UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒x Filed by a party other than the Registranto Check the appropriate box:
|
| |
o | Preliminary Proxy Statement |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
x | Definitive Proxy Statement |
o | Definitive Additional Materials |
o | Soliciting Material pursuant to §240.14a-12 |
STAMPS.COM INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x No fee required.
o Preliminary Proxy StatementoFee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material pursuant to §240.14a-12
STAMPS.COM INC.
| |
(Name of Registrant as Specified in Its Charter)
|
|
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
|
Payment of Filing Fee (Check the appropriate box):
|
☒ (1) | No fee required.
|
o
| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
| (1)
| Title of each class of securities to which transaction applies: |
| |
(2) | | |
| (2)
| Aggregate number of securities to which transaction applies: |
| |
(3) | | |
| (3)
| Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-110‑11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| |
(4) | | |
| (4)
| Proposed maximum aggregate value of transaction: |
| |
o | | |
o
| Fee paid previously with preliminary materials. |
| |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| |
(1) | (1)
| Amount previously paid: |
| |
(2) | | |
| (2)
| Form, Schedule or Registration Statement No.: |
| |
(4) | (3)
| Filing party:
|
| | |
| (4)
| Date filed: |
| | |
1990 E. Grand Avenue
El Segundo, CA 90245
You are cordially invited to attend the
20162019 Annual Meeting of Stockholders of Stamps.com Inc. (the “Annual Meeting”) to be held at 10:00 a.m. Pacific Daylight Savings Time on
Monday,Wednesday, June
13, 2016,12, 2019, at Stamps.com Inc., 1990 E. Grand Avenue, El Segundo, CA 90245.
Your vote at the Annual Meeting is important to us. At the Annual Meeting, you will be asked (i) to elect
one director,two Class II directors, (ii) to approve, on
ana non-binding advisory basis, our executive compensation,
(iii) to approve the 2016 Amendment to the Stamps.com Inc. 2010 Equity Incentive Plan, and
(iv)(iii) to ratify the selection of our independent auditors for
2016.2019. The accompanying Notice of
20162019 Annual Meeting of Stockholders and proxy statement describes the matters to be presented at the Annual Meeting.
Our board of directors unanimously recommends that stockholders vote in favor of (i) the election of the nominated
director,directors, (ii) the resolution approving, on
ana non-binding advisory basis, our executive compensation,
(iii) the approval of the 2016 Amendment to the Stamps.com Inc. 2010 Equity Incentive Plan, and
(iv)(iii) the ratification of our independent auditors for
2016.2019.
Whether or not you plan to attend the Annual Meeting, please mark, sign, date and return your proxy card in the enclosed envelope as soon as possible. Your stock will be voted in accordance with the instructions you have given in your proxy card. Please note that if your stock is held by a bank, broker or other nominee, you must follow the instructions you receive
from your bank, broker or other nominee, to have your stock voted. You may attend the Annual Meeting and vote in person even if you have previously returned your proxy card.
Sincerely,
/s/ Ken McBride
Ken McBride Chief Executive Officer | Sincerely,
|
| |
| /s/ Ken McBride
|
| |
| Ken McBride Chief Executive Officer
|
Los Angeles, California
1990 E. Grand Avenue
El Segundo, CA 90245
NOTICE OF
20162019 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE
13, 201612, 2019
TO THE STOCKHOLDERS OF STAMPS.COM INC.:
NOTICE IS HEREBY GIVEN that the 20162019 Annual Meeting of Stockholders (the “Annual Meeting”) of Stamps.com Inc., a Delaware corporation, will be held on June 13, 2016,12, 2019, beginning at 10:00 a.m. Pacific Daylight Savings Time at Stamps.com Inc., 1990 E. Grand Avenue, El Segundo, CA 90245, for the following purposes:
| |
1. | To elect one directortwo Class II directors to serve for a three-year term ending at the 20192022 annual meeting of stockholders or until his successor istheir successors are duly elected and qualified; |
| |
2. | To approve, on ana non-binding advisory basis, our executive compensation; and |
| 3. | To approve the 2016 Amendment to the Stamps.com Inc. 2010 Equity Incentive Plan; and |
| 4.3. | To ratify the appointment of Ernst & Young LLP as our independent auditors for 2016.2019. |
The foregoing matters are described in more detail in the enclosed proxy statement. Our board of directors has fixed the close of business on April 18, 201615, 2019 as the record date for the determination of our stockholders entitled to notice of, and to vote at, the Annual Meeting and any and all postponements or adjournments thereof. Only those stockholders of record as of the close of business on that date are entitled to notice of and to vote at the Annual Meeting. Our stock transfer books will remain open between the record date and the date of the meeting.Annual Meeting. A list of stockholders entitled to vote at the Annual Meeting will be available for inspection by any of our stockholders, for any purpose germane to the meeting, at the Annual Meeting and during ordinary business hours at our executive offices for a period of ten days prior to the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in person. Whether or not you plan to attend, please sign and return the enclosed proxy card as promptly as possible in the envelope enclosed for your convenience. Should you receive more than one proxy card because your shares are registered in different names and addresses, each proxy should be signed and returned to
assureensure that all your shares will be voted. You may revoke your proxy at any time before the Annual Meeting. If you attend the Annual Meeting and vote by ballot, your proxy will be revoked automatically and only your vote at the Annual Meeting will be counted.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ MATTHEW A. LIPSON
Matthew A. Lipson Chief Legal Officer and Secretary | BY ORDER OF THE BOARD OF DIRECTORS,
|
| |
| /s/ SETH WEISBERG
|
| |
| Seth Weisberg Chief Legal Officer and Secretary
|
Los Angeles, California
Important Notice Regarding Availability of Proxy Materials
for the 20162019 Annual Meeting of Stockholders to be Held on June 13, 2016
12, 2019
Our notice of annual meeting, proxy statement and annual report on Form 10-K are available on the Internet athttp://investor.stamps.com/sec.cfm.sec.cfm.
1990 E. Grand Avenue
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 13, 201612, 2019
The enclosed proxy is solicited on behalf of the board of directors (our
“Board”"Board") of Stamps.com Inc., for use at our Annual Meeting of Stockholders to be held on June
13, 201612, 2019 and at any and all adjournments or postponements thereof (the
“Annual Meeting”"Annual Meeting"). The Annual Meeting will begin at 10:00 a.m. Pacific Daylight Savings Time at Stamps.com Inc., 1990 E. Grand Avenue, El Segundo, CA 90245. This proxy statement and the accompanying proxy card are first being mailed to stockholders on or about May
6, 2016.2, 2019.
Only holders of record of our common stock at the close of business on April
18, 201615, 2019 (the
“Record Date”"Record Date") are entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
17,456,55217,388,024 shares of our common stock were issued and outstanding. Holders are entitled to one vote at the Annual Meeting for each share of common stock held that was issued and outstanding as of the Record Date. A majority of the outstanding shares of our common stock, present in person or represented by proxy, constitutes a quorum for the transaction of business at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting,Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes. Abstentions and broker non-votes are counted as present for purposes of determining the presence or absence of a quorum for the transaction of business.
If you properly sign and return the enclosed form of proxy, your shares represented will be voted at the Annual Meeting in accordance with your specified instructions. If you do not specify how your shares are to be voted, your shares will be voted (i) FOR the election of the
directordirectors proposed by our Board, (ii) FOR the resolution approving, on
ana non-binding advisory basis, our executive compensation,
(iii) FOR the approval of the 2016 Amendment to Stamps.com Inc. 2010 Equity Incentive Plan, and
(iv)(iii) FOR the ratification of our independent auditors for
2016.2019.
If your shares of common stock are held by a bank, broker or other nominee, please follow the instructions you receive from your bank, broker or other nominee to have your shares of common stock voted. If your shares are held by a broker, then the broker will ask you how you want your shares to be voted. If you give the broker instructions, then your shares will be voted as you direct. If you do not give instructions, then for the ratification of the independent auditors, the broker may vote your shares in its discretion, but for the election of
the director,directors, and the approval of our executive compensation
and the 2016 Amendment to the Stamps.com Inc. 2010 Equity Incentive Plan,on a non-binding advisory basis, the broker
mayis not
be entitled to vote your shares at all.
You may revoke or change your proxy at any time before the Annual Meeting by filing with our secretary at 1990 E. Grand Avenue, El Segundo, CA 90245, a notice of revocation or another signed proxy with a later date. You may also revoke your proxy by attending the Annual Meeting and voting in person.
We will bear the entire cost of solicitation, including the preparation, assembly, printing and mailing of this notice of annual meeting, proxy statement, the proxy card and any additional solicitation materials furnished to our stockholders. Copies of solicitation materials will be furnished to brokerage houses, fiduciaries and custodians holding shares in their names that are beneficially owned by others so that they may forward this solicitation material to such beneficial owners. In addition, we may reimburse such persons for costs incurred in forwarding the solicitation materials to such beneficial owners. The original solicitation of proxies by mail may be supplemented by a solicitation by telephone, e-mail or other means by our directors, officers or employees. No additional compensation will be paid to these individuals for soliciting. We intend to post this proxy statement and our 20152018 Annual Report on Form 10-K on our website (http://investor.stamps.com/sec.cfm) for public review. Except as described above, we do not presently intend to solicit proxies other than by mail. We have no present plans to hire special employees or paid solicitors to assist in obtaining proxies, but reserve the option to do so. For our 2015 Annual Meeting last year, we initially had no plans to hire solicitors to assist in obtaining proxies. However, we ultimately engaged a company to provide advisory and consulting services and to act as proxy solicitor in connection with such meeting, at a cost of approximately $25,000 plus expenses. If we do hire solicitors for the 2016 Annual Meeting, the arrangement may or may not be similar to what we did last year.
Annual Meeting Attendance
Attendance and voting at the Annual Meeting is limited to stockholders at the close of business on the Record Date and our invitees. No cameras, recording equipment or other electronic devices will be permitted in the Annual Meeting. In order to be admitted to the Annual Meeting, if you are (i) a stockholder of record, you must bring a valid, government issued photo identification and (ii) if you are a beneficial stockholder you must bring an account statement or letter from your broker or bank showing that you owned stock as of the Record Date and a valid, government issued photo identification. We will not be required to admit any attendees that do not show the documentation specified in the preceding sentence.
Deadline for Receipt of Stockholder Proposals
/ Nominations
Under Securities and Exchange Commission (“SEC”("SEC") Rule 14a-8, proposals of stockholders that are intended to be presented by such stockholders at our 20172020 annual meeting of stockholders and included in the proxy statement and form of proxy relating to that meeting must be received no later than January 3, 2017.2020. Stockholders wishing to submit proposals for the 20172020 annual meeting of stockholders outside of Rule 14a-8 may do so if the proposal was timely received by us under our bylaws, as calculated below. In addition, subject to SEC Rule 14a-4(c), the proxy solicited by our Board for the 20172020 annual meeting of stockholders will confer discretionary authority to vote on any stockholder proposal presented at that meeting if notice of the proposal was not timely received by us under our bylaws, as calculated below. Our bylaws provide that to be timely, notice of a nomination for director or other proposal must be delivered to or mailed and received at our principal executive offices not less than 120 days nor more than 150 days before the one year anniversary of the date of the preceding year's annual meeting.
PROPOSAL ONE: ELECTION OF DIRECTOR
DIRECTORS
Our certificate of incorporation provides for a classified board of directors consisting of three classes of directors with staggered three-year terms, with each class consisting, as nearly as possible, of one-third of the total number of directors. Our Board currently consists of
foursix members.
Our
foursix member Board is currently divided into
three classes comprised of two Class I directors,
onetwo Class II
directordirectors and
onetwo Class III
director.directors.
Class II, the class whose term of office expires at the Annual Meeting, currently consists of
one director.two directors. The
directordirectors elected to this class will serve for a term of three years, beginning on the date of the Annual Meeting and expiring at the
20192022 annual meeting of stockholders, or until
his successor hastheir successors have been duly elected and qualified.
The nomineeEach of the nominees listed below is currently a director.
The
Each nominee for election has agreed to serve if elected, and management has no reason to believe that
theeither nominee will be unavailable to serve. If a nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any substitute nominee who may be designated by our Board to fill the vacancy.
Directors are elected by a plurality of the votes cast on the election of directors, which means that the nominees with the highest number of votes cast in their favor are elected as directors up to the maximum number of directors to be elected. Accordingly,
an abstentiona withhold vote or broker non-vote will have no effect on the outcome of this election. You may not cumulate votes in the election of
director.directors.
Unless otherwise instructed, the proxy holders will vote the proxies received by them FOR the
nomineenominees named below.
The following table sets forth certain information regarding our current directors as of April 15, 2016:2019:
Name
| Age
| Position
|
| | |
Name | Age | Position |
Mohan P. Ananda (1)(2)(3) | 71 72 | Director and Director Nominee |
David C. Habiger (3) | 50 | Director and Director Nominee |
G. Bradford Jones (1)(2) | 61 64 | Director |
Kate Ann May | 52 | Director and Chief Executive Officer of our ShippingEasy subsidiary |
Kenneth T. McBride | 48 51 | Chairman of the Board and Chief Executive Officer |
Lloyd I. MillerTheodore R. Samuels, II (1)(2)(3)
| 61 64 | Director |
| (1) | Member of the Audit Committee |
(1) Member of the Audit Committee
(2) Member of the Nominating Committee
(3) Member of the Compensation Committee
| (2) | Member of the Nominating Committee |
| (3) | Member of the Compensation Committee |
Each of our directors, including our current nominee,nominees, was nominated based on the assessment of our Nominating Committee and our Board that he or she has demonstrated: relevant business experience, excellent decision-making ability, good judgment, and personal integrity and reputation. Our Board consists of, and seeks to continue to include, persons whose diversity of skills, experience and background are complementary to those of our other directors.
Nominee
Nominees For Term Ending at the
20192022 Annual Meeting of Stockholders
Mohan P. Ananda has been one of our directors since 1998. Mr. Ananda is a founder, and currently serves as the chief executive officer and chairman of the board, of Ananda Enterprises, Inc., an investment and management consulting company, and has served there for more than five years. He is also currently serving as the chief executive officer and chairman of the board of Second OpinionExpert, Inc., a healthcare technology company. From 1997 to 1998, Mr. Ananda served as our chief executive officer. From 1986 to 1996, Mr. Ananda was a partner of Ananda & Krause, a law firm. Mr. Ananda also serves on the boards of directors of several privately held companies and previously served on the boards of directors of JAB Holdings Ltd and Envestnet. Mr. Ananda received his B.S. in Mechanical Engineering from Coimbature Institute of Technology in India, his M.S. in Aeronautics from the California Institute of Technology, his Ph.D. in Astrodynamics and Control from University of California, Los Angeles, and his J.D. from the University of West Los Angeles. Mr. Ananda was instrumental in the founding of our company and has extensive experience with the technology and industry of our PC Postage business, and that experience has proven invaluable for our Board.
David C. Habiger joined our board of directors in 2016. Beginning in March 2018, Mr. Habiger has served as Chief Executive Officer of JD Power, a data analytics company. From 2012 to 2016, Mr. Habiger was the Chief Executive Officer and a director of Textura, a cloud based provider of collaboration productivity and payment solutions. From July 2011 until its sale to Cisco Systems in August 2012, Mr. Habiger served as the Chief Executive Officer of NDS Group Ltd., a provider of video software and content security solutions. Previously, Mr. Habiger served as President and Chief Executive Officer of Sonic Solutions, a world leader in digital media tools and software. Mr. Habiger also serves on the boards of directors of the following public companies: Control4 Corp. (Nasdaq: CTRL), where he is the Lead Director; Echo Global Logistics, Inc. (Nasdaq: ECHO), where he sits on the audit and compensation committees; GrubHub Inc. (NYSE: GRUB), where he sits on the audit and compensation committees; and Xperi (Nasdaq: XPER), where he sits on the audit and nominating committees. He is a venture partner at the Pritzker Group and a Senior Advisor to Silver Lake. Mr. Habiger received an MBA from the University of Chicago. Mr. Habiger’s extensive experience operating large organizations, including those that are publicly traded, and his knowledge of technology, business, accounting, and finance, as well as his experience serving on the boards of directors of other companies are invaluable to our Board’s discussions regarding business operations, executive compensation, business strategy, and finance.
Continuing
DirectorDirectors Whose Term Expires at the
20172020 Annual Meeting of Stockholders
Kenneth T. McBridehas served as our chief executive officer and a Board member since August 2001. Beginning in 1999, Mr. McBride has held various positions at Stamps.com:our company: as President from 2001 until January 2012; as chief financial officer from August 2000 to January 2004; and as senior director and vice president of finance from 1999 to 2000. Mr. McBride has also been chairman of our Board since January 2012. From May 2015 through November 2018, Mr. McBride served on the board of directors of CafePress Inc., a recognized pioneer in the customized retail products industry. From August 2012 through January 2014, Mr. McBride served on the board of directors of LegalZoom.com, Inc., the leading provider of Internet-based legal services for small businesses and consumers, where he also served as the chairman of the audit committee, and as a member of the compensation committee. Mr. McBride currently serves on the board of directors of CafePress Inc., a recognized pioneer in the customized retail products industry. Mr. McBride holds a bachelor’s degree, with honors, and a master’s degree, in Electrical Engineering from Stanford University. Mr. McBride also holds an MBA from the Graduate School of Business at Stanford University. Theodore R. Samuels, II joined our board of directors in 2017. From 1981 to his retirement in 2017, Mr. Samuels served the Capital Group Companies, an investment management company that grew to $1.4 trillion during Mr. Samuels's tenure, in a variety of capacities, including as the President of Capital Guardian Trust Company from 2010 to 2017. Mr. Samuels has also been a member of the boards of directors, audit, proxy and finance committees of Capital Group and certain of its affiliates from time to time. Mr. Samuels also serves on the boards of directors of the Perrigo Company plc, a healthcare company based in Ireland (NYSE: PRGO) where he is a member of the audit committee and previously served on the remuneration committee, and Bristol Myers Squibb Company, a leading global biopharmaceutical company (NYSE: BMY). Mr. Samuels received an MBA from Harvard Business School. Mr. Samuels’ extensive experience with and knowledge of investment management, finance, accounting, and business strategy are invaluable to our Board’s discussions on accounting, technology, finance, business strategy, and cash management.
Continuing Directors Whose
Terms ExpireTerm Expires at the
20182021 Annual Meeting of Stockholders
G. Bradford Jones has been one of our directors since 1998. Mr. Jones is currently a general partner at Brentwood Venture Capital, which he joined in 1981, and an advisory partner of Redpoint Ventures, a firm he co-founded in 1999. Mr. Jones currently serves on the boards of directors of several privately held companies. Mr. Jones received his B.A. in Chemistry from Harvard University, his M.A. in Physics from Harvard University and his J.D./M.B.A. from Stanford University. Mr. Jones’Jones' extensive experience with and knowledge of the technology industry, business management, investment management, finance and accounting, and his experience serving on the boards of directors of other companies are invaluable to our Board’s discussions regarding business strategy, accounting, issues, technology, issues, financial issues,finance, cash management, capital allocation, and share repurchase strategies.Lloyd I. Miller has been one of
Kate Ann May joined our directors since 2002. Mr. Miller is an independent investor and has served on numerous corporate boards of publicly traded companies. Mr. Miller currently serves as a director of American Banknote Corporation, a global supplier of secure documents, services and systems. Mr. Miller was also an observer to the board of directors of Crossroads Inc. andin March 2019. Ms. May has served as the chief executive officer of our ShippingEasy subsidiary since we acquired it on July 1, 2016, and our Board determined on July 25, 2018 that she was an executive officer of the company within the meaning of Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934. Ms. May became the chief executive officer of ShippingEasy, Inc., then a non-board nominating committee chairmanfledgling Sydney-based start-up, in 2012. Prior to that, she was the founder and chief executive officer of Lexington Coal Company. Mr. Miller also servedKidspot.com from 2005 to 2012. Ms. May earned her MBA with honors from the University of Texas. Ms. May brings to our Board her extensive experience in the technology industry in general and shipping and mailing technology in particular, as well as her experience as a director of DDI Corp. inbusiness leader constructing successful business models around disruptive technologies and executing to bring exceptional returns to shareholders.
Unless otherwise instructed, the
last five years. He was a memberproxies will vote “for” the election of the
Chicago Stock Exchange, Chicago Board of Trade, and traded actively on the floor of the Chicago Board of Trade from 1978 to 1992. Mr. Miller received his B.A. from Brown University. Mr. Miller’s extensive experience with and knowledge of business management, investment management, accounting, finance, and capital markets, and his experience serving on the boards of directors of other companies are invaluable to our Board’s discussions regarding business strategy, accounting issues, financial issues, cash management, and share repurchase strategies.nominees listed above.
Recommendation of our Board
Our Board recommends that the stockholdersyou vote “FOR” the election of the nomineenominees listed above.
BOARD COMMITTEES AND MEETINGS AND CORPORATE GOVERNANCE
Board Committees and Meetings
Our Board held
fiveseven meetings during
2015 and acted by unanimous written consent on three occasions.2018. Each director attended
or participated in 75% or more of the aggregate of (i) the total number of meetings of our Board and (ii) the total number of meetings held by all committees of our Board on which such director served during
2015.2018. Our Board members are not required to attend our annual meetings of stockholders, and no director, other than our chief executive officer, attended our annual meeting
of stockholders in
2015.2018. Our Board has a standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, a Compensation Committee and a Nominating Committee.
Audit Committee. The Audit Committee currently consists of three directors, Messrs. Ananda, Jones and Miller,Samuels, and is primarily responsible for hiring our independent auditors, approving the services performed by our independent auditors and reviewing their reports regarding our accounting practices and systems of internal accounting controls. Mr. Jones serves as the chairman of our Audit Committee. The Audit Committee acts pursuant to a written charter adopted by our Board, which is available on our website at http://investor.stamps.com/documentdisplay.cfm?DocumentID=1898. All members of the Audit Committee are, and during 2018 were, non-employee directors and are “independent” pursuant to the rules of The NASDAQ Stock Market and SEC rules. In addition, our Board has determined that each of Messrs. Jones and MillerSamuels is an “audit"audit committee financial expert”expert" as defined by applicable SEC rules. Our Audit Committee held five meetings during 2015.2018.
Compensation Committee. The Compensation Committee currently consistsconsisted of two directors, Messrs. Ananda and Miller.Habiger, throughout 2018. The Compensation Committee is primarily responsible for reviewing and approving our general compensation policies and setting compensation levels for our executive officers. Our Compensation Committee also has the authority to administer our employee stock purchase plan and our stock incentive plan and to grant awards under our stock incentive plan. Mr. Habiger serves as the chairman of our Compensation Committee. All members of the Compensation Committee are non-employee directors and are “independent” pursuant to the rules of The NASDAQ Stock Market. The Compensation Committee acts pursuant to a written charter adopted by our Board, which is available on our website at http://investor.stamps.com/documentdisplay.cfm?DocumentID=1896. The Compensation Committee will only delegate its authority to the extent consistent with our certificate of incorporation and bylaws and applicable laws, regulations and listing standards. No compensation consultant was engaged to provide advice or recommendations on our executive or director compensation for 2015.2018. The Compensation Committee held two meetings and acted by unanimous written consent on thirteen occasions during 2015.2018.
Nominating Committee. The current members of our Nominating Committee arethroughout 2018 were Messrs. Ananda Jones and Miller.Jones. All members of the Nominating Committee are non-employee directors and are “independent” directors under the rules of The NASDAQ Stock Market. The Nominating Committee acts pursuant to a written charter adopted by our Board, which is available on our website at http://investor.stamps.com/documentdisplay.cfm?DocumentID=1894. The Nominating Committee held one meeting during 2015.2018.
The responsibilities of the Nominating Committee include (i) screening and recommending to our Board qualified candidates for election or appointment to our Board; (ii) recommending the number of members that shall serve on our Board; (iii) evaluating and reviewing the independence of existing and prospective directors; and (iv) reviewing and reporting on additional corporate governance matters as directed by our Board.
Our Nominating Committee manages the process for evaluating current Board members at the time they are considered for re-nomination. After considering the appropriate skills and characteristics required on our Board, the current makeup of our Board, the results of the evaluations, and the wishes of our Board members to be re-nominated, our Nominating Committee recommends to our Board whether those individuals should be re-nominated. Our Nominating Committee also periodically reviews with our Board whether it believes our Board would benefit from adding one or more new members, and if so, the appropriate skills and characteristics desired in such new member(s). If our Board determines that a new member would be beneficial, our Nominating Committee solicits and receives recommendations for candidates and manages the process for evaluating candidates. All potential candidates, regardless of their source (including candidates recommended by stockholders), are reviewed under the same process. Our Nominating Committee screens the available information about the potential candidates. Based on the results of the initial screening, interviews with viable candidates are scheduled with Nominating Committee members, other members of our Board and senior
members of management. Upon
completion of these interviews and other due diligence, our Nominating Committee may recommend to our Board the election or nomination of a candidate.
