | | | | | Employee Development. | | We invest significant resources to develop the talent needed to remain at the forefront of innovation and make us an employer of choice. Employees throughout our organization have access to tailored training and learning programs that include programs for distinct audiences. Our annual engagement survey and supplemental quarterly pulse surveys provide a platform for employees to share anonymous feedback directly with their managers and our executives. | |
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| | | | | | | | | | | | Societal
Impact. | | Connecting with and contributing to our communities is a long-standing tradition and important activity for our employees. Our team members are passionate about many causes and we encourage participation in them by providing eight hours of volunteer time off annually. In addition, throughout the year, we come together as a company to engage in community service through “AppFolio Gives Back,” where we donate time and funds to one or more charities. | |
| | | | | | | | | | | | | Health, Safety, and Wellness. | | We are committed to providing a safe workplace for our employees and assisting them in maintaining a healthy work-life balance. We regularly solicit feedback to assess the well-being and needs of our employees and offer resources focused on mental health and physical wellness. In 2022, we launched "Together @ AppFolio," our approach to flexible yet still connected modern work. We believe that our employees thrive in a flexible, collaborative environment, with each department determining what is right for their respective teams when it comes to in-person and remote work as we drive toward our strategic objectives. To support our employees as they work outside of our office hubs, we have made available trainings and toolkits focused on helping employees be successful and healthy in a remote work environment. We have also enhanced our internal lifestyle programs, including virtual group fitness classes and increased supplemental time off to create additional space for employees to reset and recharge. | |
| | | | | | | | | | | | | Privacy Responsibilities. | | Our customers and employees entrust us with large amounts of confidential information, including personally identifiable information. We take this trust seriously and invest significant time, effort and resources protecting this highly sensitive information. We comply with industry best-practices, including encrypting sensitive data, utilization of a robust 24/7/365 security monitoring system, and regularly assessing product features for security vulnerabilities. In addition, we encrypt our customers' data and give them access control features to help them effectively protect their information. We have developed security protections and control policies to help ensure a secure environment for sensitive information, and we engage independent third-party experts to audit our adherence to these policies. We do not access, use or share customer data for any purpose other than providing, maintaining and improving our services and as otherwise required by law. | |
Codes of Business Conduct and tax compliance services. All Other Fees. Represents license fees for accounting research software.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting FirmEthics
We have adopted a policy underCode of Business Conduct and Ethics, with which our audit committee must pre-approveemployees, officers and directors are required to comply. The purpose of our Code of Business Conduct and Ethics is to deter wrongdoing and promote, among other things, honest and ethical conduct and to ensure to the greatest possible extent that the Company’s business is conducted in a consistently legal and ethical manner. A copy of our Code of Business Conduct and Ethics, including any future amendments, can be found on our website, ethics.appfolio.com, and we expect that any waivers of requirements applicable to our executive officers or directors will be disclosed on our investor relations website, http://ir.appfolioinc.com, or in future filings with the SEC. Stockholder Communications with our Board Our stockholders have the ability to communicate with our Board as a whole and with our individual directors through an established process for stockholder communication. For a stockholder communication directed to our Board as a whole, stockholders and other interested parties may send such communication to the attention of our Board at stockholderquestions@appfolio.com or via U.S. Mail or Expedited Delivery Service to AppFolio, Inc., 70 Castilian Drive, Santa Barbara, California 93117, Attn: Board of Directors c/o Chief Legal Officer. For a stockholder communication directed to an individual director in his or her capacity as a member of our Board, stockholders and other interested parties may send such communication to the attention of the individual director at stockholderquestions@appfolio.com or via U.S. Mail or Expedited Delivery Service to AppFolio, Inc., 70 Castilian Drive, Santa Barbara, California 93117, Attn: {Name of Individual Director} c/o Chief Legal Officer. We will review all auditincoming stockholder communications and permissible non-audit servicespromptly forward such communications to the director(s) to whom such communications are addressed. We will generally not forward communications that are unrelated to the duties and responsibilities of our Board, including communications that we determine to be provided byprimarily commercial in nature, product or service complaints or inquires, and materials that are patently offensive or otherwise inappropriate.
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Compensation Committee Interlocks and Insider Participation Messrs. von Blottnitz and Wolf and Ms. Kerr served on the Compensation Committee during the fiscal year ended December 31, 2022, and have each been determined to be an independent director under applicable SEC rules and regulations and applicable NASDAQ listing standards. None of the members of our independent registered public accounting firm. As partCompensation Committee is or has ever been an officer or employee of our company or any of its subsidiaries. Except as disclosed in the section titled “Related Party Transactions,” none of the members of our Compensation Committee had any relationship with our company requiring disclosure under Item 404 of Regulation S-K, nor is any such relationship currently contemplated. None of our executive officers currently serves, or in the past year has served, as a member of a board of directors or compensation committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on our Board or Compensation Committee. We have entered into an indemnification agreement with each of our directors, including each of the members of our Compensation Committee. See the section titled “Related Party Transactions” for additional information. Director Compensation Policy Under our Director Compensation Policy, we pay our non-employee directors who beneficially own less than 5% of the outstanding shares of our Class A Common Stock or Class B Common Stock a cash retainer for service on our Board and for service on each committee of which the director is a member. The Chairperson of our Board and the Chairperson of each committee receives a higher retainer for such service. Eligible directors may elect not to receive any compensation for their service. During 2022, and as of the date of this review,Proxy Statement, the fees we pay to eligible non-employee directors who have not elected to forego such fees for service on our auditBoard and for service on each committee also considers whetherare as follows (Chairperson annual retainers are in lieu of, and not in addition to, director annual retainers): | | | | | | | | | | | | | | | | | Director Annual Retainer
($) | | Chairperson Annual Retainer
($) | | Board of Directors | 40,000 | | | 50,000 | | | Audit Committee | 10,000 | | | 50,000 | | | Compensation Committee | 10,000 | | | 50,000 | | | Nominating and Corporate Governance Committee | 10,000 | | | 50,000 | | | Risk and Compliance Oversight Committee | 10,000 | | | 50,000 | |
In addition, eligible non-employee directors who do not elect to forego compensation for their service on our Board receive the categoriesfollowing: ▪Initial equity award.A one-time restricted stock award of pre-approved services are consistentour Class A Common Stock with a fair market value of $250,000 under our 2015 Stock Incentive Plan (the "2015 Plan"), with the rulesnumber of shares granted based on accountant independencethe average closing price per share of our Class A Common stock for the twenty trading days preceding the grant date. ▪Annual equity award. An annual restricted stock award of our Class A Common Stock with a fair market value of $150,000 under the 2015 Plan, with the number of shares granted based on the average closing price per share of our Class A Common stock for the twenty trading days preceding the grant date. Each grant will vest in full on the one-year anniversary of the SECgrant date, subject to the director’s continuous service. All unvested shares of restricted stock granted to the eligible directors pursuant to the policy will immediately vest in full upon a change-in-control transaction. We have agreed to reimburse all of our eligible directors for reasonable travel and out-of-pocket expenses incurred in connection with attending our Board and committee meetings as well as continuing director education. Our employee directors receive no additional compensation for their service as a director and may not serve on any of our Board committees. During 2022, Jason Randall, our former Chief Executive Officer, was our only employee director. As of the Public Companydate of this Proxy Statement, Mr. Trigg is our only employee director.
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Director Compensation Table The following table provides information regarding the total compensation that was granted or paid during 2022 to each of our eligible directors who elected to receive compensation in accordance with our aforementioned Director Compensation Policy: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Awards | | | | | Directors Eligible to Receive Compensation(1) | | Fees Earned or Paid in Cash ($)(2) | | Valuation ($)(3) | | Shares(4) | | Total Compensation ($) | | | Andreas von Blottnitz(5) | | 118,624 | | | 150,000 | | | 1,557 | | 268,624 | | | | Agnes Bundy Scanlan | | 100,000 | | | 150,000 | | | 1,557 | | 250,000 | | | | Janet Kerr | | 120,000 | | | 150,000 | | | 1,557 | | 270,000 | | | | Winifred Webb | | 110,000 | | | 150,000 | | | 1,557 | | 260,000 | | |
(1)Ms. Nottebohm joined the Board in 2023 and, as such, received no compensation in 2022. Messrs. Bliss, Schauser and Trigg are not currently (or, with respect to Mr. Schauser, was not) eligible to receive compensation pursuant to our Director Compensation Policy. Mr. Wolf has elected not to receive compensation for his services on the Board. (2)Amounts in this column reflect the total cash retainer earned by each director for Board and committee service during 2022. (3)Amounts shown in this column do not necessarily reflect the actual value realized or to be realized by the directors or the amount of stock-based compensation expense reported within our consolidated financial statements. Instead, these amounts reflect the total grant date fair market value of each restricted stock grant computed in accordance with the provisions of Financial Accounting Oversight Board,Standards Board’s Accounting Standard Codification 718, or PCAOB. Our audit committee has pre-approved all services preformed since the pre-approval policy was adopted. In addition,ASC 718. Assumptions used in the event time constraints require pre-approval priorcalculation of these amounts are included in Note 2 of the notes to our audit committee's next scheduled meeting,consolidated financial statements included in our audit committee has authorized its Chairperson2022 Annual Report. As required by SEC rules and regulations, the amounts shown exclude the impact of estimated forfeitures related to pre-approve services. Engagements pre-approved byservice-based vesting conditions.
(4)Amounts in this column reflect the Chairperson are to be reportedaggregate number of shares of restricted stock granted to the audit committee at its next scheduled meeting.directors during 2022 pursuant to our Director Compensation Policy. Each of these shares of Class A Common Stock will vest in full on the one-year anniversary of the grant date, and are subject to repurchase until then.
(5)Mr. von Blottnitz was appointed Chairperson of the Compensation Committee on January 13, 2022 and received a prorated retainer payment in connection with such appointment.
REPORT OF THE AUDIT COMMITTEE
| | | | | | | | | | | | | | | Report of the Audit Committee |
The audit committeeAudit Committee is a committee of the Board of Directors of AppFolio, Inc., or the Company, comprisedcomposed solely of independent directors as required by the NASDAQ listing standards and the rules and regulations of the Securities and Exchange Commission, or the SEC. The audit committeeAudit Committee operates under a written charter approved by the Board, which is available on our website.website at http://ir.appfolioinc.com. The composition of the audit committee,Audit Committee, the experiences, qualifications, attributes or skills of its members, and the responsibilities of the audit committee,Audit Committee, as reflected in its charter, are intended to be in accordance with applicable requirements for corporate audit committees.Audit Committees. The audit committeeAudit Committee reviews and assesses the adequacy of its charter and the audit committee’sAudit Committee’s performance on an annual basis. With respect to the Company’sour financial reporting process, theour management of the Company is responsible for (1)(i) establishing and maintaining internal controls and (2)(ii) preparing the Company’sour consolidated financial statements. Our independent registered public accounting firm, PricewaterhouseCoopers LLP, or PwC, is responsible for auditing these financial statements. It is the responsibility of the audit committeeAudit Committee to oversee these activities. It is not the responsibility of the audit committeeAudit Committee to prepare our financial statements. These are the fundamental responsibilities of management. In the performance of its oversight function, the audit committeeAudit Committee has: | | ▪ | Reviewed and discussed the audited financial statements with management and PwC; |
| | ▪ | Discussed with PwC the matters required to be discussed by the PCAOB Auditing Standard No. 1301; and |
| | ▪ | Received the written disclosures and the letter from PwC required by applicable requirements of the PCAOB regarding the independent accountant's communications with the audit committee concerning independence, and has discussed with PwC its independence. |
▪Reviewed and discussed the audited financial statements with management and PwC; ▪Discussed with PwC the matters required to be discussed by the PCAOB Auditing Standard No. 1301, "Communication with Audit Committees;" and ▪Received the written disclosures and the letter from PwC required by applicable requirements of the PCAOB, including Rule 3526 "Communication with Audit Committees Concerning Independence," regarding the independent accountant's communications with the Audit Committee concerning independence, and has discussed with PwC its independence. The Audit Committee discussed the auditors' review of our quarterly financial information with the auditors prior to the release of such information and the filing of our quarterly reports with the SEC. The Audit Committee also met and held discussions with management and PwC with respect to our audited year-end financial statements. Based on the audit committee’sAudit Committee’s review and discussions with management and PwC, the audit committeeAudit Committee recommended to the Board that the audited consolidated financial statements be included in the 2022 Annual Report on Form 10-K for the fiscal year ended December 31, 2017, for filing with the SEC.Report. Respectfully submitted by the members of the audit committee of the Board of Directors:
James Peters (Chairperson)
Janet Kerr
Andreas von Blottnitz
In accordance with SEC rules and regulations, this Reportreport of the Audit Committee will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Act, or under the Securities Exchange Act of 1934, as amended, or the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act.
Respectfully submitted by the members of the Audit Committee of the Board:
Winifred Webb (Chairperson)
Andreas von Blottnitz
EXECUTIVE OFFICERSJanet Kerr
The following table sets forth certain summary information concerning our executive officers as of April 2, 2018:
| | | | | | | | | | | | | | | | | | Name | Name | Age | Age | | Position | Executive Officers: | Shane Trigg | | 47 | | Jason Randall | | 45 | | President, Chief Executive Officer and Director | Ida Kane | Fay Sien Goon | 48 | 45 | | Chief Financial Officer | Klaus Schauser | Matt Mazza | 55 | 47 | | Chief Strategist, Founder and Director | Jonathan Walker | | 49 | | Chief TechnologyLegal Officer and FounderCorporate Secretary |
Recent Officer Changes On March 1, 2023, Mr. Randall resigned from his position as the Company’s President and Chief Executive Officer. Also on March 1, 2023, Mr. Trigg was appointed as the Company's President and Chief Executive Officer. In connection with such appointment, Mr. Trigg relinquished his prior position as President and General Manager, Real Estate. We have no current plans to backfill Mr. Trigg's prior position. Executive Officer Biographies The biographies of each of our current executive officers below contain information regarding each such person’s relevant business experience during at least the past five years. years or more. See the section of this Proxy Statement entitledtitled “Proposal One: Election of Directors - Director Nominees and Continuing Directors” for biographical information regarding Messrs. RandallMr. Trigg. | | | | | | | | | | | | | | | | | Fay Sien Goon has served as AppFolio's Chief Financial Officer since 2021. Prior to AppFolio, Ms. Goon was Chief Accounting Officer of ServiceNow, a global enterprise software company that delivers digital workflows, where she was employed from 2012 to 2021. As Chief Accounting Officer, she led the accounting and finance functions through numerous years of successful growth. Prior to joining ServiceNow, Ms. Goon spent 11 years at Ernst & Young, leading external audits of large public and pre-IPO technology companies. | | | | | Fay Sien Goon | | | | | | | | Age: 45 Position: Chief Financial Officer | | | |
| | | | | | | | | | | | | | | | | Matt Mazza has served as AppFolio's Chief Legal Officer since 2021 and Corporate Secretary since 2022. Before becoming Chief Legal Officer, he served as the Company's General Counsel and Chief Compliance Officer, as well as in other senior legal and compliance roles, since 2016. Prior to AppFolio, Mr. Mazza served as Senior Counsel for Deckers Brands, where he was responsible for a broad spectrum of legal affairs. He began his practice as a complex business and commercial litigator in 2003. Mr. Mazza received his J.D. from the University of California, Berkeley, and a B.A. from the University of California, Santa Barbara. | | | | Matt Mazza | | | | | Age: 47 Position: Chief Legal Officer and Corporate Secretary |
Compensation Discussion and Schauser. Ida Kane has served as our Chief Financial Officer since February 2015. From 2010 to 2015, Ms. Kane served as Chief Financial Officer and Corporate Secretary of Rightscale, Inc., a cloud-based solution provider. From 2005 to 2009, Ms. Kane served as Chief Financial Officer at thinkorswim Group Inc. (NASDAQ: SWIM), an online option trading and investor education company, until its sale to TD Ameritrade Holding Corporation (NYSE: AMTD). Prior to joining thinkorswim Group Inc., Ms. Kane served as Chief Financial Officer and Vice President of Operations of a business unit of Franklin Covey Co. (NYSE: FC). Ms. Kane received a B.S. in Accounting and an M.B.A. from the University of Miami in Florida, and earned her CPA license (inactive) from the State of Florida.
Jonathan Walker co-founded AppFolio in 2006 and has served as our Chief Technology Officer since 2006. Prior to co-founding AppFolio, in 2004, Mr. Walker co-founded Versora, Inc., a provider of software products and professional integration services, and served as its Chief Technology Officer from 2004 to 2006. Prior to founding Versora, Inc., Mr. Walker served as Chief Technology Officer of Miramar Systems, Inc., a data migration solutions provider, until its acquisition by CA, Inc. (NASDAQ: CA) in 2004. Mr. Walker received a B.S. in Business and Economics from Westmont College.
EXECUTIVE COMPENSATIONAnalysis
This narrative discussion ofCompensation Discussion and Analysis explains the compensation policiesphilosophy, programs, and arrangementsprocesses that apply tomake up our named executive officersofficer compensation program (our "NEO Compensation Program"), and is intended to assist your understanding of,provide context for the considerations underlying the compensation paid to our NEOs. This Compensation Discussion and toAnalysis should be read in conjunctiontogether with the Summary Compensation Table and related disclosurescompensation tables, notes, and narrative discussion set forth below. As an emerging growth company, we are eligible to comply with the executive compensation disclosure rules applicable to a “smaller reporting company,” as defined in applicable SEC rules and regulations. Named Executive Officers Our named executive officers ("NEOs"), include our current and former principal executive officer, our principal financial officer, and our two other most highly compensated executive officersindividuals who were serving as executive officers as of December 31, 2017. For 2017, our named executive officers were:2022. Our 2022 NEOs are as follows: | | | | | | | | | | | | ▪ | Jason Randall, our Name | | Position as of December 31, 2022 | | Shane Trigg(1) | | President, Chief Executive Officer, and a member of our Board, who is our principal executive officer;Director (Principal Executive Officer) |
| | ▪Fay Sien Goon | Ida Kane, our | Chief Financial Officer who is our principal financial and accounting officer;(Principal Financial Officer) |
| Matt Mazza | | Chief Legal Officer and Corporate Secretary | ▪ | JonJonathan Walker our Chief Technology Officer; and(2) | | Founder |
| | ▪Jason Randall(3) | Brian Donahoo, our former | Former President and Chief Executive Officer and a former member of our Board, who retired on August 8, 2017. |
(1) Mr. Trigg was appointed as the Company's President and Chief Executive Officer as of March 1, 2023. In connection with such appointment, Mr. Trigg relinquished his position as President and General Manager, Real Estate. We have no current plans to backfill Mr. Trigg's prior position. (2) Mr. Walker stepped down as the Company's Chief Technology Officer effective December 31, 2022. (3) Mr. Randall resigned from his positions as the Company’s President and Chief Executive Officer as of March 1, 2023. Compensation Philosophy and Objectives The primary objective of our executive compensation programs is to attract and retain talented executive officers with the skills necessary to lead us in achieving our strategic objectives and creating long-term value for our stockholders. We recognize that there is significant competition for talented executive officersqualified executives within our industry, especially in Santa Barbara, California where our headquarters are located, and it can be particularly challenging for early-stage companies to recruit executive officers of the caliber necessary to achieve our short-term and long-term strategic objectives. The primary objective of our NEO Compensation Program is to provide a total compensation package designed to attract, motivate, and retain executive officers with the skills, energy, and commitment required to achieve our short-term and long-term strategic objectives, which we believe will positively impact long-term value. Our NEO Compensation Program provides a total compensation package, composed of a mix of cash and equity compensation, including both time-based and performance-based compensation, that we believe fulfills the above objective. From time to time, we consider appropriate changes to our NEO Compensation Program and applicable performance metrics to reflect the evolving needs of our business.
