April 11, 2016
10, 2019
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April 11, 2016
10, 2019
Shareholder:
Time.
2019.
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| Judson Bergman | |
Chairman and Chief Executive Officer |
10, 2019
| 1. | To elect one Class |
| 2. | To vote, on an advisory basis, on 2018 executive compensation; |
| 3. | To ratify the appointment of KPMG LLP as Envestnet’s independent auditors for the fiscal year ending December 31, |
| 4. | To transact such other business, if any, as lawfully may be brought before the meeting. |
| By Order of the Board of Directors, | |
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Shelly O’Brien | |
Corporate Secretary |
Directors whose terms of office will continue after this meeting | ||
ENVESTNET, INC.
10, 2019. An advisory vote on 2018 executive compensation. 2019. 16, 2019 15, 2019. INFORMATION ABOUT THE ANNUAL MEETING AND VOTINGOur boardBoard of directorsDirectors (the “Board”) is soliciting proxies for use at our Annual Meeting of StockholdersShareholders to be held on May 11, 2016,16, 2019, and any adjournments or postponements of the meeting. The meeting will be held at 10:00 a.m. Central timeTime at 35 East Wacker Drive, Suite 260, Chicago, Illinois. This proxy statement and the accompanying form of proxy are being mailed to stockholdersshareholders on or about April 11, 2016.This proxy statement summarizes the information you need to vote at the Annual Meeting. You do not need to attend the Annual Meeting to vote your shares.The following proposals are scheduled to be voted on at the Annual Meeting:·The election of one Class IIThe election of one Class I director and three Class III directors.·
The ratification of the selection of KPMG LLP, an independent registered public accounting firm, as our independent auditors for the fiscal year ending December 31, 2019.·The ratification of the selection of KPMG LLP, an independent registered public accounting firm, as our independent auditors for the fiscal year ending December 31, 2016.Envestnet’s Board recommends that you vote your shares “FOR”“FOR” each of the nominees to the Board, “FOR”“FOR” the advisory vote on executive compensation and “FOR”“FOR” the ratification of the selection of KPMG LLP as our independent auditors for 2016.Important Notice Regarding the Availability of Proxy Materials for the StockholderShareholder MeetingTo Be Held on May 11, 2016Yes. Our proxy statement for the 20162019 Annual Meeting, form of proxy card and 20152018 Annual Report are available at www.envestnet.com.www.envestnet.com.March 21, 201615, 2019 is the record date for the Annual Meeting. If you owned our common stock at the close of business on March 21, 2016,15, 2019, you are entitled to vote. On that date, we had 42,392,98248,755,665 shares of our common stock outstanding and entitled to vote at the Annual Meeting. Our common stock is our only outstanding class of stock. The closing price of our common stock on March 21, 201615, 2019 on the New York Stock Exchange was $25.29.$66.64.You have one vote for each share of our common stock that you owned at the close of business on March 21, 2016.The proxy card indicates the number of shares of common stock you are entitled to vote.What is the difference between holding shares as a stockholdershareholder of record and as a beneficial owner?Many of our stockholdersshareholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially.StockholderShareholder of RecordIf your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you are considered, with respect to those shares, the stockholdershareholder of record and these proxy materials are being sent to you directly. As the stockholdershareholder of record, you have the right to grant your voting proxy directly or to vote in person at the Annual Meeting. You may also vote by telephone or via the Internet as described below under the heading “Information About the Annual Meeting and Voting—May I vote by telephone or via the Internet?” or you may vote your proxy card by mail.Beneficial OwnerIf your shares are held in a brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name,” and our proxy materials are being forwarded to you by your broker or nominee who is considered, with respect to those shares, the stockholdershareholder of record. As the beneficial owner, you have the right to direct your broker or nominee on how to vote your shares and are also invited to attend the Annual Meeting. However, since you are not the stockholdershareholder of record, you may only vote these shares in person at the Annual Meeting if you follow the instructions described below under the heading “Information About the Annual Meeting and Voting—How do I vote in person at the Annual Meeting?” Yourand your broker or nominee has provided a voting instruction card forsigned proxy giving you to use in directing your broker or nominee as to howthe right to vote yourthe shares. If you would like to vote by telephone or on the Internet, you should read the information described below under the heading “Information About the Annual Meeting and Voting—May I vote by telephone or via the Internet?”If you are a stockholdershareholder of record, you must properly submit your proxy card (by telephone, via the Internet or by mail) so that it is received by us in time to vote. Your “proxy” (one of the individuals named on your proxy card) will vote your shares as you have directed. If you sign the proxy card (including electronic signatures in the case of Internet or telephonic voting) but do not make specific choices, your proxy will vote your shares as recommended by the Board:·“FOR” the election of each Class I director nominee and Class III director nominees; the election of each Class II and Class III director;
| “FOR” the approval of the advisory vote on executive compensation; and |
| “FOR” the ratification of KPMG LLP as our independent auditors for the fiscal year ending December 31, 2019. |
| Send in another signed proxy with a later date or resubmit your vote by telephone or the Internet; |
| Send a letter revoking your proxy to Envestnet’s Corporate Secretary at 35 East Wacker Drive, Suite 2400, Chicago, Illinois, 60601; or |
| Attend the Annual Meeting and vote in person. |
15, 2019.
Are there any voting agreements with respect to our common stock?
shareholders.
Meeting.
5
CORPORATE GOVERNANCE
| In General |
We | |
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Independent Director Meetings | Our independent directors meet at regularly scheduled | |
Other Corporate Governance Highlights |
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2018.
| The Audit Committee | The Audit Committee provides oversight of the integrity of our financial statements and financial reporting process, the system of internal controls, the audit process, the performance of our internal audit program, and the performance, qualification, and independence of the independent auditors. | |
The Audit Committee is composed entirely of directors who are independent of us and our management, as defined by the NYSE listing standards. | ||
The members of the Audit Committee are currently Mr. Smith | ||
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The Board has determined that each member of the Audit Committee satisfies the financial literacy requirements of the NYSE and that Messrs. Chapin, | |
The Audit Committee held seven meetings during | |
The Compensation Committee | The Compensation Committee has responsibility for evaluating the performance of the CEO and senior management and determining executive compensation in conjunction with the independent directors. The Compensation Committee also works with the Nominating and Governance Committee and the CEO on succession planning. |
The Compensation Committee is composed entirely of directors who are independent of us and our management, as defined by the NYSE listing standards. | |
The members of the Compensation Committee are currently Mr. Fox | |
The Compensation Committee held | |
The Compliance and Information Security Committee | The Compliance and Information Security Committee provides oversight of our regulatory compliance programs and information technology security framework and reviews, assesses and makes recommendations to our Board regarding such regulatory compliance programs and information technology security framework. |
| The Compliance and Information Security Committee is composed entirely of directors who are independent of us and our management, as defined by the NYSE listing standards. | |
| The members of the Compliance and Information Security Committee are Ms. Crowell (Chairperson), Mr. Aguilar, Ms. Mosley and Mr. Roame. |
| The Compliance and Information Security Committee held four meetings during 2018. | |
| The Nominating and Governance Committee | The responsibilities of the Nominating and Governance Committee include identifying individuals qualified to become Board members, recommending director nominees to the Board and developing and recommending corporate governance guidelines. The Nominating and Governance Committee also has the responsibility to review and make recommendations to the full Board regarding director compensation. In addition to general corporate governance matters, the Nominating and Governance Committee assists the Board and |
The Nominating and Governance Committee is composed entirely of directors who are independent of us and our management, as defined by the NYSE listing standards. | |
The members of the Nominating and Governance Committee are Mr. Roame | |
The Nominating and Governance Committee held | |
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Effective October 28, 2015, the non-employee director compensation policy was amended so that each non-employee director receives an annual retainer of $100,000, a meetingunits. Meeting attendance stipend of $5,000 for each board meeting attended in person, including all coinciding committee meetings and an additional meeting attendance stipend of $1,000 for each telephonic meeting, including all coinciding committee meetings.stipends have been eliminated. The chairpersonChairperson of our Audit Committee receives an additional annual retainer of $25,000. The chairpersonsChairpersons of our other committees receive an additional annual retainer of $15,000.$20,000. The lead independent director receives an additional annual retainer of $25,000.$30,000. All non-chairperson committee members receive an additional annual retainer of $10,000 for each committee on which they serve. Directors receive 25% ofAny such additional annual retainer amounts paid to a director for serving on a committee as a Chairperson or as a member are paid twenty-five percent (25%) in cash and 25% in options to acquire shares of our common stock and 50%seventy-five percent (75%) in restricted stock awards. In orderunits. Effective January 1, 2019, the annual retainer was increased to align the interests$190,000, of the non-employee members of the Board with the long-term interests of the Corporation’s stockholders, all non-employee directors are required to have an ownership level equivalent to $300,000 within 4 years of October 28, 2015.
which $140,000 will be in restricted stock units.
As discussed above, our director compensation program was amended effective October 28, 2015. Director compensation for the full year was prorated, as applicable, to reflect the program changes.
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| Fees Earned |
| Option |
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| Awards |
| Total |
Name1 |
| ($) |
| ($)(*) |
| ($) |
Ross Chapin |
| 31,793 |
| 63,650 |
| 95,443 |
Cynthia Egan (2) |
| 31,358 |
| 56,950 |
| 88,308 |
James Fox |
| 28,460 |
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| 28,460 |
Gates Hawn (3) |
| 72,292 |
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| 72,292 |
James Johnson |
| 34,076 |
| 70,350 |
| 104,426 |
Charles Roame |
| 30,485 |
| 63,650 |
| 94,135 |
Yves Sisteron |
| 30,612 |
| 63,650 |
| 94,262 |
Gregory Smith |
| 28,460 |
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| 28,460 |
Outstanding Unvested Awards restricted stock units Company. The Compensation Committee Company. The self-evaluation may be in the form of written or oral questionnaires or interviews and may be conducted by a third party. Each year the Nominating and Governance Committee discusses and considers the appropriate approach and approves the form of the self-evaluation. The Nominating and Governance Committee will consider a What is our Related Party transactions approval policy and what procedures do we use to implement it? The benefits to us of the proposed Related Party Transaction; The impact on a director’s independence in the event the Related Party is a director, an immediate family member of a director, or an entity in which a director is a partner, shareholder or executive officer; The creation of an actual or apparent conflict of interest; The availability of other sources for comparable products or services; The terms of the proposed Related Party Transaction; The Related Party’s interest in the transaction; and The terms available to unrelated third parties or to employees generally. Transactions in which the Related Party’s interest derives solely from his or her service as a director, trustee or officer (or similar position) of a not‑for‑profit organization or charity that receives donations from us; PROPOSAL NO. 1: ELECTION OF DIRECTORS Mr. Bergman, age Name Fees Earnedor Paid in Cash($) OptionAwards($)(*) StockAwards($)(*) Total($)Luis Aguilar 56,000 — 125,408 181,408 Ross Chapin 65,750 — 157,145 222,895 Gayle Crowell 58,750 — 131,468 190,218 James Fox 61,500 — 142,158 203,658 James Johnson** 33,544 — 127,501 161,045 Valerie Mosley — — 100,000 100,000 Charles Roame 60,500 — 140,009 200,509 Gregory Smith 64,500 — 154,666 219,166 *OptionRestricted stock unit awards were granted on February 28, 2015, in connection2018 with 2014 service.1Mr. Fox and Mr. Smith were appointeda fair market value of $55.10. Ms. Mosley received restricted stock unit awards upon her appointment to the board with a grant date of October 23, 2018 and a fair market value of $100,000. The amounts reported represent the aggregate grant date fair value during the fiscal year, as calculated under the Financial Accounting Standards Board’s Accounting Codification Topic 718. Under ASC Topic 718, the grant date fair value is calculated using the closing market price of our Common Stock on the date of grant, which is then recognized, subject to market value changes, over the requisite service period of the Board in February 2015. They received their first equity award in 2016. Luis A. Aguilar and Gayle Crowell were appointed to the Board in March 2016.2Ms. Egan resigned from the Board on March 29, 2016.3Gates Hawn retired from the Board in February 2015. In March 2015, he received $72,292 in cash in lieu of receiving an option award.9
**Mr. Johnson retired from the Board on May 10, 2018.As of December 31, 2015,2018, the following unvested awards were outstanding for each director.Ross Chapin7,402optionsCynthia Egan3,540729options James Fox03,742optionsJames Johnson8,293optionsCharles Roame7,277options164Yves Sisteron8,0303,046options Greg4,042 restricted stock units Gayle Crowell 729 options 3,852 restricted stock units James Fox 2,724 options 3,731 restricted stock units Valerie Mosley options 1,351 restricted stock units Gregory Smith 02,706options 3,942 restricted stock units Charles Roame 2,782 options 3,516 restricted stock units The Nominating and Governance Committee of our Board evaluates the Board’s leadership structure on a regular basis.While the Board does not have a policy with respect to combining or separating the Chairman and Chief Executive Officer positions, under the current Board leadership structure, the positions of Chairman and Chief Executive Officer are combined into one role. Mr. Bergman has served as our Chairman and Chief Executive Officer since 1999. Effective as of November 19, 2015, Anil Arora was appointed Vice Chairman. The independent directors of the Board have designated one lead director. The lead director’s responsibilities include, among other things, presiding over all executive sessions of the non‑employee directors, where non‑employee directors meet outside the presence of the management directors, presiding at all other meetings of the Board at which the Chairman is not present, servesserving as a liaison between the Chairman and the independent directors discussesand discussing with the Chairman all information sent to the Board, and discusses with the Chairman theincluding meeting agendas of the Board.agendas. The other responsibilities of the lead director are determined by the Board from time to time. Yves Sisteron served as lead director until October 28, 2015, when Ross Chapin washas been designated the lead director.In considering its leadership structure, the Board takes a number of factors into account. Based on its most recent review of the leadership structure, the Board believesdetermined that the current structure is appropriate for our companyCompany because it allows for effective evaluation and execution of our strategies and operations management. In addition, a number of Board and Committeecommittee processes and procedures, including regular executive sessions of non‑employee directors and annual performance evaluations, provide substantial independent oversight of our Chairman and Chief Executive Officer’s performance.Envestnet’s policies and procedures relating to risk assessment and risk management are overseen by our Board. The Board takes an enterprise‑wide approach to risk management