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1990 E. Grand Avenue
2018.
/s/ Ken McBride
Ken McBride
Chief Executive Officer
11, 2018
1. | To elect |
2. | To approve, on a non-binding advisory basis, our executive compensation; |
3. | To |
4. | To ratify the appointment of Ernst & Young LLP as our independent auditors for |
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 17, 201713, 2018 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.
/s/ SETH WEISBERG
Seth WeisbergMATT LIPSON
Matt Lipson
Chief Legal Officer
and Secretary
Important Notice Regarding Availability of Proxy Materials
for the 20172018 Annual Meeting of Stockholders to be Held on June 14, 2017
11, 2018
3, 2018.
2018.
1
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 20162017 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.
/ Nominations
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PROPOSAL ONE: ELECTION OF DIRECTORS
DIRECTOR
Each
Name | Age | Position | ||
Mohan P. Ananda (1)(2)(3) | Director | |||
David C. Habiger (3) | Director | |||
G. Bradford Jones (1)(2) | Director | |||
Kenneth T. McBride | Chairman of the Board and Chief Executive Officer | |||
Theodore R. Samuels, II (1) | Director |
Each of our directors, including our current nominees,nominee, was nominated based on the assessment of our Nominating Committee and our Board that he 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.
Nominees
Kenneth T. McBride has served as our chief executive officer and a Board member since August 2001. Beginning in 1999, Mr. McBride has held various positions at 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 August 2012 through January 2014, Mr. McBride served on the board of directors of LegalZoom.com, Inc.,
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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 2017, Mr. Samuels served the Capital Group Companies, a $1.4 trillion investment management company, 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), 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 Term Expires at the 2018 Annual Meeting of Stockholders
G. Bradford Joneshas 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.
Lloyd I. Miller has been one of 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. and served as a non-board nominating committee chairman of Lexington Coal Company. Mr. Miller also served as a director of DDI Corp. from March 2011 until the closing of a merger transaction on May 31, 2012. He was a member 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, finance, cash management, and share repurchase strategies.
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solutions, leading them through their IPO and ultimate solutions. From July 2011 until its sale to Oracle for approximately $700 millionCisco Systems in cash.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); Enova International, Inc. (Nasdaq: ENVA);, where he sits on the audit and compensation committees; GrubHub Inc. (NYSE: GRUB); Immersion, where he sits on the audit and compensation committees; and Xperi (Nasdaq: IMMR);XPER), where he sits on the audit and Tessera Holding Corp. (Nasdaq: TSRA).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.
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BOARD COMMITTEES AND MEETINGS AND CORPORATE GOVERNANCE
2017.
2017.
2017.
6
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.
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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 confirmed our Board’s determination that its leadership structure is most appropriate for our company, as the Board is fully integrated into the risk oversight function.
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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 13, 201614, 2017 for 5,000 shares each of our common stock at an exercise price per share of $90.68,$145.15, the fair market value per share of our common stock on the grant date. Mr. HabigerSamuels received an automatic option grant on October 25,January 4, 2017, the date he joined our Board, for 5,000 shares of our common stock at an exercise price per share of $93.28,$115.90, the fair market value per share of our common stock on the grant date.
Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(1)(2) | Total ($) | ||||||
Mohan Ananda | 53,700 | 161,200 | 214,900 | ||||||
David C. Habiger | 1,400 | 167,200 | 168,600 | ||||||
G. Bradford Jones | 59,000 | 161,200 | 220,200 | ||||||
Lloyd I. Miller | 59,700 | 161,200 | 220,900 |
Name | Fees Earned or | Option | ||||
Paid in Cash | Awards | Total | ||||
($) | ($)(1)(2) | ($) | ||||
Mohan Ananda | 71,500 | 251,800 | 323,300 | |||
David C. Habiger | 62,500 | 251,800 | 314,300 | |||
G. Bradford Jones | 76,300 | 251,800 | 328,100 | |||
Theodore R. Samuels, II | 64,300 | 454,350 | 518,650 |
(1) | The amounts in this column represent the aggregate grant date fair value of option awards granted in |
(2) | As of December 31, |
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PROPOSAL TWO: ADVISORY VOTE ON EXECUTIVE COMPENSATION
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PROPOSAL THREE: ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION
In addition2018 AMENDMENT TO STAMPS.COM INC. 2010 EQUITY INCENTIVE PLAN
After careful consideration, our board has determined that the advisory vote on executive compensation should be conducted every one year so that our stockholders may annually provide us with direct input on the most recent executive compensation information, as disclosed in our proxy statement. Setting a one year period for conducting this advisory stockholder vote will enhance stockholder communication by providing a simple means for us to obtain information on investor sentiment about our executive compensation program design, structure and policies.
You may cast your vote on your preferred voting frequency by choosing the option of “one year,” “two years,” or “three years,” or by abstaining from a vote, when you vote in response to the resolution set forth below. You are not voting to approve or disapprove the board’s recommendation on this item.
RESOLVED, that a non-binding advisory vote of the stockholders of Stamps.com Inc. to approve the company’s executive compensation, as disclosed pursuant to Item 402 of Regulation S-K (which disclosure includes the Compensation Discussion and Analysis provided with this Proxy Statement. Those factors include: the Summary Compensation Tableindividual’s position and scope of responsibility; the vesting period (and thus, retention value) remaining on the grantee’s existing 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 related tableselements of total compensation. The minimum vesting requirement would help ensure that awards provide incentives for participants to contribute to building the company's long-term value, and disclosure) shallprohibiting the payment of dividends on awards that remain unvested or subject to restrictions would prevent a situation where a dividend was paid to an award holder with respect to an award that never vests thus avoiding conferring an unintended benefit.