Guiding Principles of our NEO Compensation Program When establishingevaluating our executive compensation programs, weNEO Compensation Program each year, our Compensation Committee and Board are guided by the following principles: | | ▪ | attract and retain executive officers with the background, experience and vision required to create long-term stockholder value; |
| | ▪ | provide a total compensation package, taking into account cash and non-cash compensation, that is generally competitive with other companies in our industry that are of a similar size and stage of growth; and |
| | ▪ | continue to align the interests of our executive officers with those of our stockholders by tying a portion of total compensation to the achievement of strategic objectives that we believe will drive our long-term success. |
Compensation DeterminationsAttract, Motivate, and Retain our NEOs
Our compensation committee, which is comprised solely of independent directors under applicable NASDAQ listing standards, assists our Board in developing and reviewing the compensation programs and strategy applicable to our directors and executive officers, and overseeing our overall compensation philosophy. See the section of this Proxy Statement entitled “Corporate Governance - Committees of our Board - Compensation Committee” for additional information.
Compensation Program
Our compensation program for our named executive officers has generally consisted of a base salary, a short-term cash bonus program, equity-based awards and other benefits. In 2018, we also adopted a long-term cash bonus plan that is designed to provide incentives to achieve our long-term objectives. Each aspect of our compensation program is discussed in more detail below.
Base Salary
We pay base salaries to attract▪Attract, motivate, and retain executive officers with the necessary background, experienceskill, energy, and visioncommitment required forto achieve our future success. Base salaries generally reflect each executive officer’s title and responsibility level, individualstrategic objectives, which we believe will drive long-term value.
performance, business experience and equity ownership. Base salaries are reviewed periodically and adjusted in response to factors such as title, responsibility level and individual performance.
For 2017, adjustments were made to the base salaries for Jason Randall and Ida Kane. The base salaries paid to each of▪Retain our namedqualified executive officers by offering compensation that is set forthgenerally competitive with other companies in the Summary Compensation Table below.
Short-Term Cash Bonus Program
We have adopted a short-term cash bonus programour industry that applies to each of our named executive officers, as well as to certain other executive officers and senior management personnel. The principal purpose of the short-term cash bonus program is to align the payment of cash bonuses with the achievement of short-term strategic objectives that our Board and compensation committee believe will continue to position us for long-term success, which generally relate to continued revenue growth and improving cash flow from operations.
For 2017, upon recommendation of our compensation committee, our Board established a short-term cash bonus program that was intended to reward participants for our achievement relative to a pre-established target related to free cash flow for fiscal year 2017, or the Performance Target. The target cash bonus amount, or the Target Cash Bonus, for each named executive officer in 2017 was initially $100,000. On August 8, 2017, however, in connection with Mr. Randall's appointment as President and Chief Executive Officer, the compensation committee increased his Target Cash Bonus from $100,000 to $210,000. At the same time, the compensation committee increased the Target Cash Bonus for Ms. Kane from $100,000 to $200,000. For Messrs. Donahoo and Randall and Ms. Kane, the cash bonus amount was based 100% on our achievement relative to the Performance Target. For Mr. Walker, the cash bonus amount was based 50% on our achievement relative to the Performance Target, and 50% on the achievement of individual MBOs. For performance equal to or greater than 150% of the Performance Target, 150% of the Target Cash Bonus was achievable. For performance equal to 100% of the Performance Target, 100% of the Target Cash Bonus was achievable. For performance below 90% of the Performance Target, no cash bonus could be earned. For performance between 90% and 150% of the Performance Target, the cash bonus was to be determined by reference to a sliding payout scale that was established by our compensation committee.
The actual payments made to each named executive officer pursuant to the 2017 short-term cash bonus program are set forth in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table below.
Equity-Based Awards
Consistent with our compensation philosophy and objectives discussed above, we believe meaningful equity ownership is one important aspect of a broader compensation program that alignssimilar size and stage of growth.
Align Interests with Stockholders ▪Align the interests of our executive officers with those of our stockholders by tying a significant portion of total compensation to the achievement of strategic objectives, which we believe will drive long-term value.
Reward Achievement through Performance-Based Compensation ▪Offer a significant portion of the total compensation opportunity in the form of performance-based compensation that is at-risk instead of guaranteed. ▪Ensure performance-based compensation is directly correlated to the achievement of our short-term and long-term strategic objectives, and provides meaningful incentives for achieving those objectives. ▪Ensure that the total compensation opportunity is appropriate for each executive given their respective scope of responsibilities and ability to impact results. Roles of our executive officersCompensation Committee and our Board of Directors Our Compensation Committee is composed solely of independent directors under applicable SEC rules and regulations and NASDAQ Listing Rules. The Compensation Committee’s primary responsibility is to assist our Board in developing and reviewing our NEO Compensation Program and compensation considerations applicable to our directors. Specifically, the Compensation Committee is responsible for (i) reviewing, and recommending to our Board for approval, the compensation and benefits paid to, and any other compensatory arrangements entered into with, incentivesour Chief Executive Officer and directors (ii) approving the compensation and benefits paid to, create long-term value forand any other compensatory arrangements entered into with, our stockholders. Equity-based awards forsenior executives, and (iii) administering our executive officerscash and equity compensation plans. In discharging its responsibility to oversee the effective design of our NEO Compensation Program, the Committee regularly assesses each element of, and considers changes to, our NEO Compensation Program. All the members of our Board, other than Mr. Trigg, are tied to specific performance targets and/or, in certain cases, individualized MBOs, that are designed to create long-term shareholder value, therebyindependent directors under applicable SEC rules and regulations and NASDAQ Listing Rules. Our Board provides significant input and has ultimate oversight of our NEO Compensation Program; further, several of our significant stockholders sit on our Board, which makes it uniquely representative of the interests of our stockholders, providing even greater emphasis on aligning our executive officers’stockholder interests with those of management. Elements of our stockholders. That alignmentNEO Compensation Program The key elements of our NEO Compensation Program include: ▪Base Salary ▪Corporate Bonus Plan ▪Long-Term Executive Cash Incentive Plan ▪Long-Term Equity Incentive Plan ▪Employee Benefits Base Salary Base salary represents a fixed portion of the compensation of our NEOs and is further amplified by the fact that equity-based awards foran important element of compensation intended to attract and retain highly-talented individuals. Base salaries provide our executive officers may, in some circumstances, increase or decrease depending upon theNEOs with a guaranteed base level of achievement vis-a-vis the pertinent performance target,income, which, in turn, increases or decreasesprovides security and allows our NEOs the volumefreedom to focus on strategic objectives. In setting base salaries, the Compensation Committee considers: ▪balancing the levels of guaranteed pay with at-risk pay to properly manage our compensation-related risk; and value of their equity-based awards. Upon completion▪our NEOs’ contributions to the achievement of our IPOstrategic objectives and overall Company performance.
Base salaries are also reviewed periodically in 2015,the context of factors such as title, skills, responsibility level, individual performance, business experience, total compensation opportunity, and equity ownership. In 2022, the annual base salaries for Messrs. Trigg and Walker were increased to acknowledge their contribution to the business and increased level of responsibility due to our growth. The Board also increased Mr. Randall's base salary, which had not been changed in several years, to bring it in line with market ranges and the compensation of other NEOs.
The following table sets forth the 2022 and, for comparison purposes, 2021 base salaries of our NEOs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | 2022 Base Salary
($) | | 2021 Base Salary
($) | | Percentage Adjustment 2022 v. 2021
(%) | | | Shane Trigg | | 440,000 | | | 420,000 | | | 5 | | | Fay Sien Goon | | 450,000 | | | 450,000 | | | — | | | Matt Mazza | | 375,000 | | | 375,000 | | | — | | | Jonathan Walker | | 375,000 | | | 350,000 | | | 7 | | | Jason Randall | | 500,000 | | | 360,000 | | | 39 | |
Corporate Bonus Plan We provide annual performance-based cash bonuses for our NEOs based on Company achievement of pre-established targets under our Corporate Bonus Plan. The Compensation Committee believes that the annual performance metrics used in the Corporate Bonus, which are discussed below, align the interests of our NEOs with those of our stockholders by tying bonus payout to Company performance against key metrics. In designing the Corporate Bonus Plan for recommendation to the Board, the Compensation Committee considers the following: ▪Company performance objectives based on Board-approved annual targets derived from and aligned with our long-term strategic objectives, which relate to long-term growth; and ▪Use of threshold, target, and maximum bonus payout levels to strike an appropriate balance between compensation incentives and risk tolerance and taking. With respect to fiscal year 2022, the Compensation Committee or Board, as appropriate, established target cash bonus amounts under the Corporate Bonus Plan for each NEO, as set forth in the table below. Such targets were determined by a number of items, including the executive’s responsibilities, base salary, our projected financial performance, and a review of compensation data in our industry. | | | | | | | | | | | | | | | | Name | | 2022 Corporate Bonus Plan Target Cash Bonus Amount
($) | | | Shane Trigg | | 440,000 | | | | Fay Sien Goon(1) | | 2,450,000 | | | | Matt Mazza | | 225,000 | | | | Jonathan Walker | | 375,000 | | | | Jason Randall | | 500,000 | | |
(1)Ms. Goon's 2022 Corporate Bonus Plan target amount includes a bonus opportunity of $450,000 at target and a one-time bonus opportunity of $2,000,000 at target, which is part of Ms. Goon's employment agreement. 2022 Performance Metrics and Payout Curves Cash bonuses are earned under the Corporate Bonus Plan based entirely on the Company's actual performance relative to preset performance metrics. In 2022, performance metrics for all NEOs were: ▪Net new residential units added to our platform during 2022 ("Net New Residential Units"); ▪2022 annual Revenue ("Revenue"); and ▪Non-GAAP operating margin, defined as GAAP operating margin less non-cash transactions and less one-time or non-recurring transactions ("Non-GAAP Operating Margin"). In 2022, 60% of the Corporate Bonus Plan target cash bonus amount was tied to achievement of the Net New Residential Units performance metric; 20% of the Corporate Bonus Plan target cash bonus amount was tied to achievement of the Revenue performance metric; and 20% of the Corporate Bonus Plan target cash bonus amount was tied to achievement of the Non-GAAP Operating Margin performance metric.
Bonus amounts earned under the Corporate Bonus Plan are determined by a payout curve. In 2022, for the Net New Residential Units performance metric, no payment was earned if achievement was below 80% of target, and the maximum payment was capped if achievement was 120% of target or greater. For the Revenue performance metric, no payment was earned if achievement was below 90% of target, and the maximum payment was capped if achievement was 110% of target or greater. For the Non-GAAP Operating Margin performance metric, no payment was earned if Non-GAAP Operating Margin was below 3.5% of target, and the maximum payment was capped if achievement is above 3.5% of target. 2022 Corporate Bonus Plan Payouts Consistent with the application of the performance metrics and payout curves described above, and after review of the audited financial statements included in our 2022 Annual Report and consultation with appropriate members of our finance and accounting organization, our Compensation Committee, verified the following: ▪Net New Residential Units achievement of 100% of target; ▪Revenue achievement of 105% of target; and ▪Non-GAAP Operating Margin achievement of 150% of target, which resulted in a blended payout of 111% of the target 2022 Corporate Bonus Plan Payout amount for each of our NEOs. The actual payments made to each NEO pursuant to the 2022 Corporate Bonus Plan, all of which were approved by the Board or Compensation Committee, as appropriate, are as follows: | | | | | | | | | | | | | | | | | | | | | | Name | | Objective | | 2022 Corporate Bonus Plan Actual Payout Amount
($) | | | Shane Trigg | | Performance Target | | 488,400 | | | | Fay Sien Goon | | Performance Target | | 2,719,500 | | | | Matt Mazza | | Performance Target | | 249,750 | | | | Jonathan Walker | | Performance Target | | 416,250 | | | | Jason Randall | | Performance Target | | 531,583 | | |
Long-Term Executive Cash Incentive Plans In 2018, our Board, upon the recommendation of the Compensation Committee, adopted a Long-Term Executive Cash Incentive Plan and granted a performance award thereunder to Mr. Randall (the "2018 Long-Term Award"). The 2018 Long-Term Award was granted in lieu of any equity incentive awards through 2025 and provided for cash payments to Mr. Randall upon the achievement by the Company of long-term performance targets. The 2018 Long-Term Award was granted with the intent to provide Mr. Randall with significant additional motivation to contribute to the Company's achievement of its long-term strategic objectives, which the Board believed would result in increased "economic value" on a per share basis ("EVPS"). Payouts under the 2018 Long-Term Award were based on surpassing certain threshold increases in EVPS measured as of December 31, 2023, 2024 and 2025 (each, a "Measurement Period"). As also set forth in the section titled "Compensation Discussion and Analysis - Employment Agreements and Similar Arrangements," Mr. Randall received a prorated portion of the 2018 Long-Term Award in the amount of $14,300,800 pursuant to the terms of the Transition and Separation Agreement he entered into with the Company. No further payment is due to Mr. Randall under the 2018 Long-Term Award. Long-Term Equity Incentive Plan Our 2015 Plan provides for the issuance of time and performance-based restricted stock units to our executives, which may be settled for shares of our Class A Common Stock or cash. We believe that the issuance of restricted stock units aligns the interests of our executives with those of our stockholders adoptedby incentivizing our executives to build Company value that can be sustained over time, while helping to manage the 2015 Plan. Our compensation committee has been granted the authority to determine the type, amount, and other termsdilutive effect of our equity awards taking into accountcompensation programs. Restricted stock units have value to recipients even in the absence of stock price appreciation, which helps us retain and incentivize employees during periods of market volatility, and also results in our compensation objectives and philosophy discussed above, subject to approval by our Board. We expect future equity awards will be granted pursuant to the 2015 Plan. See the section of this Proxy Statement entitled “Executive Compensation - Stock Incentive Plans” for additional information. During 2017, upon recommendation of the compensation committee, our Board approved grants of incentive stock options covering up to 86,000granting fewer shares of common stock than through stock options with an equivalent grant date fair value.
Time-Based Restricted Stock Unit Grants In December 2021, our Compensation Committee approved the following time-based restricted stock unit grants with respect to the 2022 fiscal year for: ▪Mr. Trigg valued at $920,000 in the aggregate, which resulted in a grant of 7,476 shares of our Class A Common Stock, as part of his annual equity compensation;
▪Ms. KaneGoon valued at $1,200,000 in the aggregate, which resulted in a grant of 9,752 shares of our Class A Common Stock, as part of her annual equity compensation; ▪Mr. Mazza valued at $800,000 in the aggregate, which resulted in a grant of 6,501 shares of our Class A Common Stock, as part of his annual equity compensation; and ▪Mr. Walker valued at $2,400,000 in the aggregate, which resulted in a grant of 19,503 shares of our Class A Common Stock, as part of his annual equity compensation. The foregoing time-based restricted stock unit grants vest quarterly over four years in equal installments, subject to continued employment with us through the applicable vesting date. Performance-Based Restricted Stock Unit Grants PRSU Awards In December 2021, our Compensation Committee approved the following performance-based restricted stock unit grants ("PRSU Awards") with respect to the 2022 fiscal year for: ▪Mr. Randall, respectively, which we referTrigg valued at $1,380,000 on the date of grant (assuming 100% performance metric achievement) as part of his annual equity compensation; ▪Ms. Goon valued at $1,800,000 on the date of grant (assuming 100% performance metric achievement) as part of her annual equity compensation; ▪Mr. Mazza valued at $1,200,000 on the date of grant (assuming 100% performance metric achievement) as part of his annual equity compensation; and ▪Mr. Walker valued at $3,600,000 on the date of grant (assuming 100% performance metric achievement) as part of his annual equity compensation. (the foregoing PRSU Awards are collectively referred to as the Performance Options."2022 PRSU Awards"). The Performance Options were issued pursuant to the 2015 Plan. Vesting of the Performance Options is2022 PRSU Awards vested based on the achievement of pre-established Revenue and Non-GAAP Operating Margin performance targets for fiscal year 2019, andmetrics (each as defined above) measured over a one-year period ending on December 31, 2022. One-third of the 2022 PRSU Awards fully vested on achievement of the performance metrics, with the remainder fully vesting quarterly over the following two years in equal installments, subject to the NEO’s continued employment throughoutthrough the applicable vesting dates. 80% of the 2022 PRSU Awards target share amount was tied to achievement of the Revenue performance period.metric, and 20% of the 2022 PRSU Awards target share amount was tied to achievement of the Non-GAAP Operating Margin performance metric. Of the Performance Options granted during 2017, 66,000 Performance Options will vest based upon the maximum payoutThe actual number of 100%, which would occur if we achieveshares of our Class A Common Stock to be issued in settlement of any given 2022 PRSU Award ranges from 0% to 150% of the 2019 free cash flowtarget 2022 PRSU Award Class A Common Stock amount, as determined by a payout curve. For the Revenue performance target.metric, no payment is earned if achievement is below 90% of target, and the maximum payment is capped if achievement is 110% of target or greater. For the Non-GAAP Operating Margin performance at 100%metric, no payment is earned if Non-GAAP Operating Margin is below 3.5% of target, and the maximum payment is capped if achievement is above 3.5% of target.