that is designed to support our business plans at a reasonable level of risk. A fundamental part of risk assessment and risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for our company.Company. The Board annually approves our business plan, giving consideration to risk management. The involvement of the Board in setting our business strategy is a key part of its assessment of management’s risk tolerance and also a determination of what constitutes an appropriate level of risk for our company.The Audit Committee of the Board reviewedreviews our policies and practices with respect to risk assessment and risk management including discussingand discusses with management our major financial risk exposures and the steps that have been taken to monitor and control such exposures.10reviewed compensation risk. The Compensation Committee assessedassesses our executive compensation programs to ascertain any potential material risks that may be created by the compensation program.In conducting this assessment, the Compensation Committee focused on our incentive compensation programs in order to identify any general areas of risk or potential for unintended consequences that exist in the design of our compensation programsprograms; and to evaluate our incentive plans relative to our enterprise risks to identify potential areas of concern, if any.The Compensation Committee considered the findings of this assessment of compensation policies and practices and determined that our compensation programs are designed and administered with the appropriate balance of risk and reward in relation to our overall business strategy. Envestnet’sThe Company's policies and practices are not structured to encourage executives to take unnecessary or excessive risks, and therefore do not create risks reasonably likely to have a material adverse effect on our company.The Compliance and Information Security Committee reviews potential risk related to regulatory compliance requirements and reviews and assesses our regulatory compliance programs. The Compliance and Information Security Committee also reviews potential risk related to our information technology systems, including cybersecurity risk, and reviews and assesses our information technology security framework. The Board and each committee of the Board conductsconduct a formal annual self‑evaluationsevaluation to assess the business skills, experience and background represented on the Board and to determine whether the Board and its committees are functioning effectively. During the year, the Nominating and Governance Committee receives input on the Board of Director’sBoard’s performance from directors and discusses the input with the full Board and oversees the full Board of Director’s review of its performance. Each committee also discusses the input with respect to the committee and the review of its performance.self-evaluation process. The self‑assessments focusevaluation focuses on whether the Board is operating effectively and on areas in which the Board or management believes that the Board or any of its committees could improve.The results of the self-evaluation are reviewed by the Nominating and Governance Committee and summarized for the full Board. Any recommendations for improvement are reviewed and appropriate plans are initiated to address such recommendations by the full Board. In accordance with its charter, the Nominating and Governance Committee identifies potential nominees for directors from various sources. TheWhen reviewing candidates qualifications, the Nominating and Governance Committee reviewsconsiders the qualificationsrelevance of these persons to determine whether they might be a good candidate for membership on the Board.their experience and background as well as their independence, judgment and understanding of our business and related industries. The Nominating and Governance Committee includes a review of the person’s judgment, experience, independence, understanding of our business or other related industries and such other factors as the Nominating and Governance Committee determines are relevant in light of the needs of the Board and our company.Company. The Nominating and Governance Committee will select qualified candidates and review its recommendations with the Board, which will decide whether to nominate the person for election to the Board at an annual meeting. Between annual meetings, the Board, upon the recommendation of the Nominating and Governance Committee, can approve additions to the Board.Envestnet does not have a formalThe Board diversity policy. However,believes that it is important that the Board considers diversity in professional experience and professional training in recommending nominees.members represent a diverse mix of viewpoints. The Nominating and Governance Committee works with the Board on an annual basis to determineperiodically assess the appropriate characteristics,expertise, experience, skills and experience forbackgrounds of its directors in light of the needs of the Board, asincluding the extent to which the current composition of the Board reflects a wholediverse mix of knowledge, experience, skills and its individual members.backgrounds. The skills and backgrounds collectively represented on the Board should reflect the diverse nature of the business environment in which the Company operates. In evaluating the suitability of individual Board members, the Board and the Nominating and Governance Committee take into account numerous factors such as the individual’s general understanding of marketing, financethe Company’s business, or aspects thereof, and other disciplinesthe industry in which it operates, skills relevant to the success of a publicly traded company; understanding of our business;company, gender, race, education and professional background, including current employment and other Board memberships; reputation for integrity;memberships, and any other factors they consider to be relevant. The Board evaluates each individual in the context of the Board as a whole, with the objective of recommending a group that can best perpetuateadvance the success of the business and represent stockholder interestshareholder interests through the exercise of sound judgment, using its diversity of experience. Any search firm engaged to assist the Board or the Nominating and Governance Committee in identifying candidates for appointment to the Board is specifically directed to include diverse candidates. In determining whether to recommend a director for re‑election, the Nominating and Governance Committee also considers the director’s past attendance at meetings and participation in and contributions to the activities of the Board.The Nominating and Governance Committee annually reviews its own performance. In connection with such self‑evaluation, the Nominating and Governance Committee assesses whether it effectively nominates candidates for director in accordance with the above described standards specified by the corporate governance guidelines. See each nominee’s and director’s biography appearing later in this proxy statement for a description of the specific experiences that each such individual brings to our Board.11stockholder’sshareholder’s recommendation for directors, but the Nominating and Governance Committee has no obligation to recommend such candidates for nomination by the Board. Assuming that appropriate biographical and background material is provided for candidates recommended by stockholders,shareholders, the Nominating and Governance Committee will evaluate those candidates by following substantially the same process and applying substantially the same criteria as for candidates recommended by other sources. If a stockholdershareholder has a suggestion for candidates for election, the stockholdershareholder should mail it to: Corporate Secretary, Envestnet, Inc., 35 East Wacker Drive, Suite 2400, Chicago, Illinois, 60601. No person recommended by a stockholdershareholder will become a nominee for director and be included in a proxy statement unless the Nominating and Governance Committee recommends, and the Board approves, such person.If a stockholdershareholder desires to nominate a person for election as director at a stockholders’shareholders’ meeting, that stockholdershareholder must comply with Section 5.2 of our By‑by‑laws, which requires notice not more than 120 days nor less than 90 days in advance of the anniversary of the date of the proxy statement provided in connection with the previous year’s annual meetingAnnual Meeting of stockholders.Shareholders. This time period has passed with respect to the 20162019 Annual Meeting. With respect to the 20172020 Annual Meeting, Envestnet must receive such written notice between December 12, 20162019 and January 11, 2017.2020. Such notice must describe the nomination in sufficient detail to be summarized on the agenda for the meeting and must set forth:·As to each person whom the stockholder proposes to nominate for election or re‑election as a director:
���As to each person whom the shareholder proposes to nominate for election or re‑election as a director:·The name, age, business address and residence address of the person;·The principal occupation or employmentThe name, age, business address and residence address of the person;·The class, series and numberThe principal occupation or employment of shares of Envestnet common stock that are owned beneficially by the person;·Any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to the Exchange Act; and
The class, series and number of shares of Envestnet common stock that are owned beneficially by the person;·The nominee’s written consent to serve, if elected.
Any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to the Exchange Act; and·As to the stockholder giving the notice:
The nominee’s written consent to serve, if elected.·The name and record address of the stockholder;
As to the shareholder giving the notice:·The number of shares of Envestnet common stock that are owned beneficially by the stockholder; and
The name and record address of the shareholder;·A description of all arrangements or understandings between such stockholder and each person the stockholder proposes for election or reelection as a director pursuant to which such proposed nomination is being made.The number of shares of Envestnet common stock that are owned beneficially by the shareholder; andA description of all arrangements or understandings between such shareholder and each person the shareholder proposes for election or reelection as a director pursuant to which such proposed nomination is being made.The Compensation Committee of Envestnet’s Board has responsibility for determining the compensation of our executive officers. None of the members of the Compensation Committee is a current or former officer or employee of our company.Company. None of our executive officers serves on the compensation committee of any company that employs any member of the Compensation Committee.Our Board has adopted a written Related Party transactions policy. This policy applies to any transaction, arrangement or relationship which we refer to as a Related(a “Related Party Transaction,Transaction”), in which we (including any of our subsidiaries) were, are, or will be a participant, the amount involved exceeds $120,000 annually and in which any director, officer, 5% or greater stockholdershareholder or certain other related parties or entities each of which we refer to as(each, a Related Party,“Related Party”), has a direct or indirect material interest. We refer to these transactions as Related Party Transactions. Under the policy, the Audit Committee considers all of the relevant facts and circumstances in determining whether to approve a Related Party Transaction, including:·······The Audit Committee will approve only those Related Party Transactions that are in, or are not inconsistent with, the best interests of our companyCompany and our stockholders,shareholders, as the Audit Committee determines in good faith.The following types of transactions do not require approval or ratification under this policy:·Transactions involving the purchase or sale of products or services in the ordinary course of business, not exceeding $120,000;·Transactions in which the Related Party’s interest derives solely from his or her service as a director of another corporation or organization that is a party to the transaction;·Transactions in which the Related Party’s interest derives solely from his or her ownership of less than 10% of the equity interest in another person (other than a general partnership interest) which is a party to the transaction;·Transactions in which the Related Party’s interest derives solely from his or her service as a director, trustee or officer (or similar position) of a not‑for‑profit organization or charity that receives donations from us;·Compensation arrangements of any executive officer (other than an individual who is an immediate family member of a Related Party) that have been approved by the Compensation Committee of our Board and that are reported in our annual meeting proxy statement or would be reported if the executed officer were a named executive officer; and·Director compensation arrangements that have been approved by our Board and that are reported in our annual meeting proxy statement.Transactions involving the purchase or sale of products or services in the ordinary course of business, not exceeding $120,000;13
Transactions in which the Related Party’s interest derives solely from his or her service as a director of another corporation or organization that is a party to the transaction;less than 10% of the equity interest in another person (other than a general partnership interest) which is a party to the transaction;Compensation arrangements of any executive officer (other than an individual who is an immediate family member of a Related Party) that have been approved by the Compensation Committee of our Board and that are reported in our annual meeting proxy statement or would be reported if the executive officer were a named executive officer; andDirector compensation arrangements that have been approved by our Board and that are reported in our annual meeting proxy statement.What Related Party transactions dodid we have?have in 2018?During the year ended December 31, 2018, we had no Related Party Transactions.Registration RightsOn March 22, 2004, we entered into a registration rights agreement with certain holders of our common stock, or the registration rights agreement, pursuant to which these holders of our common stock are entitled to demand registration rights, Form S‑3 registration rights and piggyback registration rights with respect to the registration of their shares of our common stock under the Securities Act of 1933, as amended, or the Securities Act. We refer to shares of our common stock that are subject to the registration rights agreement as “registrable securities.”In connection with our IPO, The EnvestNet Group, Inc., Envestnet’s 41% shareholder prior to the IPO (the “Envestnet Shareholder”), merged with and into Envestnet, with Envestnet being the surviving entity. Upon consummation of the merger of the Envestnet Shareholder with and into Envestnet, certain stockholders of the Envestnet Shareholder are entitled to become a party to the registration rights agreement and to receive each of the registration rights described below.Demand Registration Rights. The holders of registrable securities have rights, at their request, to have their shares registered for resale under the Securities Act. Holders of at least 50% of registrable securities may demand the registration of their shares on up to two occasions within any 12‑month period if the gross proceeds from the registration of their shares would exceed $15,000,000.Registration on Form S‑3. In addition to the demand registration rights discussed above, holders of at least 20% of the registrable securities may require that we register their shares of our common stock for public resale on Form S‑3 or similar short‑form registration statement if the gross proceeds from the registration of their shares of our common stock would exceed $5,000,000 and our company is eligible to use Form S‑3.Piggyback Registration Rights. The holders of approximately 2.5 million shares of registrable securities have rights to have their shares of our common stock registered for resale under the Securities Act if we register any of our securities, either for our own account or for the account of other stockholders, subject to the right of the underwriters involved in any such transaction to limit the number of shares of our common stock included in an underwritten offering.The following Related Parties are currently party to the registration rights agreement: Judson Bergman (our Chairman and Chief Executive Officer and one of our directors), William Crager (our President), Scott Grinis (our Chief Technology Officer), Brandon Thomas (our Chief Investment Officer), and James Johnson, a current director. Holders of our registrable securities are entitled to the registration rights described above. Collectively, these Related Parties hold approximately 1.4 million shares covered by the registration rights agreement as of March 21, 2016. We have entered into agreements to indemnify our directors and certain of our officers in addition to the right to indemnification provided to such persons in our certificate of incorporation and by‑laws. These agreements will, among other things, require us to indemnify these individuals to the fullest extent permitted under Delaware law, including for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts incurred by such person in any action or proceeding, including any action by or in our right, on account of services by any such person as a director or officer of our companyCompany or as a director or officer of any of our subsidiaries, or as a director or officer of any other company or enterprise if any such person serves in such capacity at our request. We also intend to enter into indemnification agreements with our future directors and executive officers.Our executive officers and directors are subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. Except as disclosed in the next sentence, we(the “Exchange Act”). We believe that all of our executive officers and directors complied with all filing requirements imposed by Section 16(a) of the Exchange Act on a timely basis during fiscal year 2015. Mr. Arora filed one Form 4 late in 2016 with respect to an 2018.14acceleration of vested stock and Mr. Sisteron filed one Form 4 late with respect to the transfer of stock from his own name to a trust.Our by‑lawsby-laws divide our Board into three classes with the terms of office of each class ending in successive years. Our by‑laws provide for a minimum of 5 and a maximum of 11 directors and empower our Board to fix the exact number of directors and appoint persons to fill any vacancies on the Board until the next Annual Meeting.Following the recommendation of the Nominating and Governance Committee, our Board has nominated Luis A. Aguilar as a director of EnvestnetValerie Mosley to serve a one-yeartwo-year term to expire at the Annual Meeting in 20172021 and Judson Bergman, Anil Arora and Gayle Crowell as directors of Envestnet to each serve a three‑yearthree-year term to expire at the Annual Meeting in 20192022 or, in each case, until their respective successors shall have been elected and shall have qualified. Each nominee is currently serving as a director of Envestnet. Mr. Arora was appointed to the Board on November 19, 2015. Mr. Aguilar and Ms. Crowell were appointed to the Board on March 29, 2016. Our Nominating and Governance Committee has been working with our directors and management over the last few years to identify qualified individuals to serve on our Board. Ms. Crowell and Messrs. Aguilar, Fox, Roame and Smith were identified through this process. Each of Mr. Johnson and Mr. Sisteron have informed us of his desire to retire from the Board. Mr. Johnson has agreed to serve until the Board is able to transition another director into the role of Chair of the Audit Committee. Following Mr. Johnson’s resignation, it is not expected that a new director will be appointed to serve the remainder of his term. Mr. Sisteron will retire effective as of May 11, 2016, the date of the Annual Meeting.THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THESE NOMINEES AS DIRECTORS OF ENVESTNET.It is the intention of the persons named as proxies, subject to any direction to the contrary, to vote in favor of the candidates nominated by the Board. We know of no reason why any nominee may be unable to serve as a director. If any nominee is unable to serve, your proxy may vote for another nominee proposed by the Board, or the Board may reduce the number of directors to be elected. If any director resigns, dies or is otherwise unable to serve out his or her term, or the Board increases the number of directors, the Board may fill the vacancy until the Annual Meeting.We have set forth below information with respect to the nominees for election as directors and the other directors whose terms of office as directors will continue after the Annual Meeting. There are no arrangements or understandings between any director and any other person pursuant to which any director was or is selected as a director or nominee.Nominee for election for term expiring in 2021 (Class I)Valerie Mosley Ms. Mosley, age 59, is CEO of Valmo Ventures, a company that creates, collaborates and invests in companies, assets and efforts that have significant potential to grow, profit and add value to society. Ms. Mosley serves as a board member at Dynex Capital, Inc. and Eaton Vance Funds. Ms. Mosley was Senior Vice President, Partner, Portfolio Manager and Investment Strategist at Wellington Management Company, LLP, a $900 billion global money management firm. Ms. Mosley also chaired the firm’s Industry Strategy Group, which took a long-term perspective to identify trends, headwinds and tailwinds impacting various industries. As a member of several investment strategy groups, Ms. Mosley helped establish investment parameters to which team portfolio managers adhered. Ms. Mosley received her MBA from the University of Pennsylvania and an undergraduate degree from Duke University. Ms. Mosely’s qualifications to serve on the Board include her experience in the wealth management business and her service as a board member of other companies. Judson Bergman 59,62, is the founder of our companyCompany and has served as our Chairman, Chief Executive Officer and a director since 1999. Since founding the Company, he has focused on guiding the Company’s strategy and overseeing its organizational and business development. Prior to founding our company,Company, Mr. Bergman was the Managing Director for Mutual Funds at Nuveen Investments, Inc., a diversified investment manager.where he was responsible for the profitable growth of the firm’s mutual fund business and also served on the firm’s Investment Management Committee. He also directed Nuveen’s product and corporate development activity, where he helped build the firm’s closed-end fund business, led the development and growth of Nuveen’s separately managed accounts business and helped guide the firm’s expansion into asset classes beyond municipal investments. Mr. Bergman serves as a trustee of RS Investment Trust and RS Variable Products Trust, registered investment companies. Mr. Bergman earnedreceived his MBA in finance and accounting from Columbia University and received a BAan undergraduate degree from Wheaton College.Mr. Bergman has extensive familiarity with the financial services industry acquired through his years with the companyCompany and his experience at Nuveen, as well as his education in finance and accounting.
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| Anil Arora | Mr. Arora, age |
| Mr. Arora’s qualifications to serve on our Board include his experience in the technology industry and the operational insight and expertise he accumulated as President and Chief | |
| Gayle Crowell | Ms. Crowell, age |
| Ms. Crowell’s qualifications to serve on our Board include her experience as a senior executive and director of a public company and her experience in the technology industries. |
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| Directors whose terms expire in 2020 (Class II) | |
| Luis Aguilar | Mr. Aguilar, age |
| Mr. Aguilar represented the Commission as its liaison to both the North American Securities Administrators Association and to the Council of Securities Regulators of the Americas. He also served as the sponsor of the SEC's first Investor Advisory Committee. | |
| Mr. Aguilar serves as a director of Donnelley Financial Solutions, Inc. and MiMedx Group, Inc., and has been a Principal in Falcon Cyber Investments, an investment firm exclusively focused on cyber security investment, since January 2016. | |
| Mr. Aguilar is a graduate of the University of Georgia School of Law, and also received a master of laws degree in taxation from Emory University. He had earlier earned | |
| Mr. Aguilar’s experience as an SEC Commissioner and his extensive experience in corporate, securities and compliance matters, especially as they apply to investment advisers, investment companies and broker-dealers, contribute to his qualifications to serve on our Board. | |
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Directors whose terms of office will continue after this meeting
Directors whose terms expire in 2018 (Class I)
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| Ross Chapin | Mr. |
| Mr. | |
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| James Fox | Mr. |
| Mr. Fox participated in the Advanced Management Program at the Wharton School of the University of Pennsylvania. He earned his MBA in Finance from Suffolk University and his undergraduate degree in economics from the State University of New York. | |
| Mr. Fox’s qualifications to serve on our Board include his extensive experience in the business and financial services industry, financial reporting and his knowledge gained from service on the boards of various other companies. |
| Directors whose terms expire in 2021 (Class I) | |
| Charles Roame | Mr. Roame, age 53, has served as a director of our Company since 2011. Mr. Roame is a private investor and advisor to dozens of worldwide CEOs in the financial services and fintech markets. Mr. Roame also serves as a board member at Edelman Financial Engines (and the related affiliates of Hellman & Friedman, which owns the majority of Edelman Financial Engines), as a board member of OneK Financial (DBA FacetWealth) and as a trustee for the SA Funds (where he chairs the Nominating & Governance Committee and serves on the Audit Committee). Mr. Roame has also served as the Managing Partner of Tiburon Strategic Advisors, LLC, a provider of research, strategy consulting and other related services primarily to financial services firms, and the Tiburon Partners Fund, since 1998. Tiburon has published over 1,900 industry research papers, served hundreds of financial services companies and hosts the semi-annual Tiburon CEO Summits. Mr. Roame |
| Mr. Roame’s qualifications to serve on our Board are primarily based on his industry experience. | |
| Gregory Smith | Mr. Smith, age |
| Mr. Smith’s extensive experience in accounting, liquidity, budgeting and forecasting, treasury, capital management, tax and mergers and acquisitions and his knowledge gained from service on the boards of various other companies contribute to his qualifications to serve on our Board. | |
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Directors whose terms expire in 2017 (Class II)
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19
INFORMATION ABOUT OUR COMMON SHARE OWNERSHIP
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| Options |
| Unvested |
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| Exercisable |
| Restricted |
| Total |
| Beneficial |
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| within |
| Common |
| Beneficial |
| Ownership |
|
| Shares Held |
| 60 Days (1) |
| Stock |
| Ownership |
| Percentages |
|
Jud Bergman (2) | 649,106 |
| 643,692 |
| 20,866 |
| 1,313,664 |
| 3.1 | % |
Bill Crager (3) | 141,429 |
| 358,100 |
| 13,886 |
| 513,515 |
| 1.2 | % |
Scott Grinis | 210,708 |
| 117,328 |
| 7,235 |
| 335,271 |
| * |
|
Pete D’Arrigo | 7,888 |
| 310,948 |
| 10,102 |
| 328,938 |
| * |
|
Anil Arora (4) | 98,260 |
|
|
| 91,667 |
| 189,927 |
| * |
|
Joshua Mayer (5) | 4,719 |
| 49,351 |
| 7,235 |
| 61,305 |
| * |
|
Yves Sisteron (6) | 130,591 |
| 19,592 |
| 580 |
| 150,763 |
| * |
|
Charles Roame (7) | 7,742 |
| 11,505 |
| 3,731 |
| 22,978 |
| * |
|
Jim Johnson | 1,774 |
| 19,902 |
| 728 |
| 22,404 |
| * |
|
Ross Chapin | 37,438 |
| 17,015 |
| 769 |
| 55,222 |
| * |
|
Gregory Smith | 3,950 |
|
|
| 3,589 |
| 7,539 |
| * |
|
Cynthia Egan | 1,950 |
| 1,679 |
| 3,652 |
| 7,281 |
| * |
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James Fox | 1,950 |
|
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| 3,589 |
| 5,539 |
| * |
|
Luis Aguilar |
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|
| * |
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Gayle Crowell (8) | 13,427 |
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| 13,427 |
| * |
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All Directors and Executive Officers as a Group | 1,563,419 |
| 1,709,909 |
| 179,360 |
| 3,452,688 |
| 7.8 | % |
| Name | Shares Held | Options Exercisable within 60 Days (1) | Unvested RSUs Vesting within 60 Days (2) | Total Beneficial Ownership | Beneficial Ownership Percentages | ||||||||||
| Judson Bergman (3) | 746,153 | 423,669 | 47,713 | 1,217,535 | 2.47 | % | |||||||||
| William Crager (4) (5) | 217,149 | 251,267 | 19,766 | 488,182 | 1.00 | % | |||||||||
| Scott Grinis | 202,166 | 101,117 | 4,058 | 307,341 | * | ||||||||||
| Peter D’Arrigo | 48,729 | 139,846 | 12,046 | 200,621 | * | ||||||||||
| Anil Arora (6) | 62,773 | 20,000 | 3,250 | 86,023 | * | ||||||||||
| Ross Chapin | 46,480 | 28,323 | 225 | 75,028 | * | ||||||||||
| Charles Roame (7) | 17,985 | 22,953 | 184 | 41,122 | * | ||||||||||
| Gayle Crowell (8) | 6,404 | 1,161 | 934 | 8,499 | * | ||||||||||
| Gregory Smith | 15,594 | 6,004 | 215 | 21,813 | * | ||||||||||
| James Fox | 13,297 | 6,033 | 219 | 19,549 | * | ||||||||||
| Luis Aguilar | 9,359 | 1,161 | 934 | 11,454 | * | ||||||||||
| Valerie Mosley | 2,199 | — | — | 2,199 | * | ||||||||||
| All Directors and Executive Officers as a Group | 1,388,288 | 1,001,534 | 89,544 | 2,479,366 | 4.97 | % | |||||||||
| (1) | Includes options vested and exercisable within 60 days of March |
| (2) | Includes restricted stock units vesting within 60 days of March 15, 2019, which includes 41,667 performance shares, 16,667 performance shares, and 10,000 performance shares for Mr. Bergman, Mr. Crager and Mr. D’Arrigo respectively. |
| (3) | Includes |
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| (4) | Includes 100 shares indirectly held by Mr. Crager’s wife. |
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| (5) | Includes 100,000 shares held as security in a margin account. |
| (6) | Includes 272 shares held by |
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| (7) | Includes |
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| (8) | Includes |
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| Number of |
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| Shares |
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Name and Address of Beneficial |
| Beneficially |
| Percent of |
|
Owner |
| Owned |
| Class |
|
Wells Fargo & Company (1) |
| 5,895,555 |
| 13.91 | % |
420 Montgomery Street |
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San Francisco, CA 94104 |
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Wellington Management Group LLP (fka Wellington Management Company, LLP) (2) |
| 3,428,509 |
| 8.08 | % |
280 Congress Street |
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Boston, MA 02210 |
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Janus Capital Management LLC (3) |
| 3,026,958 |
| 7.14 | % |
151 Detroit Street |
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Denver, CO 80206 |
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Wasatch Advisors, Inc. (4) |
| 2,836,029 |
| 6.68 | % |
505 Wakara Way |
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Salt Lake City, UT 84108 |
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The Vanguard Group (5) |
| 2,589,913 |
| 6.11 | % |
100 Vanguard Blvd. |
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Malvern, PA 19355 |
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TimesSquare Capital Management, LLC (6) |
| 2,213,500 |
| 5.22 | % |
7 Times Square |
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New York, NY 10036 |
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BlackRock Inc. (7) |
| 2,146,051 |
| 5.06 | % |
55 East 52nd Street |
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New York, NY 10022 |
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| Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percent of Class | ||||
| BlackRock Inc. (1) | 5,662,492 | 11.6 | % | |||
| 55 East 52nd Street | ||||||
| New York, NY 10022 | ||||||
| The Vanguard Group (2) | 4,025,284 | 8.3 | % | |||
| 100 Vanguard Blvd. | ||||||
| Malvern, PA 19355 | ||||||
| Janus Henderson Group PLC (3) | 3,572,926 | 7.3 | % | |||
| 201 Bishopgate | ||||||
| EC2M 3AE, United Kingdom | ||||||
| Wells Fargo & Company (4) | 3,350,550 | 6.9 | % | |||
| 420 Montgomery Street | ||||||
| San Francisco, CA 94104 | ||||||
| (1) | Based on Amendment #3 Schedule 13G filed by BlackRock, Inc. (“Blackrock”) on February 11, 2019, reporting the amount of securities beneficially owned as of December 31, 2018, BlackRock reported sole voting power with respect to 5,539,130 shares and sole dispositive power with respect to 5,662,492 shares. |
| (2) | Based on Amendment #4 to Schedule 13G filed by The Vanguard Group (“Vanguard”) on February 11, 2019, reporting the amount of securities beneficially owned as of December 31, 2018, Vanguard reports sole voting power with respect to 93,036 shares, shared voting power with respect to 5,827 shares, sole dispositive power with respect to 3,931,148 shares, and shared dispositive power with respect to 94,136 shares. |
| (3) | Based on Amendment #1 to Schedule 13G filed by Janus Henderson Group PLC (“Janus Henderson Group”) on February 12, 2019, reporting the amount of securities beneficially owned as of December 31, 2018, Janus Henderson Group reported shared voting and shared dispositive powers with respect to 3,572,926 shares. |
| (4) | Based on Amendment #7 to Schedule 13G filed by Wells Fargo & Company and certain of its subsidiaries |
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21
EXECUTIVE COMPENSATION
| Name | Title | |
| Judson Bergman | Chief Executive Officer (“CEO”) and Chairman of the Board | |
| Anil Arora | Chief Executive, Envestnet | Yodlee | |
| William Crager | President | |
| Peter D’Arrigo | Chief Financial Officer (“CFO”) | |
| Scott Grinis | Chief Technology Officer | |
for a discussion and reconciliation to the most directly comparable GAAP measure.