As of December 31, 2017 | As of April 13, 2018 | ||||||
Plan Category | Number of shares of common stock to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights | Number of shares of common stock remaining available for future issuance under the equity compensation plans (excluding shares reflected in column (a)) | Number of shares of common stock to be issued upon exercise of outstanding options, warrants and rights (b) | Weighted average exercise price of outstanding options, warrants and rights | Number of shares of common stock remaining available for future issuance under the equity compensation plans (excluding shares reflected in column (a)) | |
Equity compensation plans approved by security holders | 2,703,000 | $90.04 | 307,000 | 2,494,000 | $105.28 | 105,000 | |
ShippingEasy Stock Options(1) | 42,000 | $86.89 | — | 35,000 | $86.89 | — | |
ShippingEasy Performance Awards(2) | 65,000 | n/a | — | 9,000 | n/a | — | |
Inducement Stock Options granted February 26, 2018(3) | n/a | n/a | n/a | 60,000 | $201.00 | — | |
Total(4) | 2,810,000 | 307,000 | 2,598,000 | 105,000 |
(1) | Reflects the Stamps.com 2016 ShippingEasy Equity Inducement Plan which provided for the issuance of an aggregate of 62,000 stock options to purchase Stamps.com common stock on July 1, 2016. As of December 31, 2017 and April 13, 2018, respectively, approximately 42,000 and 35,000 stock options remain outstanding under the 2016 ShippingEasy Equity Inducement Plan. The plan was exempt from stockholder approval requirements as an employment inducement grant plan under applicable Nasdaq Listing Rule 5635(c)(4) as inducements material to the new employees entering into employment with Stamps.com. |
(2) | Reflects the inducement equity awards to two executives of ShippingEasy covering an aggregate of up to approximately 87,000 shares of common stock if earnings targets for ShippingEasy are achieved over a two and one-half year period beginning July 1, 2016. As of December 31, 2017 and April 13, 2018, respectively, approximately 65,000 and 9,000 shares may be issued in the future pursuant to the |
(3) | Reflects the award of 60,000 stock options to purchase Stamps.com common stock to a newly hired executive officer as an inducement to his entering into employment with the company. This inducement award was exempt from stockholder approval requirements as an employment inducement grant under applicable Nasdaq Listing Rule 5635(c)(4) as an inducement material to the new employee entering into employment with Stamps.com. |
(4) | As of April 13, 2018, the 2,589,000 outstanding stock options have a weighted average exercise price of $107.25 per share and a weighted average remaining term of 8.24 years. |
Shares authorized for issuance under the 2010 Plan, as of April 13, 2018 | 6,800,000 | |
Shares issued and/or subject to awards granted under the 2010 Plan, as of April 13, 2018 | 6,694,872 |
This vote is advisory, and therefore not binding on us or our board. Our board values the opinions that our stockholders express in their votes cast and will considerhave the outcome of this vote when considering how frequently we should conduct an advisory vote on our executive compensationsame effect as it deems appropriate. Abstentions andnegative votes, whereas broker non-votes, if any, will result innot be counted for purposes of determining whether the alternatives receiving fewer votes.
Unless otherwise instructed, the proxies will vote for the “one year” frequency alternative.
proposal has been approved.
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PROPOSAL FOUR: RATIFICATION OF INDEPENDENT AUDITORS
2018.
12
INDEPENDENT AUDITORS’ FEES AND SERVICES
2016
respectively, including for 2017, the services of Ernst & Young LLP in connection with the filing of a Form S-8 Registration Statement.
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MANAGEMENT
The following table sets forth certain information regarding our executive officers as of April 17, 2017:
Name | Age | Position | ||||
Ken McBride | 50 | Chief Executive Officer and Chairman of the Board of Directors | ||||
44 | Chief Financial Officer | |||||
47 | President | |||||
Jonathan Bourgoine | 47 | Chief Technology Officer | ||||
Chief Marketing Officer | ||||||
John Clem | 46 | Chief Product & Strategy Officer | ||||
Amine Khechfe | 53 | Chief Strategy Officer | ||||
Chief Legal Officer and Secretary | ||||||
Steve Rifai | 50 | Chief Sales Officer |
"
Michael Biswas
James Bortnak 2002.
John Clem has been 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.
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Steve Rifaihas been our chief sales officer since April 19, 2017. Previously, Mr. Rifai served as our senior VP of sales and customer development sincefrom July 20, 2016.2016 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 PhD in Engineering from Stanford University.
Seth Weisberg has been our chief legal officer since 2008 and our secretary since 2001. Mr. Weisberg was our general counsel from 2001 to 2008 and our senior director, IP & licensing from 1999 until 2001. Mr. Weisberg previously 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. Mr. Weisberg holds a law degree from Columbia Law School, a master's degree in History from Harvard University, a bachelor's degree in Physics and Astronomy from Harvard University and a General Course Certificate from the London School of Economics. Mr. Weisberg is a registered patent attorney.
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EXECUTIVE COMPENSATION
For executives who are not also corporate officers, our chief executive officer and chief financial officer and co-president set the base salary and bonus compensation based on comparable benchmarks and performance of the executive and performance of the company, and such compensation is disclosed to the Compensation Committee. However, 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 equity award based on comparable benchmarks and performance of the executive and performance of the company.
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We do not believe our compensation structure and policies are reasonably likely to have a material adverse effect on us, and we 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. A significant portion of executive management compensation is in equity, and our stock option grants encourage results over a longer period of time because of the typical three year vesting period and 10 year life of the options awarded to executive management. This encourages our executive management team to focus on managing our company for long term results.
On April 15, 2016, the Compensation Committee approved the final incentive compensation for 2015, established the base salaries for 2016, and established an incentive compensation plan for 2016 (all decisions collectively, the “2016 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.