We expect that candidates for independent director will typically be found through recommendations from current
directors.directors, although recommendations may come from other sources as well. For example, in 2016, we hired an executive search firm that assisted us in searching for new director candidates. Our stockholders may also recommend director candidates by sending the candidate’s name, age, resume, amount of our stock beneficially owned and other information required in solicitations of proxies for the election of directors, to the Nominating Committee under the provisions set forth below for communication with our Board. To be timely, a recommendation must be delivered to or mailed and received not less than one-hundred twenty (120) days prior to our annual meeting at which directors are to be elected. No such suggestions from our stockholders were received in time for the Annual Meeting.
The Nominating Committee has no predefined minimum criteria for selecting director nominees, although it believes that all directors should share qualities such as business experience, excellent decision-making ability, good judgment, personal integrity and excellent reputation. In any given search, the Nominating Committee may also define particular characteristics for candidates to balance the overall skills and characteristics of our Board and our perceived needs. However, during any search, the Nominating Committee reserves the right to modify its stated search criteria for exceptional candidates. Although the Nominating Committee does not have a formal policy with respect to diversity, the Nominating Committee endeavors to seek nominees representing diverse experience in policy-making positions in business and technology, and in areas that are relevant to our activities.
Furthermore, the Nominating Committee Charter provides that it is committed to actively seeking out highly qualified women and individuals from minority groups to include in the pool from which Board nominees are chosen.
Compensation Committee Interlocks and Insider
Participation.Participation
The Compensation Committee currently consists of two directors, Messrs. Ananda and
Miller. NeitherHabiger. None of these individuals was one of our officers or employees during
20152018 or had any relationship with us requiring disclosure under Item 404 of Regulation S-K. None of our current executive officers has ever served as a member of the board of directors or the compensation committee of any other entity that has or has had one or more executive officers serving as a member of our Board or Compensation Committee.
Any stockholder who desires to contact our Board may do so by writing to the following address: Board of Directors, c/o Legal Department, Stamps.com Inc., 1990 E. Grand Avenue, El Segundo, CA 90245. Communications received are distributed to an independent Board member, as well as other members of our Board, as appropriate, depending on the facts and circumstances outlined in the communication
received.received, within the discretion of the Legal Department.
We are required to identify directors who are independent under standards defined by SEC rules governing proxy statement disclosures. Our Board has determined that, except for Mr. McBride
and Ms. May, each of our directors qualifies as an independent director under the rules of The NASDAQ Stock Market, the standard applied to us by such SEC rules. Mr. McBride is not independent because he serves as our chief executive
officer.officer, and Ms. May is not independent because she serves as the chief executive officer of our ShippingEasy subsidiary.
Board Leadership Structure and Role in Risk Oversight
Our Board combined the role of chairman and chief executive officer effective January 13, 2012. Our Board believes that the chief executive officer is best situated to serve as chairman because he is the director most familiar with our business and industry and is therefore best able to identify the strategic priorities to be discussed by the Board. Our Board believes that combining the role of chairman and chief executive officer facilitates information flow between management and the Board and fosters strategic development and execution. Our Board has not appointed a lead independent director as all members of our Board take an active role in evaluating our risks and strategic direction. Each committee of our Board is responsible for evaluating certain risks and overseeing the management of such risks. The Compensation Committee is responsible for overseeing the management of risks
relating to our executive compensation plans and arrangements. The Audit Committee oversees the process by which our senior management and the relevant departments assess and manage our exposure to, and management of, financial risks as well as potential conflicts of interest. The Nominating Committee manages risks associated with the independence of our Board. Our entire Board is regularly informed about these risks and oversees the management of these risks and regularly reviews information regarding our operations and finances as well as our strategic direction. Our Board’s role in risk oversight has
not affectedconfirmed our Board’s determination that its leadership structure is most appropriate for our
company.company, as the Board is fully integrated into the risk oversight function.We have adopted a written code of business and ethical conduct (our “Code of Ethics”) that applies to our principal executive officer, principal financial officer and principal accounting officer. Our Code of Ethics, which also applies to our directors and all of our officers and employees, can be found on our web site, at http://investor.stamps.com/documentdisplay.cfm?DocumentID=1897. We intend to make all required disclosures concerning any amendments to, or waivers from, our Code of Ethics on our web site at http://investor.stamps.com. Upon request to our secretary, we will provide a copy of our Code of Ethics to any person without charge. Our Board
has periodically independently reviewed compensation levels of other company boards,
most recently in April
2014 and established2017, at which time it set our Board service compensation level
at approximatelysomewhat below the average level of
3891 comparable publicly traded technology companies with
revenuemarket capitalization between
$100$1 billion and
$300 million and market cap over $400 million (as set forth$3 billion. Such comparable companies, which are also identified on Annex
A).A, had average revenue of approximately $560 million, average market capitalization of approximately $1.8 billion and average net income of approximately $20 million. Our Board expects to review its compensation as needed or as proposed by any director, but in any event at least every four years. Although our executive officers may provide background data in connection with this process, they are generally not involved in the decision on Board compensation except to the extent that Mr. McBride, our chief executive officer,
isand Ms. May, the chief executive officer of our ShippingEasy subsidiary, are involved as
a membermembers of our Board.
The following summarizes our non-employee director compensation. Directors who are also our employees do not receive any additional compensation for Board service.
Cash Compensation. Each of our non-employee directors receives an annual retainer of $30,000, $1,400$45,000, together with $1,500 for each Board meeting attended and $700$800 for each Board committee meeting attended. Additional annual retainers are paid for service on our Audit Committee or Compensation Committee as follows: the chairman of the Audit Committee receives an additional $15,000;$18,000; other members of the Audit Committee receive an additional $5,000;$6,000; the chairman of the Compensation Committee receives an additional $10,000;$13,000; and other members of the Compensation Committee receive an additional $4,000.$5,000. Directors are reimbursed for all reasonable expenses incurred by them in attending Board and committee meetings.
Option Grants. Each individual who joins our Board as a non-employee director and has not previously been one of our employees automatically receives, at the time of his or her initial election or appointment, an option to purchase 5,000 shares of our common stock. In addition, on the date of each annual meeting of stockholders, each individual who is to continue to serve as a non-employee Board member, whether or not that individual is standing for re-election at that particular annual meeting, automatically receives an option to purchase 5,000 shares of our common stock. Each option granted to our non-employee directors vests immediately, and has an exercise price per share equal to the fair market value per share of our common stock on the grant date and will havehas a maximum term of ten years. All non-employee directors who were serving at such time received automatic option grants on June 17, 201511, 2018 for 5,000 shares each of our common stock at an exercise price per share of $70.77,$266.95, the fair market value per share of our common stock on the grant date.
Director Compensation Table
The following table contains information with respect to the compensation of our non-employee directors for
2015:Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(1)(2) | Total ($) |
Mohan Ananda | | 50,900 | | | 118,100 | | | 170,400 | |
G. Bradford Jones | | 55,500 | | | 118,100 | | | 175,000 | |
Lloyd I. Miller | | 56,900 | | | 118,100 | | | 176,400 | |
the fiscal year ended December 31, 2018:
|
| | | | | | |
Name | | Fees Earned or | | Option | | |
| Paid in Cash | | Awards | | Total |
| ($) | | ($)(1)(2) | | ($) |
Mohan Ananda | | $72,100 | | $510,565 | | $582,665 |
David C. Habiger | | $70,100 | | $510,565 | | $580,665 |
G. Bradford Jones | | $77,500 | | $510,565 | | $588,065 |
Theodore R. Samuels, II | | $65,500 | | $510,565 | | $576,065 |
| |
(1) | The amounts in this column represent the aggregate grant date fair value of option awards granted in 2015,2018, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation ("ASC 718"). See Note 2 of our “Notes to Consolidated Financial Statements” in our annual report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2019 for a discussion of assumptions we made in determining the amounts included in this column. For each non-employee director, the aggregate grant date fair value in this column is equal to the individual grant date fair value of the options to purchase 5,000 shares of common stock granted on June 11, 2018, as such directors received only one grant of options during 2018. |
Topic 718, Compensation—Stock Compensation (“ASC 718”). See Note 2 of our “Notes to Consolidated Financial Statements” in our annual report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2016 for a discussion of assumptions we made in determining the amounts included in this column. For each director, the aggregate grant date fair value in this column is equal to the individual grant date fair value of the options to purchase 5,000 shares of common stock granted on June 17, 2015, as directors received only one grant of options during 2015.
| |
(2) | As of December 31, 2015,2018, Mohan Ananda held options to purchase 20,00015,000 shares of our common stock, David C. Habiger held options to purchase 15,000 shares of our common stock, G. Bradford Jones held options to purchase 50,00030,000 shares of our common stock and Lloyd I. MillerTheodore R. Samuels, II held options to purchase 45,00015,000 shares of our common stock. |
PROPOSAL TWO: ADVISORY VOTE ON EXECUTIVE COMPENSATION
As required pursuant to Section 14A of the Securities Exchange Act of 1934, we are giving our stockholders the opportunity to vote, on
ana non-binding advisory basis, to approve our executive compensation. 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. In
2015, our2018, the advisory vote on
our executive compensation was approved by approximately
70%ninety-six and six-tenths percent
(96.6%) of the
votes cast.shares present and entitled to vote. These results represented
overwhelming majority support for our named executive officer compensation.
However, we continually strive to understand and respond to our stockholders’ opinions and concerns, including those held by the 30% of votes cast against executive compensation in 2015, regarding our executive compensation structure, and we have sought feedback from stockholders and designed our compensation structure with those in mind (see “Executive Compensation – Compensation Discussion and Analysis”).As described in detail under the heading “Executive Compensation—Compensation Discussion and Analysis,” our executive compensation structure is designed to attract and retain executives who have the skills and experience necessary to achieve our corporate goals, to align management’s interests with those of long-term stockholders, and to attract and retain executive management talent by providing overall compensation that is comparable to what is available through other employment opportunities for those individuals. We believe our total compensation is designed to reflect the value created for stockholders while supporting our strategic goals. Please read the
“Executive Compensation”"Executive Compensation" section, including “Compensation Discussion and Analysis,” for additional details about our executive compensation programs, including information about the fiscal
20152018 compensation of our named executive officers.
We will ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“
RESOLVED, that the stockholders of Stamps.com Inc. hereby approve, on
ana non-binding advisory basis, the compensation of the named executive officers, as disclosed in Stamps.com Inc.’s Proxy Statement for the
20162019 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosures.
”This vote is advisory, and therefore not binding on us, our Board or our Compensation Committee. However, our Board and Compensation Committee value the opinions that our stockholders express in their votes and will consider the outcome of this vote when considering future executive compensation arrangements as they deem appropriate.
The next “say-on-pay” advisory vote will occur at our 2020 annual meeting of stockholders based on the recommended advisory vote on the frequency of future advisory votes on executive compensation taken at our 2017 annual meeting of stockholders. Abstentions will be counted towards the tabulations of votes cast and will have the same effect as negative votes, whereas broker non-votes, if any, will not constitute votes cast and therefore will have no effect on the outcome of this advisory vote.
Unless otherwise instructed, the proxies will vote “for” the above resolution.
Recommendation of our Board
Our Board recommends that the stockholdersyou vote “FOR” approval of the Non-Binding Advisory Vote on Executive Compensation.
PROPOSAL THREE: 2016 AMENDMENT TO STAMPS.COM INC. 2010 EQUITY INCENTIVE PLAN
General
We are asking stockholders to approve an amendment (the “2016 Amendment”) to the Stamps.com Inc. 2010 Equity Incentive Plan (the “2010 Plan”), which 2016 Amendment was adopted by our Board on April 28, 2016, subject to such stockholder approval. The 2016 Amendment increases the maximum aggregate number of shares of common stock and stock equivalents available for issuance pursuant to awards under the 2010 Plan by an additional one million two hundred thousand (1,200,000) shares. Except for this increase in the number of shares available for awards, the 2010 Plan otherwise remains unchanged by the 2016 Amendment.
Prior to the 2016 Amendment only 293,798 shares remained available for awards under the 2010 Plan as of April 18, 2016. The 2016 Amendment was adopted by our Board (i) in order to recognize and provide equity incentives to continue to drive our strong growth and performance, as evidenced by a substantial increase in our market capitalization, revenue and adjusted EBITDA, and the successful completion of the ShipStation®, ShipWorks® and Endicia® acquisitions, which were completed in June 2014, August 2014 and November 2015, respectively; and (ii) to continue to have sufficient awards available for grant to our employees and directors, consistent with the factors described in the Compensation Discussion and Analysis provided with this Proxy Statement. Those factors include: the individual’s position and scope of responsibility; the vesting period (and thus, retention value) remaining on the grantee’s previously granted options; the grantee’s ability to affect profitability and stockholder value; the grantee’s historic and recent job performance; equity compensation for similar positions at comparable companies; and the value of stock options in relation to other elements of total compensation.
We believe that a cost-effective and competitive equity compensation program that includes awards that have not yet vested, is essential for recruiting, motivating, and retaining talented employees, including our executive managers and named executive officers. For this reason, combined with the other factors listed above, our Board approved the 2016 Amendment on April 28, 2016.
As required by the applicable NASDAQ rules, the 2016 Amendment will not become effective unless it is approved by our stockholders.
Key Considerations
In its determination to approve the 2016 Amendment, our Board reviewed an analysis prepared by our management that included the following:
The company has gained 306 new employees through acquisitions in 2014 and 2015; however, as a result of the depletion of our option pool, approximately 180 of those employees do not have any stock options, and the company wishes to give those employees grants to align their interests with those of our shareholders.
Our current option pool has been depleted owing to grants of (i) approximately 720,000 options made to key personnel of the companies we acquired in 2014 and 2015 (and which are intended to be the primary option grant over a vesting period of three to four years for those employees), (ii) a special one-time grant to certain members of our executive management of an aggregate of 175,000 shares related to the close of the Endicia acquisition and in recognition of the significant effort involved in that acquisition, and (iii) routine grants to other Stamps.com employees.
We had significant growth in 2015, with 2015 revenue up 45% to $214.0 million, non-GAAP net income up 90% to $77.2 million, adjusted non-GAAP EBITDA up 87% to $82.6 million and non-GAAP earnings per fully diluted share up 79% to $4.43.
On the back of our 2015 results, our stock price appreciated by 128% (from $47.99 to $109.61) from December 31, 2014 to December 31, 2015.
Additionally, as a result of our company’s long term performance, our stock finished 2015 up 727% from its level at December 31, 2010, versus an increase of 89% for the Nasdaq Market index over the same five-year period.
The average percentage that the number of shares of our common stock subject to awards granted under the 2010 Plan bears to our weighted average outstanding shares during each of the last three fiscal years was 6.44%, compared to 8.74% for all companies in the Russell 3000 in the Software & Services industry.
Making grants of options that vest over multiple years are a key tool for incentive alignment that we seek to use with our employees, including the employees of any businesses we may seek to acquire.
The following paragraphs include additional information to help assess the potential dilutive impact of awards under the 2010 Plan.
The 1,200,000 shares requested to be provided under the 2016 Amendment in this Proposal 3 represent 6.87% of the 17,456,552 issued and outstanding shares as of April 18, 2016.
The following table sets forth additional relevant information about all of our outstanding awards and available shares under all of our equity plans with outstanding or available awards, all of which plans have been approved by our stockholders:
| As of December 31, 2015 | As of April 18, 2016 |
Total Stock Options Outstanding | 3,106,000 | 3,326,967 |
Total Restricted Stock Unit Awards Outstanding | 0 | 0 |
Total Restricted Stock Awards Outstanding | 0 | 0 |
Weighted-Average Exercise Price of Stock Options Outstanding | $37.75 | $46.05 |
Weighted-Average Remaining Duration of Stock Options Outstanding | 8.3 years | 8.41 years |
Total Shares Available for Grant under the 2010 Plan | 728,000 | 293,798 |
The 2010 Plan, the 2016 Amendment of which is on the ballot for this annual meeting, is the only active plan that can be used for future equity grants. Nonetheless, at April 18, 2016, option awards under our 1999 Plan remained outstanding which are exercisable to purchase an aggregate of 40,957 shares of our common stock.
Our Board believes the 1,200,000 additional authorized shares to be made available for grants of awards under the 2016 Amendment represents reasonable potential equity dilution and provides management with an appropriate equity plan with which to satisfactorily align the incentives of our employees, directors and other eligible participants to increase the value of our company for all stockholders.
The inclusion of this information in this Proxy Statement should not be regarded as an indication that the assumptions used to determine the number of shares will be predictive of actual future equity grants. These assumptions are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve risks and uncertainties that could cause actual outcomes to differ materially from those in the forward-looking statements, including our ability to attract and retain talent, achievement of performance metrics with respect to certain equity-based awards, the extent of option exercise activity, and others, including those described in our Form 10-K for the year ended December 31, 2015.
Highlights of the 2016 Amendment
The 2016 Amendment increases the maximum aggregate number of shares of stock and stock equivalents authorized for issuance under the 2010 Plan by 1,200,000 shares, subject to stockholder approval of the 2016 Amendment to the 2010 Plan.
As of April 18, 2016, and excluding the effects of the 2016 Amendment, approximately 293,798 shares of stock remain available for future grants of awards under the 2010 Plan, calculated as follows:
Shares authorized for issuance under the 2010 Plan, as of April 18, 2016
| | 5,600,000
| |
Shares issued and/or subject to awards granted under the 2010 Plan, as of April 18, 2016
| | 5,306,202
| |
If stockholders approve the 2016 Amendment, 1,493,798 shares of stock will be available for new grants under the 2010 Plan, as amended.
Summary of the 2010 Equity Incentive Plan
The 2010 Plan contains the following important features:
• Repricing of stock options and stock appreciation rights is prohibited unless stockholder approval is obtained.
• Stock options and stock appreciation rights must be granted with an exercise price that is not less than 100% of the fair market value on the date of grant.
• Automatic replacement of stock options or stock appreciation rights when a stock option or stock appreciation right is exercised with previously acquired shares of our common stock (so-called “reloading”) is not permitted.
• The 2010 Plan has a ten-year term that ends June 16, 2020.
• If an award expires unexercised, or is forfeited, canceled, reacquired by us at cost, satisfied without issuance of stock or payment of cash or is otherwise terminated without being exercised, the unvested or cancelled shares will be returned to the available pool of shares for future awards.
• No more than 700,000 shares and share equivalents may be granted to any one participant in a calendar year.
• “Full value” awards (such as restricted stock and restricted stock units) are counted against the 2010 Plan overall limits as two shares (rather than one), while options and stock appreciation rights are counted as one share.
Administration. The 2010 Plan is administered by the Compensation Committee of our Board. Subject to the provisions of the 2010 Plan, the Compensation Committee has full power and authority to select the participants to whom awards will be granted, to determine (and modify) the specific terms and conditions of each award, including the conditions for the vesting, performance goals and exercisability of the award, and to interpret the 2010 Plan and adopt, amend, or rescind rules, procedures, agreements, and forms relating to the 2010 Plan.
Eligibility. Employees, directors, and third party service providers are eligible to receive awards, although third party service providers and outside directors are not eligible for incentive stock options. The Compensation Committee has the discretion to select the employees, directors, and third party service providers to whom awards will be granted. As of April 18, 2016, we had approximately 585 employees, 3 non-employee directors and 1 consultant who were eligible to participate in the 2010 Plan. The actual number of individuals or entities who will receive awards cannot be determined in advance because the Compensation Committee has the discretion to select the award recipients.
Types of Awards. The following is a brief summary of the types of awards that may be granted:
Stock Options. A stock option (either an incentive stock option or a nonstatutory stock option) entitles the participant to purchase shares of our common stock at specified times at an exercise price set on the grant date. A participant has no rights as a stockholder with respect to any shares covered by the option until the option is exercised by the participant and shares are issued by us. At the time of grant, the Compensation Committee will determine such matters as: (a) whether the award will be an incentive stock option or a nonstatutory stock option; (b) the number of underlying shares; (c) the exercise price, which may not be less than 100% of the fair market value of a share on the grant date; (d) the vesting schedule; and (e) the term of the option, which may not exceed 10 years from the grant date.
Stock Appreciation Right (“SAR”). An SAR is an award entitling the participant to receive cash or shares, or a combination thereof, with a value equal to any increase in the value of our shares from the date of grant to the date of exercise. The amount of the award to be paid on an exercise date is determined by multiplying the number of shares for which the SAR is exercised by the excess of the fair market value of a share on the date of exercise over the per share exercise price. For cash-settled SARs, the participant will have no rights as a stockholder. For stock-settled SARs, the participant will have no rights as a stockholder with respect to any shares covered by the SAR until the award is exercised by the participant and we issue the shares. At the time of grant, the Compensation Committee will determine such matters as: (a) the number of shares subject to the award; (b) whether the award will be settled in cash, shares, or a combination of both; (c) the exercise price,
which may not be less than 100% of the fair market value of a share on the grant date; (d) the vesting schedule; and (e) the term of the SAR. A SAR may be granted independently or in combination with a related stock option. The term of an SAR may not exceed 10 years from the grant date.
Restricted Stock and Restricted Stock Units. A restricted stock award is an award to the participant of shares of our stock, which may be subject to restrictions on sale or transfer and/or recoverable by us if specified conditions are not met. A restricted stock unit is an award entitling the participant to receive shares or the cash equivalent of shares at a future date, subject to restrictions. In either case, the lapse of these restrictions may be based on continuing employment (or other business relationship) with us and our subsidiaries and/or achievement of performance goals. At the time of grant, the Compensation Committee will determine such matters as: (a) the number of shares subject to the award; (b) the purchase price or consideration (if any) for the shares; (c) the restrictions placed on the shares; (d) the date(s) when the restrictions placed on the shares will lapse or the performance period during which the achievement of the performance goals will be measured; and (e) in the case of restricted stock units, whether the award will be paid in shares or the cash equivalent of the value of shares. During the period that the restrictions are in place, a participant granted restricted stock will have the rights of a stockholder, including voting and dividend rights, but not the right to sell or transfer the shares, and subject to the obligation to return the share under specified circumstances. A participant granted restricted stock units does not have stockholder rights until shares are issued, if at all.
Qualified Performance-Based Awards. Any of the awards under the 2010 Plan may be granted as qualified performance-based awards under Section 162(m) of the Code. As determined by the Compensation Committee, the performance goals applicable to an award may be based upon one or more of the following performance criteria: revenue; gross profit or margin; operating profit or margin; earnings before or after interest, taxes, depreciation, and/or amortization; net earnings or net income (before or after taxes); earnings per share; share price (including, but not limited to, growth measures and total stockholder return); cost reduction or savings; return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales or revenue); cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity and cash flow return on investment); productivity ratios or other metrics; performance against budget; market share; working capital targets; economic value added (net operating profit after tax minus the sum of capital multiplied by the cost of capital); financial ratio metrics; and organizational/transformation metrics. These measures may be measured against our performance or other benchmarks. The Compensation Committee may provide in any such award that any evaluation of performance may include or exclude certain specified events that occur during a performance period.
Limited Transferability of Awards. Awards generally may not be sold or transferred, other than by will or by the applicable laws of descent and distribution or pursuant to a domestic relations order entered by a court of competent jurisdiction.
Effect of Change in Control and other Corporate Transactions. In the event of (i) a Change in Control with respect to us as defined in the 2010 Plan, including certain changes in ownership or Board composition, specified mergers, or sale of all or substantially all of our assets or (ii) and other merger, consolidation, sale of substantially all of our assets or other reorganization (collectively, (i) and (ii) are referred to as “Covered Transactions” in the 2010 Plan), any outstanding awards that are not assumed by the successor or substituted with an equivalent award (or if we are the surviving company in the transaction, any awards for which the transaction does not result in a continuation of such award) will be fully vested and exercisable, including shares that would not otherwise have been vested and exercisable, and shall remain exercisable for a period of fifteen (15) days from the date of notice from the Compensation Committee to the participant of such acceleration of vesting, and the award shall terminate at the end of such period.
The 2010 Plan grants the Compensation Committee authority to provide that any award shall become fully vested and exercisable in any Covered Transaction, including in the event of a participant’s termination of service without “Cause” or for “Good Reason” (as such terms are defined in the 2010 Plan) within a designated period (not to exceed 18 months) following the effective date of any Covered Transaction. All unvested options currently outstanding under the 2010 Plan vest on involuntary termination of employment within 18 months following a Covered Transaction.
Liquidation. In the event of our proposed liquidation or dissolution, each participant will be notified as soon as practicable before the effective date of the proposed transaction. The Compensation Committee may provide
for a participant to have the right to exercise any outstanding awards until 10 days prior to the transaction (including by accelerating the exercise of awards that would not otherwise be exercisable) and may provide that repurchase options or forfeiture rights on awards can lapse if the proposed transaction takes place as contemplated. To the extent not exercised prior to the transaction, an award will terminate.
U.S. Federal Income Tax Consequences. The following is a summary of the general federal income tax consequences to participants who are U.S. taxpayers and to us relating to awards granted under the 2010 Plan. This summary is not intended to be exhaustive and does not address all matters that may be relevant to a particular participant based upon his or her specific circumstances.