| FY2013 ($) | FY2014 ($) | FY2015 ($) | FY2016 ($) | FY2017 ($) | FY2018 ($) | |||||||||||||
| GAAP Net Income (Loss) in Thousands | 3,660 | 13,979 | 4,436 | (55,567 | ) | (3,280 | ) | 4,010 | ||||||||||
| GAAP Net Income (Loss) per Share | 0.10 | 0.38 | 0.12 | (1.30) | (0.08) | 0.12 | ||||||||||||
Our executive compensation philosophy, as established by ourin 2019 for 2018 performance. This table reflects how the Compensation Committee makes compensation decisions and is designed to:
| Name | 2018 AIP and Bonus (Paid in 2019) | Number of RSUs Granted in 2019 (for 2018 performance) | Number of PSUs Granted in 2019 (for 2018 performance) | Total Number of Units (1) | ||||||||
| Judson Bergman | 700,000 | 23,891 | 23,891 | 47,782 | ||||||||
| Anil Arora | — | — | — | — | ||||||||
| William Crager | 550,000 | 15,981 | 15,981 | 31,962 | ||||||||
| Peter D’Arrigo | 375,000 | 8,687 | 8,687 | 17,374 | ||||||||
| Scott Grinis | 248,000 | 4,462 | 4,462 | 8,924 | ||||||||
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We do not utilize formulas to determine compensation amounts and have established a set of guiding principles that have provided the foundation for all compensation programs for executive officers and all other employees. These guiding principles are as follows:
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We are committed to providing a comprehensive total rewards program to attract, retain, and reward highly qualified, diverse and productive employees. The total rewards program emphasizes alignment of employee efforts to support our corporate strategies. The components of the program include compensation, benefits, learning and development opportunities and recognition of employee performance. We strive to remain externally competitive in relevant labor markets while maintaining internal equity. The program also promotes fiscally responsible pay decisions, encourages efficient use of our resources and ensures compliance with applicable legal and contractual requirements.
To our employees, our compensation philosophy means fair pay based on their role in the company, a subjective determination of the market value of their job and their performance in that position. In addition, there is opportunity for additional rewards when we meet or exceed business objectives. Performance rewards provide employees with the opportunity to earn additional compensation beyond their base salary.
Compensation for our executive officers consists of three primary elements. They receive a base salary which is paid in semi‑monthly cash installments, they receive an annual incentive‑based cash payment, which is typically paid in February of the subsequent year or in quarterly installments and they receive an annual grant of restricted stock and stock options. For details regarding why we pay each element and how the amounts are determined, see “—Our 2015 Executive Compensation Program—Base Salary,” “—Our 2015 Executive Compensation Program—Annual
Incentive‑Based Cash Compensation,” and “—Our 2015 Executive Compensation Program—Equity Awards.” Although these sections discuss our practices employed in 2015, generally we plan to continue these practices in future years.
We do not have a specific policy that governs the allocation of compensation between cash and non‑cash compensation or between long‑term or current compensation. The allocations are driven primarily through a desire to pay what we view as competitive compensation, as determined solely by us based on our review of broad‑based third party surveys and other generally available information, which we have historically used to obtain a general understanding of market compensation practices.
The Compensation Committee determines, and recommends to the Board for approval, the Chief Executive Officer’s compensation without the participation of the Chief Executive Officer. The Compensation Committee is also responsible for reviewing the performance of the Chief Executive Officer. Our Chief Executive Officer is the only executive officer that has a role in determining the compensation of our named executive officers other than himself. The Chief Executive Officer will provide the Compensation Committee with recommendations, which the Committee has the discretion to approve or disapprove, for (a) changes to base salary, (b) distribution of annual incentive‑based cash compensation and (c) restricted stock and stock option grants.
Beginning in March of 2014 and continuing into 2015, the Compensation Committee retained an independent third‑party compensation specialist, Compensation Advisory Partners (“CAP”), to assist in identifying and facilitating certain changes to our compensation and employee retention programs, including the amounts of compensation paid to our senior management, including the named executive officers, and advice regarding employment agreements.
CAP was engaged to analyze the pay levels of and possible terms of employment agreements for senior management, including those of our named executive officers. In particular, CAP’s engagement involved (a) reviewing draft employment agreements, (b) defining the roles and responsibilities of senior management, (c) identifying comparable firms within the relevant competitive marketplace and (d) assessing the comparability of senior management roles and compensation from those firms to our senior management.
Our 2015 Executive Compensation Program
Our 2015 executive compensation program had three primary components: base salary, annual incentive‑based cash compensation and equity awards.
Base Salary. Base salaries are intended to provide our executives with a degree of financial certainty and stability that does not depend on company performance. In determining the base salaries for our Chief Executive Officer and the other named executive officers, the Compensation Committee,programs at the beginning of each year, reviews the overall scope of each executive officer’s responsibilities while taking into account the base salaries paid by companies with which we compete for talent. For 2015, base salary adjustments were based on a subjective determination of competitive market rates, individual performance, changes in job duties and responsibilities and our overall financial performance. We did not follow a specific formula or set of criteria in determining base salary adjustments in 2015.
Market data, such as the base salary of comparable jobs at comparable companies, were reviewed to provide guidance as to what constitutes competitive base salaries. In addition, individual performance of the executive’s duties and responsibilities is also considered. If the executive has performed his or her duties above expectations, then an
23
increase in the base salary may be justified. Similarly, if the executive is given different duties or responsibilities or if they have changed jobs within the company, then their base salary may be increased or decreased accordingly.
In all cases where base salaries may be changed, the overall compensation budget must be sufficient for such changes. In certain extreme cases, our financial results and performance may lead to reductions in base salaries as a cost cutting measure.
Annual Incentive‑Based Cash Compensation. We maintain an annual incentive‑based cash compensation program comprising two elements: the Annual Incentive Program, which is intended to reward executives and eligible employees based on our revenue growth and profitability; and Incentive Compensation, which is intended to reward executives and employees for gross sales from expanding existing client relationships and developing new client relationships.
Beginning in 2015, the Compensation Committee established a two-step process for paying annual incentive-based cash compensation to its executive officers. For the first step, in order for the payment of the incentive-based cash compensation to qualify as performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code, the Compensation Committee established a performance goal based on performance metrics pursuant to the Envestnet, Inc. 2010 Long-Term Incentive Plan. If the performance goal is not met, no annual incentive-based cash compensation will be paid to executive officers for such year. If the performance goal is met, for the second step, a cash bonus pool is established pursuant to which payments can be made to the executive officers as described below for the Annual Incentive Program and Incentive Compensation subject to the applicable limits contained in the Envestnet, Inc. 2010 Long-Term Incentive Plan.
Annual Incentive Program. Under the Annual Incentive Program, a predetermined percentage of the revenues and profits from the preceding year are distributed to employees, including our executive officers.Envestnet. At the beginning of each year, the Compensation Committee approves the calculation methodology, or formula, which will be used atcomponents of compensation for the NEOs, the individual performance goals for the Chief Executive Officer, and sets the performance goals for any related compensation programs.
In calculating the amount to be paid under the Annual Incentive Program, the Compensation Committee utilizes revenues and adjusted EBITDA, which is priorCEO’s performance relative to the payment of any amount paid pursuant to the Annual Incentive Program and certain extraordinary non‑cash or non‑recurring general and administrative expenses.identified goals. The Compensation Committee may exercise its discretion to adjust for revenues and expenses attributable to acquisitions, as well as extraordinary or non‑recurring gains or losses. The amounts paid for 2015 under the Annual Incentive Program were based on our financial performance during the 12‑month period ending December 31, 2015. The Compensation Committee established a minimum threshold amount of revenue and adjusted EBITDA, defined as described above, of $342.8 million and $56.0 million, respectively. Performance above either or bothCEO provides an overview of the minimum threshold amounts would result in an aggregate annual incentive pool amountperformance of 0.2% of total revenue for revenue equal to or in excesseach of the threshold amount plus 0.2% of total revenue for each incremental $4.3 million of revenue between $342.8 million and $364.2 million plus 1.4% of the excess revenue above $364.2 million plus 2.8% of the incremental revenue above $407.1 million plus 4.4% of incremental revenue above $428.5 million plus 2.8% of incremental revenue above $471.4 million and 4.3% of threshold adjusted EBITDA if the threshold amount has been achieved plus 8.3% of the excess adjusted EBITDA above the threshold amount plus 18.3% of incremental adjusted EBITDA above $93.3 million. The Compensation Committee has final authority to exercise its discretion in setting compensation amounts or awards for the company as a whole and for individuals and is not bound by the formula or by recommendations of Mr. Bergman nor of any consultant. For the amount to be earned in 2015, the Compensation Committee agreed with management’s recommendation and approved the amount to be paid under the Annual Incentive Program of approximately $9.9 million.
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At the end of each year, an allocation of the Annual Incentive Program to each eligible employee, including executive officers, is made. The CEO recommendsother NEOs to the Compensation Committee the distribution amounts for each executive officer, including himself, based on a subjective analysis of his or her performance. For the named executive officers, the CEO subjectively assesses their performance broadly with consideration given to four general categories: integrity, intelligence/business knowledge, qualitative considerations and effectiveness. No quantitative criteria are used. The CEO’s analysis is based on his sole and absolute discretion when assessing performance. Similarly, the amounts he recommends for individual Annual Incentive Program recommendations are based on his sole and absolute discretion. The CEO presents his recommendations to the Compensation Committee for their consideration along with his individual Annual Incentive Program distributioncompensation recommendations. The Compensation Committee reviewsexercises its discretion to make changes to any recommendations made by the CEO and makes the final approval for annual incentive distributionsapproves all compensation decisions for the named executive officers, including the CEO. For the year ending December 31, 2015, the Compensation Committee chose to accept the individual annual bonus distribution recommendations which it received from the CEO. Distributions of the Annual Incentive Program earned for a fiscal year are paid in the subsequent fiscal year, generally within the first two months.
Incentive Compensation. We maintain a compensation program with amounts paid to eligible employees as incentive compensation based on a target percentage of gross sales, though the total amount of incentive compensation is not an exact percentage of gross sales. The target percentage is revised annually. For the purposes of determining the total amount available for incentive compensation, we estimate our new fee revenue based on gross sales. We do this by calculating the average fee paid on all of our products, taking into account differing fee rates on the various products we sell and various fee schedules related to different client programs. The average will also vary by region due to the mix of clients and products within each region. In 2015, we targeted 12.0% of such estimated fee revenue to be used for total incentive compensation, with discretion to award total incentive compensation of up to an additional 1.5% of estimated fee revenue. Incentive Compensation amounts are calculated quarterly and paid out in 20.0% installments over the subsequent five quarters. Incentive Compensation payments are not guaranteed. The recipient must still be employed at the time of payment. Incentive Compensation payments are allocated among sales and service personnel and sales management, and the allocation of the incentive compensation payments is approved at the discretion of Mr. Bergman and Mr. Crager. In exercising their discretion, these officers annually establish a framework of percentages of the total available amount that is to be paid to different categories of employees, but there is no predetermined formula. The amount of the Incentive Compensation payments may also be adjusted based on our overall performance. In 2015, approximately $6.1 million in incentive compensation was earned by eligible employees, of which Mr. Crager received $322,249. Mr. Crager is the only executive officer who receives Incentive Compensation. The amount of Mr. Crager’s Incentive Compensation was based on our total gross sales and the CEO’s subjective assessment of his leadership of the sales organization.