For each executive manager, a benchmark group (collectively, the benchmark groups for all of our executive management are referred to as the “2016 Equilar Benchmarks”) was created using individuals that have similar titles and responsibilities at companies (i) having market capitalization of $1 billion to $3 billion; (ii) located anywhere in the United States; and (iii) in the technology sector. These parameters, which increased for 2016 from those used in 2015 to reflect the increase in the size of our company’s market capitalization, provided companies for our benchmarks that are consistent with the size of our company and the general scope of responsibilities of our executive management. Individuals at other companies who were founders, who were interim, who had resigned, 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 a cash bonus) as of the date of their companies' proxy statements were excluded from the analysis. Only proxies filed after January 1, 2015 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 in our benchmark groups were generally the same for our 2016 Compensation Decisions as for the compensation decisions that were made in 2015, except that (i) a higher market capitalization range 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 Inc. 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 Inc. 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 of companies included in the 2016 Equilar Benchmarks for each of our named executive officers in connection with the 2016 Compensation Decisions is included in Annex B.
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titles and responsibilities at companies (i) having market capitalization of $1 billion to $3 billion; (ii) with corporate headquarters in the United States; and (iii) 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 afteron January 1, 2016 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 was the same for our 20162017 Compensation Decisions as for the compensation decisions that were made in 2015. A list2016. Lists of those companies included in the 2017 Equilar Benchmarks foridentified as having an executive with similar titles and responsibilities as each of our named executive officers in connection with the 2017 Compensation Decisions is alsoare included in Annex B.
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 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 2018 Equilar Benchmarks. 2017 |
2016 Base Salaries
Each
The Compensation Committee believes that the range of base salaries it set is reasonable. In setting the 2016 base salaries of executive management, 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, Stamps.com Inc. ranks very highly in several key financial ratios, including the 88th percentile for return on equity, the 93rd percentile for return on assets, and the 94th percentile for return on revenue.
2017 Base Salaries
For 2017, each corporate officer’s base salary was set by the Compensation Committee between the 50
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The Compensation Committee believes that the range of base salaries it set is reasonable.
Name and Principal Position | 2017 Base Salary | Percent Increase from 2016 Base Salary | 2017 Base Salary Percentile Versus 2017 Equilar Benchmark | ||||
Ken McBride | $ | 720,958 | 10 | % | 55th percentile | ||
Chief Executive Officer and Chairman of the Board of Directors | |||||||
Kyle Huebner | $ | 437,938 | 10 | % | 64th percentile | ||
Chief Financial Officer and Co-President | |||||||
Amine Khechfe | $ | 362,500 | 30 | % | 50th percentile | ||
Chief Strategy Officer | |||||||
Steve Rifai | $ | 362,500 | 37 | % | 76th percentile | ||
Senior VP of Sales and Customer Development | |||||||
Seth Weisberg | $ | 407,160 | 11 | % | 74th percentile | ||
Chief Legal Officer and Secretary |
Name and Principal Position | 2018 Base Salary | Percent Increase from 2017 Base Salary | 2018 Base Salary Percentile Versus 2018 Equilar Benchmark | |||
Ken McBride | $805,255 | 10% | 68th percentile | |||
Chief Executive Officer and Chairman of the Board of Directors | ||||||
Jeff Carberry | $355,000 | 44% | 25th percentile | |||
Chief Financial Officer | ||||||
Kyle Huebner | $489,143 | 10% | 50th percentile | |||
President (CFO until July 31, 2017) | ||||||
Sebastian Buerba | $424,585 | 10% | 79th percentile | |||
Chief Marketing Officer | ||||||
John Clem | $423,258 | 10% | 75th percentile | |||
Chief Product Officer | ||||||
Michael Biswas | $419,362 | 5% | 72nd percentile | |||
Chief Technology Officer |
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of responsibilities of our executive management. If the executive management were to achieve performance that would result in the 2016 bonus pool being set at the $2.3 million level, the 2016 Plan would represent approximately 45% of the total fiscal 2016 compensation for the participants in the 2016 Plan.
The Compensation Committee had established revenue and non-GAAP adjusted EBITDA targets for purposes of the 2016 Plan based on the latest publicly available guidance at the time of the 2016 Compensation Decisions were made – that is the guidance issued by us was on February 25, 2016, when we stated that we expected 2016 revenue to be in a range of $290 million to $310 million, and 2016 non-GAAP net earnings per fully diluted share to be in a range of $5.00 to $5.50. The final 2016 financial results were revenue of $364.3 million, and non-GAAP adjusted EBITDA of $174.4 million, and non-GAAP adjusted income per fully diluted share of $8.70. Under the 2016 Plan, the revenue result generated an increase to the 2016 bonus pool of 33.3%, and the non-GAAP adjusted EBITDA result generated an increase to the 2016 bonus pool of 66.7%, and the two factors were added together to generate a total increase of 100% to the Base Pool (i.e. double the amount of the 2016 Base Pool).
Prior to making the final decision on the 2016 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 executive management team generated very positive 2016 financial results including: (i) total revenue of $364.3 million, up 70% versus 2015; (ii) non-GAAP adjusted EBITDA of $174.4 million, up 111% versus 2015; (iii) non-GAAP net income from operations of $169.8 million up 115% versus 2015; (iv) non-GAAP adjusted income per fully diluted share of $8.70 up 96% versus 2015; (v) paid customers growth from 633,000 to 681,000 during 2016; and (vi) total postage printed growth of 106% to $5.5 billion for 2016. In light of the aforementioned positive factors, the Compensation Committee set the final 2016 Plan bonus to $4.6 million, or 200% of the 2016 Base Pool.
Once the Compensation Committee established the 2016 Plan bonus pool level, the Compensation Committee discussed allocation of the bonus pool for the individual executive managers. The Compensation Committee believed that most of the executive managers performed well in 2016.