PRSU Award Payouts Consistent with the application of the 2019 free cash flow performance target, approximately 61%metrics and payout curves described above, and after review of the Performance Options will vest. Foraudited financial statements included in our 2022 Annual Report and consultation with appropriate members of our finance and accounting organization, our Compensation Committee, verified the following: ▪Revenue achievement of 105% of target; and ▪Non-GAAP Operating Margin achievement of 150% of target. This resulted in a blended performance at 80%vesting of 114% of the 2019 free cash flow performance target approximately 48%2022 PRSU Award Class A Common Stock amounts for each of our NEOs.
The actual number of shares of our Class A Common Stock issued, or to be issued, in settlement of the Performance Options will vest. For performance below 80%2022 PRSU Awards, subject to satisfaction of the 2019 free cash flow performance target, no Performance Options will vest. For performance between 80%continued employment conditions, are as follows: | | | | | | | | | | | | | | | | | | | | | | Name | | Objective | | Class A Common Shares Subject to 2022 PRSU Award | | | Shane Trigg | | Performance Target | | 12,784 | | | Fay Sien Goon | | Performance Target | | 16,675 | | | Matt Mazza | | Performance Target | | 11,118 | | | Jonathan Walker | | Performance Target | | 33,350 | |
In addition, Messrs. Trigg and 150% of the 2019 free cash flow performance target, the vesting percentage will be determined by reference toMazza were each granted a sliding vesting scalePRSU Award in 2020 (the "2020 PRSU Awards") that was established by our compensation committee. Our Board will confirm the achievement percentage
relative to the 2019 free cash flow performance target in due course, and the Performance Options will vest, or fail to vest, in accordance with the foregoing.
The remaining 20,000 Performance Options granted during 2017 are subject to vestingvested based uponon the achievement of a pre-established performanceconsolidated net revenue growth target relatedmeasured over a three year period ending on December 31, 2022, subject to adjusted gross margin for fiscal year 2019, and continued employment throughoutthrough the performance period. These Performance Options have two levelsperiod, with the actual number of vesting; 50%shares of our Class A Common Stock issued in settlement of the Performance Options will vest based upon2020 PRSU Awards determined by a payout curve. After a review of the audited financials statements included in our 2022 Annual Report and consultation with appropriate members of our finance and accounting organization, our Compensation Committee, verified the achievement of 110%74% of the 2019 adjusted gross marginconsolidated net revenue growth target, which resulted in Messrs. Mazza and Trigg receiving the remaining 50%following number of the Performance Options will vest upon the achievement of 115% of the 2019 adjusted gross margin target. If 110% of the 2019 adjusted gross margin target is not achieved, then none of these Performance Options will vest. Our Board will confirm the achievement percentage relative to the 2019 adjusted gross margin target in due course, and the Performance Options will vest, or fail to vest, in accordance with the foregoing.
We did not grant any equity awards to Mr. Walker or to Mr. Donahoo during 2017.
Long-Term Cash Bonus Plan
On February 20, 2018, our Board, upon recommendationshares of our compensation committee, adopted the Long-Term Executive Cash Incentive Plan, or the Long-Term Cash Bonus Plan, which establishes the terms upon which long-term cash incentive bonuses may become payable to ourClass A Common Stock, respectively:
| | | | | | | | | | | | | | | | | | | | | | Name | | Objective | | Class A Common Shares Granted Under 2020 PRSU Award | | | Shane Trigg | | Performance Target | | 3,106 | | | Matt Mazza | | Performance Target | | 1,035 | |
Employee Benefits Our executive officers, from time to time as determined byincluding our Board. Pursuant to the Long-Term Cash Bonus Plan, our Board has the discretion to grant performance awards, or Performance Awards, that are intended to reward plan participants for their individual contributions to our achievement of one or more long-term company performance objectives, or Company Performance Objectives, over a specified period of time, or the Performance Period. On February 20, 2018, our Board granted Performance Awards under the Long-Term Cash Bonus Plan to Mr. Randall and Ms. Kane, or the Recipients. No Performance Awards were granted to Mr. Walker.
The Performance Awards establish our baseline "economic value"on a per share basis, or EVPS. The Performance Awards then measure growth in EVPS over time. The Performance Awards are generally designed to reward the Recipients for their contributions towards achieving profitable growth that results in increases in EVPS over the next eight years. Pursuant to the Performance Awards, the Recipients will be eligible to earn cash bonuses based on the actual increase in EVPS measured as of the end of three separate Performance Periods ending December 31, 2023, December 31, 2024 and December 31, 2025. If the actual increase in EVPS at the end of any Performance Period reflects the achievement of a low internal rate of return, no cash bonuses will be paid pursuant to the Performance Awards for that Performance Period. However, if actual increases in EVPS as of the end of any Performance Period reflect the achievement of a high internal rate of return, and therefore significant economic value added, the cash bonuses paid to the Recipients would be significant. Because the actual amount of the cash bonuses to be paid under the Performance Awards, if any, is dependent on our performance relative to an internal rate of return that results in increases in EVPS over a period of multiple years into the future, any bonus amounts that may become payable pursuant to the Long-Term Cash Bonus Plan are highly speculative and we are currently unable to predict a reasonable range for the bonus amounts with any degree of certainty.
The Performance Awards are designed to provide long-term incentives for participants to achieve our long-term objectives which we believe will positively impact long-term stockholder value. The Performance Awards are being granted in lieu of the grant of additional equity incentive awards to the Recipients. Accordingly, our compensation committee currently does not intend to issue additional equity awards to the Recipients until the Performance Awards have expired.
The Performance Awards provide that cash bonuses may be accelerated if: (i) we undergo a "change in control" (as determined by our Board), (ii) the Participant has been continuously employed by us through the date of the change in control, and (iii) within one hundred and eighty (180) days after the change in control the Participant is either involuntarily terminated by us or voluntarily resigns from his or her employment with us. The amount of the cash bonus to be paid under these circumstances is dependent upon the year in which the change in control occurs (assuming the other conditions are met). If the change in control occurs during 2018, each Recipient will be entitled to a cash bonus of $1,000,000, which amount will increase by $1,000,000 per year for each year thereafter through 2022, with the amount payable in 2022 then continuing to be payable in 2023 with no additional increase.
Benefits
We offer a standard benefits package that we believe is necessary to attract and retain executive officers. Our named executive officersNEOs, are eligible to participate inreceive the same employee benefits that are generally available to all of our full-time employees. These benefits include our medical, dental and vision insurance; life and disability insurance plans; and assistance with certain fertility services. In structuring these benefit plans, we seek to provide an aggregate level of benefits that are comparable to those provided by similar companies.
In addition, our NEOs receive a supplemental medical reimbursement benefit that covers up to $10,000 annually of medical, dental, vision, and other welfare benefit plans. pharmacy expenses not covered under the Company's insurance plans, subject to certain exceptions (the "Executive Medical Reimbursement Program"). We also pay the premiums for short and long-term disability insurance and life insurance for our named executive officers. Furthermore, we maintain a tax-qualified 401(k) retirement plan that provides eligible U.S. employees with an opportunity to save for the benefit of our eligible employees, including our named executive officers.retirement on a tax-advantaged basis. In 2018,2022, we increased the amount by which we match contributions made by participants in our 401(k) plan from (i)matched 50% of the first 4% of eligible compensation contributed by the employee to (ii) 50% of the first 6%8% of eligible compensation contributed by the employee. Employees whoSuch matching contributions are immediately and fully vested. Employment Agreements and Similar Arrangements We have entered into employment agreements with Mr. Trigg and Ms. Goon. We have not entered into employment agreements with Messrs. Mazza or Walker. We entered into an employment agreement with Mr. Randall in 2022 and later entered into a transition and separation agreement with Mr. Randall on March 1, 2023. Mr. Trigg’s Employment Agreement On March 1, 2023, we entered into an amended and restated employment agreement with Mr. Trigg to serve as our President and Chief Executive Officer. His employment agreement provides for "at will" employment and sets forth the terms and conditions of Mr. Trigg's employment, including an annual base salary, eligibility to participate under the Corporate Bonus Plan, a one-time sign-on bonus of $300,000, a special one-time award of time-based restricted stock units having an aggregate value of $1,500,000 (which grant is additive to additional time-based restricted stock units granted to Mr. Trigg earlier in 2023), time-based options to purchase a total of 120,000 shares of the Company's Class A Common Stock, and, subject to approval of the Board, in each of fiscal years 2024, 2025, 2026 and 2027, time-based restricted stock units and PRSU Awards covering a number of shares of the Company's Class A Common Stock having an aggregate value of (i) no less than $3,000,000 annually in fiscal years 2024 and 2025, and (ii) no less than $3,500,000 annually in fiscal years 2026 and 2027.
Mr Trigg's employment agreement provides that if he is terminated by us other than for Cause or Mr. Trigg resigns for Good Reason (other than in connection with a Corporate Transaction, as each term is defined in his employment agreement), then Mr. Trigg will be entitled to receive twelve months of base salary continuation, payment of any earned but unpaid annual bonus in respect of the prior completed fiscal year, a prorated cash bonus award for the fiscal year in which such termination occurs, and twelve months of COBRA premiums. With respect to each outstanding time-based restricted stock unit award held by Mr. Trigg, if terminated on or prior to the end of December 31, 2024 the portion of such time-based restricted stock unit award that would have vested had Mr. Trigg remained employed with the Company through the end of December 31, 2025 will accelerate upon such qualifying termination, or, if terminated following December 31, 2025, the portion of such time-based restricted stock unit award that would have vested had Mr. Trigg remained employed with the Company for an additional twelve months will accelerate upon such qualifying termination. With respect to each outstanding PRSU Award held by Mr. Trigg, each PRSU Award shall, to the extent such performance conditions applicable to the PRSU Award have not been satisfied, accelerate on a prorated basis based on the number of days employed during the applicable performance period and achievement of the applicable performance metrics determined by the Board based on estimated forecasts (but not greater than target-level performance), or, to the extent such performance conditions applicable to the PRSU Award have been satisfied, the portion of such PRSU Award that would have vested had Mr. Trigg remained employed with the Company for an additional twelve months will accelerate upon such qualifying termination. With respect to each outstanding time-based option, the prorated portion based on the number of full or partial calendar months elapsed between the applicable vesting date and such qualifying termination will be accelerated, with any outstanding vested time-based options remaining exercisable for the longer of eighteen months following such qualifying termination and the applicable expiration date of the options. Payment of such amounts is conditioned upon the effectiveness of a general release of claims in favor of the Company and continuing compliance with certain restrictive covenants. Ms. Goon’s Employment Agreement On September 15, 2021, we entered into an employment agreement with Ms. Goon to serve as our Chief Financial Officer, starting October 18, 2021. Her employment agreement provides for “at will” employment and sets forth the terms and conditions of Ms. Goon's employment, including an annual base salary, eligibility to participate in our employee benefit plans, eligibility to participate under the Corporate Bonus Plan, a special one-time award under the Corporate Bonus Plan for 2022 with a target bonus opportunity of $2,000,000 (as discussed above under the section titled "Short-Term Cash Incentive Plan"), and, subject to approval of the Board, eligibility to receive a grant of time-based restricted stock unit awards and PRSU Award (as discussed above under the section titled "Long-Term Equity Incentive Plan"). Ms. Goon’s employment agreement provides that if she is terminated by us for any reason other than for Cause or Ms. Goon resigns for Good Reason (other than in connection with a Corporate Transaction, as each term is defined in her employment agreement), then Ms. Goon will be entitled to receive twelve months of base salary continuation, payment of any earned but unpaid annual bonus in respect of the prior completed fiscal year, a prorated cash bonus award for the fiscal year in which such termination occurs, and twelve months of COBRA premiums. With respect to each outstanding time-vesting restricted stock unit award held by Ms. Goon, the portion of such time-vesting restricted stock unit award that would have vested had Ms. Goon remained employed with the Company for an additional twelve months will accelerate upon such qualifying termination, subject to limited exceptions. With respect to each outstanding PRSU Award held by Ms. Goon, each PRSU Award shall accelerate on a prorated basis based on the number of days employed during the applicable performance period and achievement of the applicable performance metrics determined by the Board based on estimated forecasts. Payment of such amounts is conditioned upon the effectiveness of a general release of claims in favor of the Company and continuing compliance with certain restrictive covenants. Mr. Randall’s Employment Agreement On July 27, 2022, we entered into an employment agreement with Mr. Randall regarding his continued service as our President and Chief Executive Officer. His employment agreement provided for “at will” employment and set forth the terms and conditions of Mr. Randall's employment, including an annual base salary, eligibility to participate in our employee benefit plans, eligibility to participate under the Corporate Bonus Plan, and eligibility to receive the 2018 Long-Term Award. Mr. Randall's employment agreement provided that if he was terminated by us for any reason other than for Cause or Mr. Randall resigned for Good Reason (other than in connection with a Change of Control, as each term is defined in his employment agreement), then Mr. Randall would be entitled to receive twelve months of base salary continuation, payment of any earned but unpaid annual bonus in respect of the prior completed fiscal year, a prorated cash bonus award for the fiscal year in which such termination occurs, twelve months of COBRA premiums, and if such termination or resignation occurred during fiscal year 2023, 2024 or 2025, a prorated portion of the 2018 Long-Term Award. Mr. Randall’s Transition and Separation Agreement On March 1, 2023, we entered into a transition and separation agreement with Mr. Randall in connection with his resignation as the Company’s President, Chief Executive Officer and as a member of the Board. During the transition period from March 1 to March 31, 2023, Mr. Randall continued to receive his current base salary and participate in the 401(k) planCompany’s benefit plans. Mr. Randall ceased to be employed on March 31, 2023 and pursuant to the transition and separation agreement, he will be entitled to: (i) aggregate lump sum cash payments of $625,000 (which includes a lump sum cash severance payment equal to twelve months of his then-base salary ($500,000) and a pro rata portion of his annual bonus under the Corporate Bonus Program for the period of January 1 through March 31, 2023 ($125,000)); (ii) aggregate cash payments of $14,300,800 (which
represent a pro rata portion of his 2018 Long-Term Award); (iii) twelve months of COBRA premiums, subject to certain limitations; (iv) continued participation in the Company’s Executive Medical Reimbursement Program through the end of calendar year 2023, subject to certain limitations; and (v) an extension of the exercise period with respect to the vested stock options held by Mr. Randal until the earlier of eighteen months following his termination and the expiration date applicable to such options. Change in Control Provisions Equity Award Acceleration Mr. Trigg's employment agreement provides that if his employment with us is terminated other than for Cause, or Mr. Trigg resigns for Good Reason, on or within twelve months following the consummation of a Corporate Transaction (as each term is defined in his employment agreement), then all outstanding restricted stock unit awards held by Mr. Trigg shall accelerate and become fully-vested. Ms. Goon’s employment agreement provides that if her employment with us is terminated other than for Cause, or Ms. Goon resigns for Good Reason, on or within twelve months following the consummation of a Corporate Transaction (as each term is defined in her employment agreement), then all outstanding restricted stock unit awards held by Ms. Goon shall accelerate and become fully-vested.
Other Compensation-Related Topics Role of Executive Officers in Executive Compensation Discussions The members of the Compensation Committee are immediately vested in the best position to assist our Board in developing and reviewing our executive compensation programs and the compensation considerations applicable to our directors and executive officers, because each is an independent director under applicable SEC rules and regulations and NASDAQ Listing Rules. Nevertheless, the Compensation Committee may from time to time solicit the input of our CEO and CFO regarding compensation for our other executive officers, particularly with respect to salary, cash bonus opportunities and equity awards. While our CEO and CFO may participate in some deliberations regarding compensation for our other executive officers, they do not participate in, and are not present at, any deliberations regarding their own contributions whilecompensation. The Compensation Committee considers the employer match vests atinformation provided by our CEO and CFO in making executive officer compensation decisions and recommendations to our Board, as appropriate. Compensation Risk Considerations In assessing our overall compensation philosophy and the elements of our executive compensation programs, we consider how our programs may encourage risk-taking by employees, taking into account a ratenumber of 25% per year until they vest 100% after four yearsfactors, including the following: | | | | | | | | | | The Compensation Committee and our Board are composed of significant stockholders and stockholder representatives who have significant influence on our compensation practices, which results in an alignment of our compensation practices with the interests of our stockholders. | | | Our compensation programs are designed to enhance stockholder value through performance metrics intended to help ensure achievement of our short and long term strategic objectives. | | | We focus on limiting equity dilution through judicious use of equity compensation. While we continue to grant equity to certain senior management, we focus on limiting dilution by balancing equity compensation with other incentives provided to our NEOs under our short-term and long-term cash incentive plans and employee benefit plans. | | | Our executive compensation programs consist of both guaranteed pay and at-risk pay, and the Compensation Committee reviews this mix regularly. | | | We regularly review data regarding the executive compensation programs of other companies in our industry of a similar size and stage, as well as larger companies headquartered in California, to ensure alignment with our executive compensation programs and market competitiveness. While we have not engaged a compensation consultant, we did review and consider data from both targeted and broader-based compensation surveys in order to gain a broader perspective on overall market trends. However, we have not formally set a peer group, and thus did not formally benchmark executive compensation against a peer group for purposes of setting any specific element of compensation or total compensation. | | | Subject to limited exceptions, and specifically with respect to our directors and NEOs (as may be disclosed below in the Section titled "Security Ownership of Certain Beneficial Owners and Management"), our insider trading policy prohibits our NEOs, directors, and employees from hedging their economic interest in our securities, and from pledging our securities. | | | Our change in control arrangements are designed to attract and retain executives without providing excessive benefits. | |
Our Board believes that, although the majority of service. The benefitsthe compensation opportunity provided to our namedNEOs and other senior executives is at-risk pay that is determined based upon the achievement of strategic objectives intended to increase economic value over time as measured on a per share basis, our executive compensation programs do not encourage excessive or unnecessary risk-taking. Tax and Accounting Considerations Among the factors it considers when making executive compensation recommendations, the Compensation Committee reviews anticipated tax and accounting impacts to the Company (and, potentially, to our executives) of various payments, equity awards and other benefits. In that regard, the Compensation Committee considers the impact of the provisions of Section 162(m) of the Internal Revenue Code (the "Code"). That section generally limits the deductibility of compensation paid by a publicly-held company to "covered employees" for a taxable year to $1.0 million, except for certain "performance-based compensation" payable pursuant to written contracts that were in effect on November 2, 2017 and that are not modified in any material respect on or after that date. "Covered employees" generally include our CEO, CFO and other highly compensated executive officers.