Equity Awards. We grant stock options and restricted stock units to our current and newly hired executive officers to enable them to share in our success and to reinforce a corporate culture that aligns employee interestsNEOs with the interestsobjective of our stockholders. All equity grants to our executive officers to date have been awarded under the Envestnet Asset Management Group, Inc. 2004 Stock Incentive Plan, or the Envestnet, Inc. 2010 Long‑Term Incentive Plan (the “Equity Plans”). It has been our practice to annually grant equity awards to employees, including executives, in recognition of performance and as an incentive for retention, as well as to align their interestsensuring that compensation delivered is aligned with the interests of our stockholders. The size of these grants is based on a number of factors, including our subjective analysis of competitive practices, individualachieved performance as determined inresults. Compensation decisions for the discretion of the Compensation Committee, changes in the scope of the individual’s position, internal equity and retention potential. Ultimately, all amounts were determined in the sole and absolute discretion ofCEO are made by the Compensation Committee based on its conclusionsassessment of Company results and his individual performance.
| What We Do | What We Don’t Do |
ü Pay for Performance by basing a substantial part of NEOs compensation on company and individual performance, including PSUs ü Conduct annual outreach with investors and an annual say-on-pay advisory vote ü Strong emphasis on long term equity compensation; majority of CEO pay is in the form of equity compensation ü Retain an independent compensation consultant ü Maintain a clawback policy on incentive awards ü Require stock ownership (as a multiple of base salary) for NEOs (guidelines on page 28) | û No single trigger vesting of equity awards following a change in- control û No excise-tax “gross-ups” û No Supplemental Executive Retirement Plan (“SERP”) û No re-pricing of underwater stock options û No excessive perquisites û No hedging of company's securities by employees |
| Peer Company Name | ||
| Blucora, Inc | MarketAxess Holdings Inc. | SS&C Technologies Holdings, Inc. |
| Cornerstone OnDemand, Inc. | Morningstar, Inc. | The Ultimate Software Group, Inc. |
| FactSet Research Systems Inc. | MSCI Inc. | WageWorks, Inc. |
| Fair Isaac Corporation | SEI Investments Co | Workday, Inc. |
| Compensation Component | Purpose | Performance Alignment | Basis | Term | ||||
| Base Salary | Attracts & retains NEOs with a market competitive level of fixed compensation. | Individual Performance | Fixed | Short-Term | ||||
| Annual Incentive Plan (“AIP”) | Aligns compensation with annual company results. | Company & Individual Performance | Variable | Short-Term | ||||
| Restricted Stock Units (“RSUs”) | Provide employees with company stock to maintain retention. | Company Performance | Variable | Long-Term | ||||
| Performance Stock Units (“PSUs”) | Aligns compensation to the long-term business objectives designed to create shareholder value. | Company Performance | Variable | Long-Term | ||||
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estimated using the Black Scholes methodology described below in footnote 2 of the 2015 Grants of Plan‑Based Awards table. The value of restricted stock units results in a dollar‑for‑dollar offset to the valuereflects 75% of the annual stock option pool amount. Historically,incentive and was achieved at 101% of target.
| Metric Weighting | Threshold ($) | Target ($) | Maximum ($) | 2018 Actual ($) | Payout by Metric | |||||||
| Revenue ($mil.) | 35% | 750.00 | 805.00 - 835.00 | 875.00 | 812.40 | 90% | ||||||
| Adjusted EBITDA ($mil.) | 20% | 128.90 | 151.00 - 156.00 | 164.00 | 157.50 | 111% | ||||||
| Adjusted EPS | 20% | 1.31 | 1.75 - 1.91 | 2.00 | 1.92 | 111% | ||||||
| Individual/Team Performance Evaluation | 25% | Based on Individual Assessment | ||||||||||
| Payout as % of Target | 50% | 90% - 110% | 125% | |||||||||
| Target AIP ($) | AIP Payout ($) | Payout as % of Target | Additional Payment ($) | Total AIP and Bonus Payment ($) | |||||||||||
| Judson Bergman | 600,000 | 642,900 | 107 | % | 57,100 | 700,000 | |||||||||
| Anil Arora (1) | 433,373 | — | — | — | — | ||||||||||
| William Crager | 500,000 | 535,750 | 107 | % | 14,250 | 550,000 | |||||||||
| Peter D’Arrigo | 350,000 | 375,000 | 107 | % | 375,000 | ||||||||||
| Scott Grinis | 242,000 | 248,050 | 103 | % | 248,050 | ||||||||||
| Metric | Metric Weighting | Threshold | Target | Maximum | ||||
| Revenue Growth (CAGR*) | 25% | 8% | 14% | 20% | ||||
| Adjusted EBITDA Growth (CAGR) | 25% | 10% | 16% | 22% | ||||
| Adjusted EPS Growth (CAGR) | 25% | 10% | 16% | 22% | ||||
| Relative TSR compared to Russell 2000 Index Constituents | 25% | 35th Percentile | Median | 75th Percentile | ||||
| Payout as % of Target | 50% | 100% | 150% | |||||
Our CEO, with the help of his management team, recommended to the Compensation Committee individuals who should receive equity awards, the components of the award and the size of each individual award. The individual component and distribution amounts that were recommended were based on the CEO’s subjective review of each individual’s performance within his or her role in our company since the previous year’s grant, as well as a subjective determination of the competitive practices necessary to retain key employees. This recommendation was submitted to the Compensation Committeeselected for its considerationalignment with shareholders. No PSUs will be earned if achievement is below the threshold level.
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Name | Awards |
| Options |
| Award |
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Judson Bergman | 11,600 |
| 17,400 |
| 29,000 |
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William Crager | 7,600 |
| 11,400 |
| 19,000 |
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Peter D’Arrigo | 5,500 |
| 8,250 |
| 13,750 |
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Scott Grinis | 4,000 |
| 6,000 |
| 10,000 |
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Joshua Mayer | 4,000 |
| 6,000 |
| 10,000 |
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We provide the following benefits to our executives on the same basis as provided to all of our employees:
| Health, dental and vision insurance; |
| Life insurance; |
| Medical and dependent care flexible spending account; |
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| A 401(k) plan, with company match; and |
| A college scholarship plan for employees’ children. |
We do not currently have a formal policy requiring a fixed course of action with respect to compensation adjustments following later restatements of financial results. Under those circumstances, the Board orCompany, the Compensation
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Committee would evaluatedetermine, in its discretion, whether compensation adjustments were appropriate,any unsettled incentive awards held by the Covered Officer would be forfeited or any previously settled incentive awards held by such person would be required under applicable law, based on the facts and circumstances relatingto be repaid to the restatement.
Section 162(m)Company. For purposes of the Internal Revenue clawback policy, a “covered person” is any person who is an “officer” (as that term is defined in Section 16 of the Exchange Act), as well any other officer of the Company designated by the Compensation Committee.
In light of the strong shareholder support on our say‑on‑pay proposal in 2015, we made no significant changes to the executive compensation program based on concerns or issues raised by our shareholders. We continue to desire feedback from our shareholders on our executive compensation program and will consider the views of our shareholders as we evaluate our compensation program in 2016.
2015.
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Principal Position | Year |
| ($) |
| ($)(1) |
| ($) |
| ($)(2) |
| ($)(3) |
| Total | ||||||
Judson Bergman | 2015 |
| $ | 450,000 |
| $ | 400,000 |
| $ | 625,008 |
| $ | 366,636 |
| $ | 20,132 |
| $ | 1,861,776 |
Chief Executive Officer | 2014 |
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| 450,000 |
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| 400,000 |
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| 527,184 |
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| 341,342 |
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| 5,200 |
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| 1,723,726 |
| 2013 |
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| 449,583 |
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| 225,000 |
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| 55,776 |
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| 57,424 |
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| 5,100 |
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| 792,883 |
William Crager | 2015 |
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| 350,000 |
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| 100,000 |
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| 409,488 |
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| 240,210 |
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| 327,549 |
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| 1,427,247 |
President | 2014 |
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| 344,500 |
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| 100,000 |
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| 372,376 |
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| 237,090 |
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| 290,010 |
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| 1,343,976 |
| 2013 |
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| 335,000 |
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| 80,000 |
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| 86,533 |
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| 82,400 |
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| 149,900 |
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| 733,833 |
Peter D’Arrigo | 2015 |
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| 313,788 |
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| 242,200 |
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| 296,340 |
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| 178,836 |
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| 5,300 |
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| 1,036,464 |
Chief Financial Officer | 2014 |
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| 305,000 |
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| 275,000 |
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| 276,144 |
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| 178,238 |
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| 5,200 |
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| 1,039,582 |
| 2013 |
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| 287,500 |
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| 150,000 |
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| 60,358 |
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| 48,830 |
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| 17,600 |
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| 564,288 |
Scott Grinis | 2015 |
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| 245,000 |
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| 180,000 |
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| 215,520 |
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| 126,426 |
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| 5,300 |
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| 772,246 |
Chief Technology Officer | 2014 |
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| 239,500 |
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| 200,000 |
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| 167,360 |
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| 104,252 |
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| 10,700 |
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| 721,812 |
| 2013 |
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| 239,500 |
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| 85,000 |
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| 47,861 |
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| 48,830 |
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| 10,600 |
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| 431,791 |
Joshua Mayer(4) | 2015 |
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| 250,000 |
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| 157,000 |
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| 215,520 |
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| 126,426 |
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| 4,542 |
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| 753,488 |
Chief Operating Officer | 2014 |
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| 247,500 |
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| 175,000 |
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| 167,360 |
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| 104,252 |
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| 5,200 |
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| 699,312 |
| Equity Awards (2) | |||||||||||||||||||||||
| Name and Title | Year | Salary ($) | Bonus ($)(1) | Stock Units ($) | Option Awards ($) | Non-Equity Incentive Comp ($)(3) | All Other Comp ($)(4) | Total ($) | |||||||||||||||
Judson Bergman CEO & Chairman of the Board | 2018 | 600,000 | 57,100 | 2,869,369 | — | 642,900 | 30,997 | 4,200,366 | |||||||||||||||
| 2017 | 600,000 | 600,000 | 1,095,362 | 167,126 | — | 26,065 | 2,488,553 | ||||||||||||||||
| 2016 | 600,000 | 440,000 | 4,061,945 | 409,415 | — | 25,160 | 5,536,520 | ||||||||||||||||
Anil Arora Chief Executive, Envestnet | Yodlee | 2018 | 437,750 | — | 1,569,613 | — | — | 14,331 | 2,021,694 | |||||||||||||||
| 2017 | 437,750 | 433,373 | 634,000 | — | — | 13,739 | 1,518,862 | ||||||||||||||||
| 2016 | 425,000 | 381,543 | — | — | — | 14,300 | 820,843 | ||||||||||||||||
William Crager President | 2018 | 375,000 | 14,250 | 1,771,560 | — | 535,750 | 17,285 | 2,713,845 | |||||||||||||||
| 2017 | 375,000 | 500,000 | 545,240 | 83,186 | — | 16,576 | 1,520,002 | ||||||||||||||||
| 2016 | 375,000 | 422,216 | 1,671,525 | 51,050 | — | 14,300 | 2,534,091 | ||||||||||||||||
Peter D’Arrigo Chief Financial Officer | 2018 | 325,000 | — | 981,599 | — | 375,000 | 20,156 | 1,701,755 | |||||||||||||||
| 2017 | 325,000 | 350,000 | 366,135 | 55,864 | — | 18,389 | 1,115,388 | ||||||||||||||||
| 2016 | 325,000 | 295,000 | 1,017,760 | 36,944 | — | 14,960 | 1,689,664 | ||||||||||||||||
Scott Grinis Chief Technology Officer | 2018 | 300,000 | — | 536,136 | — | 248,050 | 93,274 | 1,177,460 | |||||||||||||||
| 2017 | 300,000 | 242,000 | 212,390 | 32,401 | — | 10,313 | 797,104 | ||||||||||||||||
| 2016 | 300,000 | 220,000 | 1,398,079 | 28,212 | — | 7,400 | 1,953,691 | ||||||||||||||||
| (1) | Prior to 2018, amounts paid under our AIP were disclosed in the Bonus column. Bonuses earned for a fiscal year |
| (2) | Amounts disclosed in the Equity Awards column relate to grants of restricted stock units, performance stock units and stock options in the identified year. With respect to each equity grant, the amounts disclosed reflect the full |