Incentive Stock Options. No taxable income is recognized when an incentive stock option is granted or exercised (except for purposes of the alternative minimum tax). If the participant exercises an incentive stock option and then later sells or otherwise disposes of the shares more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss. If the participant exercises the incentive stock option and then later sells or otherwise disposes of the shares before the end of the two- or one-year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option. Any additional gain or loss will be capital gain or loss.
Nonstatutory Stock Options and Stock Appreciation Rights. No taxable income is recognized when a nonstatutory stock option or a stock appreciation right is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of the shares on the exercise date over the exercise price. Any additional gain or loss recognized upon later disposition of any shares received on exercise is capital gain or loss.
Restricted Stock. The federal income tax consequences of restricted stock depend on the facts and circumstances of each award, including, in particular, the nature of any restrictions imposed with respect to the awards. In general, unless the participant makes a valid election under Section 83(b) of the Code to be taxed at the time of grant of restricted stock, if an award is subject to a “substantial risk of forfeiture” (e.g., conditioned upon the future performance of substantial services by the participant) and is nontransferable, the participant will not have taxable income upon the grant of restricted stock. Instead, at the time the participant holds stock or other property free of any substantial risk of forfeiture or transferability restrictions, the participant will recognize ordinary income equal to the fair market value (on that date) of the shares or other property less any amount paid. Alternatively, the participant may elect under Section 83(b) of the Code to include as ordinary income in the year of grant of restricted stock, an amount equal to the fair market value (on the grant date) of the restricted stock less any amount paid.
Restricted Stock Units. In general, the participant will not have taxable income upon the grant of restricted stock units. Instead, when the restricted stock units vest and the participant receives stock or other property pursuant to the restricted stock units, the participant will recognize ordinary income equal to the fair market value (on the date of receipt) of the shares or other property less any amount paid.
Tax Withholding. Ordinary income recognized on exercise of nonstatutory stock options and stock appreciation rights, on vesting of restricted stock and restricted stock and on delivery of stock or other property under units is subject to income tax and employment tax withholding, unless the participant is a non-employee director or consultant. The Compensation Committee may allow a participant to satisfy his or her tax withholding requirements under federal and state tax laws in connection with the exercise or receipt of an award by electing to have shares withheld, and/or by delivering to us already-owned shares of our common stock.
Tax Effect for Us. We generally will be entitled to a tax deduction for an award under the 2010 Plan in an amount equal to the ordinary income realized by a participant at the time the participant recognizes the income (for example, the exercise of a nonstatutory stock option). However, Section 162(m) of the Code limits our ability to deduct the annual compensation to the principal executive officer and the next three most highly compensated officers (other than the principal financial officer) to $1,000,000 per individual, unless the qualified performance-based compensation requirements of Section 162(m) are met.
This summary does not contain all information about the 2010 Plan. The complete text of the 2010 Plan as amended to date can be found by reading the original 2010 Plan, which can be found in Annex A to our
definitive proxy statement for our 2010 Annual Meeting of Stockholders filed with the SEC on April 28, 2010, together with the 2014 Amendment to the 2010 Plan, which can be found in Annex C to our definitive proxy statement for our 2015 Annual Meeting of Stockholders filed with the SEC on April 28, 2015. A copy of the 2016 Amendment to the 2010 Plan is included as Annex C to this Proxy Statement. The foregoing description of the 2010 Plan is qualified in its entirety by reference to the full text of the 2010 Plan, the 2014 Amendment and the 2016 Amendment, which are incorporated herein by reference.
Other Information
Because all awards made under the 2010 Plan, as amended, will be made at the Compensation Committee’s discretion, the benefits and amounts that will be received or allocated under the 2010 Plan and the 2014 Amendment are not determinable at this time. The closing price of the common stock, as reported on NASDAQ on April 19, 2016, was $95.02 per share.
Vote Required
The affirmative vote of the holders of a majority of the shares of our common stock present at the Annual Meeting in person or by proxy and entitled to vote on this proposal will be required to approve the 2016 Amendment to the Stamps.com 2010 Equity Incentive Plan. Abstentions will be counted towards the tabulation of votes cast and will have the same effect as negative votes, whereas broker non-votes, if any, will not be counted for purposes of determining whether the proposal has been approved.
Recommendation of our Board
Our Board recommends that the stockholders vote “FOR” approval of the 2016 Amendment to the Stamps.com 2010 Equity Incentive Plan.
PROPOSAL FOUR: RATIFICATION OF INDEPENDENT AUDITORS
Our Audit Committee has appointed the firm of Ernst & Young LLP, our independent auditors during
2015,2018, to serve in the same capacity for
2016,2019, and is asking
our stockholders to ratify this appointment. Stockholder ratification of the appointment is not required by our bylaws or by any other applicable legal requirement. However, our Board is submitting the appointment of Ernst & Young LLP to
our stockholders for ratification as a matter of good corporate practice.
If stockholders fail to ratify the appointment, the Audit Committee and our Board will reconsider whether or not to retain Ernst & Young LLP. Even if the appointment is ratified, our Audit Committee in its discretion may direct the appointment of a different independent auditing firm at any time during the year if our Audit Committee believes that such a change would be in our best interests.
A representative of Ernst & Young LLP is expected to be present at the Annual Meeting, will have the opportunity to make a statement if he or she desires to do so, and will be available to respond to appropriate questions.
The ratification of the appointment of Ernst & Young LLP as our independent auditors for
20162019 requires the affirmative vote of the holders of a majority of the shares of our common stock present at the Annual Meeting in person or by proxy and entitled to vote. Abstentions will be counted towards the tabulation of votes cast and will have the same effect as negative
votes, whereasvotes. Brokers may vote on this proposal, and any broker non-votes
if any, will not be counted for purposeswould have no effect on the outcome of
determining whether the proposal has been approved.this vote.
Unless marked to the contrary, proxies received will be voted
FOR“for” ratification of the appointment of Ernst & Young LLP as our independent auditors for
2016.2019.
Recommendation of our Board
Our Board recommends that
the stockholdersyou vote “FOR” the ratification of the appointment of
Ernst & Young LLP to serve as our independent auditors for 2016.2019.
INDEPENDENT AUDITORS’ FEES AND SERVICES
Fees Billed by Ernst & Young LLP during
20152018 and
20142017
During
20152018 and
2014,2017, Ernst & Young LLP provided various audit, audit related and non-audit services to us as follows:
Aggregate fees billed to us by Ernst & Young LLP for professional services rendered for the audit of our annual financial statements, including professional services related to the audits of the effectiveness of internal control over financial reporting, and review of financial statements included in our quarterly reports on Form 10-Q, totaled approximately $689,552$820,834 and $479,020$867,620 during 20152018 and 2014, respectively.Audit-Related Fees
Audit-related fees related to accounting consultations2017, respectively, including for 2017, the services of Ernst & Young LLP in connection with acquisitions totaled approximately $11,880 and $6,504 in 2015 and 2014, respectively.
the filing of a Form S-8 Registration Statement.
Audit-Related Fees
There were no audit-related fees billed to us during 2018 or 2017.
Fees billed to us by Ernst & Young LLP for tax services rendered to us during
20152018 and
20142017 totaled approximately
$25,157$74,482 and
$5,299,$50,968, respectively. Tax services for which we were billed in
20152018 comprised a review of certain federal tax matters
undertaken partlyand tax advice related to the acquisition of MetaPack, and in
2014 and partly in 2015.2017 comprised a review of certain federal tax matters.
We had no fees billed to us by Ernst & Young LLP for professional services during
20152018 or
20142017 other than the audit fees, audit-related fees and tax fees described above.
Our Audit Committee’s charter provides that the Audit Committee pre-approve all audit and permitted non-audit services to be performed by our independent auditors. Pre-approval is generally provided at a meeting of the Audit Committee and covers a specified period of time. Any pre-approval is detailed as to the particular service or category of services covered and is generally subject to a specific budget. The independent auditors and management periodically report to the Audit Committee regarding the extent of services provided by our independent auditors in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve other particular services on a case-by-case basis. All services provided to us by Ernst & Young LLP during
20152018 and
20142017 were pre-approved by the Audit Committee in accordance with this policy.
Determination of Independence
Our Audit Committee and our Board have determined that the fees received by Ernst & Young LLP for the non-audit related professional services listed above are compatible with maintaining Ernst & Young LLP’s independence, and such fees were approved by the Audit Committee.
MANAGEMENT
The following table sets forth certain information regarding our executive officers as of April 15, 2016:
2019:Name
| Age
| Position
|
Kenneth
| | | | |
Name | | Age | | Position |
Ken McBride | 48
| 51 | | Chief Executive Officer and Chairman of the Board of Directors |
Kyle Huebner Jeff Carberry | 45
| 45 | | Chief Financial Officer and Co-President |
James Bortnak Jonathan Bourgoine | 47
| Co-President and Corporate & Business Development48
| | Chief Technology Officer |
Sebastian Buerba | | 44 | | Chief Marketing Officer |
John Clem | 44
| 47 | | Chief Product &Officer |
Kyle Huebner | | 48 | | President |
J. Nathan Jones | | 49 | | Chief Executive Officer of ShipStation |
Amine Khechfe | | 54 | | Chief Strategy Officer |
Seth Weisberg Matt Lipson | 47
| 46 | | Chief Legal Officer and Secretary |
Katie May | | 52 | | Chief Executive Officer of ShippingEasy |
Steve Rifai | | 51 | | Chief Sales Officer |
Mr.
Ken McBride’s biography is set forth above under the heading “Proposal"Proposal One: Election of Director – Continuing DirectorDirectors Whose Term Expires at the 20172020 Annual Meeting of Stockholders.”Kyle Huebner"
Jeff Carberry has beenserved as our chief financial officer since 2004 and on January 13, 2012 was also elected as our co-president.July 31, 2017. Previously, Mr. HuebnerCarberry was our vice president, of marketingfinance from 2001April 2014 to 2004, our vice president of corporate strategy from 2000 to 2001, andJuly 2017, our senior director of corporate strategyfinance from 1999April 2011 to 2000.April 2014 and our director of finance from July 2008 to April 2011. Prior to joining us,Stamps.com, Mr. Carberry was an investment banking associate in the Leveraged Finance division of CIBC World Markets from 19972007 to 1999,2008 and was an investment banking associate at RBC Capital Markets from 2005 to 2007.
Jonathan Bourgoine has been our chief technology officer since February 26, 2018. Before joining our company, Mr. Huebner was a management consultant at Bain & Company. From 1992 to 1995, Mr. HuebnerBourgoine served as a research analystVP and Chief Technology Officer of Mattel, the largest toy manufacturer in the world, from 2011 to 2018. Previously, Mr. Bourgoine served as VP of Infrastructure Engineering and later as SVP of Operations for J.P. Morgan, Inc. PriorYoubet.com, the leading parimutuel horse racing e-commerce gaming website and totalizator platform from 2004 to 1992,2011. Mr. Huebner held various management positions with Melville Corporation. Mr. Huebner received his B.A. in Mathematics from Dartmouth College and hisBourgoine holds an M.B.A. from HarvardCalifornia Coast University and a B.S. in Information Technology from Western Governors University.James Bortnak was elected as co-president and corporate & business development officer as of January 13, 2012. From February 2010 to January 13, 2012 he
Sebastian Buerba has served as our senior vice president, corporate & business development. Mr. Bortnak was previously our chief marketing officer from 2004 to 2009.since January 2012. Previously, Mr. BortnakBuerba served as our vice president, business developmentmarketing from 2002April 2009 to 2004,January 2012, as director, marketing from April 2006 to April 2009, and as a senior member of our Business Development group since joining us in 1999.product strategy manager from July 2004 to April 2006. Prior to joining us,Stamps.com, Mr. Bortnak practiced business law, focusing in the area of technology and start-up companies. Mr. Bortnak holds an LLBBuerba worked as marketing product manager for Telecom Argentina Stet-France Telecom S.A. from the University of British Columbia, and1998 to 2002.
John Clem has been a member of the California Barour chief product officer since 1997.JohnJuly 2016. Previously, Mr. Clem has been served as our chief product & strategy officer sincefrom January 2012.2012 to July 2016. Mr. Clem was our vice president, product and service operations from March 2006 to January 2012. Previously, Mr. Clem served as the director of corporate strategy from March 2003 to February 2004 and as a director of marketing from March 2004 to February 2006. Prior to joining us, Mr. Clem worked as an engineer and manager in the petrochemical and utilities industries and a management consultant at Booz Allen & Hamilton. Mr. Clem received his Bachelor’s Degree, with honors, in Mechanical Engineering from California State Polytechnic University at Pomona and his M.B.A., with honors, from the Ross School of Business at The University of Michigan.
Seth Weisberg
Kyle Huebner has been our president since July 31, 2017. Before that, Mr. Huebner had been our chief financial officer since 2004 and on January 13, 2012 was also elected as our co-president. Previously, Mr. Huebner was our vice president of marketing from 2001 to 2004, our vice president of corporate strategy from 2000 to 2001, and our senior director of corporate strategy from 1999 to 2000. Prior to joining us, from 1997 to 1999, Mr. Huebner was a management consultant at Bain & Company. From 1992 to 1995, Mr. Huebner served as a research analyst for J.P. Morgan, Inc. Prior to 1992, Mr. Huebner held various management positions with Melville Corporation. Mr. Huebner received his B.A. in Mathematics from Dartmouth College and his M.B.A. from Harvard University. Mr. Huebner has retired from his role as president, effective May 2, 2019.
J. Nathan Jones joined ShipStation as its chief executive officer in February 2013 and has been the chief executive officer of our ShipStation subsidiary since we acquired it on June 10, 2014. Our Board determined on July 25, 2018 that Mr. Jones was an executive officer of the company within the meaning of Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934. Prior to joining ShipStation, Mr. Jones was the founder and CEO of AcademicSuperstore from 1998 to 2008 until it was acquired by Journey Education Marketing. Thereafter, he served as the President of Journey Education until its acquisition by Digital River in 2010. Mr. Jones received his B.A. in Finance from the University of Texas.
Amine Khechfe has been our chief strategy officer since July 2016. From November 18, 2015 to July 20, 2016, he served as the general manager of PSI Systems, Inc. (“Endicia”), our wholly owned subsidiary. From July 1, 2007 to November 18, 2015, Mr. Khechfe served as general manager of Endicia, then a wholly owned subsidiary of Newell Rubbermaid, Inc. Mr. Khechfe co-founded Endicia in 1999, and prior to July 1, 2007, Mr. Khechfe held a variety of management roles at Endicia in engineering, management consulting, software development, marketing, business development and sales engineering over the course of his career. Mr. Khechfe earned a Bachelor of Science degree in Engineering from Worcester Polytechnic Institute and a Master of Science in Engineering from Stanford University.
Matt Lipson has been our chief legal officer since 2008 and our secretary since 2001.January 15, 2018. Previously, Mr. Weisberg wasLipson served as our vice president and general counsel from 2001May 2017 to 2008January 2018, deputy general counsel from April 2016 until May 2017, associate general counsel from 2006 until April 2016 and our senior director, IP & licensingcounsel from 1999 until 2001.2002 through 2006. Prior to joining the company, Mr. Weisberg previouslyLipson was an associate at Irell & Manella LLP worked as a software developer and founder at Shortcut Software, created physical computer models at RAND Corporation and was a high school teacher in the Mississippi Teacher Corps.Morrison & Foerster LLP. Mr. WeisbergLipson holds a law degree from Columbiathe University of Michigan Law School and a master’sbachelor’s degree in History from Harvard University of California, Los Angeles.
Katie May’s biography is set forth above under the heading "Proposal One: Election of Director – Continuing Directors Whose Term Expires at the 2021 Annual Meeting of Stockholders."
Steve Rifai has been our chief sales officer since April 19, 2017. Previously, Mr. Rifai served as our senior VP of sales and customer development from July 2016 to April 2017. From November 18, 2015 to July 20, 2016, he served as the VP of customer development of Endicia, our wholly owned subsidiary. Prior to our acquisition of Endicia, from October 2015 to November 18, 2015, Mr. Rifai served as VP of customer development of Endicia, from October 2010 to October 2015 he served as managing director of Endicia, and from April 2000 to October 2010 he served as director of marketing for Endicia. Mr. Rifai held the role of Director of R&D for Ansys, Inc. from April 1999 through April 2000, and several positions at Centric Engineering Systems, Inc. from 1989 through April 1999. Mr. Rifai holds a bachelor’s degreePhD in Physics and AstronomyEngineering from Harvard University and a General Course Certificate from the London School of Economics. Mr. Weisberg is a registered patent attorney.Stanford University.
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis provides qualitative information and context for the information presented in the Summary Compensation Table and other tables and narratives that follow. As discussed above in Proposal Two, in
2015 our2018 the advisory vote on
our executive compensation was approved by approximately
seventyninety-six and six-tenths percent
(70%(96.6%) of the
votes cast.shares present and entitled to vote. These results represented majority support for our named executive officer compensation. We took the percent of approval into account when determining that no specific
changes/changes or revisions would be made to our compensation structure. However, we continually strive to understand and respond to our stockholders’ opinions and concerns regarding our executive compensation structure and will continue to do so in the future. The goals of our executive management compensation program are to attract executives who have the skills and experience necessary to achieve our corporate goals, to align management’s interests with those of long-term stockholders, and to attract and retain executive management talent by providing overall compensation that is comparable to what is available through other employment opportunities for those individuals. Our executive management compensation program is designed to reward our executive team for delivering both short and long term financial results, including annual growth in revenue and adjusted EBITDA
thoughthrough our non-equity incentive plans, and growth in long term
shareholderstockholder value through our equity incentive plans.
Company Performance Highlights
We had an extraordinary year in 2015.
In August 2018, we completed our strategic acquisition of MetaPack. Total revenue rose 45%25% to a record $214.0$586.9 million. Mailing and shipping revenue, which includes service, product and insurance revenue but excludes customized postage and other revenue, was up 46%26% year-over-year to a record $206.7$567.3 million. The strong performance in our core mailing and shipping business contributed to record earnings with non-GAAPGAAP net income up 92%of $168.6 million, compared to $77.2$150.6 million adjusted non-GAAP EBITDA up 87% to $82.6 million,in the prior year, and non-GAAPGAAP net income per fully diluted share of $8.99, compared to $8.19 in the prior year. In 2018, our non-GAAP adjusted income was up 79%6% to $4.43. The company’s strong performance$220.9 million, non-GAAP adjusted EBITDA was reflected by the performance of our common stock price which increased 128% during 2015 (from December 31, 2014up 12% to December 31, 2015).$258.0 million, and non-GAAP adjusted income per fully diluted share up 4% to $11.78.
Non-GAAP adjusted income, non-GAAP adjusted EBITDA and non-GAAP adjusted income per fully diluted share are described further, and are reconciled to their corresponding GAAP measures, in Annex C. We believe the compensation program for the named executive officers has been instrumental in helping us achieve our strong financial performance.
Analysis and Response to Substantial Minority Vote Against Fiscal 2014 Executive Compensation
In response to the minority of our stockholders (approximately 30% of votes cast) that voted against the advisory vote on executive compensation at our 2015 Annual Meeting of Stockholders, the company sought feedback from stockholders regarding their concerns with our executive compensation arrangements. Most stockholders did not cite any specific reason for opposition other than the adverse recommendation of proxy voting service Institutional Shareholder Services (“ISS”).
The Compensation Committee reviewed the factors that ISS asserted as the basis for its adverse recommendation for the advisory vote on compensation with respect to fiscal 2014, and considered a number of these factors in its analysis of fiscal 2015 compensation, including the following:
ISS took issue with the fact that we do not fully disclose the performance goals under the annual incentive program. The Compensation Committee does not believe disclosing such goals would be in the best interests of the Company, because they constitute trade secrets and/or confidential commercial or financial information, the disclosure of which would result in competitive harm to the company.
ISS also cited the discretionary upward adjustments to award amounts earned in fiscal 2014 as a basis for their recommendation. The Compensation Committee felt that such discretionary adjustments were warranted owing to the extraordinary performance and execution of our management team during fiscal 2014. In addition to the then-record revenue and non-GAAP net income metrics that were incorporated in the formula for calculating the 2014 bonus pool, our management team accomplished extraordinary performance achievements in fiscal 2014 which were not contemplated by the 2014 non-equity incentive plan. For example, our management successfully consummated the strategic acquisitions of both ShipWorks and ShipStation during fiscal 2014 and then successfully integrated these businesses.
The Committee did not ultimately make any similar discretionary upward adjustment to the 2015 non-equity incentive plan (the “2015 Plan”) amounts that were earned in fiscal 2015 and are to be paid in 2016. On April 9, 2015, the Committee had approved both the 2015 Plan and a special one-time deal bonus related to the completion and announcement of the intended acquisition of Endicia for certain of our executives and other key employees in the aggregate amount of $280,000 (the “Endicia Deal Bonus”). The Endicia Deal Bonus was a special one-time bonus separate from the 2015 Plan intended to recognize the extraordinary effort of our executive management in the completion of the definitive agreement to acquire Endicia. However, upon the recommendation of our chief executive officer, the Committee determined in April 2016 that the $280,000 Endicia Deal Bonus would be deemed included within the 2015 Plan amounts (even though $20,000 of the Endicia Deal Bonus was not paid to the executive officers), such that the amount to be paid out in May 2016 would be reduced by the $280,000 previously paid.
Finally, ISS expressed concern that our chief executive officer’s total pay increased fivefold from 2013 to 2014, due to a stock option grant in 2014 that is entirely time-vesting and which ISS determined had a $5 million value. The Compensation Committee makes standard grants to our executives, including our chief executive officer, typically once every three years. Accordingly, we believe that the compensation associated with our chief executive’s 2014 option grant should be considered to be compensation for the three year period of fiscal 2014, fiscal 2015 and fiscal 2016. Our Compensation Committee has used time based grants made once every three years as its standard approach for providing the majority of equity incentive awards to our executive officers, including our chief executive officer, since 2002. At the same time, from the beginning of 2002 to the end of 2015, our enterprise value has increased by a total of approximately $2 billion under the leadership of our current chief executive officer and executive management team. In light of the extraordinary long term performance of our company, the Compensation Committee believes its equity compensation strategy has been effective in aligning management incentives with those of long term shareholders. However, for the future grant scheduled to be considered during 2017, the Compensation Committee may consider adjustments to its approach, which may include annual grants of smaller awards and/or some element of performance-based vesting.
Overall Methodology of Setting Compensation
The Compensation Committee sets all compensation for, and awards to, our chief executive officer and all corporate officers, which typically includes our chief financial officer, and co-president, our chief legal officer, our co-president and corporate and business development officer, our chief technology officer, the chief executive officer of our ShippingEasy subsidiary, and the chief product & strategyexecutive officer andof our vice president of postal technology and affairs.ShipStation subsidiary. The Compensation Committee reviews the performance and compensation of our chief executive officer and following discussions with our chief executive officer, establishes his compensation level. For the remaining corporate officers, our chief executive officer makes recommendations to the Compensation Committee, and the Compensation Committee may or may not make adjustments to the recommendations of our chief executive officer before setting the final executive officer compensation.
With respect to equity compensation, the Compensation Committee reviews the performance and equity compensation of our chief executive officer and establishes his equity compensation level. For the remaining corporate officers, our chief executive officer makes recommendations to the Compensation Committee, and the Compensation Committee may or may not make adjustments to the recommendations of our chief executive officer before setting the final executive officer equity compensation.
For executives who are not also corporate officers, our chief executive officer and chief financial officer set the base salary and bonus compensation based on comparable benchmarks and performance of the executive and based on performance of the company, and such compensation is disclosed to the Compensation Committee. However, forcompany. For equity awards to executives who are not also corporate officers, our chief executive officer makes recommendations to the Compensation Committee and the Compensation Committee sets the specific executive manager
equity award based on comparable benchmarks and performance of the executive and based on performance of the company. With respect to equity
A portion of the compensation for the Compensation Committee grants stock options tochief executive management from time to time, generally based upon the recommendationofficer of our chief executive officer. ShippingEasy subsidiary was established in the Management Incentive Plan, dated July 1, 2016, which was entered into in connection with our acquisition of ShippingEasy.
We do not believe our compensation structure and policies are reasonably likely to have a material adverse effect on us, and we
do seek to maintain a compensation structure that discourages excessive risk taking by our executives. We do this by aligning the interests of our management closely with long-term stockholders.
For example,A significant portion of executive management compensation is in equity, and our stock option grants encourage results over a
minimumlonger period of
time because of the typical three
years, helpingyear vesting period and 10 year life of the options awarded to
ensure current results remain sustainable.executive management. This encourages our executive management team to focus on managing our company for long term results.
The majority of our compensation decisions are generally made
earlyin March or April each year,
wherewhen the Compensation Committee
determinesmeets to determine the final incentive compensation for the prior year and establishes the base salaries,
equity grants (when applicable), and
non-equity incentive compensation
modelplan for the coming year for corporate officers.