Thus, our tax deduction with regard to compensation of these officers generally reflectis limited to $1.0 million per taxable year with respect to each such officer and qualified for the aforementioned exception to non-deductibility under Section 162(m) of the Code. With respect to cash incentive and equity awards that may not qualify for such exception and those providedthat we may grant in the future, we do not anticipate that the $1.0 million deduction limitation set forth in Section 162(m) of the Code will have a material impact on our results of operations. The Compensation Committee also considers the impact of Section 409A of the Code and, in general, our executive plans and programs are designed to allcomply with the requirements of that section so as to avoid possible adverse tax consequences that may result from noncompliance. Developments and changes in accounting standards and tax law may impact our compensation decisions. As accounting standards and applicable tax laws develop, we may revise certain features of our employees.executive compensation program to appropriately align our executive compensation program with our overall executive compensation philosophy and objectives. However, we believe that these are only some of the many relevant considerations of setting executive compensation, and should not be permitted to compromise our ability to design and maintain compensation programs that are consistent with our compensation philosophy and objectives. Accordingly, we retain the discretion to pay compensation that is not tax deductible and/or could have adverse accounting consequences. Employment Agreements
We currently do not have employment agreementsCompensation Committee Report
The Compensation Committee has reviewed and discussed with any of our named executive officers. All of our named executive officers are employed on an at-will basis, with no fixed term of employment. Severance Agreements
We currently do not have severance agreements, change-in-control agreements or other similar types of agreements with any of our named executive officers, except as set forth above inmanagement the information included under the section entitledtitled "Compensation Program - Long-Term Cash Bonus Plan.Discussion and Analysis," including the Summary Compensation Table and related compensation tables, notes and narrative discussion. Based on such review and discussion, the Compensation Committee has recommended to the Board of Directors that the "Compensation Discussion and Analysis" disclosure, including the Summary Compensation Table and related compensation tables, notes and narrative discussion, be included in this Proxy Statement and incorporated into our Annual Report.
In accordance with SEC rules and regulations, this Compensation Committee Report will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act, or the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. Respectfully submitted by the members of the Compensation Committee of the Board of Directors: Andreas von Blottnitz (Chairperson) Janet Kerr Alex Wolf
Summary Compensation Table The following table sets forth summary compensation information for our named executive officers for the years ended December 31, 20172022, 2021 and 2016.2020: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Title | | Year | | Salary
($) | | Bonus ($) | | Stock Awards(1) ($) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation(2) ($) | | All Other Compensation(3) ($) | | Total
($) | | Shane Trigg | | 2022 | | 440,000 | | | — | | | — | | | — | | | 488,400 | | | 12,931 | | | 941,331 | | | President and Chief | | 2021 | | 420,000 | | | 250,000 | | | 2,700,110 | | | — | | | 997,500 | | | 175,013 | | | 4,542,623 | | | Executive Officer | | 2020 | | 290,759 | | | — | | | 3,900,000 | | | — | | | 322,938 | | | 7,586 | | | 4,521,283 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fay Sien Goon | | 2022 | | 450,000 | | | 500,000 | | (4) | — | | | — | | | 2,719,500 | | (5) | 15,991 | | | 3,685,491 | | | Chief Financial Officer | | 2021 | | 93,967 | | | — | | | 12,000,403 | | | — | | | 120,205 | | | 11,010 | | | 12,225,585 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matt Mazza | | 2022 | | 375,000 | | | — | | | — | | | — | | | 249,750 | | | 10,393 | | | 635,143 | | | Chief Legal Officer and | | 2021 | | 375,000 | | | — | | | 6,450,400 | | | — | | | 433,565 | | | 11,459 | | | 7,270,424 | | | Corporate Secretary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jonathan Walker | | 2022 | | 375,000 | | | — | | | — | | | — | | | 416,250 | | | 10,754 | | | 802,004 | | | Founder | | 2021 | | 350,000 | | | — | | | 7,200,304 | | | — | | | 875,000 | | | 9,204 | | | 8,434,508 | | | | | 2020 | | 320,063 | | | — | | | — | | | — | | | 130,000 | | | 16,688 | | | 466,751 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jason Randall | | 2022 | | 477,923 | | | — | | | — | | | — | | | 531,584 | | | 15,810 | | | 1,025,317 | | | Former President and Chief | | 2021 | | 360,000 | | | — | | | — | | | — | | | 1,098,000 | | | 3,382 | | | 1,461,382 | | | Executive Officer | | 2020 | | 360,000 | | | — | | | — | | | — | | | 374,400 | | | 7,830 | | | 742,230 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Name and Title | | Year | | Salary | | Option Awards(1) | | Non-Equity Incentive Plan Compensation(2) | | All Other
Compensation(3) | | Total | Jason Randall(4) | | 2017 | | $ | 288,000 |
| | $ | 823,540 |
| | $ | 269,355 |
| | $ | 960 |
| | $ | 1,381,855 |
| | President and Chief Executive Officer | | 2016 | | $ | 240,000 |
| | $ | 1,449,469 |
| | $ | 148,000 |
| | $ | 786 |
| | $ | 1,838,255 |
| | | | | | | | | | | | | | | Ida Kane(5) | | 2017 | | $ | 316,000 |
| | $ | 823,540 |
| | $ | 259,409 |
| | $ | 6,280 |
| | $ | 1,405,229 |
| | Chief Financial Officer | | 2016 | | $ | 300,000 |
| | $ | 1,811,837 |
| | $ | 148,000 |
| | $ | 6,059 |
| | $ | 2,265,896 |
| | | | | | | | | | | | | | | Jonathan Walker(6) | | 2017 | | $ | 250,000 |
| | $ | — |
| | $ | 125,000 |
| | $ | 8,446 |
| | $ | 383,446 |
| | Chief Technology Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | Brian Donahoo(7) | | 2017 | | $ | 250,000 |
| | $ | — |
| | $ | 1,483,333 |
| | $ | 14,908 |
| (8) | $ | 1,748,241 |
| | Former President and Chief Executive Officer | | 2016 | | $ | 250,000 |
| | $ | — |
| | $ | 148,000 |
| | $ | 4,461 |
| | $ | 402,461 |
|
| | (1) | Amounts shown in this column do not necessarily reflect the actual value received or to be received by our named executive officers or the amount of stock-based compensation expense reported within our consolidated financial statements.(1)Amounts shown in this column do not necessarily reflect the actual value received or to be received by our named executive officers. Instead, these amounts reflect the total grant date fair market value of the stock options computed in accordance with the provisions of ASC 718. Assumptions used in the calculation of these amounts are included in Note 2 of the notes to our consolidated financial statements included in the 2017 Annual Report. As required by SEC rules and regulations, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. |
During 2017, upon recommendation of the compensation committee, our Board approvedtime-based restricted stock units and performance-based restricted stock units. As required by SEC rules and regulations, the grantamounts shown exclude the impact of estimated forfeitures related to service based vesting conditions. Assumptions used in the calculation of these amounts are included in Note 2 of the Performance Optionsnotes to Ms. Kaneour consolidated financial statements included in our 2022 Annual Report. With respect to the performance-based restricted stock unit awards, amounts are based on the probable outcome of the applicable performance conditions, which is target level performance, calculated in accordance with ASC 718.
(2)Amounts shown in this column reflect the amounts earned and Mr. Randall aspaid under our 2022 Corporate Bonus Plan, a cash bonus program described in the section of this Proxy Statement entitled "Executive Compensation"Compensation Discussion and Analysis - Compensation ProgramCorporate Bonus Plan." (3)Amounts shown in this column represent our matching contributions under our 401(k) Plan, reimbursement of medical expenses pursuant to established health plans, insurance premiums paid for the benefit of our named executive officers, and de minimis bonus amounts generally paid to all employees. (4)Ms. Goon received a sign-on bonus when joining the Company in fiscal year 2021. The sign-on bonus was subject to a one-year clawback provision and is therefore included as part of 2022 compensation. (5)Ms. Goon's 2022 Corporate Bonus Plan target amount includes a bonus opportunity of $450,000 at target and a one-time bonus opportunity of $2,000,000 at target, which was part of Ms. Goon's employment agreement. The calculation of the actual amount paid is discussed more fully in the section titled "Compensation Discussion and Analysis - Equity-Based Awards.Corporate Bonus Plan."
| | | | | | | | | (2) | Amounts shown in this column reflect the amounts earned under our 2017 cash bonus program based on our achievement relative to a pre-established target related to free cash flow for fiscal year 2017. Our cash bonus program is described in the section of this37 | 2023 Proxy Statement entitled "Compensation Program - Cash Bonus Program." |
| | | | | | | | | (3) | Except as otherwise noted, the amounts shown in this column represent our matching contributions under our 401(k) Plan and the amount of premiums paid for our short-term and long-term disability and life insurance.Executive Compensation |
Grants of Plan-Based Awards The following table presents, for each of our named executive officers, information concerning grants of plan-based awards made during fiscal year 2022. This information supplements the information about these awards set forth in the Summary Compensation Table above. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)(2) | | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | | All Other Stock Awards(3) (#) | | All Other Option Awards(3) (#) | | Exercise Price of Options(3) ($) | | Grant Date Fair Value of Option and Stock Awards(3) ($) | | | Name | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | Threshold (#) | | Target (#) | | Maximum (#) | | | Shane Trigg | | 1/1/2022 | | 220,000 | | | 440,000 | | | 660,000 | | | — | | — | | — | | — | | — | | — | | | — | | | | Fay Sien Goon(4) | | 1/1/2022 | | 225,000 | | | 450,000 | | | 675,000 | | | — | | — | | — | | — | | — | | — | | | — | | | | | | 1/1/2022 | | 1,000,000 | | | 2,000,000 | | | 3,000,000 | | | — | | — | | — | | — | | — | | — | | | — | | | | Matt Mazza | | 1/1/2022 | | 112,500 | | | 225,000 | | | 337,500 | | | — | | — | | — | | — | | — | | — | | | — | | | | Jonathan Walker | | 1/1/2022 | | 187,500 | | | 375,000 | | | 562,500 | | | — | | — | | — | | — | | — | | — | | | — | | | | Jason Randall | | 1/1/2022 | | 250,000 | | | 500,000 | | | 750,000 | | | — | | — | | — | | — | | — | | — | | | — | | |
(1)Amounts in the "Estimated Future Payouts Under Non-Equity Incentive Plan Awards" column relate to a cash bonus opportunity under our Corporate Bonus Plan. The actual amounts paid to our named executive officers are set forth in the Summary Compensation Table above, and the calculation of the actual amounts paid is discussed more fully in the section titled "Compensation Discussion and Analysis - Corporate Bonus Plan." (2)This table does not include the 2018 Long-Term Award granted to Mr. Randall, of which Mr. Randall received a pro-rated portion of in connection with his separation from the Company. Please refer to the section titled "Compensation Discussion and Analysis - Long-Term Executive Cash Incentive Plans" for more information. (3)Equity plan awards for our 2022 NEO equity compensation program were granted by our Board in December 2021 and disclosed in last year's Proxy Statement. Please refer to the section titled "Compensation Discussion and Analysis - Long-Term Equity Incentive Plan" for more information. (4)Ms. Goon's 2022 Corporate Bonus Plan target amount includes a bonus opportunity of $450,000 at target and a one-time bonus opportunity of $2,000,000 at target, which was part of Ms. Goon's employment agreement. For additional information, see the section titled "Compensation Discussion and Analysis - Corporate Bonus Plan."
| | | | | | | | | (4) | In connection with Mr. Randall's appointment as President and Chief Executive Officer, effective as of August 8, 2017, his base salary was increased from $240,000 to $360,000.38 | 2023 Proxy Statement |
| | | | | | | | | (5) | Effective as of August 8, 2017, our Board approved an increase in Ms. Kane's base salary from $300,000 to $340,000.Executive Compensation |
| | (6) | Mr. Walker was not a named executive officer in 2016 and, therefore, compensation information for that year has been excluded. |
| | (7) | In connection with his retirement as our President and Chief Executive Officer effective August 8, 2017 (the "Retirement Date"), we entered into a Resignation Agreement and General Release of Claims (the "Resignation Agreement") with Mr. Donahoo. Pursuant to the Resignation Agreement, and in exchange for his execution of a general release in favor of AppFolio as well as other valid consideration, Mr. Donahoo remained eligible to receive (i) continued payment of his then-current base salary through December 31, 2017; (ii) continued eligibility to receive his previously announced cash bonus pursuant to our 2017 short-term cash bonus program (the "Short-Term Cash Plan"), subject to our achievement of a pre-established free cash flow-related target for fiscal year 2017; and (iii) continued vesting of outstanding equity awards from the Retirement Date through December 31, 2017, and accelerated vesting of any then-unvested equity awards on December 31, 2017. In addition, Mr. Donahoo also remained eligible pursuant to the Retirement Agreement for a reduced bonus opportunity pursuant to our 2016 long-term cash incentive plan, under which he was initially eligible to receive a one-time cash bonus of up to $2,000,000 upon our achievement of a pre-established performance target for 2018. In connection with the foregoing, Mr. Donahoo ultimately received a bonus of $1,333,333 pursuant to the 2016 long-term cash incentive plan, and a bonus of $150,000 pursuant to the Short-Term Cash Plan. The foregoing description of the Resignation Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Resignation Agreement, which was previously filed with the SEC on August 7, 2017. |
| | (8) | This amount includes a lump sum payment of $10,000, which was paid to Mr. Donahoo in lieu of us paying COBRA premiums, in accordance with the Resignation Agreement. |
Outstanding Equity Awards at Fiscal Year End The following table sets forth information about the outstanding equity awards held by each of our named executive officers as of December 31, 2017.2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#)
Exercisable | | Number of Securities Underlying Unexercised Options (#)
Unexercisable | | Number of Securities Underlying Unexercised Unearned Options
(#) | | Option Exercise Price
($) | | Option Expiration Date | | Number of Shares That Have Not Vested
(#) | Market Value of Shares That Have Not Vested ($)(1) | | Equity Incentive Plan Awards: Number of Shares That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Shares That Have Not Vested ($)(1) | | Shane Trigg | | 12/13/2021 | | — | | — | | — | | — | | | — | | 8,521 | | (2) | 897,943 | | | 4,263 | | (2) | 449,235 | | | 12/13/2021 | | — | | — | | — | | — | | | — | | 6,074 | | (3) | 640,078 | | | — | | | — | | | | 1/19/2021 | | — | | — | | — | | — | | | — | | — | | | — | | | 2,588 | | (4) | 272,723 | | | | 4/13/2020 | | — | | — | | — | | — | | | — | | 18,883 | | (5) | 1,989,891 | | | — | | | — | | | | 4/13/2020 | | — | | — | | — | | — | | | — | | — | | | — | | | 3,106 | | (6) | 327,310 | | | Fay Sien Goon | | 12/13/2021 | | — | | — |
| — | | — | | | — | | 11,115 | | (2) | 1,171,299 | | | 5,560 | | (2) | 585,913 | | | 12/13/2021 | | — | | — |
| — | | — | | | — | | 7,923 | | (3) | 834,926 | | | — | | | — | | | | 10/18/2021 | | — | | — |
| — | | — | | | — | | 36,432 | | (7) | 3,839,204 | | | — | | | — | | | | 10/18/2021 | | — | | — | | — | | — | | | — | | 3,416 | | (8) | 359,978 | | | — | | | — | | | | 10/18/2021 | | — |
| — |
| — |
| — | | | — | | — | | | — | | | 18,217 | | (4) | 1,919,707 | | | Matt Mazza | | 12/13/2021 | | — | | — | | — | | — | | | — | | 7,410 | | (2) | 780,866 | | | 3,708 | | (2) | 390,749 | | | 12/13/2021 | | — | | — | | — | | — | | | — | | 5,282 | | (3) | 556,617 | | | — | | | — | | | | 10/27/2021 | | — | | — | | — | | — | | | — | | 23,120 | | (8) | 2,436,386 | | | — | | | — | | | | 1/19/2021 | | — | | — | | — | | — | | | — | | — | | | — | | | 1,747 | | (4) | 184,099 | | | | 1/19/2021 | | — | | — | | — | | — | | | — | | 873 | | (9) | 91,997 | | | — | | | — | | | | 12/17/2019 | | — | | — | | — | | — | | | — | | — | | | — | | | 1,035 | | (6) | 109,068 | | | | 11/15/2019 | | — | | — | | — | | — | | | — | | 1,837 | | (10) | 193,583 | | | — | | | — | | | Jonathan Walker | | 12/13/2021 | | — | | — | | — | | — | | | — | | 22,230 | | (2) | 2,342,597 | | | 11,120 | | (2) | 1,171,826 | | | 12/13/2021 | | — | | — | | — | | — | | | — | | 15,846 | | (3) | 1,669,851 | | | — | | | — | | | | 12/17/2019 | | — |
| — | | — | | — | | | — | | 1,864 | | (11) | 196,428 | | | — | | | — | | | Jason Randall | | 5/18/2017 | | 20,000 | | | — |
| — | | 27.95 | | | 10/1/2024 | (12) | — | | | — | | | — | | | — | | | 2/24/2017 | | 38,280 | | | — |
| — | | 23.80 | | | 10/1/2024 | (12) | — | | | — | | | — | | | — | | | | 5/20/2016 | | 100,000 | | | — |
| — | | 13.43 | | | 10/1/2024 | (12) | — | | | — | | | — | | | — | | | | 5/20/2016 | | 80,001 | |
| — |
| — |
| 13.43 | | | 10/1/2024 | (12) | — | | | — | | | — | | | — | | | | 2/29/2016 | | 98,666 | |
| — | | — | | 11.70 | | | 10/1/2024 | (12) | — | | | — | | | — | | | — | | | | 12/3/2014 | | 29,297 | |
| — |
| — | | 4.92 | | | 10/1/2024 | (12) | — | | | — | | | — | | | — | | | | 12/3/2014 | | 25,000 | |
| — | | — | | 4.92 | | | 10/1/2024 | (12) | — | | | — | | | — | | | — | |
(1)The amount in this column was calculated based on the closing price of our Class A Common Stock on December 30, 2022, which was $105.38. (2)This amount represents a PRSU Award of our Class A Common Stock granted pursuant to the 2015 Plan. This award vests over three-years based on the achievement of pre-established financial metrics with a December 31, 2022 measurement date and is reflected in the table as earned at 114% of target. One-third of the 2022 PRSU Awards fully vested on achievement of the performance metrics on February 10, 2023. The remaining shares will vest quarterly over the following two years in equal installments, subject to the NEO’s continued employment through the applicable vesting dates. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#)
Exercisable | | Number of Securities Underlying Unexercised Options (#)
Unexercisable | | Option Exercise Price | | Option Expiration Date | | Number of Shares That Have Not Vested (#) | | Market Value of Shares
That Have Not Vested(1) | | Jason Randall | | 5/18/2017 | | | | 20,000 |
| (2) | $ | 27.95 |
| | | | | | | | | | 2/24/2017 | | | | 66,000 |
| (3) | $ | 23.80 |
| | | | | | | | | | 5/20/2016 | | | | 100,000 |
| (4) | $ | 13.43 |
| | | | | | | | | | 5/20/2016 | | | | 100,001 |
| (5) | $ | 13.43 |
| | | | | | | | | | 2/29/2016 | | 98,666 |
|
| | | $ | 11.70 |
| | 2/28/2026 | | | | | | | | 12/3/2014 | | 28,125 |
|
| 9,375 |
| (6) | $ | 4.92 |
| | 12/2/2024 | | | | | | | | 12/3/2014 | | 6,250 |
|
| 18,750 |
| (7) | $ | 4.92 |
| | 12/2/2024 | | | | | | Ida Kane | | 5/18/2017 | | | | 20,000 |
| (2) | $ | 27.95 |
| | | | | | | | | | 2/24/2017 | | | | 66,000 |
| (3) | $ | 23.80 |
| | | | | | | | | | 5/20/2016 | | | | 125,000 |
| (4) | $ | 13.43 |
| | | | | | | | | | 5/20/2016 | | | | 125,001 |
| (5) | $ | 13.43 |
| | | | | | | | | | 2/29/2016 | | 123,333 |
|
| | | $ | 11.70 |
| | 2/28/2026 | | | | | | | | 2/01/2015 | | 60,981 |
| (8) | | | $ | 5.64 |
| | 1/31/2025 | | | | | | | | 2/01/2015 | | 39,584 |