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| (3) | Beginning in 2018, amounts paid under our AIP are disclosed in the Non-Equity Incentive Compensation column. Non-Equity Incentive Compensation payments are based on fiscal performance and are paid in the subsequent fiscal year, generally within the first two months (e.g., the amounts earned for 2018 were paid in the February 2019). For more information, see “Executive Compensation - Compensation Components Offered to our NEOs - Annual Incentive Program”. |
| (4) | For Mr. Bergman, the |
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All All Other Other Stock Option Exercise Grant Awards: Awards: or Base Date Fair Number of Number of Price of Value of Shares of Securities Option Stock and Grant Stock or Underlying Awards Option Name Date (1) Units (#) Options (#) ($/Sh) Awards (2) Judson Bergman 2/28/2015 $ $ William Crager 2/28/2015 Peter D’Arrigo 2/28/2015 Scott Grinis 2/28/2015 Joshua Mayer 2/28/2015 Option Awards (1) Stock Awards (2) Equity Incentive �� Equity Plan Awards: Equity Incentive Market or Incentive Plan Plan Awards: Payout Awards: Market Number of Value of Number of Number of Number of Number of Value of Unearned Unearned Securities Securities Securities Shares or Shares or Shares, Units Shares, Units Underlying Underlying Underlying Units of Units of or Other or Other Unexercised Unexercised Unexercised Option Option Stock that Stock That Rights That Rights That Options (#) Options (#) Unearned Exercise Expiration have not Have Not Have Not Have Not Name Exercisable Unexercisable Options (#) Price ($) Date Vested (#) Yet Vested ($) Vested (#) Vested ($) Judson Bergman $ 4/26/2017 4/30/2018 5/15/2019 7/28/2020 2/28/2021 2/28/2022 2/28/2023 2/28/2024 2/27/2025 William Crager 4/26/2017 4/26/2017 4/26/2017 4/30/2018 5/15/2019 7/28/2020 2/28/2021 2/28/2022 2/28/2023 2/28/2024 2/27/2025 Peter D’Arrigo 6/16/2018 7/28/2020 2/28/2021 2/28/2022 2/28/2023 2/28/2024 2/27/2025 Scott Grinis 4/26/2017 4/30/2018 5/15/2019 7/28/2020 2/28/2021 2/28/2022 2/28/2023 2/28/2024 2/27/2025 Joshua Mayer 5/15/2019 7/28/2020 2/28/2021 2/28/2022 2/28/2023 2/28/2024 2/27/2025 Option Awards Stock Awards Number of shares Value realized on Number of shares Value realized on acquired on exercise exercise acquired on vesting vesting Name (#) ($) (#) ($) Judson Bergman William Crager Peter D’Arrigo Scott Grinis Joshua Mayer amended (the “Code”). “Participants”. Executive Registrant Aggregate Aggregate Aggregate Contributions Contributions Withdrawals/ Earnings Balance Name in Last FY(1) in Last FY Distributions in Last FY at Last FYE Scott Grinis $ $ $ The amounts in this column are also included in the Summary Compensation Table as follows: the $258,000 listed for Mr. Bergman is included in the Salary 2015The following table contains information concerning grants of plan‑based awards made in 20152018 to our named executive officers.11,600 17,400 53.88 991,645 7,600 11,400 53.88 649,698 5,500 8,250 53.88 470,176 4,000 6,000 53.88 341,946 4,000 6,000 53.88 341,946 Estimated Future PayoutsUnder Non-Equity IncentivePlan Awards (1) Estimated Future PayoutsUnder Equity IncentivePlan Awards (2) All Other StockAwards: Numberof Shares of Stock or Units(3) Fair MarketValue ofRestricted Stockon Grant Date($/Share) Grant Date FairValue of Stockand OptionAwards(3) ($)Name Grant Date(1) Threshold($) Target($) Maximum($) Threshold(Shares) Target(Shares) Maximum(Shares) Judson Bergman 2/28/2018 — — — — — — 38,000 55.10 2,093,800 3/15/2018 300,000 600,000 750,000 — — — — — — 3/15/2018 — — — 6,334 12,667 19,001 — 61.23 775,600 AnilArora 2/28/2018 — — — — — — 19,000 55.10 1,046,900 3/15/2018 216,687 433,373 541,716 — — — — — — 7/31/2018 — — — 4,266 8,532 12,798 — 61.27 522,756 William Crager 2/28/2018 — — — — — — 20,000 55.10 1,102,000 3/15/2018 250,000 500,000 625,000 — — — — — — 3/15/2018 — — — 3,334 6,667 10,001 — 61.23 408,220 7/31/2018 — — — 2,133 4,266 6,399 — 61.27 261,378 Peter D'Arrigo 2/28/2018 — — — — — — 13,000 55.10 716,300 3/15/2018 175,000 350,000 437,500 — — — — — — 3/15/2018 — — — 2,167 4,333 6,500 — 61.23 265,310 ScottGrinis 2/28/2018 — — — — — — 7,000 55.10 385,700 3/15/2018 121,000 242,000 302,500 — — — — — — 3/15/2018 — — — 1,229 2,457 3,686 — 61.23 150,442 (1) On March 15, 2018, the Compensation Committee granted non-equity incentive compensation awards. The actual cash value was paid in 2019 based on financial metrics and individual factors as described above AIP section of the CD&A on page 27 above. Each of the financial metrics has a threshold target that must be hit in order to receive a payment equal to 50% of the target value. The threshold value listed in the table above assumes that the threshold amount was hit for each of individual financial metrics and individual factors, but it is possible that a lower amount could be paid out for each executive if the threshold targets are not hit for one or more of the financial metrics. (2) On March 15, 2018 and July 31, 2018 the Board granted performance-based restricted stock unit awards or PSUs. The actual number of PSUs that will become vested is based on financial metrics described above in the Equity Awards section of the CD&A on page 27 above. Each of the financial metrics has a threshold target that must be hit in order to receive a payment equal to 50% of the target value. The threshold value listed in the table above assumes that the threshold amount was hit for each of individual financial metrics, but it is possible that a lower amount could become vested if the threshold targets are not hit for one or more of the financial metrics. (3) All restricted stock units and stock option grants were approved by the Compensation Committee and the Board on their respective grant dates.(2)The fair value of stock options granted was determined using the Black‑Scholes model as of the grant date. The model assumes: (i) the stock option would be exercised 6 years after grant date, (ii) expected stock price volatility of 37.492205%, (iii) a risk‑free yield equal to 1.65% US Treasury STRIPS, and (iv) our dividend yield (0%) would remain constant from grant date to exercise date.Narrative to 20152018 Summary Compensation Table and 20152018 Grants of Plan‑Based Awards TableSee “See “—Compensation Discussion and Analysis”Analysis” above for a complete descriptionmore detailed discussion of the compensation plans pursuant to which the amounts listed under the 20152018 Summary Compensation Tabletable and 20152018 Grants of Plan‑Based Awards Tabletable were paid or awarded, and the criteria on which such payments were based. The Compensation Discussion and Analysis also describes certain grants of stock options to our named executive officers.28The following table lists all outstanding equity awards held by our named executive officers (“NEO”)NEOs as of December 31, 2015:175,000 7.50 36,000 7.50 15,000 7.15 376,000 9.00 10,000 12.55 7,951 12.45 6,272 3,136 15.34 1,212 36,178 6,766 13,534 41.84 8,400 250,740 17,400 53.88 11,600 346,260 2,806 0.11 20,000 1.08 80,000 7.50 14,000 7.50 12,000 7.15 164,000 9.00 25,000 12.55 13,594 12.45 9,000 4,500 15.34 1,880 56,118 4,700 9,400 41.84 5,934 177,130 11,400 53.88 7,600 226,860 186,937 7.50 86,000 9.00 10,000 12.55 10,195 12.45 5,333 2,667 15.34 1,040 31,044 3,533 7,067 41.84 4,400 131,340 8,250 53.88 5,500 164,175 12,000 7.50 9,000 7.50 6,000 7.15 56,000 9.00 10,000 12.55 10,195 12.45 5,333 2,667 15.34 1,040 31,044 2,066 4,134 41.84 2,667 79,610 6,000 53.88 4,000 119,400 800 7.15 20,000 9.00 10,000 12.55 4,418 12.45 5,333 2,667 15.34 1,040 31,044 2,066 4,134 41.84 2,667 79,610 6,000 53.88 4,000 119,400 Option Awards (1) Stock Awards (2) Name Grant
Date Number ofSecuritiesUnderlyingUnexercisedOptions (#)Exercisable Number ofSecuritiesUnderlyingUnexercisedOptions (#)Unexercisable OptionExercisePrice ($) OptionExpirationDate Number ofShares orUnits ofStock thathave notVested (#) MarketValue ofShares orUnits ofStock ThatHave NotYet Vested ($)Judson Bergman 7/28/2010 317,000 — 9.00 7/28/2020 — — 2/28/2011 10,000 — 12.55 2/28/2021 — — 2/28/2012 7,951 — 12.45 2/28/2022 — — 2/28/2013 9,408 — 15.34 2/28/2023 — — 2/28/2014 20,300 — 41.84 2/28/2024 — — 2/27/2015 17,400 — 53.88 2/27/2025 — — 2/29/2016 8,187 745 20.51 2/28/2026 745 36,647 5/12/2016 20,832 4,168 31.03 5/12/2026 41,667 2,049,600 3/28/2017 6,718 4,800 31.70 3/28/2027 14,400 708,336 2/28/2018 — — — — 38,000 1,869,220 3/15/2018 — — — — 12,667 623,090 Anil Arora 12/7/2015 18,333 1,667 32.46 12/7/2025 649 31,924 3/28/2017 — — — — 8,335 409,999 2/28/2018 — — — — 19,000 934,610 7/31/2018 — — — — 8,532 419,689 William Crager 7/28/2010 164,000 — 9.00 7/28/2020 — — 2/28/2011 25,000 — 12.55 2/28/2021 — — 2/28/2012 13,594 — 12.45 2/28/2022 — — 2/28/2013 13,500 — 15.34 2/28/2023 — — 2/28/2014 14,100 — 41.84 2/28/2024 — — 2/27/2015 11,400 — 53.88 2/27/2025 — — 2/29/2016 5,364 488 20.51 2/28/2026 488 24,005 3/28/2017 3,343 2,390 31.70 3/28/2027 7,169 352,643 5/12/2016 — — — — 16,667 819,850 2/28/2018 — — — — 20,000 983,800 3/15/2018 — — — — 6,667 327,950 7/31/2018 — — — — 4,266 209,845 Peter D'Arrigo 7/28/2010 86,000 — 9.00 7/28/2020 — — 2/28/2011 10,000 — 12.55 2/28/2021 — — 2/28/2012 10,195 — 12.45 2/28/2022 — — 2/28/2013 8,000 — 15.34 2/28/2023 — — 2/28/2014 10,600 — 41.84 2/28/2024 — — 2/27/2015 8,250 — 53.88 2/27/2025 — — 2/29/2016 3,882 353 20.51 2/28/2026 353 17,364 3/28/2017 2,245 1,605 31.70 3/28/2027 4,815 — 5/12/2016 — — — — 10,000 491,900 2/28/2018 — — — — 13,000 639,470 3/15/2018 — — — — 4,333 213,140 Scott Grinis 7/28/2010 56,000 — 9.00 7/28/2020 — — 2/28/2011 10,000 — 12.55 2/28/2021 — — 2/28/2012 10,195 — 12.45 2/28/2022 — — 2/28/2013 8,000 — 15.34 2/28/2023 — — 2/28/2014 6,200 — 41.84 2/28/2024 — — 2/27/2015 6,000 — 53.88 2/27/2025 — — 2/29/2016 2,964 270 20.51 2/28/2026 270 13,281 3/28/2017 1,302 931 31.70 3/28/2027 2,793 137,388 8/2/2016 — — — — 8,751 430,462 2/28/2018 — — — — 7,000 344,330 3/15/2018 — — — — 2,457 120,860 (1) Except as otherwise noted,No stock options were granted in 2018. Vesting for all other stock options occurs with one-third (1/3) of the grant award vesting for stock option grants that expire February 28, 2023, February 28, 2024 and February 27, 2025 occurs annually on the anniversary of the grant date where one third vestsand one-twelfth (1/12) vesting every quarter thereafter.(2) Vesting for all RSUs occurs with one-third (1/3) of the grant award vesting on the first anniversary one third vests onof the second anniversarygrant date and the remainder vests on the third anniversary.one-twelfth (1/12) vesting every quarter thereafter.For the PSUs granted to Mr. Bergman, Mr. Crager and Mr. D’Arrigo in 2016, vesting was subject to a performance goal based on EBITDA during 2017. Such performance goal was met as certified by the Compensation Committee in 2018, and such PSUs became “Banked Units” as of the date of such certification with one-third (1/3) of such Banked Units vesting annually thereafter on the anniversaries of the date of grant. The final tranche of such awards is scheduled to vest on May 12, 2019.(2)All of Mr. Bergman’s 1,212 restricted shares vested on February 28, 2016 and one half of his 8,400 restricted shares vest on February 28 of each of 2016 and 2017 and one third of his 11,600 restricted shares vest on February 28 of each of 2016, 2017 and 2018. All of Mr. Crager’s 1,880 restricted shares vested on February 28 of 2016 and one half of his 5,934 restricted shares vest on February 28 of 2016 and 2017 and one third of his 7,600 restricted shares vest on February 28 of each of 2016, 2017 and 2018. All of Mr. D’Arrigo’s 1,040 restricted shares vested on February 28 of 2016, one half of his 4,400 restricted shares vest on February 28 of each of 2016 and 2017 and one third of his 5,500 restricted shares vest on February 28 of each of 2016, 2017 and 2018. All of Mr. Grinis’ 1,040 restricted shares vested on February 28 of 2016 and one half of his 2,667 restricted shares vest on February 28 of 2016 and 2017 and one third of his 4,000 restricted shares vest on February 28 of each of 2016, 2017 and 2018. All of Mr. Mayer’s 1,040 restricted shares vested on February 28 of 2016 and one half of his 2,667 restricted shares vest on February 28 of each of 2016 and 2017 and one third of his 4,000 restricted shares vest on February 28 of each of 2016, 2017 and 2018.Finally, for the PSUs granted in 2018 to all of the named executive officers, vesting is subject to satisfaction of performance goals during a three-year performance period. The performance goals are based on four equally weighted metrics (Revenue growth, Adjusted EBITDA Growth, Adjusted EPS Growth and Relative TSR compared to Russell 2000 Index Constituents). The final number of shares earned under the grants, if any, will vary based on the degree of achievement on each metric. The maximum number of PSUs that can be earned will be 150% of the target award. The PSUs will cliff vest on the three-year anniversary of the date of grant.2920152018 Option Exercises and Stock Vested Option Awards Stock Awards Name Number of sharesacquired on exercise(#) Value realized onexercise($) Number of sharesacquired on vesting(#) Value realized onvesting($)Judson Bergman — — 68,666 3,860,463 Anil Arora — — 57,961 2,861,200 William Crager 12,000 646,055 31,184 1,753,067 Peter D’Arrigo — — 19,981 1,123,260 Scott Grinis — — 17,988 1,001,842 240,000 9,922,023 7,079 381,417 133,334 5,232,789 5,857 315,575 10,000 340,811 4,020 216,598 3,153 169,884 3,540 190,735 On February 9, 2015, the Board adopted the Envestnet, Inc. Executive Deferred Compensation Plan (the “Deferred Compensation Plan”), and the Deferred Compensation Plan became effective March 1, 2015. The Deferred Compensation Plan is an unfunded deferred compensation plan that is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended.Persons eligible to participate in the Deferred Benefit Plan are called “Participants.”Under the Deferred Compensation Plan, Participants have the opportunity to elect to defer receipt of up to 90% of their base salary and bonus. Under the Deferred Compensation Plan, Participants have the right to elect to receive distributions on a specified payment date in the future, or in a lump sum or annual installment payments following the termination of employment. Certain revisions to the distribution election may be made if done in accordance with the Deferred Compensation Plan.Amounts deferred by a Participant under the Deferred Compensation Plan will be credited to a deferral account that will be used to determine the amounts to be paid to the Participant under the Deferred Compensation Plan. Amounts deferred will be credited or debited with a hypothetical rate of return based on the performance of the available measurement funds selected by the Participant among those made available by the Company under the Deferred Compensation Plan. The deferral account represents an unfunded, unsecured promise by the company to pay such amounts in the future, and does not represent ownership of, or any ownership interest in, any particular assets of the company.Company. Participants will at all times be fully vested in all deferral contributions and earnings thereon.The following table sets forth information concerning nonqualified deferred compensation of our named executive officersNEOs who participated in the Deferred Compensation Plan in 2015.2018. The amounts set forth in this table include only contributions made and earnings received during 20152018 and do not include contribution and earnings with respect to the 20152018 bonus paid in 2016.2019.181,715 (3,818) 177,897 Name ExecutiveContributionsin Last FY (1) RegistrantContributionsin Last FY AggregateWithdrawals/Distributions AggregateEarningsin Last FY AggregateBalanceat Last FYEJudson Bergman $ 258,000 — — $ (36,254 ) $ 448,642 Anil Arora — — — (9,563 ) 184,225 Scott Grinis 229,400 — — (24,359 ) 1,250,656 (1) column.