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Based on these factors and an assessment that each of the named executive officers had satisfied his individual goals and objectives, the Compensation Committee set the individual allocation of the 2016 bonus pool. The compensation was as follows:
Name and Principal Position | 2016 Non-Equity Incentive Plan (To Be Paid in May 2017) | 2016 Bonus Compensation (1) | 2016 Total Base Salary plus 2016 Non-Equity Incentive Plan plus 2016 Bonus Compensation | 2016 Total Base Salary plus Non-Equity Incentive Plan Compensation Plus 2016 Bonus Compensation Versus 2017 Equilar Benchmarks | ||||||
Ken McBride | $ | 1,620,000 | — | $ | 2,274,796 | 82nd percentile | ||||
Chief Executive Officer and Chairman of the Board of Directors | ||||||||||
Kyle Huebner | $ | 794,000 | — | $ | 1,191,748 | 99th percentile | ||||
Chief Financial Officer and Co-president | ||||||||||
Amine Khechfe (1) | — | $ | 236,650 | $ | 515,467 | 51st percentile | ||||
Chief Strategy Officer | ||||||||||
Steve Rifai (1) | — | $ | 278,500 | $ | 544,022 | 51st percentile | ||||
Senior VP of Sales and Customer Development | ||||||||||
Seth Weisberg | $ | 611,000 | — | $ | 977,668 | 99th percentile | ||||
Chief Legal Officer and Secretary | ||||||||||
All other executive officers | $ | 1,545,000 | — | $ | 2,601,409 | Not meaningful | ||||
Total (2) | $ | 4,570,000 | $ | 515,150 | $ | 8,105,110 | 88th percentile |
For additional information concerning the compensation of each of our named executive officers for 2016, see “Summary Compensation Table.”
On April 19, 2017, the Compensation Committee approved a non-equity incentive plan for 2017 (the “2017 Plan”) under which our corporate officers, including some of our named executive officers, are eligible for cash bonus awards to be paid in 2018. The 2017 Plan sets a base level aggregate bonus pool of $3.25 million (the “2017 Base Pool”) and provides that the actual bonus pool for 2017 could range from zero to twice the 2017 Base Pool based on our performance in 2017 relative to targets for revenue and non-GAAP adjusted EBITDA (which, as publicly reported by the company, typically excludes non-recurring and / or non-cash items such as ASC 718-related expenses, litigation charges, non-recurring adjustments, changes in non-cash contingent consideration valuation, corporate development / acquisition expenses, and other one-time and non-recurring items). The Compensation
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Committee set the amount of the 2017 Base Pool at $3.25 million, so that, if executive management performs 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 2017 slightly above the median level (at the 67th percentile) of those companies in the 2017 Equilar Benchmark.
Name and Principal Position | 2017 Non-Equity Incentive Plan (To Be Paid in May 2018) | 2017 Bonus Compensation (1) | 2017 Total Base Salary plus 2017 Non-Equity Incentive Plan plus 2017 Bonus Compensation | 2017 Total Base Salary plus Non-Equity Incentive Plan Compensation Plus 2017 Bonus Compensation Versus 2018 Equilar Benchmarks | ||||||||||
Ken McBride | $ | 1,800,000 | — | $ | 2,520,020 | 93rd percentile | ||||||||
Chief Executive Officer and Chairman of the Board of Directors | ||||||||||||||
Kyle Huebner | $ | 845,000 | — | $ | 1,282,368 | 68th percentile | ||||||||
President | ||||||||||||||
Jeff Carberry (1) | — | 400,000 | $ | 640,609 | 45th percentile | |||||||||
Chief Financial Officer | ||||||||||||||
Michael Biswas | $ | 550,000 | — | $ | 942,735 | 97th percentile | ||||||||
Chief Technology Officer | ||||||||||||||
Sebastian Buerba (1) | $ | 628,000 | — | $ | 1,000,431 | 99th percentile | ||||||||
Chief Marketing Officer | ||||||||||||||
John Clem | $ | 622,000 | — | $ | 1,000,457 | 93rd percentile | ||||||||
Chief Product Officer | ||||||||||||||
All other executive officers eligible to participate in the 2017 Plan | $ | 1,185,000 | $ | 400,000 | $ | 2,304,610 | Not meaningful | |||||||
Total | $ | 5,630,000 | $ | 400,000 | $ | 9,691,230 | 85th percentile |
(1) | Mr. Carberry was not an executive officer at the time the 2017 Plan was established, and did not participate in the 2017 Plan. Mr. Carberry received a discretionary bonuses for 2017 separate from the 2017 Plan. |
Company Performance vs. Public Guidance (1) | Total Resulting Bonus Pool (1) | Total Executive Team Compensation (2) | Change in Total Executive Team Compensation versus 2016 Total Executive Team Compensation (2) | Total Team Compensation vs. 2017 Equilar Benchmarks (3) | ||||||
Bottom End of Guidance Range ($400 million revenue, $200 million Non-GAAP adjusted EBITDA) | $ | 2,275,000 | $ | 5,712,000 | -30 | % | 52nd percentile | |||
Midpoint of Guidance Range ($412.5 million revenue, $210 million Non-GAAP adjusted EBITDA) | $ | 3,250,000 | $ | 6,687,000 | -17 | % | 67th percentile | |||
Top End of Guidance Range ($425 million revenue, $220 million Non-GAAP adjusted EBITDA) | $ | 4,225,000 | $ | 7,662,000 | -5 | % | 82nd percentile |
Company Performance vs. Public Guidance (1) | Total Resulting Bonus Pool (1) | Total Executive Team Compensation (2) | Change in Total Executive Team Compensation versus 2017 Total Executive Team Compensation (2) | Total Team Compensation vs. 2018 Equilar Benchmarks (3) | ||||
Bottom End of Guidance Range ($530 million revenue, $245 million Non-GAAP adjusted EBITDA) | $2,870,000 | $6,509,000 | -24% | 58th percentile | ||||
Midpoint of Guidance Range ($545 million revenue, $255 million Non-GAAP adjusted EBITDA) | $4,100,000 | $7,739,000 | -10% | 74th percentile | ||||
Top End of Guidance Range ($560 million revenue, $265 million Non-GAAP adjusted EBITDA) | $5,330,000 | $8,969,000 | -4% | 84th percentile |
(1) | The Compensation Committee retains the right to change the actual bonus pool in its discretion. |
(2) | Total executive management team compensation is projected total base salary plus total incentive-based compensation for all current executive managers as a group, including all named executive officers and others. Mr. Bourgoine is expected to receive a bonus under the terms of his separately negotiated employment agreement, and is not expected to participate in the 2018 Bonus Plan. |
(3) | Total executive management team compensation versus |
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 |
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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.