| (9) | | | $ | 5.64 |
| | 1/31/2025 | | | | | | | | 2/01/2015 | | — |
| | — |
| | $ | — |
| | | | 7,292 |
| (10) | $ | 302,618 |
| | Jonathan Walker | | 5/20/2016 | | | | 25,000 |
| (4) | $ | 13.43 |
| | | | | | | | | | 5/20/2016 | | | | 25,001 |
| (5) | $ | 13.43 |
| | | | | | | | | | 2/29/2016 | | 24,666 |
|
| | | $ | 11.70 |
| | 2/28/2026 | | | | | | | | 12/3/2014 | | 37,500 |
|
| 12,500 |
| (6) | $ | 4.92 |
| | 12/2/2024 | | | | | | | | 12/3/2014 | | 6,250 |
|
| 18,750 |
| (7) | $ | 4.92 |
| | 12/2/2024 | | | | | | Brian Donahoo | | 12/3/2014 | | 75,000 |
|
|
|
|
| $ | 4.92 |
| | 12/2/2024 | |
| |
|
| | | | | | | | | (1) | The amounts in this column were calculated based on the closing price of our Class A Common Stock as of December 29, 2017, which was $41.50.39 | 2023 Proxy Statement |
| | | | | | | | | (2) | This amount represents Performance Options to purchase shares of our Class A Common Stock are subject to vesting based on the achievement of the adjusted gross margin target for 2019.Executive Compensation |
(3)This amount represents a time-based restricted stock unit award of our Class A Common Stock granted pursuant to the 2015 Plan. This award vests over four years in equal quarterly installments, commencing on May 10, 2022, subject to the executive's continued employment through the applicable vesting date. (4)This amount represents a PRSU Award of our Class A Common Stock granted pursuant to the 2015 Plan. This award vests based on the achievement of pre-established financial metrics with a December 31, 2023 measurement date and is reflected in the table at the 100% performance level, subject to the executive's continued employment through the applicable vesting date. (5)This amount represents a time-based restricted stock unit award of our Class A Common Stock granted pursuant to the 2015 Plan. This award vests over five years in equal annual installments, commencing on May 10, 2020, subject to the executive's continued employment through the applicable vesting date. (6)This amount represents a PRSU Award of our Class A Common Stock granted pursuant to the 2015 Plan. This award vests based on the achievement of pre-established financial metrics with a December 31, 2022 measurement date and is reflected in the table as earned at 74% of target. The 2020 PRSU Awards fully vested on achievement of the performance metrics on January 24, 2023. (7)This amount represents a time-based restricted stock unit award of our Class A Common Stock granted pursuant to the 2015 Plan. This award vests over five years in equal annual installments, commencing on November 10, 2022, subject to the executive's continued employment through the applicable vesting date. (8)This amount represents a time-based restricted stock unit award of our Class A Common Stock granted pursuant to the 2015 Plan. This award vests over four years in equal annual installments, commencing on November 10, 2022, subject to the executive's continued employment through the applicable vesting date. (9)This amount represents a time-based restricted stock unit award of our Class A Common Stock granted pursuant to the 2015 Plan. This award vests over four years in equal annual installments, commencing on February 10, 2022, subject to the executive's continued employment through the applicable vesting date. (10)This amount represents a time-based restricted stock unit award of our Class A Common Stock granted pursuant to the 2015 Plan. This award vests over four years in equal annual installments, commencing on December 10, 2020, subject to the executive's continued employment through the applicable vesting date. (11)This amount represents a time-based restricted stock unit award of our Class A Common Stock granted pursuant to the 2015 Plan. This award vests over four years in equal annual installments, commencing on January 10, 2020, subject to the executive's continued employment through the applicable vesting date. (12)Expiration dates for Mr. Randall represent the extension of the post-termination exercise window of such vested options held by Mr. Randall at the time of his separation from the Company. | | | | | | | | | (3) | This amount represents Performance Options to purchase shares of our Class A Common Stock that are subject to vesting based on the achievement of the 2019 free cash flow performance target.40 | 2023 Proxy Statement |
| | | | | | | | | (4) | This amount represents Performance Options to purchase shares of our Class A Common Stock that were subject to vesting based on the achievement of a free cash flow performance target for fiscal year 2017. On February 20, 2018, our Board confirmed that the vesting conditions had been achieved and each of these shares has now vested.Executive Compensation |
Option Exercises and Stock Vested The following table provides information regarding options exercised and stock awards vested for our NEOs during fiscal year 2022, including the number of shares acquired upon exercise or vesting and the value realized as determined based on applicable SEC rules. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Equity Awards | | | Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($)(1) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($)(2) | | | Shane Trigg | | — | | — | | | 7,697 | | 689,200 | | | | Fay Sien Goon | | — | | — | | | 12,077 | | 1,431,191 | | | | Matt Mazza | | — | | — | | | 11,056 | | 1,292,792 | | | | Jonathan Walker | | 49,547 | | 4,441,797 | | | 4,589 | | 502,096 | | | | Jason Randall | | — | | — | | | — | | — | | |
(1)The value realized upon exercise of an option is the difference between the fair market value of the shares of the common stock received upon the exercise, valued on the exercise date, and the exercise price paid. (2)The value realized upon vesting of restricted stock units is the fair market value of the underlying shares of the common stock, valued on the vesting date. Potential Payments upon Termination or Change in Control Our obligations to make certain payments to our named executive officers in connection with a change in control or termination are discussed in the sections titled "Compensation Discussion and Analysis - Change in Control Provisions" and "Compensation Discussion and Analysis - Employment Agreements and Similar Arrangements." If we had undergone a change in control as of December 31, 2022, Mr. Trigg would not have been entitled to receive any payment, as we did not enter into an employment or other agreement with Mr. Trigg that contemplated a change in control payment until fiscal year 2023. If we had terminated Ms. Goon without Cause or Ms. Goon has resigned for Good Reason on December 31, 2022, she would be entitled to a severance payment equal to $2,900,000. In addition, Ms. Goon's outstanding equity awards would accelerate as described in the section titled "Compensation Discussion and Analysis - Employment Agreements and Similar Arrangements." If we had undergone a change in control as of December 31, 2022, Mr. Randall would have been entitled to receive a one-time cash payment of $5,000,000, payable by our Company. None of our other named executive officers are entitled to receive any payments upon a change in control, except those related to the acceleration of their outstanding equity awards, which acceleration would occur on the same terms as applicable to all employees holding equity awards under our 2007 Plan (as defined below in the section titled "Equity Compensation Plan Information") and/or 2015 Plan. CEO Pay Ratio The following table presents (i) our median employee's fiscal year 2022 total compensation, (ii) the fiscal year 2022 total compensation of Mr. Randall, our former CEO who served during 2022, and (iii) the ratio between the two. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Exchange Act. | | | | | | | | | (5)CEO annual total compensation | This amount represents Performance Options | $1,025,317 | | Median employee annual total compensation | | $118,420 | Ratio of CEO to purchase shares of our Class A Common Stock that are subject to vesting based on the achievement of a free cash flow performance target for fiscal year 2018.median employee compensation | | 9:1 |
| | | | | | | | | (6) | This amount represents options to purchase shares of our Class B Common Stock that vest in twelve (12) equal monthly installments through December 3, 2018.41 | 2023 Proxy Statement |
| | | | | | | | | (7) | This amount represents options to purchase shares of our Class B Common Stock that vest in thirty-six (36) equal monthly installments through December 3, 2018.Executive Compensation |
In determining our median employee, we chose December 31, 2022 as the determination date, which is the last day of our most recently completed fiscal year. Our median employee was determined based on total compensation (annualized base salary, equity-based compensation reflecting grant date fair value, and cash incentive compensation paid, where applicable), derived from our payroll and stock administration systems for our entire employee population, excluding our CEO, for the twelve months ending December 31, 2022. The SEC’s rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. | | | | | | | | | (8) | This amount represents options to purchase shares of our Class B Common Stock that vested as to 25% of the shares on February 1, 2016, the first anniversary of the grant date, and the remaining shares vest in 36 equal monthly installments thereafter. These options have the ability to be early exercised and therefore are included in the exercisable column.42 | 2023 Proxy Statement |
| | | | | | | | | | | | (9) | This amount represents options to purchase shares of our Class B Common Stock that will vest in 48 equal monthly installments commencing on February 1, 2017. These options have the ability to be early exercised and therefore are included in the exercisable column. |
| | (10) | This amount represents shares of our Class B Common Stock that are subject to a restricted stock award that vested as to 25% of the shares on February 1, 2016, the first anniversary of the grant date, and the remaining shares vest in 36 equal monthly installments thereafter.Equity Compensation Plan Information |
Stock Incentive Plans
Our Board and stockholders previously adopted the 2015 Plan, our Employee Stock Purchase Plan or the ESPP,(the "ESPP"), and the 2007 Stock Incentive Plan or(the "2007 Plan"). Our Board and stockholders adopted the ESPP in June 2015. However, as of December 31, 2022, the ESPP had not been implemented, and it is not expected to be implemented during 2023. Our Board and stockholders adopted the 2007 Plan. The following paragraphs providePlan in February 2007, and the 2007 Plan expired by its terms in February 2017. We expect to continue to issue equity awards pursuant to our 2015 Plan, a summary descriptions of each of these plans.which is set forth below. 2015 Stock Incentive Plan Plan Approval. Our Board and stockholders adopted the 2015 Plan in June 2015. Authorized Shares. We originally reserved an aggregate of 2,000,000 shares of our Class A common stockCommon Stock for issuance under the 2015 Plan. The number of shares reserved for issuance will increase automatically on January 1 of each calendar year beginning in 2016 and continuing through 2025 by the lesser of (i) the number of shares of our Class A common stockCommon Stock subject to awards granted under the 2015 Plan during the preceding calendar year, or (ii) the number of shares of our Class A common stockCommon Stock determined by our Board. The number of shares of our Class A common stockCommon Stock is also subject to adjustment in the event of a recapitalization, stock split, reclassification, stock dividend or other change in our capitalization. As of January 1, 2018, we had reserved an aggregate of2023, 2,000,000 shares of our Class A common stockCommon Stock were reserved for issuance under the 2015 Plan. In addition, the following shares of our Class A common stockCommon Stock will be available for grant and issuance under the 2015 Plan: | | ▪ | shares subject to stock options or stock appreciation rights, or SARs, granted under the 2015 Plan that cease to be subject to the stock option or SAR for any reason other than exercise of the stock option or SAR; |
| | ▪ | shares subject to awards granted under the 2015 Plan that are subsequently forfeited or repurchased by us at the original issue price; |
| | ▪ | shares subject to awards granted under the 2015 Plan that otherwise terminate without shares being issued; |
| | ▪ | shares surrendered, canceled, or exchanged for cash or a different award (or combination thereof); and |
| | ▪ | shares subject to awards under the 2015 Plan that are used to pay the exercise price of an award or withheld to satisfy the tax withholding obligations related to any award. |
▪shares subject to stock options or stock appreciation rights ("SARs") granted under the 2015 Plan that cease to be subject to the stock option or SAR for any reason other than exercise of the stock option or SAR; ▪shares subject to awards granted under the 2015 Plan that are subsequently forfeited or repurchased by us at the original issue price; ▪shares subject to awards granted under the 2015 Plan that otherwise terminate without shares being issued; ▪shares surrendered, canceled, or exchanged for cash or a different award (or combination thereof); and ▪shares subject to awards under the 2015 Plan that are used to pay the exercise price of an award or withheld to satisfy the tax withholding obligations related to any award. Plan Administration.The 2015 Plan will beis administered by our compensation committee,Compensation Committee, all of the members of which are independent directors under the applicable NASDAQ listing standards, or by our Board acting in place of our compensation committee.Compensation Committee. Our compensation committee will haveCompensation Committee has the authority to construe and interpret the 2015 Plan, grant awards and make all other determinations necessary or advisable for the administration of the 2015 Plan. Awards and Eligible Participants. The 2015 Plan authorizes the award of stock options, SARs, restricted stock awards or restricted stock units, or RSUs, performance awards and stock bonuses. The 2015 Plan provides for the grant of awards to our employees, directors, consultants and independent contractors, subject to certain exceptions. No person will be eligible to receive more than 500,000 shares of our Class A Common Stock under the 2015 Plan in any calendar year other than a new employee, who will be eligible to receive no more than 750,000 shares of our Class A Common Stock under the 2015 Plan in the calendar year in which the employee commences employment. No participant will be eligible to receive more than $2,000,000 in performance awards in any calendar year under the 2015 Plan. No more than 5,000,000 shares of our Class A Common Stock will be issued under the 2015 Plan pursuant to the exercise of incentive stock options. Stock Options. The 2015 Plan permits us to grant incentive stock options and non-qualified stock options. The exercise price of stock options will be determined by our compensation committee,Compensation Committee, and may not be less than 100% of the fair market value of our Class A Common Stock on the date of grant, subject to certain exceptions. Our compensation committeeCompensation Committee has the authority to reprice any outstanding stock option (by reducing the exercise price, or canceling the stock option in exchange for cash or another equity award) under the 2015 Plan without the approval of our stockholders. Stock options may vest based on the passage of time or the achievement of performance conditions in the discretion of our compensation committee.Compensation Committee. Our compensation committeeCompensation Committee may provide for stock options to be exercised only as they vest or to be immediately exercisable with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest. The maximum term of stock options granted under the 2015 Plan is 10 years.
Stock Appreciation Rights.SARs provide for a payment to the holder, in cash or shares of our Class A Common Stock, based upon the difference between the fair market value of our Class A Common Stock on the date of exercise and the stated exercise price on the date of grant, up to a maximum amount of cash or number of shares. SARs may vest based on the passage of time or the achievement of performance conditions in the discretion of our compensation committee.Compensation Committee. Our compensation committeeCompensation Committee has the authority to reprice any outstanding SAR (by reducing the exercise price, or canceling the SAR in exchange for cash or another equity award) under the 2015 Plan without the approval of our stockholders.
| | | | | | | | | | Equity Compensation Plan Information |
Restricted Stock Awards.A restricted stock award represents the issuance to the holder of shares of our Class A Common Stock, subject to the forfeiture of those shares due to failure to achieve certain performance conditions or termination of employment. The purchase price, if any, for the shares will be determined by our compensation committee.Compensation Committee. Unless otherwise determined by the administrator at the time of award, vesting will cease on the date the holder no longer provides services to us and unvested shares will be forfeited to or repurchased by us. Restricted Stock Units.RSUs Restricted stock units represent the right on the part of the holder to receive shares of our Class A Common Stock at a specified date in the future, subject to forfeiture of that right due to failure to achieve certain performance conditions or termination of employment. If a RSUrestricted stock unit has not been forfeited, then, on the specified date, we will deliver to the holder of the RSUrestricted stock unit shares of our Class A Common Stock, cash or a combination of cash and shares of our Class A Common Stock. Performance Awards.Performance awards cover a number of shares of our Class A Common Stock that may be settled upon achievement of performance conditions as provided in the 2015 Plan in cash or by issuance of the underlying common stock. These awards are subject to forfeiture prior to settlement due to failure to achieve certain performance conditions or termination of employment. Stock Bonuses.Stock bonuses may be granted as additional compensation for past or future service or performance and, therefore, no payment will be required for any shares awarded under a stock bonus. Unless otherwise determined by our compensation committeeCompensation Committee at the time of award, vesting will cease on the date the holder no longer provides services to us and unvested shares will be forfeited to us. Change in Control. If we are party to a merger or consolidation, sale of all or substantially all our assets or similar change-in-control transaction, outstanding awards, including any vesting provisions, may be assumed or substituted by the successor company. In the alternative, outstanding awards may be cancelled in connection with a cash payment. Outstanding awards that are not assumed, substituted or cashed out will accelerate in full and expire upon the closing of the transaction. Awards held by non-employee directors will immediately vest as to all or any portion of the shares subject to the award and will become exercisable at such times and on such conditions as our compensation committeeCompensation Committee determines. Amendment; Termination.The 2015 Plan will terminate 10 years from the date our Board approved it, unless it is terminated earlier by our Board. Our Board may amend, suspend or terminate the 2015 Plan at any time, subject to compliance with applicable law.law and certain limitations. 2015 Employee Stock Purchase Plan
Plan Approval. Our Board and stockholders adopted the ESPP in June 2015. However, as of December 31, 2017, the ESPP had not been implemented, and it is not expected to be implemented during 2018.
Qualified Plan. We have adopted the ESPP in order to enable eligible employees to purchase shares of our Class A Common Stock at a discount. The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Code.