The Compensation Committee may also meet at other times of the year to address equity grants.On April 15, 2016,March 28, 2018, the Compensation Committee approved the final incentive compensation for 2015,2017, established the base salaries for 2016,2018, and established an incentive compensation plan for 20162018 (all decisions collectively, the “2016“2018 Compensation Decisions”). In doing so, the Compensation Committee and the chief executive officer utilized reports and data from Equilar, Inc. (“Equilar”), a company that provides standardized data based on U.S. proxy data from all publicly traded companies. Equilar.
For each executive manager, a benchmark group (collectively, the benchmark groups for all of our executive management are referred to as the
“2016“2018 Equilar Benchmarks”) was created using individuals that have similar titles and responsibilities at companies (i) having market capitalization of $1 billion to
$3$5 billion; (ii)
located anywherewith corporate headquarters in the United States; and (iii)
operating in
industries that include allthe technology
companies.sector. These parameters
which increased for 2016 from those usedresulted in
2015 to reflect the increase in the sizea set of
our company’s market capitalization, provided companies for our benchmarks that are consistent with the size of our company and
resulted in a set of individual managers within those companies that have the
same general scope of responsibilities
ofas our executive management. Individuals at other companies who were founders, who were interim, who had resigned,
that had unusual compensation, or that had received no cash bonus during the last year (e.g., those that received stock in lieu of cash or whose performance did not warrant
aany cash bonus) as of the date of their
companies’companies' proxy statements were excluded from the analysis. Only proxies filed
afteron January 1,
20152017 or later were included, and compensation was time-adjusted using industry average compensation increases or budgeted increases from company surveys available from Culpepper and Associates (for example, the Compensation Committee assumed a 3.0% average annual increase for time adjusting prior year compensation numbers). The criteria for inclusion of a company
and executive manager in
one of our benchmark groups
were generallywas the same for our
20162018 Compensation Decisions as for the compensation decisions that were made in
2015, except that (i) a higher market capitalization range2017. Lists of
$1 billion to $3 billion was used to reflect the increase in size of our market capitalization during 2015; (ii) revenue was eliminated as a selector as very few companies had revenue in the range of our company and simultaneously had market capitalization in line with our company; and (iii) all U.S. geographies were included to increase the number of companies we had for each executive, where it was noted that the vast majority of comparable companies were located in areas where the cost of living is at or below that of our company. The aforementioned criteria resulted in companies of a size and for which the scope of responsibility for the executive management were generally similar to our company at the time that the 2016 Compensation Decisions were made. Furthermore, the Compensation Committee noted that, when examining the 114 companies that constitute the complete list of all companies across all titles in the 2016 Equilar Benchmarks for all of our executives, at the time of the 2016 Compensation Decisions, Stamps.com had a similar market capitalization of $1.6 billion versus the median market capitalization for the 114 companies of $1.7 billion. Furthermore, Stamps.com ranks very highly in several key financial ratios as compared to the 114 companies, including the 88th percentile for return on equity, the 93rd percentile for return on assets, and the 94th percentile for return on revenue. A list ofthose companies included in the
20162018 Equilar Benchmarks
foridentified as having an executive with similar titles and responsibilities as each of our named executive officers in connection with the
20162018 Compensation Decisions
isare included in Annex B.
On April 5, 2019, the Compensation Committee approved the final incentive compensation for 2018, established the base salaries for 2019, and established an incentive compensation plan for 2019 (all decisions collectively, the “2019 Compensation Decisions”). In doing so, the Compensation Committee and the chief executive officer utilized reports and data from Equilar.
For each executive manager, a benchmark group (collectively, the benchmark groups for all of our executive management are referred to as the “2019 Equilar Benchmarks”) was created using individuals that have similar titles and responsibilities at companies (i) having market capitalization of at least $1 billion; (ii) with revenue between $100 million and $750 million; (iii) with corporate headquarters in the United States; and (iv) operating in the technology sector. These parameters resulted in a set of companies for our benchmarks that are consistent with the size of our company and resulted in a set of individual managers within those companies that have the same general scope of responsibilities as our executive management. Individuals at other companies who were founders, who were interim, who had resigned, that had unusual compensation, or that had received no cash bonus during the last year (e.g., those that received stock in lieu of cash or whose performance did not warrant any cash bonus) as of the date of their companies' proxy statements were excluded from the analysis. Only proxies filed on January 1,
2018 or later were included, and compensation was time-adjusted using industry average compensation increases or budgeted increases from company surveys available from Culpepper and Associates (for example, the Compensation Committee assumed a 3.0% average annual increase for time adjusting prior year compensation numbers). For our 2019 Compensation Decisions, in selecting our comparable companies, the Compensation Committee eliminated the $5 billion market capitalization limit for our comparable companies but added a requirement that such companies have revenue in the range of $100 million to $750 million. The Compensation Committee felt this provided a set of companies for each executive manager that had comparable revenue and market capitalization. All other criteria for inclusion of a company and executive manager in one of our benchmark groups was the same for our 2019 Compensation Decisions as for the 2018 Compensation Decisions. Lists of those companies included in the 2019 Equilar Benchmarks identified as having an executive with similar titles and responsibilities as each of our named executive officers in connection with the 2019 Compensation Decisions are included in Annex B.
Each Element of Compensation, Why We Pay It, and How We Determine Amounts
We currently compensate our executive management, which consists of
sevennine members, including our named executive officers, through three main elements: base salary, incentive pay and equity participation. Certain members of our executive management also have post-termination compensation arrangements.
| • | Base Salary.Base Salary. We pay a base salary to each member of our executive management (each, an “executive manager”) in order to allow the executive manager to cover his or her living expenses and in order to compete with other employers. We generally establish base salaries for each individual on an annual basis based on (i) the responsibilities of the individual’s position, (ii) the individual’s salary history and performance with us and perceived ability to influence our financial performance in the short and long-term, (iii) the compensation of our other employees, and (iv) an evaluation of salaries for similar positions in our benchmark group and other competitive factors. We generally seek to set individual base salaries within a reasonable range versus comparable individuals in our benchmark group, taking into account factors such as individual performance and seniority, and taking into account the performance of our company relative to comparable companies under the 2019 Equilar Benchmarks.
2018 Base Salaries
For 2018, each corporate officer at the time of the March 28, 2018 Compensation Committee action had his base salary to each member of our executive management (each, an “executive manager”) in order to allow the executive manager to cover his living expenses and in order to compete with other employers. We generally establish base salaries for each individual on an annual basis based on (i) the responsibilities of the individual’s position, (ii) the individual’s salary history, performance and perceived ability to influence our financial performance in the short and long-term, (iii) the compensation of our other employees, and (iv) an evaluation of salaries for similar positions in our benchmark group and other competitive factors. We generally seek to set individual base salaries within a reasonable range versus comparable individuals in our benchmark group, taking into account factors such as individual performance and seniority, and taking into account the performance of our company relative to comparable companies under the 2016 Equilar Benchmarks. |
For 2016, each corporate officer’s base salary was set by the Compensation Committee between the 3825th and 6682thnd percentile versus the 20162018 Equilar Benchmarks. In particular, the salaries for our chief executive officer and our chief financial officer and co-president, for 20162018 were set at approximately the 5268ndth percentile versus their respective 2016 Equilar Benchmarks. In addition, the salaries for our co-president and corporate and business development officer, chief product & strategy officer and chief legal officer were set at the 6625th, 38th and 51st percentiles, respectively, versus the 20162018 Equilar Benchmarks.
The 2018 salary for our chief technology officer was set pursuant to our hiring negotiations with him. The chief executive officers of our ShipStation and ShippingEasy subsidiaries were not executive officers at the time 2018 salaries were set. Accordingly, their 2018 base salaries were established through evaluation and comparison to Culpepper data for employees in similar positions, which is the same method we generally use for all our non-executive officers.
The Compensation Committee believes that the range of base salaries it set is reasonable. In setting the 2016
2019 Base Salaries
For 2019, each executive officer's base salaries of executive management,salary was set by the Compensation Committee noted that when examiningin a range between the 114 companies that constitute51st and 99th percentile versus the complete list of all companies across all titles in2019 Equilar Benchmarks. In particular, the 2016salaries for our chief executive officer and our chief financial officer for 2019 were set at approximately the 99th and 76th percentiles, respectively, versus their 2019 Equilar BenchmarksBenchmarks. In addition, the salary for allour chief technology officer, the chief executive officer of our executives, Stamps.com ranks very highly in several key financial ratios, including the 88th percentile for return on equity, the 93rd percentile for return on assets,ShippingEasy subsidiary and the 94chief executive officer of our ShipStation subsidiary were set at the 51st, 66th percentile for return on revenue. and 99th percentiles, respectively, versus the 2019 Equilar Benchmarks.
The Compensation Committee believes that the range of base salaries it set is reasonable.
The following table sets forth the base salaries
for our named executive officers established by the Compensation Committee for
2016.Name and Principal Position | 2016 Base Salary | Percent Increase from 2015 Base Salary | 2016 Base Salary Percentile Versus 2016 Equilar Benchmark |
Kenneth McBride | $ | 665,417 | | | 10 | % | 52nd percentile |
Chief Executive Officer and Chairman of the Board of Directors
| | | | | | |
| | | | | | | |
Kyle Huebner | $ | 398,125 | | | 9 | % | 52nd percentile |
Chief Financial Officer and Co-President
| | | | | | |
| | | | | | | |
James Bortnak | $ | 362,646 | | | 9 | % | 66th percentile |
Co-President and Corporate & Business Development Officer
| | | | | | |
| | | | | | | |
John Clem | $ | 340,083 | | | 18 | % | 38th percentile |
Chief Product & Strategy Officer
| | | | | | |
| | | | | | | |
Seth Weisberg | $ | 367,200 | | | 15 | % | 51st percentile |
Chief Legal Officer and Secretary
| | | | | | |
2019.
|
| | | | | | |
Name and Principal Position | | 2019 Base Salary | | Percent Increase from 2018 Base Salary | | 2019 Base Salary Percentile Versus 2019 Equilar Benchmark |
Ken McBride | | $845,518 | | 5.0% | | 99th percentile |
Chief Executive Officer and Chairman of the Board of Directors | | | | | | |
| | | | | | |
Jeff Carberry | | $425,000 | | 19.7% | | 76th percentile |
Chief Financial Officer | | | | | | |
| | | | | | |
Jonathan Bourgoine | | $372,750 | | 5.0% | | 51st percentile |
Chief Technology Officer (beginning 2-26-2018) | | | | | | |
| | | | | | |
Nathan Jones | | $462,000 | | 5.0% | | 99th percentile |
CEO of our ShipStation subsidiary | | | | | | |
| | | | | | |
Katie May | | $400,000 | | 33.3% | | 66th percentile |
Chief Executive Officer of our ShippingEasy subsidiary | | | | | | |
For information concerning the base salaries paid to each of our named executive officers for 2015,2016, 2017 and 2018, see “Summary Compensation Table.”
Non-Equity Incentive Plan Compensation. We pay non-equity incentive plan compensation to our corporate officers in order to provide incentives for them to drive the business toward annual goals that are set by the Compensation Committee. Our incentive-based compensation for fiscal 20152018 was based on a group bonus pool. The total bonus pool begins with a base pool amount, which is then adjusted based on a formula using our actual performance relative to certain financial targets for the year. (The Compensation Committee also retains the right to adjust the pool for other factors.) Once the final group bonus pool is set after year end, the Compensation Committee allocates it to individual members of executive management based on (i) individual performance and contributions during the year and (ii) individual total compensation relative to the compensation benchmarks. No individual executive manager has an individual bonus guarantee, and in order to earn and receive a bonus, an executive manager must be employed on the date of the Compensation Committee meeting where the final bonus plan outcome is determined.
On April 9, 2015,March 28, 2018, the Compensation Committee approved a non-equity incentive plan for 20152018 (the “2015“2018 Plan”) under which membersour corporate officers, including some of our executive management, including our named executive officers, are eligible for cash bonus awards to be paid in 2016.2019. The 20152018 Plan setsets a base level aggregate bonus pool of $1,800,000$4.1 million (the “2015“2018 Base Pool”) and providedprovides that the actual bonus pool for 20152018 could range from zero to twice the 20152018 Base Pool based on our performance in 20152018 relative to pre-set targets for revenue and non-GAAP adjusted EBITDA (which, as publicly reported by the company, typically excludes non-recurring and/ and / or non-cash items such as ASC 718-related expenses, litigation charges, non-recurring adjustments, changes in the ShipStation earn-outnon-cash contingent consideration valuation, corporate development / acquisition expenses, and other one-time and non-recurring items). The Compensation Committee set the amount of the 20152018 Base Pool at $1,800,000,$4.1 million so that, if executive management performedperforms at a reasonable level and is able to generate results at the midpoint of the guidance range, as a group they would receive a total cash compensation for 2015 slightly above2018 at the median level (at the 7174stth percentile) versus the 2015 Equilar Benchmarks. If the executive management were to achieve performance that would resultof those companies in the 2015 bonus pool being set at the $1.8 million level, the 2015 Plan would represent approximately 42% of the total fiscal 2015 compensation for the executive managers eligible for bonuses under the 2015 Plan.
2018 Equilar Benchmark.
The Compensation Committee had established revenue and non-GAAP adjusted EBITDAtargets for purposes of the 20152018 Plan based on the latest publicly available guidance at the time of the 20152018 Compensation Decisions were made – that is the guidance issued by us was on February 12, 2015,21, 2018, when we stated that we expected 20152018 revenue to be in a range of $160$530 million to $180$560 million, and 20152018 non-GAAP net earnings per fully diluted shareadjusted EBITDA to be in a range of $2.50$245 million to $2.90.$265 million. The final 20152018 financial results were revenue of $214.0$586.9 million, and non-GAAP adjusted EBITDA of $82.6$258.0 million. Under the 20152018 Plan, the revenue result generated an increase to the 20152018 bonus pool of 32.5%27.5%, and the non-GAAP adjusted EBITDA result generated an increase to the 20152018 bonus pool of 66.6%5.0%, and the two factors were added together to generate a total increase of 99.1%32.5% to the 2018 Base Pool.
Prior to making the final decision on the
20152018 Plan, the Compensation Committee discussed individual performance of the executive managers, the performance of Mr. McBride in his overall leadership of our company, and the overall company performance. Mr. McBride and the
rest of the executive management team,
among other things, completed the strategic acquisition of MetaPack and generated very positive
20152018 financial results including: (i) total revenue of
$214.0$586.9 million, up
45%25% versus
2014;2017; (ii) non-GAAP adjusted EBITDA of
$82.6$258.0 million, up
87%6% versus
2014;2017; (iii) non-GAAP net income
from operations of
$77.2$252.2 million up
92%12% versus
2014;2017; and (iv) non-GAAP
net earningsadjusted income per fully diluted share of
$4.43$11.78 up
79%4% versus
2014; (v) paid customers growth from 525,000 to 633,000 during 2015;2017. After considering the company and
(vi) total postage printed growth of 51% to $2.7 billion for 2015. In light of the aforementioned factors,individual executive management performance, the Compensation Committee
decided to set the
aggregate final
20152018 Plan
bonus to $3,584,000, or 199.1% of the 2015 Base Pool.On April 9, 2015, the Compensation Committee approved a special one-time deal bonus related to the completion and announcement of the intended acquisition of Endicia for certain of the company’s executives and other key employees in the aggregate amount of $280,000 (the “Endicia Deal Bonus”). These bonuses were not covered under the 2015 Plan but rather were special one-time bonuses to recognize the extraordinary effort of the executive management in the completion of the definitive agreement to acquire Endicia.
Mr. McBride voluntarily recommended that the $280,000 Endicia Deal Bonus also be included within the 2015 Plan amounts (even though $20,000 of the Endicia Deal Bonus was not paid to the executive officers), such thatat the amount to be paid out in May 2016 would be reducedyielded by the $280,000 previously paid. Although the Endicia Deal Bonus amounts are reflected as “bonuses” in our Summary Compensation Table for 2015, these amounts areformula included in the amounts earned by2018 Plan, or $5.4 million, an increase of 32.5% over the executive management under the 2015 Plan and will reduce the resulting May 2016 payments to the executive management team by an aggregate amount of $280,000.
2018 Base Pool.
Once the Compensation Committee established the
20152018 Plan bonus pool level, the Compensation Committee discussed allocation of the bonus pool for the individual executive managers. The Compensation Committee believed that
eachall of the executive managers performed
very successfullywell in
2015.2018.Based on these factors and an assessment that each of the named executive officers had satisfied his or her individual goals and objectives, the Compensation Committee set the individual allocation of the 20152018 bonus pool as well as 2018 discretionary and/or contractual bonuses for executives compensated outside of the 2018 bonus pool. The compensation was as follows:
Name and Principal Position | 2015 Non-Equity Incentive Plan (To Be Paid in May 2016) | Endicia Deal Bonus (Paid in April 2015) | 2015 Non-Equity Incentive Plan plus Endicia Deal Bonus | 2015 Total Base Salary plus 2015 Non-Equity Incentive Plan plus 2015 Bonus Compensation | 2015 Total Base Salary plus Non-Equity Incentive Plan Compensation Plus Endicia Deal Bonus Versus 2016 Equilar Benchmarks |
Kenneth McBride | $ | 1,033,000 | | $ | 100,000 | | $ | 1,133,000 | | $ | 1,728,833 | | 54th percentile |
Chief Executive Officer and Chairman of the Board of Directors
| | | | | | | | | | | | |
| | | | | | | | | | | | | |
Kyle Huebner | $ | 520,000 | | $ | 50,000 | | $ | 570,000 | | $ | 934,583 | | 83rd percentile |
Chief Financial Officer and Co-president
| | | | | | | | | | | | |
| | | | | | | | | | | | | |
James Bortnak | $ | 467,000 | | $ | 20,000 | | $ | 487,000 | | $ | 820,125 | | 92nd percentile |
Co-President and Corporate & Business Development Officer
| | | | | | | | | | | | |
| | | | | | | | | | | | | |
John Clem | $ | 400,000 | | $ | 20,000 | | $ | 420,000 | | $ | 707,083 | | 78th percentile |
Chief Product & Strategy Officer
| | | | | | | | | | | | |
| | | | | | | | | | | | | |
Seth Weisberg | $ | 440,000 | | $ | 50,000 | | $ | 490,000 | | $ | 810,000 | | 84th percentile |
Chief Legal Officer and Secretary
| | | | | | | | | | | | |
| | | | | | | | | | | | | |
All other executive officers | $ | 444,000 | | $ | 20,000 | | $ | 464,000 | | $ | 1,040,225 | | Not meaningful |
| | | | | | | | | | | | | |
Total | $ | 3,304,000 | | $ | 260,000 | | $ | 3,564,000 | | $ | 6,040,850 | | 77th percentile |
|
| | | | | | | | | | | | | | |
Name and Principal Position | | 2018 Non-Equity Incentive Plan (To Be Paid in May 2019) | | 2018 Bonus Compensation (1)(2)(3) | | 2018 Total Base Salary plus 2018 Non-Equity Incentive Plan plus 2018 Bonus Compensation | | 2018 Total Base Salary plus Non-Equity Incentive Plan Compensation Plus 2018 Bonus Compensation Versus 2019 Equilar Benchmarks |
Ken McBride | | $ | 1,900,000 |
| | — |
| | $ | 2,705,255 |
| | 85th percentile |
Chief Executive Officer and Chairman of the Board of Directors | | | | | | | | |
| | | | | | | | |
Jeff Carberry | | $ | 525,000 |
| | — |
| | $ | 880,000 |
| | 99th percentile |
Chief Financial Officer | | | | | | | | |
| | | | | | | | |
Jonathan Bourgoine (1) | | — |
| | $ | 350,000 |
| | $ | 705,000 |
| | 82nd percentile |
Chief Technology Officer | | | | | | | | |
| | | | | | | | |
Nathan Jones (2) | | — |
| | $ | 500,000 |
| | $ | 940,000 |
| | 99th percentile |
Chief Executive Officer of our ShipStation subsidiary | | | | | | | | |
| | | | | | | | |
Katie May (2)(3) | | — |
| | $ | 450,000 |
| | $ | 750,000 |
| | 82nd percentile |
Chief Executive Officer of our ShippingEasy subsidiary | | | | | | | | |
| | | | | | | | |
All other executive officers eligible to participate in the 2018 Plan | | $ | 2,975,000 |
| | — |
| | $ | 5,516,936 |
| | Not meaningful |
| | | | | | | | |
Total | | $ | 5,400,000 |
| | $ | 1,300,000 |
| | $ | 11,497,191 |
| | 91st percentile |
| |
(1) | Mr. Bourgoine received a discretionary bonus for 2018 as negotiated in connection with his hire, and did not participate in the 2018 Plan. |
| |
(2) | Each of Mr. Jones and Ms. May was not an executive officer at the time the 2018 Plan was established, and did not participate in the 2018 Plan. Each of Mr. Jones and Ms. May received a discretionary bonuses for 2018 separate from the 2018 Plan. |
| |
(3) | Ms. May's 2018 bonus compensation in this table does not include a $202,600 cash bonus paid to Ms. May which was earned during 2018 under the Management Incentive Plan. |
For additional information concerning the compensation of each of our named executive officers for
2015,2018, see “Summary Compensation Table.”
On April 15, 2016,5, 2019, the Compensation Committee approved a non-equity incentive plan for 20162019 (the “2016“2019 Plan”) under which our corporate officers, including some of our named executive officers, are eligible for cash bonus awards to be paid in 2017.2020. The 20162019 Plan sets a base level aggregate bonus pool of $2.3$4.9 million (the “2016“2019 Base Pool”) and provides that the actual bonus pool for 20162019 could range from zero to twice the 20162019 Base Pool based on our performance in 20162019 relative to pre-set targets for revenue and non-GAAP adjusted EBITDA (which, as publicly reported by the company, typically excludes non-recurring and/and / or non-cash items such as ASC 718-related expenses, litigation charges, non-recurring adjustments, changes in the ShipStation earn-outnon-cash contingent consideration valuation, corporate development / acquisition expenses, and other one-time and non-recurring items). The Compensation Committee increasedset the sizeamount of the 20162019 Base Pool at $4.9 million to $2.3 million fromequal the $1.8 million 20152018 Base Pool, because ofbut with adjustments to reflect the overallnet increase in the sizenumber of our company and the scope of responsibilities of ourparticipants for 2019. If executive management performs at a reasonable level and becauseis able to generate results at the midpoint of the increaseguidance range, then as a group they would receive total cash compensation for 2019 at the 83rd percentile) of those companies in the size of comparable companies expected to be used in our 2017 Compensation Decisions that are expected to happen in early 2017.2019 Equilar Benchmark.