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as a result, is included in compensation subject to the $1 million limitation on deductibility. Except for approximately $1,275,417 in excess of $1 million paid to our chairmanThis "performance-based" exception is no longer available after 2017, as a result of the boardTax Cuts and chief executive officer, theJobs Act. An aggregate of approximately $1,520,908 of cash compensation was paid to each of our named executive officers other than our chief financial officer in 2016 was less than2017 that exceeded $1 million each, and, therefore, the deductibility of such excess compensation was not affectedlimited by the limitations of 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 stockholders.
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COMPENSATION COMMITTEE REPORT
David C. Habiger Lloyd I. Miller, III |
25
Mohan P. Ananda
Name and Principal Position | Year | Base Pay | Bonus (1)(2) | Non-Equity Incentive Plan Compensation (2) | Option Awards (3)(4) | All Other Compensation (5) | Total(4) | ||||||||||||||
Ken McBride | 2016 | $ | 654,796 | $ | 0 | $ | 1,620,000 | $ | 0 | $ | 5,300 | $ | 2,280,096 | ||||||||
Chairman of the Board and | 2015 | $ | 595,833 | $ | 100,000 | $ | 1,033,000 | $ | 8,371,014 | $ | 5,300 | $ | 10,105,147 | ||||||||
Chief Executive Officer | 2014 | $ | 532,667 | $ | 59,542 | $ | 590,458 | $ | 986,663 | $ | 5,200 | $ | 2,174,530 | ||||||||
Kyle Huebner | 2016 | $ | 397,748 | $ | 0 | $ | 794,000 | $ | 0 | $ | 5,300 | $ | 1,197,048 | ||||||||
Chief Financial Officer and | 2015 | $ | 364,583 | $ | 50,000 | $ | 520,000 | $ | 4,896,500 | $ | 5,300 | $ | 5,836,383 | ||||||||
Co-President | 2014 | $ | 342,667 | $ | 30,229 | $ | 299,771 | $ | 592,000 | $ | 5,200 | $ | 1,269,867 | ||||||||
Amine Khechfe | 2016 | $ | 278,817 | $ | 236,650 | $ | 0 | $ | 2,171,400 | $ | 5,300 | $ | 2,692,167 | ||||||||
Chief Strategy Officer (6) | |||||||||||||||||||||
Steve Rifai | 2016 | $ | 265,522 | $ | 278,500 | $ | 0 | $ | 1,085,700 | $ | 4,560 | $ | 1,634,282 | ||||||||
Senior VP of Sales and | |||||||||||||||||||||
Customer Development (7) | |||||||||||||||||||||
Seth Weisberg | 2016 | $ | 366,668 | $ | 0 | $ | 611,000 | $ | 0 | $ | 5,300 | $ | 982,968 | ||||||||
Chief Legal Officer and | 2015 | $ | 320,000 | $ | 50,000 | $ | 440,000 | $ | 3,917,200 | $ | 5,300 | $ | 4,732,500 | ||||||||
Secretary | 2014 | $ | 297,833 | $ | 16,947 | $ | 168,053 | $ | 473,600 | $ | 5,200 | $ | 961,633 |
Name and Principal Position | Year | Base Pay | Bonus (1)(2) | Non-Equity Incentive Plan Compensation (2) | Option Awards (3)(4) | All Other Compensation (5) | Total(4) | |||||||
Ken McBride | 2017 | $720,020 | $0 | $1,800,000 | 5,601,350 | $5,400 | $8,126,770 | |||||||
Chairman of the Board and | 2016 | $654,796 | $0 | $1,620,000 | $0 | $5,300 | $2,280,096 | |||||||
Chief Executive Officer | 2015 | $595,833 | $100,000 | $1,033,000 | $8,371,014 | $5,300 | $10,105,147 | |||||||
Jeff Carberry | 2017 | $240,609 | $400,000 | $0 | $3,171,228 | $3,567 | $3,815,404 | |||||||
Chief Financial Officer (6) | 2016 | $218,735 | $285,000 | $0 | $0 | $4,202 | $507,937 | |||||||
2015 | $208,664 | $190,000 | $0 | $1,915,614 | $4,173 | $2,318,451 | ||||||||
Kyle Huebner | 2017 | $437,368 | $0 | $845,000 | $3,380,125 | $5,400 | $4,667,893 | |||||||
President (7) | 2016 | $397,748 | $0 | $794,000 | $0 | $5,300 | $1,197,048 | |||||||
2015 | $364,583 | $50,000 | $520,000 | $4,896,500 | $5,300 | $5,836,383 | ||||||||
Michael Biswas | 2017 | $392,735 | $0 | $550,000 | $2,704,100 | $5,400 | $3,652,235 | |||||||
Chief Technology Officer | 2016 | $354,921 | $0 | $535,000 | $0 | $5,300 | $895,221 | |||||||
2015 | $323,422 | 20,000 | $375,000 | $3,917,200 | $5,300 | $4,640,922 | ||||||||
Sebastian Buerba | 2017 | $372,431 | $0 | $628,000 | $2,704,100 | $5,195 | $3,709,726 | |||||||
Chief Marketing Officer (8) | 2016 | $323,854 | $565,000 | $0 | $0 | $5,186 | $894,040 | |||||||
2015 | $294,923 | $420,000 | $0 | $4,628,214 | $5,300 | $5,348,437 | ||||||||
John Clem | 2017 | $378,457 | $0 | $622,000 | $2,704,100 | $5,400 | $3,709,957 | |||||||
Chief Product Officer | 2016 | $339,485 | $0 | $550,000 | $0 | $5,300 | $1,197,048 | |||||||
2015 | $287,083 | $20,000 | $400,000 | $3,917,200 | $7,300 | $4,631,583 |
(1) | Bonuses for |
(2) | Bonuses paid to corporate officers and other executive management for 2015 |