Authorized Shares. We originally reserved an aggregate of 500,000 shares of our Class A Common Stock for issuance under the ESPP. The number of shares reserved for issuance increases automatically on January 1 of each calendar year beginning in 2016 and continuing through 2025 by the lesser of (i) the number of shares of our Class A Common Stock issued or transferred pursuant to rights granted under the ESPP during the preceding calendar year, or (ii) the number of shares of our Class A Common Stock determined by our Board. Because the ESPP has not been implemented and no shares of our Class A Common Stock have been issued pursuant to the ESPP, no additional shares have been reserved for issuance under the ESPP. The number of shares of our Class A Common Stock is subject to adjustment in the event of a recapitalization, stock split, reclassification, stock dividend or other change in our capitalization. The aggregate number of shares of our Class A Common Stock issued over the term of the ESPP will not exceed 1,250,000 shares of our Class A Common Stock.
Plan Administration. The ESPP will be administered by our compensation committee, all of the members of which are independent directors under the applicable NASDAQ listing standards, or by our Board acting in place of our compensation
committee. Our compensation committee will have the authority to construe and interpret the ESPP, establish offering periods, determine eligible participants, and make all other determinations necessary or advisable for the administration of the ESPP.
Eligible Participants. Our employees generally are eligible to participate in the ESPP. Our compensation committee may, in its discretion, elect to exclude employees who work fewer than 20 hours per week or five months in a calendar year. Employees who are 5% or more stockholders, or would become 5% stockholders as a result of their participation in the ESPP, are ineligible to participate. We may impose additional restrictions on eligibility in compliance with applicable law.
Payroll Deductions. Under the ESPP, eligible employees will be able to acquire shares of our Class A Common Stock by accumulating funds through payroll deductions. Eligible employees will be able to select a rate of payroll deduction between 1% and 20% of their eligible cash compensation.
Offering Periods. The ESPP is implemented through a series of offering periods under which our employees who meet the eligibility requirements for participation in that offering period will automatically be granted a nontransferable option to purchase shares of our Class A Common Stock in that offering period using their accumulated payroll deductions. Once an employee is enrolled, participation will be automatic in subsequent offering periods. We have not yet determined when the first offering period will begin, but it is anticipated that each offering period will run for approximately six months, commencing each June 1st and December 1st, with purchases occurring on the last day of each offering period. Our compensation committee has the discretion to change the commencement date of each offering period. In no event may an offering period exceed 27 months. An employee’s participation automatically ends upon termination of employment for any reason.
Limitation on Purchase. No participant will have the right to purchase shares of our Class A Common Stock in an amount that, when aggregated with the shares subject to purchase rights under all our employee stock purchase plans that are also in effect in the same calendar year, have a fair market value of more than $25,000, determined as of the first day of the applicable offering period.
Purchase Price. The purchase price for shares of our Class A Common Stock purchased under the ESPP will be 85% of the lesser of the fair market value of our Class A Common Stock on (i) the first trading day of the applicable offering period and (ii) the last trading day of the applicable offering period.
Change in Control. If we experience a change-in-control transaction or any unusual or nonrecurring transaction or event, our compensation committee has the discretion to provide for the termination of any offering period that commenced prior to the closing of the transaction or event, replace outstanding purchase rights with other rights or property, make adjustments in the number and type of shares subject to outstanding purchase rights, shorten an offering period and provide for the early exercise of purchase rights, or terminate all outstanding purchase rights without being exercised.
Amendment; Termination. The ESPP will terminate 10 years from the date our Board approved it, unless it is terminated earlier by our Board. Our Board may amend, suspend or terminate the ESPP at any time, subject to compliance with applicable law.
2007 Stock Incentive Plan
Plan Approval. The 2007 Plan was approved by our Board and stockholders in February 2007. The 2007 Plan expired by its owns terms in February 2017.
Authorized Shares. Our Board has determined not to make any further awards under the 2007 Plan following the completion of our IPO in June 2015. The 2007 Plan will continue to govern outstanding awards granted under the 2007 Plan. As of December 31, 2017, options to purchase an aggregate of 677,417 shares of our Class B Common Stock remained outstanding under the 2007 Plan.
Plan Administration. Our Board or a committee of our Board has the authority to manage and control the administration of the 2007 Plan. In particular, the administrator had the authority to determine the persons to whom awards are granted and the number of shares of our Class B Common Stock underlying each award. In addition, the administrator has the authority to accelerate the exercisability or vesting of any award, and to determine the specific terms and conditions of each award.
Stock Options. The 2007 Plan permitted us to grant options to purchase shares of our Class B Common Stock that were intended to qualify as incentive stock options under Section 422 of the Code, as well as options that did not so qualify, which are referred to as non-qualified stock options. The term of each stock option was fixed by the administrator and could not exceed 10 years from the date of grant. The 2007 Plan provided for the issuance of incentive stock options or non-qualified stock options to
employees, officers, directors, consultants and other service providers. The exercise price of each stock option granted pursuant to the 2007 Plan was determined by the administrator, and could not be less than 100% of the fair market value of the underlying common stock on the date of grant. If, on the date of grant, the person to whom an incentive stock option was granted owned or was deemed to own stock representing more than 10% of the combined voting power of our outstanding capital stock, then the stock option could not have a term in excess of five years and required an exercise price of at least 110% of the fair market value of the underlying common stock.
Exercise of Stock Options. The administrator determined the methods of payment of the exercise price of a stock option, which could include cash, shares or certain other property or consideration acceptable to the administrator. After the termination of service of an employee, officer, director, consultant or other service provider, the participant may exercise his or her stock option, to the extent vested as of the date of termination, within three months after termination or such shorter or longer period of time as stated in his or her stock option agreement, no less than 30 days or more than five years, to the extent required by applicable law. Except as provided by the administrator and as permissible under applicable law, the 2007 Plan did not permit the transferability of stock options and only the recipient of the stock option may exercise a stock option during his or her lifetime.
Restricted Stock. The 2007 Plan also permitted us to grant restricted stock awards. Restricted stock awards could have been issued to employees, officers, directors, consultants and other service providers. The purchase price for the shares of restricted stock was determined by our Board, and could not be less than 85% of the fair market value of the underlying common stock on the date of grant. If, on the date of grant, the person to whom a restricted stock award was granted owned or was deemed to own stock representing more than 10% of the combined voting power of our outstanding capital stock, then the purchase price for the shares of restricted stock had to be at least 100% of the fair market value of the underlying common stock.
Change in Control. With respect to stock options and restricted stock awards previously granted under the 2007 Plan, our Board has the authority to provide that, in the event of a “change in control,” as defined in the 2007 Plan, vesting of stock options and restricted stock will accelerate automatically, effective as of immediately prior to the change in control. Our Board has the discretion to provide other terms and conditions that relate to the vesting of the stock options and restricted stock awards upon a change in control, or for the assumption of stock options or restricted stock awards in the event of a change in control. Outstanding stock options terminate upon a change in control except to the extent they are assumed upon a change in control.
Amendment; Termination. Our Board has the power to amend, suspend or terminate the 2007 Plan at any time, subject to compliance with applicable law. No stock options or restricted stock awards could be granted under the 2007 Plan after the date that is 10 years from the date the 2007 Plan was approved by our Board. Our Board may also amend, modify or terminate any outstanding stock option or restricted stock award, provided that no amendment to a stock option or restricted stock award may substantially affect or impair the rights of a participant previously granted without his or her written consent. As noted above, the 2007 Plan expired by its owns terms in February 2017. All outstanding stock options and restricted stock awards will continue to be governed by their existing terms.
Summary of Stock Incentive Plans The following table sets forth information regarding our Stock Incentive Plansstock incentive plans as of December 31, 2017.2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and RSUs | | Weighted-Average Exercise Price of Outstanding Options(1) ($) | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | | | | Equity compensation plans approved by stockholders(2) | | 1,678,781 | (3) | 12.90 | | | 2,014,728 | (4) | | | Equity compensation plans not approved by stockholders | | — | | — | | | — | | | | Total | | 1,678,781 | | 12.90 | | | 2,014,728 | | |
(1)The weighted-average exercise price is calculated based solely on the exercise prices of the outstanding options to purchase shares of our common stock. It does not reflect the shares of our common stock that will be issued upon the vesting of outstanding restricted stock units, which have no exercise price. (2)These plans consist of the 2007 Plan, the 2015 Plan and the ESPP. (3)Includes 93,749 shares of Class B Common Stock subject to outstanding awards granted under the 2007 Plan, all of which were outstanding options, and 1,585,032 shares of Class A Common Stock subject to outstanding awards granted under the 2015 Plan, of which 422,470 were outstanding options and 1,162,562 were outstanding restricted stock units. (4)Includes 1,514,728 shares of Class A Common Stock available for issuance under the 2015 Plan and 500,000 shares of Class A Common Stock available for issuance under the ESPP. The number of shares available for issuance under the 2015 Plan increases automatically on January 1st of each year during the term of the 2015 Plan by an amount equal to the number of shares granted under the 2015 Plan during the preceding year or such lesser number that is approved by our Board. Accordingly, effective as of January 1, 2022, the aggregate number of shares available for issuance under the 2015 Plan was 2,000,000 shares. In addition, the number of shares available for issuance under the ESPP increases automatically on January 1st of each year during the term of the ESPP by an amount equal to the number of shares issued or transferred pursuant to rights granted under the ESPP during the preceding year or such lesser number that is approved by our Board. No shares have been issued or transferred pursuant to rights granted under the ESPP and as a result, the number of shares available for issuance under the ESPP did not increase as of January 1, 2022.
| | | | | | | | | | | | | | Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and RSUs | | Weighted-average Exercise Price of Outstanding Options(1) | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | | Equity compensation plans approved by stockholders(2) | | 2,290,492 |
| (3) | $ | 10.81 |
| | 2,149,611 |
| (4) | | Equity compensation plans not approved by stockholders | | — |
| | — |
| | — |
| | | Total | | 2,290,492 |
| | $ | 10.81 |
| | 2,149,611 |
| |
| | | | | | | | | (1) | The weighted average exercise price is calculated based solely on the exercise prices of the outstanding options to purchase shares of our common stock. It does not reflect the shares of our common stock that will be issued upon the vesting of outstanding RSUs, which have no exercise price.44 | 2023 Proxy Statement |
| | | | | | | | | | | | (2) | These plans consist of the 2007 Plan, the 2015 Plan and the ESPP. |
| | (3) | The numberSecurity Ownership of shares includes 677,417 shares of Class B Common Stock subject to outstanding awards granted under the 2007 Plan, all of which were outstanding options,Certain Beneficial Owners and 1,613,075 shares of Class A Common Stock subject to outstanding awards granted under the 2015 Plan, of which 1,014,779 were outstanding options and 598,296 were subject to outstanding RSUs.Management |
| | (4) | This number of shares includes 1,649,611 shares of Class A Common Stock available for issuance under the 2015 Plan and 500,000 shares available for issuance under the ESPP. The number of shares available for issuance under the 2015 Plan increases automatically on January 1st of each year during the term of the 2015 Plan by an amount equal to the number of shares granted under the 2015 Plan during the preceding year or such lesser number that is approved by our Board. Accordingly, effective as of January 1, 2017, the aggregate number of shares available for issuance under the 2015 Plan was 2,000,000 shares. In addition, the number of shares available for issuance under the ESPP increases automatically on January 1st of each year during the term of the ESPP by an amount equal to the number of shares issued or transferred pursuant to rights granted under the ESPP during the preceding year or such lesser number that is approved by our Board. No shares have been issued or transferred pursuant to rights granted under the ESPP. |
COMPENSATION COMMITTEE REPORT
The compensation committee has reviewed and discussed with management the information included under the heading "Executive Compensation" above, including the related compensation tables and footnotes. Based on such review and discussion, the compensation committee has recommended to the Board of Directors that the "Executive Compensation" disclosure, including the related compensation tables and footnotes, be included in this Proxy Statement.
Respectfully submitted by the members of the compensation committee of the Board of Directors:
William Rauth (Chairperson)
Janet Kerr
Andreas von Blottnitz
In accordance with SEC rules and regulations, this Compensation Committee Report will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Act, or under the Securities Exchange Act of 1934, as amended, or the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the beneficial ownership of our Class A Common Stock and Class B Common Stock as of February 28, 2018March 31, 2023, except as noted in the footnotes below, for: | | ▪ | each of our named executive officers; |
| | ▪ | all of our executive officers and directors as a group; and |
| | ▪ | each stockholder known by us to be the beneficial owner of more than 5% of outstanding shares of Class A Common Stock or Class B Common Stock. |
▪each of our named executive officers; ▪each of our directors; ▪all of our executive officers and directors as a group; and ▪each stockholder known by us to be the beneficial owner of more than 5% of outstanding shares of our Class A Common Stock or Class B Common Stock. We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on information furnished to us and information filed with the SEC, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of our Class A Common Stock or Class B Common Stock that they beneficially own, subject to applicable community property laws. Applicable percentage ownership is based on 15,051,03920,741,047 shares of Class A Common Stock and 19,055,66714,719,225 shares of Class B Common Stock outstanding at February 28, 2018.March 31, 2023. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of common stock subject to options and RSUsrestricted stock units held by that person or entity that are currently exercisable or releasable or that will become exercisable or releasable within 60 days of February 28, 2018.March 31, 2023. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o AppFolio, Inc., 5070 Castilian Drive, Santa Barbara, California, 93117. | | | | | | | | | | | | | | | | | | | | Shares Beneficially Owned | | | | | | Class A | | Class B | | % of Total Voting Power(1) | | Name of Beneficial Owner | | Shares | | % | | Shares | | % | | | 5% Stockholders: | | | | | | | | | | | Ashe Capital Management, LP(2) | | 1,189,171 |
| | 7.9 | % | | — |
| | * | | * | Maurice Duca(3)(4) | | 552,072 |
| | 3.7 | % | | 7,842,779 |
| | 41.2 | % | | 38.4 | % | Entities affiliated with IGSB(4) | | 13,072 |
| | * | | 4,848,902 |
| | 25.4 | % | | 23.6 | % | Entities affiliated with Oberndorf Enterprises LLC(5) | | 1,122,718 |
| | 7.5 | % | | — |
| | * | | * | The Vanguard Group(6) | | 797,490 |
| | 5.3 | % | | — |
| | * | | * | | Directors and Named Executive Officers: | | | | | | | | | | | Timothy Bliss(4)(7) | | 13,072 |
| | * | | 6,175,353 |
| | 32.4 | % | | 30.0 | % | Ida Kane(8) | | 248,333 |
| | 1.6% | | 162,501 |
| | * | | * | Janet Kerr(9) | | 17,189 |
| | * | | — |
| | * | | * | James Peters(10) | | 22,765 |
| | * | | — |
| | * | | * | Jason Randall(11) | | 198,666 |
| | 1.3% | | 87,083 |
| | * | | * | William Rauth(4)(12) | | 33,072 |
| | * | | 5,322,906 |
| | 27.9 | % | | 25.9 | % | Klaus Schauser(13) | | — |
| | * | | 4,694,585 |
| | 24.6 | % | | 22.8 | % | Andreas von Blottnitz(14) | | 18,765 |
| | * | | 491,950 |
| | 2.6 | % | | 2.4 | % | Jonathan Walker(15) | | 49,666 |
| | * | | 1,624,650 |
| | 8.5 | % | | 7.9 | % | All executive officers and directors as a group(16) | | 601,528 |
| | 4.0% | | 13,710,126 |
| | 71.9 | % | | 66.7 | % |
| | | | | | | | | * | Represents beneficial ownership of less than one percent.45 | 2023 Proxy Statement |
| | | | | | | | | (1) | PercentageSecurity Ownership of total voting power represents voting power with respect to all shares of Class A Common StockCertain Beneficial Owners and Class B Common Stock, as a single class. The holders of Class B Common Stock are entitled to ten votes per share, and holders of our Class A Common Stock are entitled to one vote per share. Each share of Class B Common Stock is convertible, at any time at the option of the holder, into one share of Class A Common Stock.Management |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares Beneficially Owned | | | | | | Class A | | Class B | | % of Total Voting Power(1) | | Name of Beneficial Owner | | Shares | | % | | Shares | | % | | | 5% Stockholders: | | | | | | | | | | | | Ashe Capital Management, LP(2) | | 1,639,403 | | 7.9% | | — | | * | | 1.0% | | BlackRock, Inc.(3) | | 1,462,787 | | 7.1% | | — | | * | | * | | Brown Capital Management, LLC(4) | | 2,800,675 | | 13.5% | | — | | * | | 1.7% | | Echo Street Capital Management LLC (5) | | 1,478,765 | | 7.1% | | — | | * | | * | | Klaus Schauser(6) | | 200,000 | | 1.0% | | 3,874,585 | | 26.3% | | 23.2% | | Maurice Duca(7)(8) | | 197,878 | | 1.0% | | 6,532,996 | | 44.4% | | 39.0% | | The Vanguard Group(9) | | 1,834,444 | | 8.8% | | — | | * | | * | | Directors and Named Executive Officers: | | | | | | | | | | | | Timothy Bliss(10) | | — | | * | | 1,421,531 | | 9.7% | | 8.5% | | Andreas von Blottnitz(11) | | 4,528 | | * | | 491,950 | | 3.3% | | 2.9% | | Agnes Bundy Scanlan (12) | | 4,352 | | * | | — | | * | | * | | Fay Sien Goon(13) | | 12,924 | | * | | — | | * | | * | | Janet Kerr(14) | | 16,955 | | * | | — | | * | | * | | Matt Mazza(15) | | 10,679 | | * | | — | | * | | * | | Olivia Nottebohm(16) | | 1,977 | | * | | — | | * | | * | | Jason Randall(17) | | 336,947 | | 1.6% | | 74,297 | | * | | * | | William Shane Trigg(18) | | 24,394 | | * | | — | | * | | * | | Jonathan Walker(19) | | 655,170 | | 3.2% | | 7,194 | | * | | * | | Winifred Webb(20) | | 5,734 | | * | | — | | * | | * | | Alex Wolf(21) | | 175,724 | | * | | — | | * | | * | | All executive officers and directors as a group (12 people)(22) | | 1,249,384 | | 5.9% | | 1,994,972 | | 13.5% | | 12.6% |