The latest publicly available guidance issued by us was on February
25, 2016,21, 2019, when we stated that we expected
20162019 revenue to be in a range of
$290$540 million to
$310$570 million, and
20162019 non-GAAP
net income per fully diluted shareadjusted EBITDA to be in a range of
$5.00$145 million to
$5.50.$165 million. The Committee proposed a bonus plan schedule where
a 15%no increase would be applied to the
20162019 Base Pool if the company achieves performance consistent with the mid-point of its public guidance
range and the resulting equivalent non-GAAP adjusted EBITDA.range. The
Committee further proposed a 3%30% decrease be applied to the 20162019 Base Pool if the company achieves performance at the low end of its guidance range and the resulting equivalent non-GAAP adjusted EBITDA.range. The Committee further proposed a 33%30% increase be applied to the 20162019 Base Pool if the company achieves performance at the high end of its guidance range and the resulting equivalent non-GAAP adjusted EBITDA.range. To illustrate some possible outcomes of the 20162019 Plan, the following table (i) shows the potential aggregate pool resulting under the 20162019 Plan if the company achieves a financial outcome at the top end, midpoint, and bottom end of our guidance range and (ii) compares the resulting executive management team total cash compensation to the total cash compensation of the 20162019 Equilar benchmarks:
Company Performance vs. Public Guidance (1) | Total Resulting Bonus Pool (1) | Total Executive Team Compensation (2) | Change in Total Executive Team Compensation versus 2015 Total Executive Team Compensation (2) | Total Team Compensation vs. 2016 Equilar Benchmarks (3) |
Bottom End of Guidance Range ($290 million revenue, $5.00 Non-GAAP EPS) | $ | 2,231,000 | | $ | 4,986,000 | | | -14 | % | 50th percentile |
| | | | | | | | | | |
Midpoint of Guidance Range ($300 million revenue, $5.25 Non-GAAP EPS) | $ | 2,645,000 | | $ | 5,400,000 | | | -7 | % | 60th percentile |
| | | | | | | | | | |
Top End of Guidance Range ($310 million revenue, $5.50 Non-GAAP EPS) | $ | 3,059,000 | | $ | 5,814,000 | | | +1 | % | 70th percentile |
Benchmarks:
|
| | | | | | | | |
Company Performance vs. Public Guidance (1) | | Total Resulting Bonus Pool (1) | | Total Executive Team Compensation (2) | | Change in Total Executive Team Cash Compensation versus 2018 Total Executive Team Cash Compensation (2) | | Total Team Compensation vs. 2019 Equilar Benchmarks (3) |
Bottom End of Guidance Range ($540 million revenue, $145 million Non-GAAP adjusted EBITDA) | | $3,430,000 | | $8,027,000 | | -24% | | 75th percentile |
| | | | | | | | |
Midpoint of Guidance Range ($555 million revenue, $155 million Non-GAAP adjusted EBITDA) | | $4,900,000 | | $9,497,000 | | -10% | | 83rd percentile |
| | | | | | | | |
Top End of Guidance Range ($570 million revenue, $165 million Non-GAAP adjusted EBITDA) | | $6,370,000 | | $10,967,000 | | 4% | | 91st percentile |
| |
(1) | The Compensation Committee retains the right to change the actual bonus pool in its discretion. |
| |
(2) | Total executive management team cash compensation is projected total base salary plus total incentive-based cash compensation for all current executive managers as a group, including all named executive officers and others. |
| |
(3) | Total executive management team cash compensation versus 20162019 Equilar benchmarksBenchmarks is the ranking of total projected executive management team cash compensation versus the total of all 20162019 Equilar benchmarksBenchmarks for all executive managers that are included under the 20162019 Bonus Plan. |
This table merely illustrates certain potential outcomes, and does not represent any statement that the guidance given in February
20162019 continues to be valid. Our actual results may vary from our prior guidance, and those differences may be material.
| • | Equity Incentives. We generally grant equity participation to our executive managers in order to provide direct incentives for them to guide the business toward our long-term goal of increasing stockholder value. Historically, the primary form of equity participation that we awarded our executive management consisted of incentive stock options (ISOs) and non-qualified stock options. We selected this form of equity participation because of the favorable accounting and tax treatments (particularly in past years), and the prevailing convention within the software and technology industry, in which we compete for talent, of providing stock options to executive management employees. When we grant stock options, our practice is for our chief executive officer to meet with the Compensation Committee to discuss appropriate levels of stock option grants for each executive manager. Timing of stock option grants typically relates to (i) new employee hires, (ii) promotions of existing employees, (iii) year-end performance reviews of employees, or (iv) company-wide option grants as deemed appropriate by the Compensation Committee. |
Equity Incentives. We generally grant equity participation to our executive managers in order to provide direct incentives for them to guide the business toward our long-term goal of increasing stockholder value. Historically, the primary form of equity participation that we awarded our executive management consisted of incentive stock options (ISOs) and non-qualified stock options. We selected this form of equity participation because of the favorable accounting and tax treatments (particularly in past years), and the prevailing convention within the software and technology industry, in which we compete for talent, of providing stock options to executive management employees. When we grant stock options, our practice is for our chief executive officer to meet with the Compensation Committee to discuss appropriate levels of stock option grants for each executive manager. Timing of stock option grants typically relates to (i) new employee hires, (ii) promotions of existing employees, (iii) year-end performance reviews of employees, or (iv) company-wide option grants as deemed appropriate by the Compensation Committee.
The only executive officers to receive grants of equity awards in 2018 were our chief technology officer, who received an inducement award upon his hire, and the chief executive officers of our ShipStation and ShippingEasy subsidiaries, who were granted options under our 2010 Equity Incentive Plan prior to their being identified as executive officers of the company.
At its April 5, 2019 meeting, the Compensation Committee examined equity grant practices over the three fiscal years ending in 2018 at 58 public companies (the "2019 Option Benchmarks"): (i) having market capitalization of at least $1 billion; (ii) with revenue between $100 million and $750 million; (iii) operating in the technology sector; and (iv) excluding companies that underwent unusual transactions, such as their initial public offering or acquisitions or restructurings during the analysis period, or had differentiating structural features, such as holding companies and closely held companies. For each 2019 Option Benchmark that issued full-value awards during the measurement period, the Compensation Committee adjusted the full-value awards based on the ratio of the fair value of a full-value award to the fair value of an option to reflect the higher dilutive nature of full-value awards as compared to options. In each individual company case the company-specific ratios were calculated for each company based on information from Equilar and the respective 10-K of each company. This was calculated as the raw value of the option granted (i.e. options multiplied by strike price) divided by the reported fair value of the option grant. A 2.0:1 ratio was assumed where Equilar data was unavailable; this assumption was deemed reasonable as there is a 2.3:1 median where Equilar data was available and our 2010 Plan establishes a 2.0:1 ratio.
The Compensation Committee then decided to issue a company-wide option grant of 1.65 million total options. The Compensation Committee instructed Mr. McBride to develop a recommended allocation for such company-wide option grant and to return to the Compensation Committee with his recommendation. The proposed 1.65 million targeted company-wide option grant is meant to be a retention grant to all existing employees, including executive managers, for the next three years. The proposed 1.65 million company-wide option grant would result in the company granting, in the aggregate, slightly less than the amount of options, measured as a percentage of the number of outstanding shares and options, as were granted by the median of the 2019 Option Benchmarks during the periods reviewed.
We currently do not have specific equity ownership goals relative to benchmarks for our named executive officers. In determining the number of options to be granted to executive officers, the Compensation Committee generally takes into account such factors as the individual’s position and scope of responsibility; the vesting period (and thus, retention value) remaining on the executive’s existing options; the executive’s ability to affect profitability and stockholder value; the individual’s historic and recent job performance; equity compensation for similar positions at comparable companies; and the value of stock options in relation to other elements of total compensation.
On April 9, 2015, pursuantPost-Termination Compensation Arrangements. We provide post-termination compensation arrangements to the 2014 Amendment, the Compensation Committee approved grantscertain members of performance-based stock options to purchase an aggregate of 175,000 shares to our executive management relatedas we believe that it is important to give them some limited protection in the March 24, 2015 announcementevent they are terminated without cause or terminated following a change in control. Further, it is our belief that we had entered into a definitive agreement with Newell Rubbermaid Inc. to acquire Endicia for $215 million in cash. In doing so, the Committee recognizedinterests of stockholders will be best served if the significant effortinterests of our executive team throughmanagement are aligned with them, and providing change in control benefits is designed to eliminate, or at least reduce, any reluctance of executive management to pursue potential change in control transactions that may be in the datebest interests of such approval, as well as the prospective significant future effort in executing the dealstockholders, but potentially adverse to close and performing the necessary integration work.management’s employment interests. The special one-time deal-completion option grants were contingent upon management successfully closing the Endicia deal, and vest in 36 equal monthly installments commencing upon the date of closingcash components of our acquisitionexecutive management post-termination compensation arrangements, for executives who have any, are
up to six months of
Endicia (that is, Novemberbase salary, and typically also include continuing health benefits during the same period. For example, our chief executive officer would receive six months of base salary following his involuntary termination without cause or his resignation or termination following a change in control. In addition, all unvested options under our stock option plans, including those held by executive management, vest on involuntary termination of employment within 18
2015). | • | Post-Termination Compensation Arrangements. We provide post-termination compensation arrangements to certain members of our executive management as we believe that it is important to give them some limited protection in the event they are terminated without cause or terminated following a change in control. Further, it is our belief that the interests of stockholders will be best served if the interests of our executive management are aligned with them, and providing change in control benefits is designed to eliminate, or at least reduce, any reluctance of executive management to pursue potential change in control transactions that may be in the best interests of stockholders, but potentially adverse to management’s employment interests. The cash components of all of our executive management post-termination compensation arrangements, if any, range from three to six months of base salary, and typically also include continuing health benefits during the same period. For example, our chief executive officer and our chief financial officer and co-president each receives six months of base salary following his termination without cause or termination following a change in control. In addition, all unvested options under our stock option plans, including those held by executive management, vest on involuntary termination of employment within 18 months following a change of control. |
months following a change of control.
For information concerning the post termination compensation of our named executive officers, see “Potential Payments Upon Termination or Change-In-Control.”
| • | Clawback Policy. On April 24, 2015, our Compensation Committee adopted and has communicated to our executive officers, a “clawback” policy to further align the interests of our executives with stockholders. Under our clawback policy, our Compensation Committee may, in certain cases reduce or cancel, or require recovery of, any executive officer’s annual bonus or long-term incentive compensation award, or portions thereof, if the Board determines that such award should be adjusted because that executive officer has engaged in intentional misconduct that has led to a material restatement of the company’s financial statements. |
Clawback Policy. On April 24, 2015, our Compensation Committee adopted and has communicated to our executive officers, a “clawback” policy to further align the interests of our executives with stockholders. Under our clawback policy, our Compensation Committee may, in certain cases reduce or cancel, or require recovery of, any executive officer’s annual bonus or long-term incentive compensation award, or portions thereof, if the Board determines that such award should be adjusted because that executive officer has engaged in intentional misconduct that has led to a material restatement of the company’s financial statements.
As reflected in the Summary Compensation Table, we generally do not provide special perquisites to our executive management. Executive management participates in our standard benefit plans on the same terms as other employees. These plans include medical and dental insurance, 401(k), life insurance, charitable gift matching (limited to 50% matching of up to $200 per employee per year) and our employee stock purchase plan. Relocation benefits for executive officers may also be reimbursed but are individually negotiated when they occur.
On April 5, 2019, the Compensation Committee approved a program whereby employees who retire as C-level officers after at least 20 years of service may continue to participate in our health plans. Participating executive retirees must pay 100% of the applicable premiums, and the program may be canceled or modified at any time by our Compensation Committee in its sole discretion.
Tax and Accounting Considerations.
We record
cash compensation as an expense at the time the obligation is accrued. Under Section 162(m) of the Internal Revenue Code, compensation in excess of $1,000,000 paid in any one year to
any named executive officers
(other than our chief financial officer)or persons who were named executive officers for taxable years beginning on or after January 1, 2017 (collectively "Covered Persons"), is not tax deductible
by us. We incurred an aggregate of approximately $7,450,423 of compensation expense for tax purposes in 2018 to
us unless certain requirements are met. Our current program for the payment of non-equity incentive compensation and additional bonuses does not meet the Section 162(m) requirements necessary to be considered “performance-based,” and, as a result, is included in compensation subject to theour Covered Persons that exceeded $1 million
limitation on deductibility. Except for approximately $728,833 in excess of $1 million paid to our chairman of the board and chief executive officer, the cash compensation paid to each,
of our named executive officers in 2015 was less than $1 million, and, therefore,
the deductibility of such
excess compensation was not
affectedtax deductible by
the limitations ofus under Section 162(m). We retain the flexibility to pay compensation which is not deductible for tax purposes because we believe that doing so permits us to take into consideration factors that are consistent with good corporate governance and the best interests of our
shareholders.stockholders.In general, income recognized by employees upon the exercise of nonqualified stock options is tax-deductible fortax deductible by us, subject to any limitations that may be imposed by Section 162(m). Gain with respect to such options that are granted or modified after November 2, 2017. Income recognized by an employee with respect to an incentive stock option will not be tax deductible by us unless there is a “disqualifying disposition” of the shares by the employee. A disqualifying disposition occurs when an employee sells or disposes of incentive stock option shares within two years after the grant date or within one year after the exercise date. TheUpon a disqualifying disposition, the employee is taxed on a portion of the gain, based on stock value at the time of exercise of the incentive stock option, at ordinary income tax rates. rates, and such portion of the gain may be tax deductible by us.
In
addition, ifgeneral, income recognized by employees upon the vesting of stock awards is tax deductible to the employer, subject to limitations of Section 162(m). If in the future we grant restricted stock or restricted stock unit awards to named executive officers,
that vest on a time basisincome recognized by such employees upon grant or
otherwise are not performance-based for purposes of Section 162(m), theyvesting may not be fully
tax deductible by us at the time the award is
otherwise taxable to the
employee.employee as a result of the Section 162(m) limitation.
As a result of her becoming a named executive officer in 2018, the value of the shares issued to the chief executive officer of our ShippingEasy subsidiary pursuant to the Management Incentive Plan are included in calculating the amount of her compensation subject to the Section 162(m) limitation on tax deductibility to us.
We account for equity compensation paid to our executives and employees under the rules of ASC 718, which requires us to estimate and record a non-cash expense over the term of the equity compensation award.
The value of a total of 982,667 options granted under the 2014 Amendment and approved by the Board in 2014, subject to stockholder approval (the “Contingent Grants”), was not included in the compensation expense for 2014, because such options had no value, as computed in accordance with ASC 718, until the stockholder approval upon which they were contingent was obtained in June 2015. Accordingly, although the Contingent Grants were made in 2014, we valued the expense based on our stock price in June 2015 when such Contingent Grants were approved by our stockholders. Due to the increase in our stock price between the date of grant and the date of stockholder approval, the Contingent Grants were valued at $42.66 per share, as compared to the $11.84 per share valuation for the other options granted on the same date. The Contingent Grants will result in an aggregate stock-based compensation expense of up to approximately $41.9 million, amortized over the vesting period from October 2015 through September 2017 (up to $5.2 million, $21.0 million and $15.7 million in each of fiscal 2015, 2016 and 2017, respectively).Forward-Looking Statements
This proxy statement contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to expectations concerning matters that are not historical facts. You can identify many (but not all) of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,”
“projects,” “seeks,” “intends,” “plans,
” “could,” “would,” “may” or other similar expressions in this proxy statement. We claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. We caution you that any forward-looking statements presented in this proxy statement, or that we may make orally or in writing from time to time, are based on beliefs and assumptions made by, and information currently available to, us. Such statements are based on assumptions, and the actual outcome will be affected by known and unknown risks, trends, uncertainties and
other factors,
thatmany of which are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance, and some will inevitably prove to be incorrect. As a result, our actual future results may differ from our expectations, and those differences may be material. We
aredo not
undertakingundertake any obligation to
updaterelease publicly any
revisions or updates to forward-looking statements.
Accordingly, you should use caution in relying on forward-looking statements, which are based on known results and trends at the time they are made, to anticipate future results or trends.Please refer to the risk factors under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 1A. Risk Factors” of our 20152018 Annual Report on Form 10-K as well as those described elsewhere in our public filings. The risks included are not exhaustive, and additional factors could adversely affect our business and financial performance. We operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, one should avoid undue reliance on forward-looking statements.
COMPENSATION COMMITTEE REPORT
The information contained in this Compensation Committee Report shall not be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing (except to the extent that we specifically incorporate this information by reference) and shall not otherwise be deemed “soliciting“soliciting material” or “filed” with the Securities and Exchange Commission or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Securities Exchange Act of 1934 (except to the extent that we specifically request that this information be treated as soliciting material or specifically incorporate this information by reference).
The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” section of this proxy statement with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” section be included in this proxy statement.
| Submitted by the Compensation Committee:
|
| |
| Mohan P. Ananda Lloyd I. Miller, III
|
28
Submitted by the Compensation Committee:Mohan P. Ananda
SUMMARY COMPENSATION TABLE
The following summary compensation table indicates the total compensation earned during
2015, 20142018, 2017 and
2013,2016, respectively, by our chief executive officer,
our chief financial officer
and co-president and each of our other three highest compensated executive officers whose total compensation exceeded $100,000 during
2015.2018. The listed individuals are referred to in this proxy statement as the “named executive officers.”
Name and Principal Position | Year | Base Pay | Bonus (1) | Non-Equity Incentive Plan Compensation (1) | Option Awards (2)(3) | All Other Compensation (4) | Total (3) |
Ken McBride | | 2015 | | $ | 595,833 | | $ | 100,000 | | $ | 1,033,000 | | $ | 8,371,014 | | $ | 5,300 | | $ | 10,105,147 | |
Chairman of the Board and | | 2014 | | $ | 532,667 | | $ | 59,542 | | $ | 590,458 | | $ | 986,663 | | $ | 5,200 | | $ | 2,174,530 | |
Chief Executive Officer | | 2013 | | $ | 443,000 | | $ | 118,689 | | $ | 438,311 | | $ | 0 | | $ | 5,100 | | $ | 1,005,100 | |
| | | | | | | | | | | | | | | | | | | | | |
Kyle Huebner | | 2015 | | $ | 364,583 | | $ | 50,000 | | $ | 520,000 | | $ | 4,896,500 | | $ | 5,300 | | $ | 5,836,383 | |
Chief Financial Officer and | | 2014 | | $ | 342,667 | | $ | 30,229 | | $ | 299,771 | | $ | 592,000 | | $ | 5,200 | | $ | 1,269,867 | |
Co-President | | 2013 | | $ | 304,000 | | $ | 63,074 | | $ | 232,926 | | $ | 0 | | $ | 5,100 | | $ | 605,100 | |
| | | | | | | | | | | | | | | | | | | | | |
James Bortnak | | 2015 | | $ | 333,125 | | $ | 20,000 | | $ | 467,000 | | $ | 4,770,400 | | $ | 5,168 | | $ | 5,595,693 | |
Co-President and Corp. | | 2014 | | $ | 316,167 | | $ | 31,603 | | $ | 313,397 | | $ | 592,000 | | $ | 5,182 | | $ | 1,258,349 | |
& Bus. Dev. Officer | | 2013 | | $ | 270,667 | | $ | 70,176 | | $ | 259,157 | | $ | 0 | | $ | 5,100 | | $ | 605,100 | |
| | | | | | | | | | | | | | | | | | | | | |
Seth Weisberg | | 2015 | | $ | 320,000 | | $ | 50,000 | | $ | 440,000 | | $ | 3,917,200 | | $ | 5,300 | | $ | 4,732,500 | |
Chief Legal Officer and | | 2014 | | $ | 297,833 | | $ | 16,947 | | $ | 168,053 | | $ | 473,600 | | $ | 5,200 | | $ | 961,633 | |
Secretary | | 2013 | | $ | 285,500 | | $ | 33,028 | | $ | 121,972 | | $ | 0 | | $ | 5,100 | | $ | 445,600 | |
| | | | | | | | | | | | | | | | | | | | | |
John Clem | | 2015 | | $ | 287,083 | | $ | 20,000 | | $ | 400,000 | | $ | 3,917,200 | | $ | 7,300 | | $ | 4,631,583 | |
Chief Product & | | 2014 | | $ | 263,000 | | $ | 18,962 | | $ | 188,038 | | $ | 473,600 | | $ | 5,009 | | $ | 948,609 | |
Strategy Officer | | 2013 | | $ | 251,667 | | $ | 38,356 | | $ | 141,644 | | $ | 0 | | $ | 7,007 | | $ | 438,674 | |
|
| | | | | | | | | | | | | | |
Name and Principal Position | | Year | | Base Pay | | Bonus (1) | | Non-Equity Incentive Plan Compensation | | Option Awards (2) | | All Other Compensation (3) | | Total |
Ken McBride | | 2018 | | $791,740 | | $0 | | $1,900,000 | | $0 | | $5,602 | | $2,697,342 |
Chairman of the Board and | | 2017 | | $720,020 | | $0 | | $1,800,000 | | 5,601,350 | | $5,400 | | $8,126,770 |
Chief Executive Officer | | 2016 | | $654,796 | | $0 | | $1,620,000 | | $0 | | $5,300 | | $2,280,096 |
| | | | | | | | | | | | | | |
Jeff Carberry | | 2018 | | $334,996 | | $0 | | $525,000 | | $0 | | $6,164 | | $866,160 |
Chief Financial Officer (4) | | 2017 | | $240,609 | | $400,000 | | $0 | | $3,171,228 | | $3,567 | | $3,815,404 |
| | | | | | | | | | | | | | |
Jonathan Bourgoine | | 2018 | | $293,558 | | $350,000 | | $0 | | $4,651,266 | | $5,564 | | $5,300,388 |
Chief Technology Officer (5) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
|
J. Nathan Jones | | 2018 | | $432,615 | | $500,000 | | $0 | | $3,707,820 | | $11,102 | | $4,651,537 |
Chief Executive Officer of our | | | | | | | | | | | | | |
|
ShipStation subsidiary (6) | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | |
|
Katie May | | 2018 | | $299,288 | | $652,600 | | $0 | | $3,716,070 | | $102 | | $4,668,060 |
Chief Executive Officer of our | | | | | | | | | | | | | |
|
ShippingEasy subsidiary (7) | | | | | | | | | | | | | |
|
| |
(1) | Bonuses for 2018 paid to corporate officers who were not participants in the 2018 Plan, such as Ms. May, Messrs. Bourgoine and other executive managementJones, consisted of paymentsdiscretionary bonuses awarded by the Compensation Committee. Ms. May's bonus amount also includes $202,600 of a cash bonus pool earned in 2018 under the non-equity incentive plan (the “2015 Plan”)Management Incentive Plan and a special one-time bonus related to the signing of the definitive agreement to acquire Endicia for certain of our executives and other key employees, in the aggregate amount of $280,000 (the “Endicia Deal Bonus”). These bonuses were not covered under the 2015 Plan but rather were special one-time bonuses to recognize extraordinary efforts in the completion of the definitive agreement to acquire Endicia. Pursuant to the 2015 Plan, an aggregate bonus pool of $3,584,000 would have been allocated to the executive management team to be paid out in May 2016. However, at the chief executive officer’s recommendation, the Compensation Committee determined that the $280,000 Endicia Deal Bonus be treated as an advance against the 2015 Plan (even though $20,000 of the Endicia Deal Bonus was not paid to our executive officers), thereby reducing the amount to be paid outher in May 2016 by $280,000. Although the $280,000 amount is reflected as a “bonus” in our Summary Compensation Table, the amount of this discretionary bonus was ultimately earned by our executive management under the terms of the 2015 Plan.2019. |
| |
(2) | The amounts in this column generally represent the aggregate grant date fair value of option awards granted during 2014 and 2015,the relevant year, computed in accordance with ASC 718. Historically, it has been our general practice to make routine awards of stock options to our executive management team every three years. The assumptions for these amounts are included in Note 2 to our audited financial statements included in our Annual Report on Form 10-K for 2015. However, the value of the options granted under the 2014 Amendment and approved by the Board in 2014 (the “Contingent Grants”) was not included in the compensation line for 2014, because such options had no value, as computed in accordance with ASC 718, until the stockholder approval upon which they were contingent was obtained in June 2015. Although the Contingent Grants were made in 2014, we valued the expense based on our stock price in June 2015 when such Contingent Grants were approved by our stockholders.2018. |
| |
(3) | Due to the increase in our stock price between the date of grant and the date of stockholder approval, the Contingent Grants were valued at $42.66 per share, as compared to the $11.84 per share valuation for the other options granted on the same date. As a result, the Contingent Grants to Messrs. McBride, Huebner, Bortnak, Weisberg and Clem accounted for $7,110,014, $4,266,000, $4,266,000, $3,412,800 and $3,412,800, respectively, of their option award amounts in 2015. In the aggregate, the Contingent Grants will result in stock-based compensation expense of up to approximately $41.9 million, including the $22.5 million attributable to our named executive officers. |
| (4) | Consists of contributions to our 401(k) plan that we made on behalf of each named executive officer to match a portion of his elective deferred contributions to such plan. In addition, thisOther compensation also includes amountsde minimis other perquisites. |
| |
(4) | Mr. Carberry was appointed as our chief financial officer on July 31, 2017. Prior to that, he served as our vice president, finance and was not an executive officer of $2,000 paid to John Clem inthe company. The table reflects Mr. Carberry’s total compensation from us for each of 20132017 and 2015 related2018, in all capacities. |
| |
(5) | Mr. Bourgoine was hired as our chief technology officer on February 26, 2018. Prior to patent inventor bonuses.that, he was not an employee of the company or its subsidiaries. |
| |
(6) | Although Mr. Jones has been the chief executive officer of our ShipStation subsidiary since we acquired it in 2014, he was not determined to be an executive officer of the company by our board of directors until July 25, 2018. The table reflects Mr. Jones’s total compensation from us for 2018, in all capacities. |
| |
(7) | Although Ms. May has been the chief executive officer of our ShippingEasy subsidiary since we acquired it on July 1, 2016, she was not determined to be an executive officer of the company by our board of directors until July 25, 2018. The table reflects Ms. May’s total compensation from us for 2018, in all capacities. Ms. May's 2018 compensation does not include the value of shares issued in 2018 under the Management Incentive Plan, which was entered into in 2016 in connection with our acquisition of ShippingEasy. |
GRANTS OF PLAN-BASED AWARDS
The following table provides information with respect to grants of plan-based awards made during
20152018 to the named executive officers.