(3) | The amounts in this column generally represent the aggregate grant date fair value of option awards granted during 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 |
26
(4) | 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, Carberry, Huebner, Biswas, Buerba and |
(5) | 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, this includes amounts of $2,000 paid to John Clem in 2015 related to patent inventor bonuses. |
(6) | Mr. |
(7) | Mr. |
(8) | Although Mr. Buerba has been our chief marketing officer since January 2012, he was not an executive officer of the company until he began reporting directly to our |
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | Option Awards: Number of Securities Underlying Option (#)(5) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards(6) | ||||||||||||||||
Name | Grant Date | Threshold ($)(2) | Target ($)(3) | Maximum ($)(4) | |||||||||||||||
Ken McBride | 4/15/2016 | $ | 709,238 | $ | 840,849 | $ | 1,462,346 | — | — | — | |||||||||
Kyle Huebner | 4/15/2016 | $ | 356,810 | $ | 423,022 | $ | 735,690 | — | — | — | |||||||||
Amine Khechfe | 2/5/2016 | — | — | — | 70,000 | $ | 87.88 | $ | 2,171,400 | ||||||||||
Steve Rifai | 2/5/2016 | — | — | — | 35,000 | $ | 87.88 | $ | 1,085,700 | ||||||||||
Seth Weisberg | 4/15/2016 | $ | 306,731 | $ | 363,650 | $ | 632,435 | — | — | — |
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1)(2) | Option Awards: Number of Securities Underlying Option (#)(7) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards(8) | |||||||||||||
Name | Grant Date (3) | Threshold ($)(4) | Target ($)(5) | Maximum ($)(6) | ||||||||||||
Ken McBride | 4/19/2017 | $801,196 | $1,144,565 | $2,289,130 | 145,000 | $112.00 | $ | 5,601,350 | ||||||||
Kyle Huebner | 4/19/2017 | $392,685 | $560,978 | $1,121,957 | 87,500 | $112.00 | $ | 3,380,125 | ||||||||
Jeff Carberry | 8/1/2017 | n/a | n/a | n/a | 60,000 | $152.15 | $ | 3,171,228 | ||||||||
Michael Biswas | 4/19/2017 | $264,592 | $377,989 | $755,978 | 70,000 | $112.00 | $ | 2,704,100 | ||||||||
Sebastian Buerba | 4/25/2017 | n/a | n/a | n/a | 70,000 | $112.00 | $ | 2,704,100 | ||||||||
John Clem | 4/19/2017 | $272,011 | $388,587 | $777,174 | 70,000 | $112.00 | $ | 2,704,100 |
(1) | Under the |
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(2) | Mr. Carberry, who did not become an executive officer until July 31, 2017, did not participate in the 2017 Plan. |
(3) | Each of Messrs. McBride, Huebner, Biswas, Buerba and Clem was eligible for an award under the 2017 Plan, which was established on April 19, 2017, and was also granted an award of stock options on April 25, 2017. |
(4) | The amounts in this column assume (i) an aggregate bonus pool equal to |
(5) | The amounts in this column assume (i) an aggregate bonus pool equal to |
(6) | The amounts in this column assume the maximum possible bonus pool of 200% of the |
(7) | These option awards were all issued under the 2010 Equity Incentive Plan, as |
(8) | The amounts in this column represent the aggregate grant date fair value of option awards granted during |
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Option Awards | ||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date | ||||||||||
Exercisable | Unexercisable | |||||||||||||
Ken McBride | 26,755 | — | 12.55 | 5/20/2021 | ||||||||||
80,248 | (1) | — | 32.41 | 9/19/2024 | ||||||||||
101,065 | (2) | 62,517 | (2) | 32.41 | 9/19/2024 | |||||||||
18,055 | (3) | 31,945 | (3) | 66.28 | 4/9/2025 | |||||||||
Kyle Huebner | 16,338 | — | 12.55 | 5/20/2021 | ||||||||||
46,915 | (1) | — | 32.41 | 9/19/2024 | ||||||||||
59,405 | (2) | 37,510 | (2) | 32.41 | 9/19/2024 | |||||||||
9,027 | (3) | 15,973 | (3) | 66.28 | 4/9/2025 | |||||||||
Amine Khechfe | — | 70,000 | (4) | 87.88 | 2/5/2026 | |||||||||
Steve Rifai | — | 35,000 | (4) | 87.88 | 2/5/2026 | |||||||||
Seth Weisberg | 31,915 | (1) | — | 32.41 | 9/19/2024 | |||||||||
46,907 | (2) | 30,008 | (2) | 32.41 | 9/19/2024 | |||||||||
7,222 | (3) | 12,778 | (3) | 66.28 | 4/9/2025 |
Option Awards | ||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercisable Options (#) | Option Exercise Price ($) | Option Expiration Date | ||||||
Ken McBride | 40,337 (1) | — | 32.41 | 9/19/2024 | ||||||
34,721 (2) | 15,278 (2) | 66.28 | 4/9/2025 | |||||||
12,082 (3) | 132,918 (3) | 112.00 | 4/25/2027 | |||||||
Kyle Huebner | 29,268 (1) | — | 32.41 | 9/19/2024 | ||||||
6,944 (2) | 7,640 (2) | 66.28 | 4/9/2025 | |||||||
7,291 (3) | 80,209 (3) | 112.00 | 4/25/2027 | |||||||