* Represents beneficial ownership of less than one percent. (1)Percentage of total voting power represents voting power with respect to all shares of Class A Common Stock and Class B Common Stock, as a single class. The holders of shares of our Class B Common Stock are entitled to ten votes per share, and holders of shares of our Class A Common Stock are entitled to one vote per share. Each share of Class B Common Stock is convertible, at any time at the option of the holder, into one share of Class A Common Stock. (2)This information is based solely on Amendment No. 8 to Schedule 13G filed on February 13, 2023. The 1,639,403 shares of Class A Common Stock are held in funds under the management and control of Ashe Capital Management L.P. Ashe Capital Management L.P. possesses sole voting and dispositive power over the shares and therefore the Class A Common Stock may be deemed to be beneficially owned by Ashe Capital Management L.P. The address for Ashe Capital Management L.P. is 530 Sylvan Ave., Suite 101, Englewood Cliffs, NJ 07632. (3)This information is based solely on Amendment No. 4 to Schedule 13G filed on January 31, 2023. The 1,462,787 shares of Class A Common Stock consist of (i) 1,417,298 shares with respect to which BlackRock, Inc. possesses sole power to vote and (ii) 1,462,787 shares with respect to which BlackRock, Inc. possesses sole dispositive power. The address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. (4)This information is based solely on Amendment No. 6 to Schedule 13G filed on February 14, 2023. The 2,800,675 shares of Class A Common Stock consists of (i) 1,883,624 shares of which Brown Capital Management, LLC possesses sole power to vote and (ii) 2,800,675 shares of which Brown Capital Management, LLC possesses sole dispositive power. The address for Brown Capital Management, LLC is 1201 N. Calvert Street, Baltimore, MD 21202. (5)This information is based solely on Schedule 13G filed on February 14, 2023, and consists of 1,478,765 shares of Class A Common Stock over which Echo Street Capital Management LLC possesses shared voting and dispositive power. The address for Echo Capital Management LLC is 12 E. 49th Street, 44th Floor, New York, NY 10017. (6)Consists of (i) 200,000 shares of Class A Common Stock held by the 1206 Family Trust dated December 13, 2002, of which Mr. Schauser and his spouse serve as co-trustees, and (ii) 3,874,585 shares of Class B Common Stock held by the 1206 Family Trust dated December 13, 2002, of which Mr. Schauser and his spouse serve as co-trustees. (7)The 197,878 shares of Class A Common Stock consist of (i) 9,805 shares of Class A Common Stock held by a limited liability company with respect to which Mr. Duca possesses sole voting and investment power; (ii) 44,037 shares of Class A Common Stock with respect to which Mr. Duca is the sole trustee and who, in that capacity, possesses sole voting and investment power; (iii) 59,383 shares of Class A Common Stock to which Mr. Duca possesses sole voting and investment power; and (iv) 84,653 shares of Class A Common Stock to which Mr. Duca may be deemed to share, but as to which Mr. Duca disclaims, beneficial ownership. (8)The 6,532,996 shares of Class B Common Stock consist of (i) 3,947,398 shares of Class B Common Stock with respect to which Mr. Duca possesses sole voting and investment power; (ii) 29,595 shares of Class B Common Stock held by two limited liability companies with respect to which Mr. Duca possesses sole voting and investment power; (iii) 2,536,153 shares of Class B Common Stock of which Mr. Duca is the sole trustee and who, in that capacity, possesses sole voting and investment power; and (iv) 19,850 shares of Class B Common Stock with respect to which Mr. Duca may be deemed to share (but as to which Mr. Duca disclaims) beneficial ownership. The address for Mr. Duca is P.O. Box 5609, Santa Barbara, CA 93150. | | | | | | | | | (2) | The 1,189,171 Class A Common Stock are held in funds under the management and control of Ashe Capital Management L.P. Ashe Capital Management L.P. has sole share voting and dispositive power over the shares and therefore the Class A Common Stock may be deemed to be beneficially owned by Ashe Capital Management L.P. The address for Ashe Capital Management L.P. is 530 Sylvan Ave., Suite 101, Englewood Cliffs, NJ 07632.46 | 2023 Proxy Statement |
| | | | | | | | | (3) | The 7,842,779 Class B Common Stock consistSecurity Ownership of (i) the 3,855,275Certain Beneficial Owners and 993,627 Class B Common Stock owned, respectively, by IGSB IVP III, or IVP III, and IGSB Internal Venture Fund III, or Venture Fund III, with respect to which, as indicated in footnote (4) below, Mr. Duca disclaims beneficial ownership; (ii) 2,984,196 Class B Common Stock with respect to which Mr. Duca possesses sole voting and investment power; and (iii) a total of 9,681 Class B Common Stock with respect to which Mr. Duca may be deemed to share (but as to which Mr. Duca disclaims) beneficial ownership. The address for Mr. Duca is P.O. Box 5609, Santa Barbara, CA 93150.Management |
(9)This information is based solely on Amendment No. 6 to Schedule 13G filed on February 9, 2023. The 1,834,444 shares of Class A Common Stock consist of (i) 32,682 shares with respect to which The Vanguard Group possess shared power to vote, (ii) 1,783,419 shares with respect to which The Vanguard Group possesses sole dispositive power, and (iii) 51,025 shares with respect to which The Vanguard Group possesses shared dispositive power. The address for the Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. (10)Mr. Bliss possesses sole voting and investment power with respect to 762,549 shares of Class B Common Stock, joint voting and investment power with his spouse on 536,150 shares of Class B Common Stock and Mr. Bliss' spouse possesses sole voting and investment power with respect to 122,832 shares of Class B Common Stock. The address for Mr. Bliss is P.O. Box 50440, Santa Barbara, CA 93150. (11)Consists of (i) 491,950 shares of Class B Common Stock and (ii) 4,528 shares of Class A Common Stock. The 491,950 shares of Class B Common Stock consists of 429,450 shares of Class B Common Stock held by Oceanlink Investments Limited, which is managed by a Board of Directors that currently possesses shared voting and dispositive power with respect to these shares. Oceanlink Trust, of which Mr. von Blottnitz is a trustee and beneficiary, holds all of the equity interests of Oceanlink Investments Limited. Mr. von Blottnitz possesses shared power to revoke Oceanlink Trust. Mr. von Blottnitz possesses sole voting and investment power with respect to the remaining 62,500 shares of Class B Common Stock. Mr. von Blottnitz also holds 4,528 shares of Class A Common Stock with respect to which Mr. von Blottnitz possesses sole voting and dispositive power and that were granted pursuant to our Director Compensation Policy, of which 1,557 are subject to repurchase until June 28, 2022. The address for Oceanlink Investments Limited is P.O. Box 621, Le Gallais Chambers, 54 Bath Street, St. Helier, Jersey, Channel Islands JE48YD. (12)Includes 4,352 shares of Class A Common Stock that were granted pursuant to our Director Compensation Policy, of which 1,557 which are subject to repurchase until June 27, 2023. (13)Includes 2,670 shares of Class A Common Stock granted to Ms. Goon that will vest within 60 days of March 31, 2023. (14)Includes 16,955 shares of Class A Common Stock that were granted pursuant to our Director Compensation Policy, of which 1,557 shares are subject to repurchase until June 27, 2023. (15)Includes 1,669 shares of Class A Common Stock that were granted to Mr. Mazza that will vest within 60 days of March 31, 2023. (16)The 1,977 shares of Class A Common Stock were granted pursuant to our Director Compensation Policy and are subject to repurchase until March 1, 2024. (17)Includes 336,947 shares of Class A Common Stock and 54,297 shares of Class B Common Stock underlying options granted to Mr. Randall that are exercisable within 60 days of March 31, 2023. (18)Includes 10,133 shares of Class A Common Stock that were granted to Mr. Trigg that will vest within 60 days of March 31, 2023. (19)Includes (i) 571,802 shares of Class A Common stock pledged as collateral to secure personal indebtedness pursuant to an exception to the Company's insider trading policy granted by the Chief Legal Officer and (ii) 3,999 shares of Class A Common Stock that were granted to Mr. Walker that will vest within 60 days of March 31, 2023. (20)Includes 5,734 shares of Class A Common Stock that were granted pursuant to our Director Compensation Policy, of which 1,557 are subject to repurchase until June 27, 2023. (21)The 175,724 shares of Class A Common Stock consist of (i) 165,724 shares of Class A Common Stock with respect to which Mr. Wolf possesses sole voting and investment power and (ii) 10,000 shares of Class A common stock with respect to which Mr. Wolf may be deemed to share voting and dispositive power. However, Mr. Wolf disclaims beneficial ownership of these 10,000 shares except to the extent of any pecuniary interest he may have therein. The address for Mr. Wolf is P.O. Box 5387, Santa Barbara, CA 93150. (22)Includes (i) 6,228 shares of Class A Common Stock that are subject to repurchase until June 27, 2023, (ii) 1,977 shares of Class A Common Stock that are subject to repurchase until March 1, 2024, and (iii) 336,947 shares of Class A Common Stock and 54,297 Class B Common Stock underlying options that will be exercisable within 60 days of March 31, 2023, and (iv) 18,471 shares of Class A Common Stock that will be vested within 60 days of March 31, 2023. | | | | | | | | | (4) | Consists of (i) 3,868,347 Class B Common Stock held by IVP III, and (ii) 993,627 Class B Common Stock held by Venture Fund III, each of which is convertible at any time into one Class A Common Stock at the option of the holder thereof. IGSB is the sole manager of IVP III and Venture Fund III. Messrs. Timothy K. Bliss, Maurice J. Duca and William R. Rauth are the managing members of IGSB and, in those capacities, may be deemed to share voting and dispositive power over, and, therefore, may be deemed to share beneficial ownership of the 3,868,347 and 993,627 Class B Common Stock owned, respectively, by IVP III and Venture Fund III. However, decisions regarding the voting, disposition and conversion of the Class B Common Stock that are owned by IVP III and Venture Fund III require the unanimous approval of Messrs. Bliss, Duca and Rauth. As a result, each of them disclaims beneficial ownership of those Class B Common Stock. The address for each of the entities affiliated with IGSB is P.O. Box 5609, Santa Barbara, CA 93150.47 | 2023 Proxy Statement |
| | | | | | | | | | | | (5) | Consists of (i) 286,171 Class A Common Stock held by William Oberndorf, (ii) 631,086 Class A Common Stock held by Oberndorf Investments LLC, (iii) 185,269 Class A Common Stock held by the Bill & Susan Oberndorf Foundation, (iv) 10,700 Class A Common Stock held by Peter C. Oberndorf Irrevocable Trust dated 6/30/89, (v) 850 Class A Common Stock held by Peter Oberndorf, (vi) 8,612 Class A Common Stock held by the William E. Oberndorf Irrevocable Trust, dated 6/30/89, and (vii) 30 Class A Common Stock held by Caroline G. Oberndorf. Of these shares, 631,086 Class A Common Stock may be deemed to be beneficially owned by William E. Oberndorf solely in his capacity as the sole controlling person of Oberndorf Investments LLC; 185,269 Class A Common Stock may be deemed to be beneficially owned by William E. Oberndorf solely in his capacity as a controlling person of the Bill & Susan Oberndorf Foundation; 10,700 Class A Common Stock may be deemed to be beneficially owned by William E. Oberndorf solely in his capacity as trustee for the Peter Oberndorf Irrevocable Trust, dated 6/30/89; 8,612 Class A Common Stock may be deemed to be beneficially owned by William E. Oberndorf solely in his capacity as trustee for the William E. Oberndorf Irrevocable Trust, dated 6/30/89; and 30 Class A common shares may be deemed to be beneficially owned by William E. Oberndorf solely in his capacity as an authorized signatory for the account of Caroline G. Oberndorf. The address for the entities affiliated with Oberndorf Enterprises LLC is 615 Front Street, San Francisco, CA, 94111. | | Pay Versus Performance |
Pay versus Performance Table The following table sets forth certain information with respect to the Company’s financial performance and the compensation paid to our NEOs for the fiscal years ended December 31, 2022, 2021 and 2020. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year | Summary Compensation Table Total for PEO(1) ($) | Compensation Actually Paid to PEO(2) ($) | Average Summary Compensation Table Total for non-PEO NEOs(3) ($) | Average Compensation Actually Paid to non-PEO NEOs(4) ($) | Value of Initial Fixed $100 Investment Based On: | Net Income (thousands) (7) ($) | Revenue (thousands) (8) ($) | | | Total Shareholder Return(5) ($) | Peer Group Total Shareholder Return(6) ($) | | | 2022 | 1,025,317 | | 1,025,317 | | 1,515,992 | | 563,715 | | 254 | 192 | (68,119) | | 471,883 | | | | 2021 | 1,461,382 | | 1,461,382 | | 6,790,593 | | 5,879,551 | | 292 | 299 | 1,028 | | 359,370 | | | | 2020 | 742,230 | | 1,387,017 | | 1,901,060 | | 3,348,458 | | 434 | 217 | 158,403 | | 310,056 | | |
(1)Reflects the total compensation amounts reported in the Summary Compensation Table ("SCT") for Mr. Randall, our Principal Executive Officer ("PEO"), for each of the applicable fiscal years. (2)Reflects the compensation actually paid amounts for the PEO included in the preceding column for the applicable fiscal year. In calculating the amounts set forth in this column, the fair value or change in fair value, as applicable, of the equity award adjustments included in such calculations was computed in accordance with FASB ASC Topic 718. For each applicable fiscal year, the compensation actually paid to the PEO reflects each of the following adjustments made to the total compensation amounts reported in the SCT for the applicable fiscal year, computed in accordance with Item 402(v) of Regulation S-K | | | | | | | | | | | | | | | | | | | | | | Year | | 2022 | 2021 | 2020 | | | SCT Total Compensation ($) | | 1,025,317 | | 1,461,382 | | 742,230 | | | | Less: Stock and Option Award Grant Date Fair Values Reported in SCT for the Covered Year ($) | | — | | — | | — | | | | Plus: Year-End Fair Value of Stock and Option Awards Granted in the Covered Year that are Outstanding and Unvested ($) | | — | | — | | — | | | | Change in Fair Value of Stock and Option Awards Granted in Prior Years that are Outstanding and Unvested (From Prior Year-End to Year-End) ($) | | — | | — | | — | | | | Plus: Vesting Date Fair Value of Stock and Option Awards Granted in the Covered Year that Vested in the Covered Year ($) | | — | | — | | — | | | | Change in Fair Value of Stock and Option Awards Granted in Prior Years that Vested in the Covered Year (From Prior Year-End to Year-End) ($) | | — | | — | | 795,930 | | | | Less: Prior Year-End Fair Value of Stock and Option Awards Granted in Prior Years that Failed to Vest during the Covered Year ($) | | — | | — | | (151,143) | | | | Plus: Dollar Value of Dividends or other Earnings Paid on Stock and Option Awards in the Covered Year prior to Vesting (if not reflected in the fair value of such award or included in Total Compensation for the Covered Year) ($) | | — | | — | | — | | | | Compensation Actually Paid ($) | | 1,025,317 | | 1,461,382 | | 1,387,017 | | |
Valuation methodology. Stock option fair values were calculated based on the Black-Scholes option pricing model. Adjustments have been made using stock option fair values as of each measurement date using the stock price as of the measurement date and updated assumptions (e.g., term, volatility, dividend yield, risk free rates) as of the measurement date. Performance-based restricted stock unit grant date fair values were calculated using the stock price as of the date of grant assuming target performance. Adjustments have been made using the stock price and projected performance as of year-end and as of the date of vest. Time-based restricted stock unit grant date fair values were calculated using the stock price as of the date of grant. Adjustments have been made using the stock price as of year-end and as of each date of vest. (3)Reflects the average total compensation amounts reported in the SCT for the following non-PEO NEOs for the applicable fiscal year: ▪In 2022, Ms. Goon, Mr. Mazza, Mr. Trigg, and Mr. Walker. ▪In 2021, Ms. Goon, Mr. Mazza, Mr. Trigg, Mr. Walker, and Ida Kane (our former Chief Financial Officer, who resigned effective June 4, 2021). ▪In 2020, Ms. Kane, Mr. Trigg, and Mr. Walker. | | | | | | | | | (6) | The 797,490 Class A Common Stock consist of i) 779,534 shares over which The Vanguard Group possesses sole voting and investment power and ii) 17,956 shares over which The Vanguard Group possesses sole voting power and shared dispositive power. The address for the Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
48 | 2023 Proxy Statement |
| | | | | | | | | (7) | The 6,175,353 Class B Common Stock consist of (i) the 3,855,275 and 993,627 Class B Common Stock owned, respectively, by IVP III and Venture Fund III, with respect to which, as indicated in footnote (4) above, Mr. Bliss may be deemed to share, but with respect to which he disclaims, beneficial ownership; and (ii) 1,326,451 Class B Common Stock over which Mr. Bliss possesses sole voting and investment power. The address for Mr. Bliss is P.O. Box 5609, Santa Barbara, CA 93150.Pay Versus Performance |
(4)Reflects the average compensation actually paid amounts for the non-PEO NEOs included in the preceding column for the applicable fiscal year. In calculating the amounts set forth in this column, the fair value or change in fair value, as applicable, of the equity award adjustments included in such calculations was computed in accordance with FASB ASC Topic 718. For each applicable fiscal year, the average compensation actually paid to the non-PEO NEOs reflects each of the following adjustments made to the total compensation amounts reported in the SCT for the applicable fiscal year, computed in accordance with Item 402(v) of Regulation S-K: | | | | | | | | | | | | | | | | | | | | | | Year | | 2022
Average | 2021
Average | 2020
Average | | | SCT Total Compensation ($) | | 1,515,992 | | 6,790,593 | | 1,901,060 | | | | Less: Stock and Option Award Grant Date Fair Values Reported in SCT for the Covered Year ($) | | — | | (5,675,366) | | (1,300,000) | | | | Plus: Year-End Fair Value of Stock and Option Awards Granted in the Covered Year that are Outstanding and Unvested ($) | | — | | 5,309,193 | | 2,196,118 | | | | Change in Fair Value of Stock and Option Awards Granted in Prior Years that are Outstanding and Unvested (From Prior Year-End to Year-End) ($) | | (685,507) | | (430,333) | | 135,678 | | | | Plus: Vesting Date Fair Value of Stock and Option Awards Granted in the Covered Year that Vested in the Covered Year ($) | | — | | — | | — | | | | Change in Fair Value of Stock and Option Awards Granted in Prior Years that Vested in the Covered Year (From Prior Year-End to Year-End) ($) | | (108,666) | | (114,536) | | 465,983 | | | | Less: Prior Year-End Fair Value of Stock and Option Awards Granted in Prior Years that Failed to Vest during the Covered Year ($) | | (158,104) | | — | | (50,381) | | | | Plus: Dollar Value of Dividends or other Earnings Paid on Stock and Option Awards in the Covered Year prior to Vesting (if not reflected in the fair value of such award or included in Total Compensation for the Covered Year) ($) | | — | | — | | — | | | | Compensation Actually Paid ($) | | 563,715 | | 5,879,551 | | 3,348,458 | | |
Valuation methodology. Stock option fair values were calculated based on the Black-Scholes option pricing model. Adjustments have been made using stock option fair values as of each measurement date using the stock price as of the measurement date and updated assumptions (e.g., term, volatility, dividend yield, risk free rates) as of the measurement date. Performance-based restricted stock unit grant date fair values were calculated using the stock price as of the date of grant assuming target performance. Adjustments have been made using the stock price and projected performance as of year-end and as of the date of vest. Time-based restricted stock unit grant date fair values were calculated using the stock price as of the date of grant. Adjustments have been made using the stock price as of year-end and as of each date of vest. (5)Reflects the cumulative total shareholder return ("TSR") of the Company for each applicable fiscal year, calculated based on a fixed investment of $100 at the applicable measurement point on the same cumulative basis as is used in Item 201(e) of Regulation S-K. (6)Reflects the cumulative TSR of the Company’s peer group (“Peer Group TSR”) for each applicable fiscal year, calculated based on a fixed investment of $100 at the applicable measurement point on the same cumulative basis as is used in Item 201(e) of Regulation S-K. The peer group used to determine the Peer Group TSR for each applicable fiscal year is the following published industry index, as disclosed in the 2022 Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K: NASDAQ Computer Index. (7)Reflects "Net Income" in the Company's Consolidated Income Statements included in the Annual Reports on Form 10-K for each applicable fiscal year. (8)We have selected “Revenue” as our most important financial measure (that is not otherwise required to be disclosed in the table) used to link compensation actually paid to our NEOs to company performance for fiscal year 2022. “Revenue” is further described in the Company's Consolidated Statement of Operations, which is included in the 2022 Annual Report on Form 10-K. | | | | | | | | | (8) | Includes (i) 5,208 Class B Common Stock that may be repurchased by us at the original purchase price as of 60 days following February 28, 2018; and (ii) 248,333 Class A and 100,565 Class B Common Stock underlying options granted to Ms. Kane that will be vested and/or exercisable within 60 days of February 28, 2018.49 | 2023 Proxy Statement |