Name | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | All Other Option Awards: Number of Securities Underlying Option (#)(5) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards (6) |
| | Threshold ($)(2)
| Target ($)(3) | Maximum ($)(4) |
Ken McBride | | 4/9/2015 | | $ | 416,794 | | $ | 595,420 | | $ | 1,190,840 | | | 50,000 | | $ | 66.28 | | $ | 1,261,000 | |
| | | | | | | | | | | | | | | | | | | | | |
Kyle Huebner | | 4/9/2015 | | $ | 211,603 | | $ | 302,290 | | $ | 604,580 | | | 25,000 | | $ | 66.28 | | $ | 630,500 | |
| | | | | | | | | | | | | | | | | | | | | |
James Bortnak | | 4/9/2015 | | $ | 221,221 | | $ | 316,031 | | $ | 632,061 | | | 20,000 | | $ | 66.28 | | $ | 504,400 | |
| | | | | | | | | | | | | | | | | | | | | |
John Clem | | 4/9/2015 | | $ | 132,733 | | $ | 189,618 | | $ | 338,931 | | | 20,000 | | $ | 66.28 | | $ | 504,400 | |
| | | | | | | | | | | | | | | | | | | | | |
Seth Weisberg | | 4/9/2015 | | $ | 118,626 | | $ | 169,466 | | $ | 338,931 | | | 20,000 | | $ | 66.28 | | $ | 504,400 | |
|
| | | | | | | | | | | | | | | | |
| | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1)(2) | | Option Awards: Number of Securities Underlying Option (#)(6) | | Exercise or Base Price of Option Awards ($/Sh) | | Grant Date Fair Value of Stock and Option Awards(7) |
Name | | Grant Date | | Threshold ($)(3) | | Target ($)(4) | | Maximum ($)(5) | |
Ken McBride | | | | $917,584 | | $1,310,835 | | $2,621,670 | | | | | | |
| | | | | | | | | | | | | | |
Jeff Carberry | | | | $278,917 | | $398,452 | | $796,904 | | | | | | |
| | | | | | | | | | | | | | |
Jonathan Bourgoine | | 2/26/2018 | | | | | | | | 60,000 | | $201.00 | | $ | 4,651,892 |
|
| | | | | | | | | | | | | | |
Nathan Jones | | 3/1/2018 | | | | | | | | 50,000 | | $192.25 | | $ | 2,704,100 |
|
| | | | | | | | | | | | | | |
Katie May | | 3/1/2018 | | | | | | | | 30,000 | | $192.25 | | $ | 2,224,692 |
|
| | 4/2/2018 | | | | | | | | 20,000 | | $196.05 | | $ | 1,491,378 |
|
| |
(1) | Under the 20152018 Plan, seveneight members of our executive management, including our namedchief executive officers,officer and our chief financial officer, were eligible for cash bonus awards to be paid in 2016.2019. The 20152018 Plan set a base level aggregate bonus pool, the 20152018 Base Pool, and provided that the actual bonus pool for 20152018 could range from zero to twice the 20152018 Base Pool, based on our performance in 20152018 relative to targets for revenue and adjusted EBITDA (which, as we have publicly reported, typically excludes non-recurring and/or non-cash items such as ASC 718-related expenses, litigation charges, non-recurring adjustments, changes in the ShipStation earn-outnon-cash contingent consideration valuation, corporate development / development/acquisition expenses, and other one-time and non-recurring items), with certain adjustments applied to the components of revenue and EBITDA based on which business unit had generated it (the “2015 Plan Adjustments”). The Compensation Committee set the amountsize of the 20152018 Base Pool at $1,800,000,$4.1 million so that, if our executive management performedperforms at a reasonable level and is able to generate results at the midpoint of the guidance range, as a group they would receive a total cash compensation for 20152018 at approximately the 7174stth percentile of those companies in the then applicable2018 Equilar Benchmarks.Benchmark. Pursuant to the 20152018 Plan, and based on our actual 2018 financial results, the total bonus pool for 20152018 ended up 199.1%132.5% of the 20152018 Base Pool, due to our 2015 results exceeding certain targets.Pool. For additional information about the 20152018 Plan, see “—Compensation Discussion and Analysis—Non-equity Incentive Plan Compensation,” and for actual amounts to be paid under the 20152018 Plan for 2015,2018, which will be paid in May 2016,April 2019, see “—Summary Compensation Table.” |
| |
(2) | Each of Messrs. McBride and Carberry was eligible for an award under the 2018 Plan. Mr. Bourgoine, who joined the company on February 26, 2018, and Mr. Jones and Ms. May, who were not determined to be executive officers until July 25, 2018, did not participate in the 2018 Plan. |
| |
(3) | The amounts in this column assumeassume: (i) an aggregate bonus pool equal to 70% of the 20152018 Base Pool, which would have resulted from an actual 20152018 financial outcome at the low endlow-end of our February 201521, 2018 public guidance range with the 2015 Plan Adjustments, for revenue and non-GAAP adjusted earnings per fully diluted share and the resulting equivalent non-GAAP adjusted EBITDA (note that our public guidance range was subsequently changed at various times throughout fiscal 2015)2018), and this would have been equivalent to $160$530 million in total revenue and $2.50$245 million in non-GAAP adjusted EBITDA earnings per fully diluted share, with the 2015 Plan Adjustments; andEBITDA; (ii) that each named executive officer receivedMr. McBride would receive the same percentage share of the bonus pool that he received under the 20142017 bonus plan.plan; and (iii) that Mr. Carberry, who did not participate in the 2017 bonus plan, would receive a one-seventh share of the amount of the 2018 bonus pool that is not assumed paid to Mr. McBride. However, each officer’s bonus may vary based on achievement of individual goals, and no individual named executive officer was guaranteed any minimum amount, so the amount could in fact be zero. |
| (3) |
(4) | The amounts in this column assume (i) an aggregate bonus pool equal to 100% of the 20152018 Base Pool, which would have resulted from an actual 20152018 financial outcome at the mid-point of our February 201521, 2018 public guidance range of $170$545 million in total revenue and $2.70$255 million in non-GAAP earnings per fully diluted share and the resulting equivalent non-GAAP adjusted EBITDA (note that our public guidance range was subsequently changed at various times throughout fiscal 2015), with Special Adjustments; and2018); (ii) that each named executive officer receivedMr. McBride would receive the same percentage share of the bonus pool that he received under the 20142017 bonus plan. However, no individual named executive officer was guaranteed any minimum amount, soplan; and (iii) that Mr. Carberry, who did not participate in the 2017 bonus plan, would receive a one-seventh share of the amount could in fact be zero.of the 2018 bonus pool that is not assumed paid to Mr. McBride. |
| (4) |
(5) | The amounts in this column assume the maximum possible bonus pool of 200% of the 20152018 Base Pool, and that each named executive officer receivedMr. McBride would receive the same percentage share of the bonus pool that he received under the 20142017 bonus plan.plan and that Mr. Carberry would receive a one-seventh share of the amount of the 2018 bonus pool that is not assumed paid to Mr. McBride. However, in the unlikely event that no other member of executive management received any bonus, and the Compensation Committee did not adjust the bonus pool as a result, any individual named executive officer could in theory be awarded the total amount of the bonus pool. |
| (5) |
(6) | TheseThe option award to Mr. Bourgoine in 2018 was issued as an inducement to Mr. Bourgoine entering into employment with us, as permitted under NASDAQ rules. Such options vest with respect to 25% of the shares on the first anniversary of the date of grant and ratably each month thereafter for a period of 36 months, provided Mr. Bourgoine remains employed by us. The option awards granted to Mr. Jones and Ms. May during 2018 were all issued under theour 2010 Equity Incentive Plan, as amended, and vest in 48 approximately equal monthly installments commencing one month after the date of grant, provided the optionee remains employed by the 2014 Amendment, vest monthly in equal parts over a 36 month period and the first vesting date was November 19, 2015 following the close of the Endicia acquisition. These option awards do not include the Contingent Grants, because they were granted in 2014, although we did not start to recognize the stock-based compensation expense until stockholder approval of such grants was obtained in 2015.us. |
| (6) |
(7) | The amounts in this column represent the aggregate grant date fair value of option awards granted during 20152018 computed in accordance with ASC 718. The assumptions for these amounts are included in Note 2 to our audited financial statements included in our Annual Report on Form 10-K for 2015.2018. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table provides information on outstanding stock options held by the named executive officers at December 31,
2015: | Option Awards |
| Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable
| Option Exercise Price ($) | Option
Expiration Date |
Name
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Kenneth McBride | | 27,779 | | | — | | | 12.55 | | | 5/20/2021 | |
| | 83,333 | (1) | | — | | | 32.41 | | | 9/19/2024 | |
| | 20,830 | (2) | | 145,837 | (2) | | 32.41 | | | 9/19/2024 | |
| | 1,388 | (3) | | 48,612 | (3) | | 66.28 | | | 4/9/2025 | |
| | | | | | | | | | | | |
Kyle Huebner | | 24,306 | | | — | | | 12.55 | | | 5/20/2021 | |
| | 50,000 | (1) | | — | | | 32.41 | | | 9/19/2024 | |
| | 12,498 | (2) | | 87,502 | (2) | | 32.41 | | | 9/19/2024 | |
| | 694 | (3) | | 24,306 | (3) | | 66.28 | | | 4/9/2025 | |
| | | | | | | | | | | | |
James Bortnak | | 5,015 | (1) | | — | | | 32.41 | | | 9/19/2024 | |
| | 7,498 | (2) | | 87,502 | (2) | | 32.41 | | | 9/19/2024 | |
| | 555 | (3) | | 19,445 | (3) | | 66.28 | | | 4/9/2025 | |
| | | | | | | | | | | | |
John Clem | | 8,699 | | | — | | | 12.55 | | | 5/20/2021 | |
| | 40,000 | (1) | | — | | | 32.41 | | | 9/19/2024 | |
| | 9,998 | (2) | | 70,002 | (2) | | 32.41 | | | 9/19/2024 | |
| | 555 | (3) | | 19,445 | (3) | | 66.28 | | | 4/9/2025 | |
| | | | | | | | | | | | |
Seth Weisberg | | 6,096 | | | — | | | 12.55 | | | 5/20/2021 | |
| | 36,915 | (1) | | — | | | 32.41 | | | 9/19/2024 | |
| | 9,998 | (2) | | 70,002 | (2) | | 32.41 | | | 9/19/2024 | |
| | 555 | (3) | | 19,445 | (3) | | 66.28 | | | 4/9/2025 | |
2018:
|
| | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option Exercise Price ($) | | Option Expiration Date | | Equity Incentive plan awards: number of unearned shares that have not vested (#) | | Equity Incentive plan awards: market or payout value of unearned shares that have not vested ($) |
Ken McBride | | 50,000 (1) |
| | — |
| | 66.28 |
| | 4/9/2025 | | | | |
| | 60,414 (2) |
| | 84,586 (2) |
| | 112.00 |
| | 4/25/2027 | | | | |
| | | | | | | | | | | | |
Jeff Carberry | | 10,000 (3) |
| | — |
| | 45.35 |
| | 2/2/2025 | | | | |
| | 10,000 (4) |
| | — |
| | 58.25 |
| | 3/2/2025 | | | | |
| | 26,665 (5) |
| | 33,335 (5) |
| | 152.15 |
| | 8/1/2027 | | | | |
| | | | | | | | | | | | |
Jonathan Bourgoine | | — |
| | 60,000 (6) |
| | 201.00 |
| | 2/26/2028 | | | | |
| | | | | | | | | | | | |
Nathan Jones | | 17,604 (7) |
| | 10,834 (7) |
| | 70.51 |
| | 8/3/2025 | | | | |
| | 1,354 (8) |
| | 1,459 (8) |
| | 87.88 |
| | 2/5/2026 | | | | |
| | 9,374 (9) |
| | 40,626 (9) |
| | 192.25 |
| | 3/1/2028 | | | | |
| | | | | | | | | | | | |
Katie May | | 5,624 (9) |
| | 24,376 (9) |
| | 192.25 |
| | 3/1/2028 | | | |
|
| | 3,333 (10) |
| | 16,667 (10) |
| | 196.05 |
| | 4/2/2028 | | | | |
| | | | | | | | | | 4,356 (11) | | $677,968 (12) |
| |
(1) | These performance-based option awards issued under the 2010 Equity Incentive Plan, as amended, vested in equal monthly installments on the last day of each month over the 36 months following the November 18, 2015 close of the Endicia acquisition. |
| |
(2) | These option awards issued under the 2010 Equity Incentive Plan, vestedas amended, vest in 36 approximately equal monthly installments over a 12 month period fromof approximately 4,028 shares beginning with October 19, 2014 through September 19, 2015.1, 2017. |
| (2) |
(3) | These option awards issued under the 2014 Amendment vest monthly2010 Equity Incentive Plan, as amended, vested in 36 approximately equal monthly installments over a 24 month period and the first vesting date was October 19,beginning on March 2, 2015. The grants will fully vest on September 19, 2017. |
| (3) |
(4) | These performance-based option awards issued under the 2014 Amendment vest monthly2010 Equity Incentive Plan, as amended, vested in 36 approximately equal monthly installments over abeginning on April 2, 2015. |
| |
(5) | These option awards issued under the 2010 Equity Incentive Plan, as amended, vest in 36 month period commencingapproximately equal monthly installments of approximately 1,667 shares beginning with September 1, 2017. |
| |
(6) | These option awards issued under the 2010 Equity Incentive Plan, as amended, vest with respect to 25% of the shares (i.e. 15,000 shares) on February 26, 2019, and with respect to the November 18, 2015 closing date for our acquisitionremaining 75% of Endicia. The grants will fullythe shares vest in 36 approximately equal monthly installments of 1,250 shares thereafter. |
| |
(7) | These option awards issued under the 2010 Equity Incentive Plan, as amended, vest with respect to 25% of the shares (i.e. 13,750 shares) on October 18,August 3, 2016, and with respect to the remaining 75% of the shares vest in 36 approximately equal monthly installments of approximately 1,146 shares thereafter. |
| |
(8) | These option awards issued under the 2010 Equity Incentive Plan, as amended, vest with respect to 25% of the shares (i.e. 1,250 shares) on February 5, 2017, and with respect to the remaining 75% of the shares vest in 36 approximately equal monthly installments of approximately 104 shares thereafter. |
| |
(9) | These option awards issued under the 2010 Equity Incentive Plan, as amended, vest in 48 approximately equal monthly installments beginning April 1, 2018. For Mr. Jones and Ms. May, such monthly installments are approximately 1,042 shares and 625 shares, respectively. |
| |
(10) | These option awards issued under the 2010 Equity Incentive Plan, as amended, vest in 48 approximately equal monthly installments of approximately 417 shares beginning May 2, 2018. |
| |
(11) | As of December 31, 2018, the 4,356 shares of stock earned under the Management Incentive Plan for performance in 2018 were issuable to Ms. May upon her continued employment on March 1, 2019, pursuant to the terms of the Management Incentive Plan. |
| |
(12) | Market value is based on our closing stock price of $155.64 on December 31, 2018. |
OPTION EXERCISES AND STOCK VESTED
The following table sets forth the number of shares acquired and the value realized upon exercise of stock options
and the vesting of other stock awards during
20152018 by each of our named executive officers.
None of our named executive officers holds any restricted shares of our common stock. | Option Awards |
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) |
Ken McBride | | — | | | — | |
Kyle Huebner | | — | | | — | |
James Bortnak | | 49,985 | | $ | 2,518,623 | |
John Clem | | 7,968 | | $ | 460,213 | |
Seth Weisberg | | 117,826 | | $ | 6,366,570 | |
|
| | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($)(1) | | Number of shares acquired on vesting (#) | | Value realized on vesting ($) |
Ken McBride | | 40,337 |
| | $ | 6,779,299 |
| | | | |
Jeff Carberry | | — |
| | $ | — |
| | | | |
Jonathan Bourgoine | | — |
| | $ | — |
| | | | |
Nathan Jones | | — |
| | $ | — |
| | | | |
Katie May | | — |
| | $ | — |
| | 28,319 (2) | | $ | 5,646,921 |
|
| |
(1) | Value realized on exercise is based on the fair market value of our common stock on the date of exercise minus the exercise price and does not necessarily reflect proceeds actually received by the named executive officer. |
| |
(2) | Comprises shares of our common stock earned by Ms. May for performance in 2017 (and continued employment through March 1, 2018) pursuant to the Management Incentive Plan, which were valued at $5,646,921 on their March 29, 2018 date of issuance. A portion of such shares was retained by us for tax withholding purposes. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
Messrs.
Mr. McBride Huebner, Bortnak and Weisberg havehas entered into a separation agreementsagreement with us such that in the event of (i) an involuntary termination by us without cause or (ii) a resignation by the executive or termination by us following a change of control, these officershe will receive six months’ salary and benefits. The change of control payment will occur upon (y) any involuntary termination of Mr. McBride's employment following the change of control or (z) his resignation within two to nine months following the change of control by these named executive officers.control. Except in the event of a change of control, no amounts would be due to any of our named executive officers in the event of a resignation or a termination with cause. The information below reflects the estimated value of the compensation to be paid by us to each of these officersany named executive officer in the event of an involuntary termination without cause or a termination or resignation following a change in control. The amounts shown below assume that the triggering events occurred on December 31, 2015.2018. The actual amounts that would be paid can only be determined at the time of the actual triggering event.Name | Payment Upon Termination without Cause or Termination or Resignation Following Change in Control (1) |
Ken McBride | $ | 314,287 | |
Kyle Huebner | $ | 195,537 | |
James Bortnak | $ | 179,162 | |
Seth Weisberg | $ | 173,787 | |
|
| | | | |
Name | | Payment Upon Termination without Cause or Termination or Resignation Following Change in Control (1) |
Ken McBride | | $ | 410,883 |
|
| |
(1) | Assumes a monthly value of $1,964$1,376 for continued benefits. |
In addition, our stock option plans provide that any optionee, including our named executive officers, whose service is “involuntarily terminated” within 18 months following a “change in control”, will have any unvested options that were assumed by the successor corporation become fully exercisable. A “change in control” is defined as the first to occur of: (i) any one person or entity or more than one person or entity acting as a group becoming the “beneficial owner” (as used in Section 13(d) of the Exchange Act) of more than 50% of the voting power of our capital stock; (ii) our Board ceasing to include a majority of members who either were on our Board two years prior to the relevant date or whose appointment, or nomination for election, to our Board was approved by a vote of a majority of the directors then in office; and (iii) any person, entity or group, subject to certain exceptions, acquiring, during any twelve month period, assets from us that have a fair market value greater than 50% of the total fair market value of all of our assets immediately before the acquisition or acquisitions. “Involuntary termination” is defined as the optionee’s involuntary dismissal or discharge by us for reasons other than misconduct, or the optionee’s voluntary resignation following: (i) a change in his or her position with us which materially reduces his or her responsibilities; (ii) a reduction in his or her level of
compensation by more than 15%; or (iii) a relocation of the optionee’s place of employment by more than 50 miles, and this change, reduction or relocation is effected without the optionee’s consent.
Assuming triggering events occurred on December 31,
2015,2018, the following amounts would then be
acceleratedearned as a result of the
accelerationaccelerated vesting of stock options for our named executive officers based on a closing stock price of
$109.61$155.64 on December 31,
2015.Name | Options Accelerated Upon Involuntary Termination following Change in Control (1)
|
Ken McBride | $ | 13,364,974 | |
Kyle Huebner | $ | 7,808,333 | |
James Bortnak | $ | 7,597,706 | |
John Clem | $ | 6,246,706 | |
Seth Weisberg | $ | 6,246,706 | |
2018. | (1) | Based on the fair market value of our common stock on December 31, 2015 minus the exercise price and does not reflect proceeds actually received by the named executive officer. |
|
| | | | |
Name | | Options Accelerated Upon Involuntary Termination following Change in Control (1) |
Ken McBride | | $ | 3,691,333 |
|
Jeff Carberry | | $ | 116,339 |
|
Jonathan Bourgoine | | $ | 0 |
|
Nathan Jones | | $ | 1,021,160 |
|
Katie May | | $ | 0 |
|
(1) Based on the fair market value of our common stock on December 31, 2018 minus the exercise price and does not reflect proceeds that might actually be received by the named executive officer.
CEO PAY RATIO
We are required by SEC rules and regulations to disclose a reasonable estimate of the ratio of the annual total compensation for our chief executive officer to the annual total compensation of our median employee. For the year ended December 31, 2018, the annual total compensation for our chief executive officer as reported in the Summary Compensation Table was $2,697,342, and the annual total compensation for our median employee was $83,113. For 2018, the annual total compensation of our chief executive officer was approximately 31 times that of our median employee.
For purposes of identifying our median employee, we examined our entire employee population as of our 2018 fiscal year end, which consisted of 1,181 total employees. Our MetaPack acquisition, which closed in August 2018, resulted in an increase to our headcount by approximately 53% and an increase in the portion of our employees that are non-U.S. employees. Therefore, rather than use the same median employee in our pay ratio calculation for 2018 as we had identified for 2017, we identified our 2018 median employee de novo. To determine our median employee, we used total compensation consisting of (i) base salary (or hourly wages including overtime) for the year ending December 31, 2018, (ii) bonuses paid in 2018, (iii) the grant date fair value of option awards granted in 2018 and (iv) the value of other compensation and perquisites, as our compensation measure that we applied consistently to all employees. For employees paid in a foreign currency, we converted amounts at the prevailing foreign exchange rates on December 31, 2018. We annualized the base salary amounts for permanent employees who commenced employment during 2018. For our non-U.S. employees who commenced employment during 2018 (generally as a result of our acquisition of MetaPack), we annualized their bonus payments, since the bonuses we paid to such employees were earned on a quarterly rather than annual basis. For MetaPack employees, we did not include any annual bonuses paid in 2018 prior to our acquisition.
For consistency, after identifying our median employee, except as described below, we calculated annual total compensation for our median employee on the same basis as annual total compensation is calculated for our named executive officers in the Summary Compensation Table (including the grant date fair value of awards granted in 2018 under our 2010 Equity Incentive Plan), accordingly, we did not include the cost of employer-sponsored health and welfare benefits in the calculation of either our chief executive officer’s or our median employee’s total annual compensation. Due to the timing of our annual employee review and bonus process, in calculating annual total compensation for our median employee, we used the bonus amounts paid to such employee in 2018, as opposed to amounts earned in 2018 some or all of which may not be paid until 2019.
As it has been our general practice to grant awards of stock options to our executive management team every three years, we expect that, historically, our CEO pay ratio would be significantly higher in years when our chief executive officer receives such grants and lower in the two intervening years (although we may make smaller more frequent awards of stock options to executives in the future, which would result in a more consistent CEO pay ratio). For example, if our chief executive officer had received an option grant in 2018 with the same grant date fair value as the one he received in 2017, then our chief executive officer’s annual compensation would have been $8,298,692, or approximately 100 times the annual compensation of our median employee of $83,113.
BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of April 12, 2016,15, 2019, by (i) all persons who are beneficial owners of more than 5% or more of our common stock, (ii) each director and nominee for director, (iii) our named executive officers and (iv) all current directors and executive officers as a group. We have relied upon information provided to us by our directors and executive officers and copies of documents sent to us that have been filed with the SEC by others for purposes of determining the number of shares each person beneficially owns. Unless otherwise indicated, each of the stockholders has sole voting and investment power with respect to the shares beneficially owned, subject to community property laws, where applicable. Unless otherwise indicated, the address of each beneficial owner listed below is c/o Corporate secretary,Secretary, Stamps.com Inc., 1990 E. Grand Avenue, El Segundo, CA 90245. The percentage of ownership is based on 17,463,154 17,388,024shares of our common stock issued and outstanding on April 12, 2016.15, 2019. Shares of our common stock issuable upon exercise of stock options that are currently exercisable or will become exercisable within 60 days after April 12, 201615, 2019 are deemed outstanding for computing the percentage of the person or group holding such options, but are not deemed outstanding for computing the percentage of any other person or group.Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentages of Shares Beneficially Owned |
Kenneth McBride (1) | | 181,358 | | | 1.03 | % |
Kyle Huebner (2) | | 113,714 | | | | * |
John Clem (3) | | 79,913 | | | | * |
James Bortnak (4) | | 22,784 | | | | * |
Seth Weisberg (5) | | 81,078 | | | | * |
Mohan P. Ananda (6) | | 741,524 | | | 4.13 | % |
G. Bradford Jones (7) | | 102,286 | | | | * |
Lloyd I. Miller (8) | | 638,640 | | | 3.65 | % |
| | | | | | |
Other 5% Stockholders:
| | | | | | |
| | | | | | |
FMR LLC (9) | | 2,347,918 | | | 13.44 | % |
82 Devonshire Street
| | | | | | |
Boston, Massachusetts 02109
| | | | | | |
| | | | | | |
BlackRock, Inc. (10) | | 1,360,441 | | | 7.79 | % |
40 East 52nd Street
| | | | | | |
New York, NY 10022
| | | | | | |
| | | | | | |
The Vanguard Group (11) | | 892,405 | | | 5.11 | % |
100 Vanguard Blvd.
| | | | | | |
Malvern, PA 19355
| | | | | | |
| | | | | | |
All directors and executive offers as a group (10 people) (12) | | 2,072,134 | | | 11.46 | % |
|
| | | | | |
Name of Beneficial Owner | | Number of Shares Beneficially Owned | | Percentages of Shares Beneficially Owned |
Ken McBride (1) | | 136,661 | | * |
|
Jeff Carberry (2) | | 66,352 | | * |
|
Jonathan Bourgoine (3) | | 18,749 | | * |
|
Nathan Jones (4) | | 43,867 | | * |
|
Katie May (5) | | 26,361 | | * |
|
Mohan P. Ananda (6) | | 654,524 | | 3.67 | % |
David C. Habiger (7) | | 15,572 | | * |
|
G. Bradford Jones (8) | | 70,286 | | * |
|
Theodore R. Samuels, II (9) | | 16,000 | | * |
|
| | | | |
Other 5% Stockholders: | | | | |
| | | | |
FMR LLC (10) | | 977,540 | | 5.62 | % |
245 Summer Street | | | | |
Boston, Massachusetts 02210 | | | | |
| | | | |
BlackRock, Inc. (11) | | 2,633,238 | | 15.14 | % |
55 East 52nd Street | | | | |
New York, NY 10055 | | | | |
| | | | |
The Vanguard Group (12) | | 1,763,020 | | 10.14 | % |
100 Vanguard Blvd. | | | | |
Malvern, PA 19355 | | | | |
| | | | |
All directors and executive officers as a group (15 people) (13) | | 1,318,143 | | 7.33 | % |
| |
* | Represents beneficial ownership of less than 1% of the outstanding shares of common stock. |
| |
(1) | Includes 167,797134,580 shares issuable upon exercise of options directly held by Mr. McBride that are presently exercisable or will become exercisable within 60 days of April 12, 2016.15, 2019. |
| |
(2) | Includes 97,66256,665 shares issuable upon exercise of options directly held by Mr. Carberry that are presently exercisable or will become exercisable within 60 days of April 12, 2016.15, 2019. |
| |
(3) | Includes 78,69418,749 shares issuable upon exercise of options directly held by Mr. Bourgoine that are presently exercisable or will become exercisable within 60 days of April 12, 2016.15, 2019. |
| |
(4) | Includes 21,69143,331 shares issuable upon exercise of options directly held by Nathan Jones that are presently exercisable or will become exercisable within 60 days of April 12, 2016.15, 2019. |
| |
(5) | Includes 61,91015,207 shares issuable upon exercise of options directly held by Ms. May that are presently exercisable or will become exercisable within 60 days of April 12, 2016.15, 2019. |
| |
(6) | 20,000Includes 15,000 shares issuable upon exercise of options directly held by Mr. Ananda that are presently exercisable or will become exercisable within 60 days of April 12, 2016.15, 2019. Includes: 548 shares held by Mr. Ananda; 464,500 shares held by Mr. Ananda in the Ananda Small Business Trust; 28,000 shares held by the Ananda Foundation; 144,077 shares held in trust for the benefit of Mr. Ananda's family; and 2,399 shares held beneficially for Mr. Ananda's children. |
| |
(7) | Includes 45,00015,000 shares issuable upon exercise of options directly held by Mr. Habiger that are presently exercisable or will become exercisable within 60 days of April 15, 2019. |
| |
(8) | Includes 30,000 shares issuable upon exercise of options directly held by Brad Jones that are presently exercisable or will become exercisable within 60 days of April 12, 2016.15, 2019. |
| (8) |
(9) | The 638,640 shares beneficially owned includes: 190,399 shares held directly by Mr. Miller; 20,000Includes 15,000 shares issuable upon exercise of options directly held by Mr. MillerSamuels that are presently exercisable or will become exercisable within 60 days of April 12, 2016; 105,35015, 2019. Includes 1,000 shares held by the Ted and Lori Samuels Family Trust, dated July 3, 1996. Mr. Samuels disclaims beneficial ownership of the shares beneficially ownedheld by Mr. Miller are ownedthe trust, except to the extent of record by Trust A-4; 38,019 of the shares beneficially owned by Mr. Miller are owned of record by Milfam I L.P.; 203,915 of the shares beneficially owned by Mr. Miller are owned of record by Milfam II L.P.; 1,000 of the shares beneficially owned by Mr. Miller are owned of record by Lloyd IV UGMA; 1,000 of the shares beneficially owned by Mr. Miller are owned of record by AMIL; 59,037 of the shares beneficially owned by Mr. Miller are owned of record by a Trust Account; 10,539 of the shares beneficially owned by Mr. Miller are owned of record by Milgrat(Z9) and 9,381 of the shares beneficially owned by Mr. Miller are owned of record by Trust C.his pecuniary interest therein. |
| (9) |
(10) | Information regarding FMR LLC’s beneficial ownership is based solely on a Schedule 13G/A it filed with the SEC on February 12, 2016.13, 2019. Abigail P. Johnson, as Director, Vice Chairman, CEO and President of FMR LLC, as well as through her family’s ownership of 49% of the voting power of FMR LLC and her being party to a shareholders’ voting agreement among all holders of FMR LLC’s Series B voting common shares, may be deemed to share beneficial ownership of the shares of our common stock held by FMR LLC. |
| (10) |
(11) | Information regarding Blackrock, Inc.’s beneficial ownership is based solely on a Schedule 13G/A it filed with the SEC on January 27, 2016.31, 2019. BlackRock, Inc. shares beneficial ownership with a number of its subsidiaries, none of which individually beneficially owns 5% or more of our outstanding common stock, except for BlackRock Fund Advisors. |
| (11) |
(12) | Information regarding The Vanguard Group’s beneficial ownership is based solely on a Schedule 13G13G/A it filed with the SEC on February 10, 2016.March 11, 2019. Various registered investment companies advised by The Vanguard Group, Inc. have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, our common stock, although no single such company’s interest in our common stock is more than five percent of the total outstanding. |
| (12) |
(13) | Includes an aggregate of 614,691605,293 shares issuable upon exercise of options that are presently exercisable or will become exercisable within 60 days of April 12, 2016.15, 2019. |
The information contained in this section shall not be deemed incorporated by reference in any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing (except to the extent that we specifically incorporate this information by reference) and shall not otherwise be deemed “soliciting material” or “filed”“filed” with the Securities and Exchange Commission or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Securities Exchange Act of 1934 (except to the extent that we specifically request that this information be treated as soliciting material or specifically incorporate this information by reference).
The following is the report of the Audit Committee with respect to our audited financial statements for the fiscal year ended December 31,
20152018 included in our Annual Report on Form 10-K for that year.
The Audit Committee has reviewed and discussed these audited financial statements with our management.
Review and Discussions with Independent Auditors
The Audit Committee has discussed with our independent auditors, Ernst & Young LLP, the matters required to be discussed under Auditing
Standard No. 16, Communications with Audit Committees (AS16),Standards adopted by the Public Company Accounting Oversight Board.
The Audit Committee has received the written disclosures and the letter from Ernst & Young LLP required by the Public Company Accounting Oversight Board Ethics and Independence Rule 3526, Communication with Audit Committees, regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with Ernst & Young LLP the independence of Ernst & Young LLP from the Company. Based on the review and discussions referred to above in this report, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31,
2015,2018, for filing with the Securities and Exchange Commission.
| Submitted by the Audit Committee
|
| of the Board of Directors
|
| |
| Mohan Ananda
|
| G. Bradford Jones
|
| Lloyd I. Miller, III
|
38
Submitted by the Audit Committee of the Board of Directors
G. Bradford Jones
Theodore R. Samuels, II
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Procedures for Review and Ratification of Related Party Transactions
We have an informal policy requiring that all related party transactions be submitted to our Audit Committee members not involved in the transaction for review and advance approval. The Audit Committee is empowered to collect and review all material facts and all necessary data for each related party transaction. After review, the Audit Committee will only approve or ratify the transactions that are in, or are not inconsistent with, our best interests and the best interests of our stockholders, as the Audit Committee determines in good faith.
Transactions with Mr. Ananda
Under our initial agreements with Mr. Ananda, we own all of the intellectual property developed by Mr. Ananda during the course of his employment and all of the intellectual property he developed for us before his formal employment began. Mr. Ananda resigned as our chief executive officer on January 1, 1999. In May 1999, we entered into a separation agreement and a license agreement with Mr. Ananda to formalize his resignation and to redefine his intellectual property rights. The license agreement reaffirms our ownership of the intellectual property invented by Mr. Ananda prior to and during his employment. In addition, the license agreement clarifies and narrows Mr. Ananda’s field of use restrictions to limit his license to a few narrowly defined electronic commerce applications that do not compete with our Internet postage service.
Management Incentive Plan
In connection with the our acquisition of ShippingEasy, Inc., we entered into a Management Incentive Plan, dated as of July 1, 2016, by and among ShippingEasy, Inc., us and Ms. May as the Participant Representative (the "MIP"). The MIP was filed as an exhibit to the Company's Form 10-Q filed with the SEC on August 9, 2016. At the time we entered into the MIP, Ms. May was not a related person within the meaning of Item 404(a) of Regulation S-K. Pursuant to the MIP, among other things, we issued to Ms. May 10,892 shares, 28,319 shares and 4,356 shares of the Company's common stock in each of March 2017, March 2018 and March 2019 valued at approximately $1,293,980, $5,646,921 and $380,042, respectively, on the dates of issuance. A portion of each stock issuance under the MIP was retained by us for tax withholding purposes.
Indemnification of Directors and Officers
In addition to the indemnification provisions contained in our certificate of incorporation and bylaws, we entered into separate indemnification agreements with certain of our directors and officers. These agreements require us, among other things, to indemnify our directors and officers against expenses (including attorneys’ fees), judgments, fines and settlements paid by those individuals in connection with any action, suit or proceeding arising out of their status or service as our director or officer (other than liabilities arising from willful misconduct or conduct that is knowingly fraudulent or deliberately dishonest) and to advance expenses incurred in connection with any proceeding against them with respect to which they may be entitled to indemnification by us.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The members of our Board, our executive officers and persons who hold more than 10% of our outstanding common stock are subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, which requires them to file with the SEC reports with respect to their ownership of our common stock and their transactions in our common stock and to furnish us with copies of those reports. Based solely on a review of copies of reports filed with the SEC under Section 16(a) and submitted to us and on written representations by certain of our directors and executive officers, we believe that all of our directors, executive officers and greater-than-10% stockholders filed all such required reports on a timely basis during
2015.2018.
Other Matters to be Presented for Voting at the Annual Meeting
We know of no other matters that will be presented for consideration for voting at the Annual Meeting. If any other matters properly come before the Annual Meeting, it is the intention of the persons named in the enclosed form of proxy to vote the shares they represent as our Board may recommend. Subject to SEC rules, discretionary authority with respect to other matters is granted by the execution of the enclosed proxy, unless you specifically withhold that power.
A copy of our annual report for 20152018 has been mailed concurrently with this proxy statement to all stockholders entitled to notice of and to vote at the Annual Meeting. The annual report is not incorporated into this proxy statement and is not considered proxy solicitation material. Our annual report shall not be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing (except to the extent that we specifically incorporate this information by reference) and shall not otherwise be deemed “soliciting material” or “filed” with the Securities and Exchange Commission. We filed an annual report on Form 10-K for 20152018 with the SEC on February 29, 2016.March 1, 2019. You may obtain a copy of that report, without charge, by writing to Investor Relations at Stamps.com Inc., 1990 E. Grand Avenue, El Segundo, CA 90245, or you can access copies of all our Securities and Exchange Commission filings on our website at http://investor.stamps.com/edgar.cfm. | By Order of the Board of Directors:
|
| |
| /s/ Ken McBride
|
| |
| Ken McBride, Chief Executive Officer
|
| |
| May 6, 2016
|
By Order of the Board of Directors: Ken McBride, Chief Executive OfficerMay 2, 2018
Annex A
(Board of Directors Compensation Peer Groups)
2017 Benchmarks
The following companies arewere included in our compensation benchmark group used forin April 2017 to determine our Board of Directors compensation:cash compensation to become effective May 1, 2017:
Company
|
AMERICAN
|
Company Name |
8X8 INC /DE/ |
ATLANTIC TELE NETWORK INC /DE |
AVG TECHNOLOGIES N.V. |
BADGER METER INC |
BROOKS AUTOMATION INC |
CALLIDUS SOFTWARE INC |
APPLIED MICRO CIRCUITSCUBIC CORP /DE/ |
BLACK DIAMONDCVENT INC
|
CALAMP CORP. DESCARTES SYSTEMS GROUP INC |
CAVIUM INC. ENGHOUSE SYSTEMS LTD. |
COMMUNICATIONSESCO TECHNOLOGIES INC
|
EVOLENT HEALTH, INC. |
FABRINET |
FIDESSA GROUP PLC |
GENERAL COMMUNICATION INC |
GIGAMON INC |
GTT Communications, Inc. |
GoPro, Inc. |
INVENSENSE INC |
IXIA |
Interactive Intelligence Group, Inc. |
KINAXIS INC. |
KULICKE & SOFFA INDUSTRIES INC |
METHODE ELECTRONICS INC |
Marketo, Inc. |
NETGEAR, INC |
OCLARO, INC. |
OMNICELL, Inc |
OSI SYSTEMS INC |
DICE HOLDINGSPOLYCOM INC
|
DSP GROUP INC PREMIER, INC. |
EBIX INC PROGRESS SOFTWARE CORP /MA |
Q2 Holdings, Inc. |
QLOGIC CORP |
QUALYS, INC. |
RAMBUS INC |
RUCKUS WIRELESS INC |
SUPER MICRO COMPUTER, INC. |
SYKES ENTERPRISES INC |
ELECTRO SCIENTIFIC |
|
SYNAPTICS INC |
SYNTEL INC |
VEECO INSTRUMENTS INC |
VONAGE HOLDINGS CORP |
2U, INC. |
ACI WORLDWIDE, INC. |
ACXIOM CORP |
AMBARELLA INC |
BOX INC |
BRADY CORP |
CABOT MICROELECTRONICS CORP |
CELESTICA INC |
COMMVAULT SYSTEMS INC |
CREE INC |
Cornerstone OnDemand Inc |
DIEBOLD NIXDORF, INC |
EBIX INC |
ELECTRONICS FOR IMAGING INC |
FAIRCHILD SEMICONDUCTOR INTERNATIONAL INC |
FRONTIER COMMUNICATIONS CORP |
Fleetmatics Group plc |
GENERAC HOLDINGS INC. |
GameStop Corp. |
Groupon, Inc. |
HUBSPOT INC |
II-VI INC |
INPHI Corp |
Inovalon Holdings, Inc. |
LIFELOCK, INC. |
MAXLINEAR INC |
MERCURY SYSTEMS INC |
MacDonald, Dettwiler and Associates Ltd. |
Manitoba Telecom Services Inc. |
NEUSTAR INC |
PLANTRONICS INC /CA/ |
PLEXUS CORP |
RINGCENTRAL INC |
SEMTECH CORP |
SOLARCITY CORP |
VIAVI SOLUTIONS INC. |
ZYNGA INC |
ADVANCED ENERGY INDUSTRIES INC |
EXAR CORP CACI INTERNATIONAL INC /DE/ |
HURCO COMPANIES INC FINISAR CORP |
ICG GROUP INC FIRST SOLAR, INC. |
INCONTACT INC InterDigital, Inc. |
INNOTRAC CORP LEXMARK INTERNATIONAL INC /KY/ |
REALPAGE INC |
SANMINA CORP |
KEYNOTE |
|
SILICON LABORATORIES INC |
VERINT SYSTEMS INC |
KEYW HOLDING CORP
|
KVH INDUSTRIESYELP INC
|
LIMELIGHT NETWORKS INC
|
LTX-CREDENCE CORP
|
MATTSON TECHNOLOGY INC
|
MINDSPEED TECHNOLOGIES INC
|
MONOLITHIC POWER SYSTEMS INC
|
PARK ELECTROCHEMICAL CORP
|
PLX TECHNOLOGY INC
|
RUDOLPH TECHNOLOGIES INC
|
SEACHANGE INTERNATIONAL INC
|
SIGMA DESIGNS INC
|
SOURCEFIRE INC
|
ULTRATECH INC
|
VASCO DATA SECURITY INTERNATIONAL INC
|
VICOR CORP
|
VITESSE SEMICONDUCTOR CORP
|
VOCUS INC
|
VOLTERRA SEMICONDUCTOR CORP
|
XO GROUP INC
|
ZHONE TECHNOLOGIES INC
|
ZYGO CORP
|
Annex B
(Selected Compensation Peer Groups)
2018 Equilar Benchmarks
The following companies are included in our compensation benchmark groups used for our 20162018 Compensation Decisions (all data from Equilar as of April 2016)March 2018).
For our chairman and chief executive officer:
Company
|
|
Company |
ARRIS International plc |
AVX Corp |
BADGER METER INC |
BOINGO WIRELESS INC |
COMMVAULT SYSTEMS INC |
EBIXCONNS INC
|
Coupa Software Inc |
DST SYSTEMS INC |
DUN & BRADSTREET CORP/NW |
ENCORE WIRE CORP |
ENGHOUSE SYSTEMS LTD. |
FAIRCHILD SEMICONDUCTOR INTERNATIONALEPLUS INC
|
FIREEYE, INC. ESCO TECHNOLOGIES INC |
FLEETMATICS GROUP PLC ETSY INC |
IMPERVA INC FINISAR CORP |
LITTELFUSE INC /DE
|
MENTOR GRAPHICS CORP |
PLEXUS CORP QUALYS, INC. |
REALPAGE INC |
SENDGRID, INC. |
SHENANDOAH TELECOMMUNICATIONS COCO/VA/ |
SUNPOWER CORP SYSTEMAX INC |
WESCO INTERNATIONAL INC WEST CORP |
For our chief financial officer and co-president:officer:
Company
|
2U, INC.
|
ACI WORLDWIDE, INC. Company |
ACXIOM CORP 2U, Inc. |
ADVENT SOFTWARE8X8 INC /DE/
|
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC. AMBARELLA INC |
AMBARELLA INC
|
AMKOR TECHNOLOGY INC |
ANIXTER INTERNATIONALAPPFOLIO INC
|
ASPEN TECHNOLOGY INC /DE/ APPIAN CORP |
ATLANTIC TELE NETWORK INC /DE ARRIS International plc |
AVX CORP Corp |
BELDEN INC. BADGER METER INC |
Bankrate, Inc. |
BENCHMARK ELECTRONICS INC |
BLUCORA, INC. |
BGC PARTNERS, INC.
|
|
BOINGO WIRELESS INC |
BOTTOMLINE TECHNOLOGIES INC /DE/ |
BRADY CORP |
BROADSOFT, INC. |
BROOKS AUTOMATION INC |
CACI INTERNATIONAL INC /DE/ |
CELESTICACALLIDUS SOFTWARE INC
|
CIENA CORP |
CIRRUS LOGIC INC Cloudera, Inc. |
COHERENT INC
|
COMMVAULT SYSTEMS INC |
CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
|
CONVERGYS CORP CORELOGIC, INC. |
CRAY INC Coupa Software Inc |
CREE INC CRITEO S.A. |
CSG SYSTEMS INTERNATIONAL INC |
CUBIC CORP /DE/ |
CYPRESS SEMICONDUCTOR CORP /DE/
|
DESCARTES SYSTEMS GROUP INC |
EBIXDIODES INC /DEL/ |
ELLIE MAEDST SYSTEMS INC
|
ENDURANCE INTERNATIONAL GROUP HOLDINGS, INC. DUN & BRADSTREET CORP/NW |
ENTEGRIS INC ENCORE WIRE CORP |
EVERTEC, INC. Endurance International Group Holdings, Inc. |
FAIRCHILD SEMICONDUCTOR INTERNATIONAL INC ENGHOUSE SYSTEMS LTD. |
FIREEYE, INC. EPLUS INC |
FLEETMATICSESCO TECHNOLOGIES INC
|
EVERTEC, Inc. |
EXTREME NETWORKS INC |
FARO TECHNOLOGIES INC |
FIDESSA GROUP PLC |
GODADDY INC. FINISAR CORP |
GRUBHUB INC. FORESCOUT TECHNOLOGIES, INC |
HUBSPOTFORMFACTOR INC
|
IMPERVA INC GameStop Corp. |
INFINERA CORP Groupon, Inc. |
INOVALON HOLDINGS, INC. GTT Communications, Inc. |
HEALTHEQUITY INC |
HUBSPOT INC |
II-VI INC |
INFINERA Corp |
INNOVIVA, INC. |
INSIGHT ENTERPRISES INC |
INSTRUCTURE INC |
INTEGRATED DEVICE TECHNOLOGY INC |
INTERDIGITAL, INC. InterDigital, Inc. |
INTERSIL CORP/DE |
ITRON INC /WA/ |
J2 GLOBAL, INC. |
LIFELOCK, INC. JABIL INC |
LITTELFUSE INC /DE KEMET CORP |
LOGITECH INTERNATIONAL SA
|
LOGMEIN, INC.
|
LORAL SPACE & COMMUNICATIONS INC. |
|
M/A-COM
|
MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. |
MACDONALD, DETTWILER ANDMANHATTAN ASSOCIATES LTD. INC |
MANITOBA TELECOM SERVICES INC. Medidata Solutions, Inc. |
MANTECH INTERNATIONAL CORP Mellanox Technologies, Ltd. |
MEDASSETSMERCURY SYSTEMS INC
|
MEDIDATA SOLUTIONS, INC. MICROSTRATEGY INC |
MELLANOX TECHNOLOGIES, LTD. MongoDB, Inc. |
MENTOR GRAPHICS CORP
|
METHODE ELECTRONICS INC Morningstar, Inc. |
MICROSTRATEGYNETGEAR, INC
|
MKS INSTRUMENTSNEUSTAR INC
|
MONOLITHIC POWER SYSTEMSNEW RELIC INC
|
NETSCOUT SYSTEMSNOVANTA INC
|
NIC INC OCLARO, INC. |
OMNIVISION TECHNOLOGIES INC OMNICELL, Inc |
OSI SYSTEMS INC
|
Orbitz Worldwide, Inc.
|
PEGASYSTEMS INC
|
PLANTRONICS INC /CA/ |
PLEXUS CORP |
PMC SIERRA INC Premier, Inc. |
POLYCOM INC Presidio, Inc. |
PREMIER,PROS HOLDINGS, INC.
|
PROOFPOINT INC Pure Storage, Inc. |
QLOGIC CORP Q2 Holdings, Inc. |
RAMBUS INC QUEBECOR, INC. |
RINGCENTRALRAMBUS INC
|
ROVI CORP REALPAGE INC |
RUCKUS WIRELESS INC SANMINA CORP |
SANMINASEMTECH CORP
|
SCANSOURCE INC SENDGRID, INC. |
SCIENCE APPLICATIONS INTERNATIONAL CORP
|
SEMTECH CORP
|
SHENANDOAH TELECOMMUNICATIONS CO/VA/
|
SHUTTERFLY INC
|
SILICON LABORATORIES INC |
SOHU COMSOLAREDGE TECHNOLOGIES INC
|
STRATASYS LTD. SPS COMMERCE INC |
SUNPOWER CORP
|
SUPER MICRO COMPUTER, INC.
|
SYKES ENTERPRISES INC |
SYNCHRONOSS TECHNOLOGIESSYNAPTICS INC
|
SYSTEMAX INC |
TECH DATA CORP |
TESSERATIVO CORP
|
TrueCar, Inc. |
TTM TECHNOLOGIES INC |
TRULIA, INC. UNITED STATES CELLULAR CORP |
UNIVERSAL DISPLAY CORP \PA\ VARONIS SYSTEMS INC |
VERINT SYSTEMS INC |
VIAVI SOLUTIONS INC. VIASAT INC |
VIRTUSA CORP
|
VISHAY INTERTECHNOLOGY INC |
WEBMD HEALTH CORP. VONAGE HOLDINGS CORP |
WESCO INTERNATIONAL INC
|
For our chief legal officer and secretary:
Company WebMD Health Corp. |
ACXIOMWEST CORP
|
ADVANCED ENERGY INDUSTRIESWORKIVA INC
|
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC. XPERI CORP |
AMKOR TECHNOLOGYZYNGA INC
|
ASPEN TECHNOLOGY INC /DE/
|
ATLANTIC TELE NETWORK INC /DE
|
BENCHMARK ELECTRONICS INC
|
CELESTICA INC
|
CIENA CORP
|
COHERENT INC
|
CONVERGYS CORP
|
CSG SYSTEMS INTERNATIONAL INC
|
FAIRCHILD SEMICONDUCTOR INTERNATIONAL INC
|
FIREEYE, INC.
|
GOPRO, INC.
|
GRUBHUB INC.
|
INFINERA CORP
|
INOVALON HOLDINGS, INC.
|
INTERDIGITAL, INC.
|
ITRON INC /WA/
|
LITTELFUSE INC /DE
|
LOGMEIN, INC.
|
LORAL SPACE & COMMUNICATIONS INC.
|
MICROSTRATEGY INC
|
OSI SYSTEMS INC
|
Orbitz Worldwide, Inc.
|
PMC SIERRA INC
|
POLYCOM INC
|
RAMBUS INC
|
RINGCENTRAL INC
|
ROVI CORP
|
RUCKUS WIRELESS INC
|
SCANSOURCE INC
|
SCIENCE APPLICATIONS INTERNATIONAL CORP
|
SEMTECH CORP
|
SOLARCITY CORP
|
SYKES ENTERPRISES INC
|
TECH DATA CORP
|
TRULIA, INC.
|
UNIVERSAL DISPLAY CORP
|
VERINT SYSTEMS INC
|
WESCO INTERNATIONAL INC
|
B - 3
For our co-president and corporate and business development officer:
Company
|
ADVENT SOFTWARE INC /DE/
|
AMKOR TECHNOLOGY INC
|
ATLANTIC TELE NETWORK INC /DE
|
AVX CORP
|
BELDEN INC.
|
CIENA CORP
|
CIRRUS LOGIC INC
|
COHERENT INC
|
COMMVAULT SYSTEMS INC
|
CORNERSTONE ONDEMAND INC
|
ELLIE MAE INC
|
FAIRCHILD SEMICONDUCTOR INTERNATIONAL INC
|
FIREEYE, INC.
|
FLEETMATICS GROUP PLC
|
INFINERA CORP
|
INTERSIL CORP/DE
|
LOGMEIN, INC.
|
MELLANOX TECHNOLOGIES, LTD.
|
MKS INSTRUMENTS INC
|
MONOLITHIC POWER SYSTEMS INC
|
NETSCOUT SYSTEMS INC
|
PLANTRONICS INC /CA/
|
PROOFPOINT INC
|
QLOGIC CORP
|
RITCHIE BROS AUCTIONEERS INC
|
SHENANDOAH TELECOMMUNICATIONS CO/VA/
|
SYNAPTICS INC
|
SYNCHRONOSS TECHNOLOGIES INC
|
UBIQUITI NETWORKS, INC.
|
VISHAY INTERTECHNOLOGY INC
|
For our chief product & strategy officer:technology officer
Company
|
|
Company |
2U, Inc. |
ACI WORLDWIDE, INC. |
ADVENTAVX Corp
|
BOINGO WIRELESS INC |
CABOT MICROELECTRONICS CORP |
CALLIDUS SOFTWARE INC /DE/ |
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
|
ANIXTER INTERNATIONAL INC CIENA CORP |
BENCHMARK ELECTRONICS INC Casa Systems Inc |
CELESTICA INC Cornerstone OnDemand Inc |
CIENA CORP DUN & BRADSTREET CORP/NW |
ELLIE MAEETSY INC
|
ENTEGRIS INC FINISAR CORP |
IMPERVA INC Gigamon Inc. |
INOVALON HOLDINGS, INC. Gigamon Inc. |
LITTELFUSE INC /DE INNOVIVA, INC. |
LOGITECH INTERNATIONAL SA Inovalon Holdings, Inc. |
LOGMEIN, INC. MICROSTRATEGY INC |
M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC. MINDBODY, Inc. |
MEDASSETSPEGASYSTEMS INC
|
MKS INSTRUMENTS INC Presidio, Inc. |
PLEXUS CORP Q2 Holdings, Inc. |
RINGCENTRAL INC ROGERS CORP |
SILICON LABORATORIES INC |
VIRTUSAStraight Path Communications Inc.
|
UNITED STATES CELLULAR CORP |
VISHAY INTERTECHNOLOGY INC |
VONAGE HOLDINGS CORP |
2019 Equilar Benchmarks
The following companies are included in our compensation benchmark groups used for our 2019 Compensation Decisions (all data from Equilar as of March 2019).