30
The measurement funds available to Participants and the returns earned by those measurement funds in 20152018 were:
| ||||||
Fund Name | Return On Investment | |||||
ClearBridge Variable Small Cap Growth Fund (Class 1) |
| % | ||||
Delaware VIP REIT Series (Standard Class) | )% | |||||
Delaware VIP Small Cap Value Series (Standard Class) |
| )% | ||||
Delaware VIP Value Series (Standard Class) |
| )% | ||||
Fidelity VIP Freedom 2020 SM (Service Class) | (5.98 | )% | ||||
| Fidelity VIP Freedom 2030 SM (Service Class) |
| )% | ||||
Fidelity VIP Freedom 2040 SM (Service Class) |
| )% | ||||
Fidelity VIP Freedom 2050 SM (Service Class) |
| )% | ||||
Fidelity VIP Investment Grade Bond Portfolio (Service Class) |
| )% | ||||
Fidelity VIP Overseas Portfolio (Service Class) |
| )% | ||||
Lincoln VIP Money Market Fund (Standard Class) | % | |||||
LVIP Delaware Special Opportunities Fund (Standard Class) |
| )% | ||||
LVIP J.P. Morgan High Yield Fund (Standard Class) |
| )% | ||||
LVIP S&P 500 Index Fund (Standard Class) |
| )% | ||||
PIMCO VIT Commodity Real Return Strategy Portfolio-AdminCls |
| )% | ||||
PIMCO VIT Total Return (Administrative Class) |
| )% | ||||
over any inconsistent provision of the Employment Agreement and be binding on the executives.
Change in Control.
End”.
31
These amounts assumeif target performance had been satisfied but subject to continued service vesting; provided, that the termination of employment or change in control was effective as of December 31, 2015 and that the price of Common Stock on which the calculations are made was the closing price of $29.85 on that date. We have estimated the value for the acceleration of stock options as of December 31, 2015 for each NEO as follows: Mr. Bergman, $45,503; Mr. Crager, $65,295; Mr. D’Arrigo $38,698; Mr. Grinis $38,698; and Mr. Mayer $38,698. The amounts shown above are estimates of the incremental compensation these officers would receive upon such terminations or a change in control. The actual amountsCompensation Committee may decide to be received can only be determinedaccelerate vesting at the time of the officer’s termination of employment or at the time of asuch change in control.
| Name | Severance Pay ($) | Pro-Rata Bonus ($) | Health Care Continuation ($) | Unvested Stock Options ($) | Unvested RSUs ($) | Unvested PSUs ($) | Total ($) | ||||||||||||||
| Judson Bergman | — | 520,000 | — | 75,691 | — | 2,205,372 | 2,801,063 | ||||||||||||||
| William Crager | — | 461,108 | — | — | — | 954,298 | 1,415,406 | ||||||||||||||
| Anil Arora | — | 407,458 | — | 27,889 | 136,847 | 104,922 | 677,116 | ||||||||||||||
| Peter D’Arrigo | — | 322,500 | — | — | — | 545,185 | 867,685 | ||||||||||||||
| Scott Grinis | — | 231,000 | — | — | 430,462 | — | 661,462 | ||||||||||||||
| Name | Severance Pay ($) | Pro-Rata Bonus ($) | Health Care Continuation ($) | Unvested Stock Options ($) | Unvested RSUs ($) | Unvested PSUs ($) | Total ($) | ||||||||||||||
| Judson Bergman | 2,240,000 | 520,000 | 23,313 | 75,691 | — | 2,205,372 | 5,064,376 | ||||||||||||||
| William Crager | 1,672,216 | 461,108 | 23,313 | — | — | 954,298 | 3,110,935 | ||||||||||||||
| Anil Arora | 437,750 | 407,458 | 19,873 | 27,889 | 136,847 | 104,922 | 1,134,739 | ||||||||||||||
| Peter D’Arrigo | 1,395,000 | 322,500 | 26,551 | — | — | 545,185 | 2,289,236 | ||||||||||||||
| Scott Grinis | 1,062,000 | 231,000 | 26,551 | — | 430,462 | — | 1,750,013 | ||||||||||||||
| Name | Severance Pay ($) | Pro-Rata Bonus ($) | Health Care Continuation ($) | Unvested Stock Options ($) | Unvested RSUs ($) | Unvested PSUs ($) | Total ($) | ||||||||||||||
| Judson Bergman | 2,240,000 | 520,000 | 23,313 | 181,009 | 2,614,203 | 2,672,689 | 8,251,214 | ||||||||||||||
| William Crager | 1,672,216 | 461,108 | 23,313 | 55,797 | 1,360,488 | 1,357,644 | 4,930,566 | ||||||||||||||
| Anil Arora | 437,750 | 407,458 | 19,873 | 27,889 | 1,376,533 | 419,689 | 2,689,192 | ||||||||||||||
| Peter D’Arrigo | 1,395,000 | 322,500 | 26,551 | 38,195 | 893,648 | 705,040 | 3,380,934 | ||||||||||||||
| Scott Grinis | 1,062,000 | 231,000 | 26,551 | 24,027 | 925,461 | 120,860 | 2,389,899 | ||||||||||||||
| ||
James Fox, Ross Chapin Gayle Crowell Gregory Smith | ||
|
|
32
The SEC's rules requiring pay ratio disclosure allow companies to exercise a significant amount of flexibility in making a determination as to who is the median employee and does not mandate that each public company use the same method. In addition, our compensation philosophy means fair pay based on a person's role in the company, a subjective determination of the market value of that person's job and that person's performance in that position. As a result, the annual total compensation of our median employee is unique to that person and is not a good indicator of the annual total compensation of any of our other employees and is not comparable to the annual total compensation of employees at other companies. Similarly, we would not expect that the ratio of the annual total compensation of our CEO to our median employee to be a number that can be compared to the ratio determined by other companies in any meaningful fashion.
Gregory Smith, Ross Chapin James Fox Charles Roame | ||
33
PROPOSAL NO. 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with the rules of the Securities and Exchange Commission, we are asking our stockholders to vote to approve, on an advisory (nonbinding) basis, the compensation of our named executive officers as disclosed in this proxy statement.
As described in detail under the heading “Executive Compensation—Compensation Discussion and Analysis,” our executive compensation program is designed to attract, motivate, and retain talented executives who possess the skills required to formulate and drive our strategic direction and achieve annual and long‑term performance goals necessary to create stockholder value. The program seeks to align executive compensation with stockholder value on an annual and long‑term basis through a combination of base pay, annual incentives and long‑term incentives. The Compensation Committee continually reviews the compensation programs for our named executive officers to ensure they achieve the desired goals of aligning our executive compensation structure with our stockholders’ interests and current market practices. Please read the “Compensation Discussion and Analysis” discussion for additional details about our executive compensation programs, including information about the fiscal year 2015 compensation of our named executive officers.
We believe that our executive compensation programs are structured in the best manner possible to support the company and our business objectives. We are asking our stockholders to indicate their support for our named executive officer compensation as described on pages 22-32 of this proxy statement, which include the “Compensation Discussion and Analysis” section and the compensation tables and related narrative disclosure. This proposal, commonly known as a “say‑on‑pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we will ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“Resolved, that the stockholders approve the compensation of the named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables and related narrative discussion.”
The say‑on‑pay vote is advisory, and therefore not binding on the Company, the Compensation Committee or the Board. However, the Board and the Compensation Committee value the opinions of our stockholders and will review the voting results carefully.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF EXECUTIVE COMPENSATION.
34
2019.
|
|
|
|
|
|
| 2014 |
| 2015 | ||
Audit fees (1) | $ | 1,920,000 |
| $ | 1,660,000 |
Audit-related fees (2) |
| 150,000 |
|
| 130,500 |
Tax fees |
|
|
|
|
|
All other fees |
|
|
|
|
|
Total | $ | 2,070,000 |
| $ | 1,790,500 |
| 2017 | 2018 | |||||||
| Audit fees (1) | $ | 4,904,000 | $ | 5,278,000 | ||||
| Audit-related fees (2) | 114,000 | 315,000 | ||||||
| Tax fees | — | — | ||||||
| All other fees | — | — | ||||||
| Total | $ | 5,018,000 | $ | 5,593,000 | ||||
| (1) | Audit fees include: |
a potential acquisition THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE RECOMMEND RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT AUDITORS. *the audits of our consolidated financial statements and internal control over financial reporting (including audit work performed over acquisitions);*reviews of quarterly consolidated financial statements;*the statutory audit of one of our subsidiaries;*consents issued in conjunction with the filing of registration statements;* comfort letters issued in conjunction with the filing of registration statements in 2014; and*the audit of an acquired business for regulatory purposes in 2014.(2)* Audit‑related fees include:* the statutory audits of two of our subsidiaries; * consent and comfort letter issued in conjunction with the filing of registration statements; (2) Audit‑related fees include:*the audit of our employee benefit plan; and*services to issue Statement on StandardsService Organization Controls (SOC1) reports;* services related to due diligence support for Attestation Engagements (SSAE) No. 16 reports.The Audit Committee pre‑approved all of the services associated with the fees described above. The Audit Committee has adopted policies and procedures for the pre‑approval of all audit and permissible non‑audit services provided by our independent auditor. The Audit Committee provides a general pre‑approval of certain audit and non‑audit services on an annual basis. The types of services that may be covered by a general pre‑approval include other audit services, audit‑related services and permissible non‑audit services. If a type of service is not covered by the Audit Committee’s general pre‑approval, the Audit Committee must review the service on a specific case by case basis and pre‑approve it if such service is to be provided by the independent auditor. Annual audit services, engagement terms and fees require specific pre‑approval of the Audit Committee. Any proposed services exceeding the pre‑approved fees also require specific pre‑approval by the Audit Committee. For both types of pre‑approval, the Audit Committee will consider whether such services are consistent with the SEC’s rules on auditor independence. The Audit Committee may delegate either type of pre‑approval authority to one or more of its members.35STOCKHOLDERSHAREHOLDER PROPOSALS FOR 20172020 ANNUAL MEETINGIf you wish to submit a proposal to be considered for inclusion in the proxy material for the next annual meeting, please send it to the Corporate Secretary, Envestnet, Inc., 35 East Wacker Drive, Suite 2400, Chicago, Illinois, 60601. Under the rules of the SEC, proposals must be received no later than December 12, 20162019 and otherwise comply with the requirements of the SEC to be eligible for inclusion in Envestnet’s 20172020 Annual Meeting proxy statement and form of proxy.A stockholdershareholder proposal not included in our proxy statement for the 20172020 Annual Meeting of StockholdersShareholders will be ineligible for presentation at the 20172020 Annual Meeting of StockholdersShareholders unless the stockholdershareholder gives timely notice of the proposal in writing to our secretary at our principal executive offices. Under our by‑laws, in order for a matter to be deemed properly presented by a stockholder,shareholder, timely notice must be delivered to, or mailed and received by, us not less than 90 nor more than 120 days prior to the next annual meeting of stockholders;shareholders; provided, however, that in the event that if we did not hold an annual meeting in the prior year or if the date of the annual meeting is more than 30 days before or after the anniversary date of the prior year’s annual meeting, we must receive the stockholder’sshareholder’s notice by the close of business on the later of 90 days prior to the annual meeting and the 10th day after the day we provided such public disclosure of the meeting date. The notice must set forth, as to each proposed matter, the following: (a) a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend our by‑laws, the language of the proposed amendment), and reasons for conducting such business at the meeting; (b) the name and record address of the stockholdershareholder proposing such business and the beneficial owner, if any, on whose behalf the proposal is made; (c) the number of shares of our common stock that are owned beneficially and of record by the stockholdershareholder and beneficial owner; (d) any material interest of the stockholdershareholder in such business; and (e) any other information that is required to be provided by such stockholdershareholder pursuant to proxy proposal submission rules of the SEC.The Board of Envestnet does not know of any matters which may be presented at the Annual Meeting other than those specifically set forth in the Notice of Annual Meeting. If any other matters come before the meeting or any adjournment thereof, the persons named in the accompanying form of proxy and acting thereunder will vote in accordance with their best judgment with respect to such matters.By Order of the Board of Directors, 