Jeff Carberry | 9,444 (4) | 556 (4) | 45.35 | 2/2/2025 | ||||||
9,166 (5) | 834 (5) | 58.25 | 3/2/2025 | |||||||
6,666 (6) | 53,334 (6) | 152.15 | 8/1/2027 | |||||||
Michael Biswas | 5,976 | — | 12.55 | 5/20/2021 | ||||||
3,346 (1) | — | 32.41 | 9/19/2024 | |||||||
2,222 (2) | 6,112 (2) | 66.28 | 4/9/2025 | |||||||
5,833 (3) | 64,167 (3) | 112.00 | 4/25/2027 | |||||||
Sebastian Buerba | 10,248 (7) | — | 32.41 | 9/19/2024 | ||||||
50,497 (1) | — | 32.41 | 9/19/2024 | |||||||
13,888 (2) | 6,112 (2) | 66.28 | 4/9/2025 | |||||||
5,833 (3) | 64,167 (3) | 112.00 | 4/25/2027 | |||||||
John Clem | 36,915 (7) | — | 32.41 | 9/19/2024 | ||||||
43,830 (1) | — | 32.41 | 9/19/2024 | |||||||
13,888 (2) | 6,112 (2) | 66.28 | 4/9/2025 | |||||||
5,833 (3) | 64,167 (3) | 112.00 | 4/25/2027 |
These option awards issued under the 2014 Amendment |
(2) | These performance-based option awards issued under the 2014 Amendment vest and become exercisable 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. The grants will fully vest on November 18, 2018. |
(3) | These option awards issued under the 2010 Equity Incentive Plan, as amended, vest in 36 approximately equal monthly installments beginning with October 1, 2017. |
(4) | These option awards issued under the 2010 Equity Incentive Plan, as amended, vested |
(5) | These option awards issued under the 2010 Equity Incentive Plan, as amended, vested in 36 approximately equal monthly installments beginning on April 2, 2015. |
(6) | These option awards issued under the 2010 Equity Incentive Plan, as amended, vest in 36 approximately equal monthly installments beginning with September 1, 2017. |
(7) | These option awards issued under the 2010 Equity Incentive Plan, as amended, vested in equal monthly installments over a 12 month period from October 19, 2014 through September 19, 2015. |
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OPTION EXERCISES AND STOCK VESTED
Option Awards | ||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | ||||
Ken McBride | 7,194 | $ | 479,602 | |||
Kyle Huebner | 14,138 | $ | 1,060,814 | |||
Amine Khechfe | — | — | ||||
Steve Rifai | — | — | ||||
Seth Weisberg | 14,181 | $ | 1,276,685 |
Option Awards | |||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | |||||
Ken McBride | 230,248 | $ | 30,210,352 | ||||
Kyle Huebner | 141,316 | $ | 13,993,785 | ||||
Jeff Carberry | 59,583 | $ | 11,807,626 | ||||
Michael Biswas | 141,788 | $ | 24,713,190 | ||||
Sebastian Buerba | 88,144 | $ | 13,422,473 | ||||
John Clem | 41,784 | $ | 6,925,530 |
(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. |
Name | Payment Upon Termination without Cause or Termination or Resignation Following Change in Control (1) | ||
Ken McBride | $ | 344,829 | |
Kyle Huebner | $ | 214,204 | |
Seth Weisberg | $ | 199,999 |
Name | Payment Upon Termination without Cause or Termination or Resignation Following Change in Control (1) | |||
Ken McBride | $ | 378,104 | ||
Kyle Huebner | $ | 234,416 |
(1) | Assumes a monthly value of $2,013 for continued benefits. |
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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.
Name | Options Accelerated Upon Involuntary Termination following Change in Control (1) | ||
Ken McBride | $ | 6,686,578 | |
Kyle Huebner | $ | 3,857,436 | |
Amine Khechfe | $ | 1,873,900 | |
Steve Rifai | $ | 936,950 | |
Seth Weisberg | $ | 3,085,930 |
Name | Options Accelerated Upon Involuntary Termination following Change in Control (1) | |||
Ken McBride | $ | 11,961,406 | ||
Kyle Huebner | $ | 7,025,825 | ||
Jeff Carberry | $ | 1,992,881 | ||
Michael Biswas | $ | 5,620,645 | ||
Sebastian Buerba | $ | 5,620,645 | ||
John Clem | $ | 5,620,645 |
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BENEFICIAL OWNERSHIP OF SECURITIES
Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentages of Shares Beneficially Owned | ||||
Ken McBride (1) | 189,789 | 1.10 | % | |||
Kyle Huebner (2) | 16,751 | * | ||||
Amine Khechfe (3) | 23,505 | * | ||||
Steve Rifai (4) | 14,582 | * | ||||
Seth Weisberg (5) | 123,057 | * | ||||
Mohan P. Ananda (6) | 746,524 | 4.23 | % | |||
David C. Habiger (7) | 5,000 | * | ||||
G. Bradford Jones (8) | 97,286 | * | ||||
Lloyd I. Miller (9) | 462,890 | 2.72 | % | |||
Theodore R. Samuels, II (10) | 6,000 | * | ||||
Other 5% Stockholders: | ||||||
FMR LLC (11) | 2,557,860 | 15.04 | % | |||
82 Devonshire Street | ||||||
Boston, Massachusetts 02109 | ||||||