For our chairman and chief executive officer:
|
|
Company |
Aspen Technology, Inc. |
Boingo Wireless, Inc. |
Bottomline Technologies, Inc. |
Commvault Systems, Inc. |
Coupa Software Incorporated |
Ebix, Inc. |
Enghous Systems Limited |
InterXion Holding N.V. |
Qualys, Inc. |
RealPage, Inc. |
Shenandoah Telecommunications Company |
Stamps.com Inc. |
Webjet Limited |
|
For our chief financial officer:
|
|
Company |
2U Inc |
8x8, Inc. |
Ambarella, Inc. |
AppFolio, Inc. |
Aspen Technology, Inc. |
Avalara, Inc. |
Alarm.com Holdings, Inc. |
Altair Engineering Inc. |
Badger Meter, Inc. |
Boingo Wireless, Inc. |
Bottomline Technologies, Inc. |
Brooks Automation, Inc. |
Callidus Software Inc. |
Commvault Systems, Inc. |
CyberArk Software Ltd. |
Cloudera, Inc. |
Cornerstone OnDemand, Inc. |
Coupa Software Incorporated |
Domo, Inc. |
Ellie Mae, Inc. |
EVERTEC, Inc. |
|
|
Forescout Technologies, Inc. |
FormFactor, Inc. |
Fidessa Group PLC |
Grubhub Inc. |
HealthEquity, Inc. |
HubSpot, Inc. |
Instructure, Inc. |
Iridium Communications Inc. |
InterDigital, Inc. |
Kinaxis Inc |
LivePerson, Inc. |
Manhattan Associates, Inc. |
Mercury Systems, Inc. |
MicroStrategy Incorporated |
MongoDB, Inc. |
Monolithic Power Systems, Inc. |
Medidata Solutions, Inc. |
Newmont Mining Corporation |
New Relic, Inc. |
NextGen Healthcare, Inc. |
NIC Inc. |
Novanta Inc. |
Omnicell, Inc. |
Progress Software Corporation |
Proofpoint, Inc. |
PROS Holdings, Inc. |
Q2 Holdings, Inc. |
Qualys, Inc. |
Rambus Inc. |
RealPage, Inc. |
RingCentral, Inc. |
Semtech Corporation |
Shenandoah Telecommunications Company |
SolarEdge Technologies, Inc. |
SolarWinds Corporation |
SPS Commerce, Inc. |
Stamps.com Inc. |
SailPoint Technologies Holdings, Inc. |
SecureWorks Corp. |
Descartes Systems Group Inc. |
TiVo Corporation |
Webjet Limited |
Workiva Inc. |
Xperi Corporation |
Yext, Inc. |
Zendesk, Inc. |
|
For our chief technology officer
|
|
Company |
2U Inc |
Boingo Wireless, Inc. |
Callidus Software Inc. |
Cornerstone OnDemand, Inc. |
Electro Scientific Industries Inc. |
Ellie Mae, Inc. |
Grubhub Inc. |
HealthEquity, Inc. |
LivePerson, Inc. |
MicroStrategy Incorporated |
NextGen Healthcare, Inc. |
Progress Software Corporation |
Q2 Holdings, Inc. |
SendGrid, Inc. |
Universal Display Corporation |
Yext, Inc. |
Zuora, Inc. |
|
For the chief executive officers of our ShipStation and ShippingEasy subsidiaries:
|
|
Company |
Bottomline Technologies, Inc. |
Brooks Automation, Inc. |
Cornerstone OnDemand, Inc. |
EVERTEC, Inc. |
Monolithic Power Systems, Inc. |
Newmont Mining Corporation |
Omnicell, Inc. |
Progress Software Corporation |
Proofpoint, Inc. |
RealPage, Inc. |
Semtech Corporation |
Shenandoah Telecommunications Company |
SunLink Health Systems, Inc. |
TiVo Corporation |
Universal Display Corporation |
Xperi Corporation |
|
Annex C
(2016 AmendmentNon-GAAP Financial Measures)
2018 Detailed Results
2018 total revenue was $586.9 million, up 25% compared to 2017. 2018 Mailing and Shipping revenue (which includes service, product and insurance revenue but excludes Customized Postage and Other revenue) was $567.3 million, up 26% versus 2017. 2018 Customized Postage revenue was $19.6 million, up 2% versus 2017.
2018 GAAP income from operations was $194.4 million, GAAP net income was $168.6 million, and GAAP net income per share was $8.99 based on 18.8 million fully diluted shares outstanding. This compares to 2017 GAAP income from operations of $163.5 million, GAAP net income of $150.6 million, and GAAP net income per share of $8.19 based on fully diluted shares outstanding of 18.4 million. 2018 GAAP income from operations, GAAP net income and GAAP income per fully diluted share increased by 19%, 12%, and 10% year-over-year, respectively.
2018 GAAP income from operations included $36.3 million of non-cash stock-based compensation expense, $18.3 million of non-cash amortization of acquired intangibles, and $3.1 million of transaction related expenses associated with the MetaPack acquisition and legal settlement expense related to the
2010 Equity Incentive Plan)2016 AMENDMENT
TO THE
STAMPS.COM INC. 2010 EQUITY INCENTIVE PLAN
Pursuantclass action wage and hours case filed against us in February 2018. 2018 GAAP net income also included $374 thousand of non-cash amortization of debt issuance costs and $1.0 million of foreign currency loss related to Section 20.2the MetaPack acquisition. 2018 GAAP income tax expense was $22.3 million and non-GAAP income tax expense was $29.2 million resulting in a non-GAAP tax expense adjustment of $6.9 million. The non-GAAP tax expense adjustment primarily reflects the tax impact from higher non-GAAP income as compared to GAAP income at the effective tax rate for fiscal 2018. See the section later in this Annex C entitled “About Non-GAAP Financial Measures” for more information on how non-GAAP taxes are calculated. Excluding the non-cash stock-based compensation expense, non-cash amortization of acquired intangibles, and transaction related expenses associated with the MetaPack acquisition, and legal settlement expense, 2018 non-GAAP income from operations was $252.2 million. Also excluding non-cash amortization of debt issuance costs and foreign currency loss related to the MetaPack acquisition, and including the non-GAAP tax expense adjustment, 2018 non-GAAP adjusted income was $220.9 million or $11.78 per share based on 18.8 million fully diluted shares outstanding.
2017 GAAP income from operations included $40.8 million of non-cash stock-based compensation expense, $16.0 million of non-cash amortization of acquired intangibles, $6.0 million of executive consulting expense, and $1.9 million of one-time insurance proceeds relating to a prior legal settlement. 2017 GAAP net income also included $374 thousand of non-cash amortization of debt issuance costs. 2017 GAAP income tax expense was $9.6 million and non-GAAP income tax expense was $13.3 million resulting in a non-GAAP tax expense adjustment of $3.7 million. The non-GAAP tax expense adjustment primarily reflects the tax impact from higher non-GAAP income as compared to GAAP income at the effective tax rate for fiscal 2017. Excluding the non-cash stock-based compensation expense, non-cash amortization of acquired intangibles, executive consulting expense, and one-time insurance proceeds, 2017 non-GAAP income from operations was $224.5 million. Also excluding non-cash amortization of debt issuance costs and including the non-GAAP tax expense adjustment, 2017 non-GAAP adjusted income was $208.2 million or $11.33 per share based on 18.4 million fully diluted shares outstanding.
Therefore, 2018 non-GAAP income from operations, non-GAAP adjusted income and non-GAAP adjusted income per fully diluted share increased by 12%, 6% and 4% year-over-year, respectively.
Non-GAAP income from operations, non-GAAP adjusted income and non-GAAP adjusted income per share are described further in the “About Non-GAAP Financial Measures” section of this Annex C and are reconciled to the corresponding GAAP measures in the following tables (unaudited):
Reconciliation of Non-GAAP to GAAP Financial Measures (2018)
|
| | | | | | | | | | | | | | |
For the Year Ended December 31, 2018 | | | Stock-Based | | Intangible | | Acquisition and | | Debt | | | | |
All amounts in millions except | | GAAP | | Compensation | | Amortization | | Litigation | | Amortization | | Income Tax | | Non-GAAP |
per share data: | | Amounts | | Expense | | Expense | | Settlement | | Expense | | Adjustments | | Amounts |
| | | | | | | | Expenses | | | | | | |
| | | | | | | | | | | | | | |
Cost of Revenues | | $ 126.91 | | $ 2.95 | | 0 | | 0 | | 0 | | 0 | | $ 123.95 |
Research & Development | | 56.59 | | 8.12 | | 0 | | 0 | | 0 | | 0 | | 48.47 |
Sales & Marketing | | 112.08 | | 6.89 | | 0 | | 0 | | 0 | | 0 | | 105.19 |
General & Administrative | | 96.95 | | 18.38 | | 18.29 | | 3.14 | | 0 | | 0 | | 57.13 |
Total Expenses | | 392.53 | | 36.35 | | 18.29 | | 3.14 | | 0 | | 0 | | 334.75 |
| | | | | | | | | | | | | | |
Income (Loss) from Operations | | 194.40 | | (36.35) | | (18.29) | | (3.14) | | 0 | | 0 | | 252.18 |
| | | | | | | | | | | | | | |
Interest and Other Income (Loss) | | (3.49) | | 0 | | 0 | | (1.03) | | (0.37) | | 0 | | (2.08) |
| | | | | | | | | | | | | | |
Benefit (Expense) for Income Taxes | | (22.27) | | 0 | | 0 | | 0 | | 0 | | 6.91 | | (29.18) |
| | | | | | | | | | | | | | |
Adjusted Income (Loss) | | 168.64 | | (36.35) | | (18.29) | | (4.17) | | (0.37) | | 6.91 | | 220.93 |
| | | | | | | | | | | | | | |
On a diluted per share basis | | $ 8.99 | | $ (1.94) | | $ (0.98) | | $ (0.22) | | $ (0.02) | | $ 0.37 | | $ 11.78 |
| | | | | | | | | | | | | | |
Shares used in per share calculation | | 18.76 | | 18.76 | | 18.76 | | 18.76 | | 18.76 | | 18.76 | | 18.76 |
Reconciliation of Non-GAAP to GAAP Financial Measures (2017)
|
| | | | | | | | | | | | | | | | | | |
For the Year Ended December 31, 2017 | | | | Stock-Based | | Intangible | | Executive | | One-time | | Debt | | | | |
All amounts in millions except | | GAAP | | Compensation | | Amortization | | Consulting | | Insurance | | Amortization | | Income Tax | | Non-GAAP |
per share data: | | Amounts | | Expense | | Expense | | Expenses | | Proceeds | | Expense | | Adjustments | | Amounts |
| | | | | | | | | | | | | | | | |
Cost of Revenues | | $ 79.23 | | $ 1.77 | | 0 | | 0 |
| | 0 | | 0 | | 0 | | $ 77.45 |
Research & Development | | 46.21 | | 9.03 | | 0 | | 0 |
| | 0 | | 0 | | 0 | | 37.17 |
Sales & Marketing | | 91.22 | | 7.29 | | 0 | | 0 |
| | 0 | | 0 | | 0 | | 83.93 |
General & Administrative | | 88.55 | | 22.73 | | 15.99 | | 6.00 |
| | (1.86) | | 0 | | 0 | | 45.68 |
Total Expenses | | 305.21 | | 40.83 | | 15.99 | | 6.00 |
| | (1.86) | | 0 | | 0 | | 244.24 |
| | | | | | | | | | | | | | | | |
Income (Loss) from Operations | | 163.50 | | (40.83) | | (15.99) | | (6.00 | ) | | 1.86 | | 0 | | 0 | | 224.46 |
| | | | | | | | | | | | | | | | |
Interest and Other Income (Loss) | | (3.26) | | 0 | | 0 | | 0 |
| | 0 | | (0.37) | | 0 | | (2.88) |
| | | | | | | | | | | | | | | | |
Benefit (Expense) for Income Taxes | | (9.65) | | 0 | | 0 | | 0 |
| | 0 | | 0 | | 3.69 | | (13.34) |
| | | | | | | | | | | | | | | | |
Adjusted Income (Loss) | | 150.60 | | (40.83) | | (15.99) | | (6.00 | ) | | 1.86 | | (0.37) | | 3.69 | | 208.24 |
| | | | | | | | | | | | | | | | |
On a diluted per share basis | | $ 8.19 | | $ (2.22) | | $ (0.87) | | $ | (0.33 | ) | | $ 0.10 | | $ (0.02) | | $ 0.20 | | $ 11.33 |
| | | | | | | | | | | | | | | | |
Shares used in per share calculation | | 18.39 | | 18.39 | | 18.39 | | 18.39 |
| | 18.39 | | 18.39 | | 18.39 | | 18.39 |
2018 GAAP Net Income and Non-GAAP Adjusted EBITDA
2018 GAAP net income was $168.6 million, up 12% compared to $150.6 million in 2017.
2018 non-GAAP adjusted EBITDA was $258.0 million, up 12% compared to $229.9 million in 2017.
Adjusted EBITDA is a non-GAAP financial measure which is described further in the “About Non-GAAP Financial Measures” section of this Annex C and is reconciled to GAAP net income in the following table (unaudited):
Reconciliation of Non-GAAP Adjusted EBITDA to GAAP Net Income (Unaudited)
|
| | | | |
| | Twelve Months ended |
All amounts in millions | | December 31, |
| | 2018 | | 2017 |
| | | | |
GAAP Net Income (Loss) | | $168.64 | | $150.60 |
| | | | |
Depreciation and Amortization expense | | $24.10 | | $21.44 |
Interest & Other Expense (Income), net | | $3.49 | | $3.26 |
Income Tax Expense (Benefit), net | | $22.27 | | $9.65 |
| | | | |
Stock-based Compensation Expense | | $36.35 | | $40.83 |
Executive Consulting Expense | | $ -- | | $6.00 |
One-time Insurance Expense (Proceeds) | | $ -- | | ($1.86) |
Acquisition and Litigation Settlement Expenses | | $3.14 | | $ -- |
| | | | |
Adjusted EBITDA | | $257.99 | | $229.92 |
About Non-GAAP Financial Measures
To supplement the Stamps.com Inc. 2010 Equity Incentive Plan,’s (the “Company’s”) condensed consolidated financial statements presented in accordance with GAAP, the Company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP income from operations, non-GAAP adjusted income, non-GAAP adjusted income per fully diluted share and adjusted EBITDA.
Non-GAAP financial measures are provided to enhance investors’ overall understanding of the Company’s financial performance and prospects for the future and as amendeda means to date (the “Plan”),evaluate period-to-period comparisons. The Company believes the non-GAAP measures that: (1) exclude certain non-cash items including stock-based compensation expense, amortization of acquired intangibles, amortization of debt issuance costs, contingent consideration charges; (2) exclude certain expenses and gains such as acquisition related expenses, litigation settlement expenses, executive consulting expenses, insurance proceeds; and (3) includes income tax adjustments provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be reflective of our underlying operating performance.
Non-GAAP adjusted income is calculated as GAAP net income plus the cumulative impact of the adjustments outlined in the paragraph immediately above.
Non-GAAP adjusted income per fully diluted share is calculated as non-GAAP adjusted income divided by fully diluted shares. Prior to the third quarter 2016, the Company referred to non-GAAP adjusted income as non-GAAP net income.
Non-GAAP income tax expense for the first, second and third quarters of our fiscal year are calculated by multiplying the projected annual effective tax rate in that quarter by the non-GAAP adjusted income before taxes for the quarter. The projected annual effective tax rate does not reflect potential future employee option exercises in the
remaining quarters of the fiscal year due to the inherent difficulty in forecasting employee option exercises. The projected annual effective tax rate also considers other factors including the Company’s tax structure and its tax positions in various jurisdictions where the Company operates. The actual annual effective tax rate realized for the fiscal year could differ materially from our projected annual effective tax rate used in the first, second and third quarters.
Non-GAAP income tax expense for the fourth quarter of the fiscal year is calculated by multiplying the actual effective tax rate for the fiscal year by the non-GAAP adjusted income before taxes for the fiscal year and subtracting the non-GAAP income tax expense or benefit reported in the first, second and third quarters. As a result, the fourth quarter reflects the tax impact of reconciling the first, second and third quarter projected annual effective rates to the actual effective tax rate for the fiscal year.
The projected non-GAAP full-year tax rate for 2019 is 30%.
Adjusted EBITDA as calculated in this Proxy Statement represents earnings before interest and other expense, net, interest and other income, net, income tax expense or benefit, depreciation and amortization and excludes certain items, such as stock-based compensation expense.
The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. These non-GAAP financial measures may differ from similarly titled measures used by other companies. Reconciliation of non-GAAP financial measures included in this Proxy Statement to the corresponding GAAP measures can be found in the financial tables of this Annex C.
The Company believes that non-GAAP financial measures, when viewed with GAAP results and the actionaccompanying reconciliation, enhance the comparability of operating results against prior periods and allow for greater transparency of operating results. Management uses non-GAAP financial measures in making financial, operating, compensation and planning decisions. The Company believes non-GAAP financial measures facilitate management and investors in comparing the Company’s financial performance to that of prior periods as well as in performing trend analysis over time.
PROXY
This Proxy is Solicited on Behalf of the Board of Directors of
STAMPS.COM INC.
Annual Meeting of Stockholders, June 12, 2019
The undersigned stockholder of Stamps.com Inc.
hereby revokes all previous proxies, acknowledges receipt of the Notice of the Annual Meeting of Stockholders to be held June 12, 2019 and the Proxy Statement, each dated May 2, 2019, and hereby appoints each of Ken McBride and Matthew A. Lipson, or either of them, as proxy and attorney-in-fact of the undersigned, with full power of substitution and revocation, on behalf and in the name of the undersigned, to represent the undersigned at the 2019 Annual Meeting of Stockholders and to vote all shares of common stock of STAMPS.COM INC. (the “Company”)
that the undersigned is entitled to vote, either on his or her own behalf or on behalf of any entity or entities, at the 2019 Annual Meeting of Stockholders to be held at Stamps.com Inc.,
1990 E. Grand Avenue, El Segundo, CA 90245 on June 12, 2019 at 10:00 a.m. Pacific Daylight Savings Time, and at any adjournment or postponement thereof, with the
Company hereby adoptssame force and effect as the undersigned might or could do if personally present thereat. The shares represented by this
Amendment to the Plan. This Amendment is effective April 28, 2016. Capitalized terms used in this Amendment, but not defined herein, shall have the respective meanings for such terms set forth in the Plan.The Plan is amended in the following respects only:
| 1. | A new definition is added to Section 2 of the Plan to read as follows: |
“2016 Plan Amendment” means the amendment to this Plan adopted by action of the Board effective April 28, 2016, increasing the number of shares of Stock and Stock equivalents reserved and available for the grant of Awards under this Plan as set forth in Section 3.1.
| 2. | The first sentence of Section 3.1 of the Plan is amended to read as follows: |
The maximum aggregate number of shares of Stock and Stock equivalents reserved and available for the grant of Awards under this Plan is the three million five hundred thousand (3,500,000) shares originally set forth in this Plan plus the additional two million one hundred thousand (2,100,000) shares added by the 2014 Plan Amendment, plus an additional one million two hundred thousand (1,200,000) shares added by the 2016 Plan Amendment, in each case calculated in accordance with Section 3.2.
| 3. | Section 21.2A is added to the Plan to read as follows: |
21.2A. Stockholder Approval of 2016 Plan Amendment. The 2016 Plan Amendment is subject to approval by the stockholders of the Company within twelve (12) months after the effective date of the 2016 Plan Amendment. No Awards of Restricted Stock or Restricted Stock Units may be granted (or any other issuances of shares of Stock made) with respect to the shares of Stock added to the Plan by the 2016 Plan Amendment unless and until such stockholder approval is obtained. Awards of Options and Stock Appreciation Rights may be granted with respect to the shares of Stock added to the Plan by the 2016 Plan Amendment prior to such stockholder approval, provided that any such Options and Stock Appreciation Rights may not be exercised or become exercisable unless and until such stockholder approval is obtained. Such stockholder approvalProxy shall be obtainedvoted in the manner and to the degree required under Applicable Laws.
Executedset forth on April 28, 2016, at El Segundo, California.
this proxy card. THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
| | | | | | |
1. | To elect two Class II directors to serve for a three-year term ending at the Company’s 2022 annual meeting of stockholders or until his successor is duly elected and qualified; |
| Mohan P. Ananda | FOR o | | WITHHOLD o | | |
| David C. Habiger | FOR o | | WITHHOLD o | | |
2. | To approve, on a non-binding advisory basis, the Company’s executive compensation; |
| | | | FOR o | STAMPS.COM INC.AGAINST o
| ABSTAIN o |
3. | To ratify the appointment of Ernst & Young LLP as independent auditors of the Company for 2019. |
| | | | FOR o | AGAINST o | ABSTAIN o |
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED (I) FOR THE ELECTION OF THE DIRECTOR NOMINEES LISTED ABOVE, (II) FOR APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPANY'S EXECUTIVE COMPENSATION, AND (III) FOR THE RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR 2019. THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY ON THE PROXIES TO VOTE AS TO ANY OTHER MATTER THAT MAY PROPERLY BE BROUGHT BEFORE THE ANNUAL MEETING OF WHICH THE BOARD OF DIRECTORS DID NOT HAVE NOTICE PRIOR TO FEBRUARY 12, 2019.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT RIGHT ¨
PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE MEETING ¨
|
| By:
| | | |
Please print the name(s) appearing on each share certificate over which you have voting authority. Persons signing in a fiduciary capacity should so indicate. If shares are held by joint tenants or as community property, both must sign and date. | |
| Title: (Print name(s) exactly as on certificate) |
Please sign your name and date: | | Date: | |
| (Authorized Signature) | | |
| | Date: | |
| (Authorized Signature) | | |