Shelly O’Brien Corporate Secretary APPENDIX ADEFINITIONS AND RECONCILIATIONS OF GAAP AND NON-GAAP FINANCIAL MEASURESIn addition to reporting results according to U.S. GAAP, we also disclose certain non-GAAP financial measures to enhance the understanding of our operating performance. Those measures include “adjusted EBITDA” and “adjusted net income per share”.“Adjusted EBITDA” represents net income (loss) before deferred revenue fair value adjustment, interest income, interest expense, accretion on contingent consideration and purchase liability, income tax provision (benefit), depreciation and amortization, non‑cash compensation expense, restructuring charges and transaction costs, severance, fair market value adjustment on contingent consideration, litigation related expense, foreign currency and related hedging activity, other (income) loss, non-income tax expense adjustment, impairment of equity method investment, loss allocation from equity method investment and loss attributable to non‑controlling interest.“Adjusted net income” represents net income (loss) before deferred revenue fair value adjustment, accretion on contingent consideration and purchase liability, non‑cash interest expense, non‑cash compensation expense, restructuring charges and transaction costs, severance, amortization of acquired intangibles, fair‑market value adjustment on contingent consideration, litigation related expense, foreign currency and related hedging activity, other (income) loss, non-income tax expense adjustment, impairment of equity method investment, loss allocation from equity method investment and loss attributable to non‑controlling interest. Reconciling items are presented gross of tax, and a normalized tax rate is applied to the total of all reconciling items to arrive at adjusted net income. The reconciling items, and resulting adjusted net income, are presented on a different basis than historically shown to eliminate the impact of quarterly volatility of the GAAP tax provision on the Company’s adjusted earnings figures.“Adjusted net income per share” represents adjusted net income attributable to common stockholders divided by the diluted number of weighted‑average shares outstanding.Our Board of Directors
Shelly O’BrienCorporate SecretaryAs measures of operating performance;36To allocate resources to enhance the financial performance of our business;To evaluate the effectiveness of our business strategies; andIn communications with our Board of Directors concerning our financial performance.Our Compensation Committee, Board of Directors and our management may also consider adjusted EBITDA, among other factors, when determining management’s incentive compensation.We also present adjusted EBITDA and adjusted net income per share as supplemental performance measures because we believe that they provide our Board of Directors, management and investors with additional information to assess our performance. Adjusted EBITDA provide comparisons from period to period by excluding potential differences caused by variations in the age and book depreciation of fixed assets affecting relative depreciation expense and amortization of internally developed software, amortization of acquired intangible assets, litigation‑related expense, foreign currency and related hedging activity, income tax provision (benefit), restructuring charges and transaction costs, accretion on contingent consideration, fair market value adjustments on contingent consideration, non-income tax expense, other (income) expense, severance, impairment of equity method investment, loss allocation from equity method investment, loss attributable to non‑controlling interest, and changes in interest expense and interest income that are influenced by capital structure decisions and capital market conditions. Our management also believes it is useful to exclude non‑cash stock‑based compensation expense from adjusted EBITDA and adjusted net income because non‑cash equity grants made at a certain price and point in time do not necessarily reflect how our business is performing at any particular time.We believe adjusted EBITDA and adjusted net income per share are useful to investors in evaluating our operating performance because securities analysts use adjusted EBITDA and adjusted net income per share as supplemental measures to evaluate the overall performance of companies, and we anticipate that our investor and analyst presentations will include adjusted EBITDA and and adjusted net income per share.Adjusted EBITDA and adjusted net income per share are not measurements of our financial performance under U.S. GAAP and should not be considered as an alternative to revenues, net income, operating income or any other performance measures derived in accordance with U.S. GAAP, or as an alternative to cash flows from operating activities as a measure of our profitability or liquidity.We understand that, although adjusted EBITDA and adjusted net income per share are frequently used by securities analysts and others in their evaluation of companies, these measures have limitations as an analytical tool, and you should not consider them in isolation, or as a substitute for an analysis of our results as reported under U.S. GAAP. In particular you should consider:Adjusted EBITDA and adjusted net income per share do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;Adjusted EBITDA and adjusted net income per share do not reflect changes in, or cash requirements for, our working capital needs;Adjusted EBITDA and adjusted net income per share do not reflect non‑cash components of employee compensation;Although depreciation and amortization are non‑cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and adjusted EBITDA does not reflect any cash requirements for such replacements;Due to either net losses before income tax expense or the use of federal and state net operating loss carryforwards in 2018, 2017 and 2016, we had cash income tax payments, net of refunds, of $5,531, $3,261, and $1,114 in the years ended December 31, 2018, 2017 and 2016, respectively. Income tax payments will be higher if we continue to generate taxable income and our existing net operating loss carryforwards for federal and state income taxes have been fully utilized or have expired; andOther companies in our industry may calculate adjusted EBITDA and adjusted net income per share differently than we do, limiting their usefulness as a comparative measure.Management compensates for the inherent limitations associated with using adjusted EBITDA and adjusted net income per share through disclosure of such limitations, presentation of our financial statements in accordance with U.S. GAAP and reconciliation of adjusted EBITDA and adjusted net income per share to net income and net income per share, the most directly comparable U.S. GAAP measure. Further, our management also reviews U.S. GAAP measures and evaluates individual measures that are not included in some or all of our non‑U.S. GAAP financial measures, such as our level of capital expenditures and interest income, among other measures. The following table sets forth the reconciliation of net income (loss) to adjusted EBITDA based on our historical results: Years ended December 31 (in millions) 2013 2014 2015 2016 2017 2018 Net income (loss) $ 3.66 $ 13.98 $ 4.44 $ (55.57 ) $ (3.28 ) $ 4.01 Deferred revenue fair value adjustment 0.16 — 0.32 1.27 0.13 0.12 Interest income (0.02 ) (0.14 ) (0.34 ) (0.04 ) (0.20 ) (2.36 ) Interest expense — 0.63 10.27 16.60 16.35 25.20 Imputed interest expense on contingent consideration 0.79 1.47 — — — — Accretion on contingent consideration — — 0.89 0.15 0.51 0.22 Fair market value adjustment to contingent consideration 0.50 (1.43 ) (4.15 ) 1.59 — — Foreign currency and related hedging activity — — — (0.72 ) 0.49 (0.59 ) Income tax provision (benefit) 2.05 8.53 4.55 15.08 1.59 (13.17 ) Depreciation and amortization 15.33 18.65 27.96 64.00 62.82 77.63 Non-cash compensation expense 8.92 11.42 15.16 33.28 31.33 40.25 Other income — (1.83 ) 0.07 (1.38 ) — — Non-income tax expense adjustment — — — 6.23 0.35 (0.59 ) Impairment of equity method investment — — — 0.73 — — Loss allocation from equity method investment — — — 1.42 1.47 1.15 Restructuring charges and transaction costs 3.30 2.67 13.50 5.78 13.67 15.58 Re-audit related expenses 3.11 — — — — — Severance 0.79 0.74 1.70 4.34 2.32 8.32 Loss attributable to non-controlling interest — 1.23 1.64 1.08 0.32 1.79 Litigation related expense 0.01 0.02 0.07 5.59 1.03 — Adjusted EBITDA $ 38.59 $ 55.94 $ 76.07 $ 99.44 $ 128.89 $ 157.55 Note: Numbers may not sum due to roundingThe following table sets forth the reconciliation of net income (loss) to adjusted net income and adjusted net income per diluted share based on our historical results: 
ANNUAL MEETING OF STOCKHOLDERS OF ENVESTNET, May 11, 2016 INC. INTERNET - Access ���www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page. TELEPHONE - Call toll-free 1-800-PROXIES ( 1-800-776-9437 ) in the United States or 1-718-921-8500 from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call. Vote online/phone until 11:59 PM EST the day before the meeting. MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible. IN PERSON - You may vote your shares in person by attending the Annual Meeting. GO GREEN - e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access. Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. 20433000000000001000 4 051116 2. The approval of the advisory vote on executive compensation. fiscal year ending December 31, 2016: O Gayle Crowell FOR ALL NOMINEES changes to the registered name(s) on the account may not be submitted via Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x 1. The election as director of the nominees listed below (except as marked to the contrary below): NOMINEES: FOR ALL NOMINEESO Judson Bergman O Anil Arora WITHHOLD AUTHORITYO Luis A. Aguilar FOR ALL EXCEPT (See instructions below) INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: FOR AGAINST ABSTAIN 3. The ratification of KPMG LLP as the independent auditors for the MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that this method. Signature of Stockholder Date: Signature of StockholderDate: NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting, proxy statement and proxy card are available at www.envestnet.com COMPANY NUMBER ACCOUNT NUMBER PROXY VOTING INSTRUCTIONS Years ended December 31 (in millions except per share amounts) 2013 2014 2015 2016 2017 2018 Net income (loss) $ 3.66 $ 13.98 $ 4.44 $ (55.57 ) $ (3.28 ) $ 4.01 Income tax provision (benefit) 8.53 4.55 15.08 1.59 (13.17 ) Income (loss) before income tax provision 22.51 8.99 (40.49 ) (1.69 ) (9.16 ) Deferred revenue fair value adjustment 0.09 — 0.32 1.27 0.13 0.12 Non-cash interest expense — 0.33 6.39 8.24 8.99 13.91 Imputed interest expense on contingent consideration 0.46 — — — — — Accretion on contingent consideration — 1.47 0.89 0.15 0.51 0.22 Fair market value adjustment to contingent consideration 0.29 (1.43 ) (4.15 ) 1.59 — — Foreign currency and related hedging activity — — — (0.72 ) 0.49 (0.59 ) Non-cash compensation expense 5.17 11.42 15.16 33.28 31.33 40.25 Other income — (1.83 ) 0.07 (1.38 ) — — Non-income tax expense adjustment — — — 6.23 0.35 (0.59 ) Impairment of equity method investment — — — 0.73 — — Loss allocation from equity method investment — — — 1.42 1.47 1.15 Restructuring charges and transaction costs 2.25 2.67 13.50 5.78 13.67 15.58 Re-audit related expenses 1.80 — — — — — Severance 0.46 0.74 1.70 4.34 2.32 8.32 Amortization of acquired intangible assets 4.90 10.64 17.64 45.52 42.13 53.86 Loss attributable to non-controlling interest — 1.23 1.64 1.08 0.32 1.79 Litigation related expense — 0.02 0.07 5.59 1.03 — Adjusted net income before income tax effect 19.09 47.77 62.20 72.63 101.05 124.84 Income tax effect (18.23 ) (24.51 ) (29.05 ) (40.42 ) (33.71 ) Adjusted net income $ 19.09 $ 29.54 $ 37.70 $ 43.58 $ 60.63 $ 91.14 Diluted number of weighted-average shares outstanding 35.67 36.88 38.39 44.58 46.15 47.38 Adjusted net income per share - diluted $ 0.54 $ 0.80 $ 0.98 $ 0.98 $ 1.31 $ 1.92 Note: Numbers may not sum due to rounding. Income tax effect broken out separately beginning in 2014.
ANNUAL MEETING OF STOCKHOLDERS OF ENVESTNET, INC. May 11, 2016 GO GREEN e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access. NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting, proxy statement and proxy card are available at www.envestnet.com Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. 20433000000000001000 4 051116 to the contrary below): fiscal year ending December 31, 2016: O Gayle Crowell FOR ALL NOMINEES changes to the registered name(s) on the account may not be submitted via Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x 1. The election as director of the nominees listed below (except as marked NOMINEES: FOR ALL NOMINEESO Judson Bergman O Anil Arora WITHHOLD AUTHORITYO Luis A. Aguilar FOR ALL EXCEPT (See instructions below) INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: FOR AGAINST ABSTAIN 2. The approval of the advisory vote on executive compensation. 3. The ratification of KPMG LLP as the independent auditors for the MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that this method. Signature of Stockholder Date: Signature of StockholderDate:
ENVESTNET, INC. 2016 Annual Meeting of Stockholders The Annual Meeting of Stockholders of Envestnet, Inc. will be held on Wednesday, May 11, 2016 at 10:00 a.m. Central Time at 35 East Wacker Drive, Suite 260, Chicago, Illinois. Registration will open at 9:30 a.m. Central Time and the meeting will start promptly at 10:00 a.m. The meeting is expected to last about 30 minutes. IMPORTANT: 1. 2. If you are planning to attend the meeting, please check the box on the proxy on the reverse side. This letter is your admission ticket to the meeting and must be presented to the registration desk on the day of the meeting. - 0 ENVESTNET, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ENVESTNET, INC. The undersigned stockholder(s) of Envestnet, Inc. (the "Company") hereby appoints Judson Bergman or Peter D'Arrigo, or either of them, with full power of substitution, as attorneys and proxies of the undersigned, with the powers the undersigned would possess if personally present, and with full power of substitution, to vote all shares of common stock of the Company at the Annual Meeting of Stockholders of the Company to be held on Wednesday, May 11, 2016, at 10:00 a.m., Central Time, at 35 E. Wacker Drive, Suite 260, Chicago, IL 60601, and at any postponements, continuations or adjournments thereof, upon all subjects that may properly come before the meeting, including the matters described in the Proxy Statement furnished herewith, subject to any directions indicated below. I hereby vote my shares of Envestnet, Inc. common stock as specified on the reverse side of this card. (Continued and to be signed on the reverse side.) 14475 1.1