| | | | | | | | | (9) | Class A Common Common Stock granted pursuant to our director compensation policy. 3,003 shares are subject to repurchase by until June 27, 2018.Pay Versus Performance |
Pay versus Performance Comparative Disclosure When reviewing the Pay versus Performance Table above, it is important to note that: ▪The Pay versus Performance Table above does not include all of the performance measures we use to align NEO compensation with Company performance in the years depicted. ▪Net income was not a performance measure we used to align NEO compensation with Company performance in the years depicted. ▪The 2018 Long-Term Award, as discussed in the section above titled “Compensation Discussion and Analysis” and granted to Mr. Randall in lieu of equity, is not reflected. As such, Mr. Randall's compensation appears lower than our average non-PEO NEO compensation in the years depicted. ▪In fiscal year 2020, Compensation Actually Paid to PEO is negative because certain performance-based options previously granted to Mr. Randall failed to vest. ▪In fiscal year 2021, the average compensation for our non-PEO NEOs was increased primarily due to (i) new hire and promotional equity grants made to Ms. Goon and Mr. Mazza, respectively, and (ii) our Board granting equity awards in December 2021 for our fiscal year 2022 NEO compensation program. | | | | | | | | | (10) | Includes 18,765 shares of Class A Common Stock that were granted pursuant to our director compensation policy, of which 3,003 shares are subject to repurchase until June 27, 2018. |
| | (11) Pay Versus Performance Graphs | Includes 198,666 Class A Common Stock | Supplemental Graphs | | | | In accordance with Item 402(v)(5) of Regulation S-K, the graphs below compare compensation actually paid to our NEOs and 39,583 Class B Common Stock underlying options grantedthe performance measures presented in the Pay versus Performance Table above (collectively, the “PVP Graphs”). | | To reflect the points above and provide additional information, we have provided supplemental graphs below that modify the PVP Graphs by (i) adding an additional $2,860,160 to Mr. Randall's compensation in each of 2022, 2021, and 2020, which reflects $14,300,800 (the pro-rata portion of the 2018 Long-Term Award paid to Mr. Randall in connection with his separation from the Company) divided by 5 (the number of years the 2018 Long-Term Award was outstanding), (ii) subtracting the December 2021 equity grants from fiscal year 2021, and (iii) adding the December 2021 equity grants to fiscal year 2022 (collectively, the "Supplemental Graphs"). In accordance with Item 402(v) of Regulation S-K, the Supplemental Graphs below are provided as supplemental disclosure that will be vestedwe believe more accurately reflects the comparison of compensation actually paid to our NEOs and exercisable within 60 days of February 28, 2018.the performance measures presented in the Pay versus Performance Table above. |
  | | | | | | | | | (12) | The 5,322,906 Class B Common Stock consist of (i) the 3,855,275 and 993,627 Class B Common Stock owned, respectively, by IVP III and Venture Fund III, with respect to which, as indicated in footnote (4) above, Mr. Rauth may be deemed to share, but with respect to which he disclaims beneficial ownership, and (ii) 474,004 Class B Common Stock over which Mr. Rauth possesses sole voting and investment power.50 | 2023 Proxy Statement |
| | | | | | | | | (13) | Consists of Class B Common Stock held by the 1206 Family Trust dated December 13, 2002, of which Mr. Schauser and his spouse serve as co-trustees.Pay Versus Performance |
 | | | (14) | Consists of (i) 491,950 Class B Common Stock and (ii) 18,765 Class A Common Stock. The Class B Common Stock are held by Oceanlink Investments Limited, which is managed by a Board of Directors that currently possesses voting and dispositive power with respect to these shares. Oceanlink Trust, of which Mr. von Blottnitz is a trustee and beneficiary, holds all of the equity interests of Oceanlink Investments Limited. Mr. von Blottnitz possesses shared power to revoke Oceanlink Trust. Mr. von Blottnitz also holds 18,765 Class A Common Stock that were granted pursuant to our director compensation policy, of which 3,003 are subject to repurchase until June 27, 2018. The address for Oceanlink Investments Limited is P.O. Box 621, Le Gallais Chambers, 54 Bath Street, St. Helier, Jersey, Channel Islands JE48YD. |
| | | | | | | | | (15) | Consists of (i) 1,554,025 Class B Common Stock held directly by Mr. Walker, (ii) 20,625 Class B Common Stock held by PENSCO Trust Company FBO Jonathan Walker and (iii) 49,666 Class A Common Stock and 50,000 Class B Common Stock underlying options granted to Mr. Walker that will be vested and exercisable within 60 days of February 28, 2018.51 | 2023 Proxy Statement |
| | | | | | | | | (16) | Includes 14,217 shares that may be repurchased by us at the original purchase price as of 60 days following February 28, 2018. Includes 686,813 shares that will be vested and exercisable within 60 days of February 28, 2018.Pay Versus Performance |
* Reflects the Pay Versus Performance Graphs modified by (i) adding an additional $2,860,160 to Mr. Randall's compensation in each of 2022, 2021, and 2020, which reflects $14,300,800 (the pro-rata portion of the 2018 Long-Term Award paid to Mr. Randall in connection with his separation from the Company) divided by 5 (the number of years the 2018 Long-Term Award was outstanding), (ii) subtracting the December 2021 equity grants from fiscal year 2021, and (iii) adding the December 2021 equity grants to fiscal year 2022.
Pay versus Performance Tabular List
Listed below are the performance measures that, in our assessment, represent the most important performance measures used to link compensation actually paid to our NEOs in fiscal year 2022 to company performance. The performance measures included below are not ranked by relative importance. RELATED PARTY TRANSACTIONS | | | | Most Important Performance Measures | | Revenue (Financial Measure) | Non-GAAP Operating Margin(1) (Financial Measure) | | Net New Residential Units (Non-financial Measure) |
(1) Non-GAAP operating margin is defined as GAAP operating margin less non-cash transactions and less one-time or non-recurring transactions.
Delinquent Section 16(a) Reports Section 16 of the Exchange Act requires our directors, executive officers and persons who own more than 10% of our Class A Common Stock or Class B Common Stock, whom we collectively refer to as our "reporting persons," to report to the SEC on a timely basis their initiation status as a reporting person and any changes in their respective beneficial ownership of our registered equity securities. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations from our reporting persons, we believe that during 2022 and through April 28, 2023, all of our reporting persons complied with all applicable SEC filing requirements under Section 16 of the Exchange, except as has already been reported.
| | | | | | | | | | | | | | | Related Party Transactions |
Certain Relationships and Transactions Other than the transactions discussed below, and the various compensation arrangements described in the section of this Proxy Statement entitled “Executive Compensation,titled “Compensation Discussion and Analysis,” since January 1, 2017,2022, there was not, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a party for which the amount involved exceeds or will exceed $120,000 and in which any director, director nominee, executive officer, holder of more than 5% of Class A Common Stock or Class B Common Stock, or any member of the immediate family of any of the foregoing, had or will have a direct or indirect material interest. Amended and Restated Investors’ Rights Agreement
We are party to an amended and restated investors’ rights agreement that provides, among other things, certain stockholders, including certain of our executive officers, directors and principal stockholders, with demand registration rights, piggyback registration rights, and Form S-3 registration rights. All registration rights will terminate on the earlier of (i) the date that is five years after our IPO, or (ii) as to any stockholder, the first date after our IPO on which such stockholder is able to dispose of all of its registrable securities without restriction under Rule 144.
Limitation of Liability and Indemnification of Directors and Officers Our Governing Documents which became effective upon the completion of our IPO, providesprovide that we will indemnify each of our directors and executive officers to the fullest extent permitted by Delaware law. In addition, as permitted by the laws of the State of Delaware, we have entered into indemnification agreements with each of our directors, officers, and executive officers. Undercertain other senior employees of the terms of ourCompany (the "indemnified persons"). These indemnification agreements we are requiredmay require us, among other things, to indemnify each of ourthe indemnified persons against liabilities that may arise by reason of their status or service as directors, and executive officers to the fullest extent permitted by the lawsor employees of the State of Delaware, if the indemniteeCompany, so long as he or she acted in good faith and in a manner the indemniteehe or she reasonably believed to be in or not opposed to our best interests and, with respect to any criminal proceeding, had no reasonable cause to believe the indemnitee’shis or her conduct was unlawful. We must indemnify our directors and executive officers against any and all (i) costs and expenses (including attorneys’ and experts’ fees, expenses and charges) actually and reasonably paid or incurred in connection with investigating, defending, being a witness in or participating in, or preparing to investigate, defend, be a witness in or participate in, and (ii) damages, losses, liabilities, judgments, fines, penalties (whether civil, criminal or other), excise taxes, and amounts paid or payable in settlement and all other charges paid or payable in connection with, in the case of either (i) or (ii), any threatened, pending or completed action, suit, proceeding, alternate dispute resolution mechanism, investigation or inquiry related to the fact that (a) such person is or was a director, officer, employee or agent of ours, or (b) such person is or was serving at our request as a director, officer, employee, member, manager, partner, trustee or agent of another corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise. TheThese indemnification agreements alsomay require us if so requested, to pay, and in some instances advance, within twenty (20) days of such request anycertain expenses, damages and all costs and expenses that such director or executive officer incurs, provided that such person agrees to return any such advance if it is ultimately determined that such person is not entitled to be indemnified for such costs and expenses. Our Governing Documents also require that such person return any such advance if it is ultimately determined that such person is not entitled to indemnification by us as authorizedother payments incurred by the laws of the State of Delaware. We are not required to provide indemnification under our indemnification agreements for certain matters, including: (i) indemnification in connection with certain proceedings or claims initiated or brought voluntarily by the director or executive officer, (ii) indemnification that is finally determined, under the procedures and subject to the presumptions set forth in the indemnification agreements, to be unlawful, (iii) indemnification related to disgorgement of profits made from the purchase or sale of our securities under Section 16(b) of the Exchange Act, or similar provisions of state statutory or common law, or (iv) indemnification for reimbursement to us of any bonus or other incentive-based or equity-based compensation previously received by the director or executive officer or payment of any profits realized by the director or executive officer from the purchase or sale of our securities, as required in each case under the Exchange Act (including any such reimbursements under Section 304 of the Sarbanes-Oxley Act) in connection with an accounting restatement or the payment to us of profits arising from the purchase or sale by the director or executive officer of our securities in violation of Section 306 of the Sarbanes-Oxley Act, our Governing Documents or otherwise, except with respect to any excess amount beyond the amount so received by the director or officer.indemnified persons. The indemnification agreements require us, to the extent that we maintain an insurance policy or policies providing liability insurance for our directors or executive officers,an indemnified person, to cover such person by such policy or policies to the maximum extent available.
We have obtained insurance policies under which, subject to the limitations of the polices,policies, coverage is provided to our directors and executive officersthe indemnified persons against loss arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director, officer, or executive officer,employee of the Company, including claims relating to public securities matters, and to us with respect to payments that
may be made by us to these directors and executive officersthe indemnified persons pursuant to our indemnification obligations or otherwise as a matter of law. Certain of our non-employee directors may, through their relationship with their employers, be insured and/or indemnified against certain liabilities incurred in their capacity as members of our Board. Employment of Immediate Family Member of Senior Executive
We have employed in our research and development organization an immediate family member of an executive officer since approximately May 2013. Their base salary, which is approximately $130,000, along with their stock-based and other compensation, is commensurate with other similarly situated employees with similar skills and experience.
Policies and Procedures for Approval of Related Party Transactions We have adopted a related party transactionRelated Party Transaction policy. Pursuant to this policy, the Chairperson of our audit committeeAudit Committee is charged with primary responsibility for determining whether, based on the particular facts and circumstances, a related person (as defined in the policy) has a direct or indirect material interest in a proposed or existing transaction involving us. Any director, officer or other employee who becomes aware of a transaction or relationship that could reasonably be expected to give rise to a conflict of interest is required to disclose the matter promptly to the Chairperson of our audit committee.Audit Committee. To assist the Chairperson of our audit committeeAudit Committee in making this determination, the policy sets forth certain categories of transactions that are deemed not to involve a direct or indirect material interest on behalf of the related person. If, after applying these categorical standards and weighing all of the facts and circumstances, the Chairperson of our audit committeeAudit Committee determines that the related person would have a direct or indirect material interest in the transaction, he or she must present the transaction to our audit committeeAudit Committee for review. Our audit committeeAudit Committee must then either approve or reject the transaction in accordance with the terms of the policy and may only approve of the transaction if the audit committee determines that, based on all of the information presented, the related party transaction is not inconsistent with the best interests of AppFolio as a whole.
ADDITIONAL INFORMATION
Section 16 Beneficial Ownership Reporting ComplianceSection 16 of the Exchange Act requires our directors, executive officers and persons who own more than 10% of our Class A Common Stock or Class B Common Stock, which we collectively refer to as our reporting persons, to report to the SEC on a timely basis their initiation status as a reporting person and any changes in their respective beneficial ownership of our registered equity securities.
To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations from our reporting persons, we believe that during 2017, all of our reporting persons complied with all applicable SEC filing requirements under Section 16 of the Exchange Act.
Procedures for Submitting Stockholder Proposals Requirements for Stockholder Proposals to be Brought Before Future Annual Meetings Our Governing Documents provide that, for nominations of persons for election to our Board or other proposals to be considered at an annual meeting of stockholders, a stockholder must provide us with written notice notno earlier than 75 days and no later than the close of business 45 days, nor earlier than the close of business 75 days prior to the first anniversary of the date that our proxy materials relating to the preceding year’s annual meeting of stockholders (or a notice of availability of proxy materials, if earlier) were first mailed. As a result, stockholder proposals must be received by us no earlier than January 17, 2019,February 11, 2024, and no later than February 16, 2019, in orderMarch 13, 2024, to be considered at our 20192024 annual meeting of stockholders. In the event the date of our 20192024 annual meeting of stockholders is more than 30 days before or more than 60 days after the anniversary date of our 20182023 annual meeting of stockholders, notice must be delivered not earlier than the close of business on the 120th120th day prior to suchthe date of our 20192024 annual meeting of stockholders and not later than the close of business on the later of (i) the 90th day prior to suchthe date of our 20192024 annual meeting of stockholders or (ii) the 10th day following the day on which public announcement of the date of our 20192024 annual meeting of stockholders is first made. Such notice must be provided to AppFolio, Inc., 5070 Castilian Drive, Santa Barbara, California 93117, Attn: Chief FinancialLegal Officer. Our Governing Documents specify certain additional requirements regarding the form and content of such notice. Requirements for Stockholder Proposals to be Considered for Inclusion in Our Future Proxy Materials In addition to the requirements stated above, any stockholder who wishes to submit a proposal for inclusion in our future proxy materials must comply with Rule 14a-8 under the Exchange Act. For such proposals to be included in our proxy materials relating to our 20192024 annual meeting of stockholders, all applicable requirements of Rule 14a-8 must be satisfied and we must receive such proposals no later than December 3, 2018.28, 2023. Such proposals must be provided to AppFolio, Inc., 5070 Castilian Drive, Santa Barbara, California 93117, Attn: Chief FinancialLegal Officer. In addition to satisfying the requirements of our Bylaws, including the notice deadlines set forth above and therein, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees, other than the Company’s nominees, must also comply with the additional requirements of Rule 14a-19 under the Exchange Act. Other Business Our Board does not presently know of any other business, other than that described in this Proxy Statement, that will be presented for consideration by our stockholders at the Annual Meeting. However, if any other business is properly brought before the Annual Meeting, or at any adjournment or postponement thereof, it is intended that the shares of our Class A Common Stock and Class B Common Stock represented by proxies will be voted in respect thereof in accordance with the judgment of the persons named as proxies. Annual Report A COPY OF OUR 20172022 ANNUAL REPORT, AS WELL AS THIS PROXY STATEMENT, HAS BEEN POSTED ON THE INTERNET, EACH OF WHICH IS ACCESSIBLE BY FOLLOWING THE INSTRUCTIONS IN THIS PROXY STATEMENT AND THE NOTICE. WE WILL PROVIDE, WITHOUT CHARGE, UPON THE WRITTEN REQUEST OF ANY STOCKHOLDER ON THE RECORD DATE (INCLUDING BENEFICIAL OWNERS HOLDING SHARES IN "STREET NAME"), A COPY OF OUR 20172022 ANNUAL REPORT. STOCKHOLDERS SHOULD DIRECT SUCH REQUESTS TO APPFOLIO, INC., 5070 CASTILIAN DRIVE, SANTA BARBARA, CALIFORNIA 93117, ATTN: CHIEF FINANCIALLEGAL OFFICER, OR BY EMAIL TO cfo@appfolio.com.
STOCKHOLDERQUESTIONS@APPFOLIO.COM.
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