BlackRock, Inc. (12) | 1,761,086 | 10.35 | % | |||
40 East 52nd Street | ||||||
New York, NY 10022 | ||||||
The Vanguard Group (13) | 1,328,600 | 7.81 | % | |||
100 Vanguard Blvd. | ||||||
Malvern, PA 19355 | ||||||
All directors and executive officers as a group (13 people) (14) | 1,961,209 | 11.08 | % |
Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentages of Shares Beneficially Owned | |||
Ken McBride (1) | 79,943 | * | |||
Kyle Huebner (2) | 10,417 | * | |||
Jeff Carberry (3) | 46,242 | * | |||
Michael Biswas (4) | 10,295 | * | |||
Sebastian Buerba (5) | 20,441 | * | |||
John Clem (6) | 118,939 | * | |||
Mohan P. Ananda (7) | 670,524 | 3.69 | % | ||
David C. Habiger (8) | 10,000 | * | |||
G. Bradford Jones (9) | 75,286 | * | |||
Theodore R. Samuels, II (10) | 11,000 | * | |||
Other 5% Stockholders: | |||||
FMR LLC (11) | 2,212,459 | 12.37 | % | ||
82 Devonshire Street | |||||
Boston, Massachusetts 02109 | |||||
BlackRock, Inc. (12) | 2,016,516 | 11.27 | % | ||
40 East 52nd Street | |||||
New York, NY 10022 | |||||
The Vanguard Group (13) | 1,547,702 | 8.65 | % | ||
100 Vanguard Blvd. | |||||
Malvern, PA 19355 | |||||
All directors and executive officers as a group (13 people) (14) | 1,129,007 | 6.17 | % |
* | Represents beneficial ownership of less than 1% of the outstanding shares of common stock. |
(1) | Includes |
(2) | Includes |
32
(3) | Includes |
(4) | Includes |
(5) | Includes |
(6) | Includes |
(7) | Includes 10,000 shares issuable upon exercise of options directly held by Mr. Ananda that are presently exercisable or will become exercisable within 60 days of April |
(8) | Includes |
(9) | Includes |
(10) | Includes |
(11) | Information regarding FMR LLC’s beneficial ownership is based solely on a Schedule 13G/A it filed with the SEC on February |
(12) | Information regarding Blackrock, Inc.’s beneficial ownership is based solely on a Schedule 13G/A it filed with the SEC on January |
(13) | Information regarding The Vanguard Group’s beneficial ownership is based solely on a Schedule 13G/A it filed with the SEC on February |
(14) | Includes an aggregate of |
33
AUDIT COMMITTEE REPORT
Board.
34
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
2017.
35
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.
36
Annex A
Company Name |
AMERICAN SOFTWARE INC |
APPLIED MICRO CIRCUITS CORP |
BLACK DIAMOND INC |
CALAMP CORP. |
CAVIUM INC. |
COMMUNICATIONS SYSTEMS INC |
DICE HOLDINGS INC |
DSP GROUP INC |
EBIX INC |
ELECTRO SCIENTIFIC INDUSTRIES INC |
EXAR CORP |
HURCO COMPANIES INC |
ICG GROUP INC |
INCONTACT INC |
INNOTRAC CORP |
KEYNOTE SYSTEMS INC |
KEYW HOLDING CORP |
KVH INDUSTRIES 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 |
A-1
2017 Benchmarks
Company Name |
8X8 INC /DE/ |
ATLANTIC TELE NETWORK INC /DE |
AVG TECHNOLOGIES N.V. |
BADGER METER INC |
BROOKS AUTOMATION INC |
CALLIDUS SOFTWARE INC |
CUBIC CORP /DE/ |
CVENT INC |
DESCARTES SYSTEMS GROUP INC |
ENGHOUSE SYSTEMS LTD. |
ESCO 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 |
POLYCOM INC |
PREMIER, INC. |
PROGRESS SOFTWARE CORP /MA |
Q2 Holdings, Inc. |
QLOGIC CORP |
QUALYS, INC. |
RAMBUS INC |
RUCKUS WIRELESS INC |
SUPER MICRO COMPUTER, INC. |
SYKES ENTERPRISES INC |
SYNAPTICS INC |
SYNTEL INC |
VEECO INSTRUMENTS INC |
VONAGE HOLDINGS CORP |
2U, INC. |
ACI WORLDWIDE, INC. |
A-2
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 |
CACI INTERNATIONAL INC /DE/ |
FINISAR CORP |
FIRST SOLAR, INC. |
InterDigital, Inc. |
LEXMARK INTERNATIONAL INC /KY/ |
REALPAGE INC |
SANMINA CORP |
SILICON LABORATORIES INC |
VERINT SYSTEMS INC |
YELP INC |
Annex B
2016 Equilar Benchmarks
The following companies are included in our compensation benchmark groups used for our 2016 Compensation Decisions (all data from Equilar as of April 2016).
B-1
B-2
B-3
B-4
2017 Equilar Benchmarks
Company |
BADGER METER INC |
CREE INC |
EBIX INC |
ENGHOUSE SYSTEMS LTD. |
ESCO TECHNOLOGIES INC |
FAIRCHILD SEMICONDUCTOR INTERNATIONAL INC |
FINISAR CORP |
Fleetmatics Group plc |
II-VI INC |
KINAXIS INC. |
PLEXUS CORP |
REALPAGE INC |
SHENANDOAH TELECOMMUNICATIONS CO/VA/ |
WEST CORP |
Company |
8X8 INC /DE/ |
ACXIOM CORP |
ADVANCED ENERGY INDUSTRIES INC |
AMBARELLA INC |
ATLANTIC TELE NETWORK INC /DE |
AVG TECHNOLOGIES N.V. |
AVX Corp |
CALLIDUS SOFTWARE INC |
BADGER METER INC |
BROADSOFT, INC. |
BROOKS AUTOMATION INC |
BENCHMARK ELECTRONICS INC |
CACI INTERNATIONAL INC /DE/ |
CELESTICA INC |
COMMVAULT SYSTEMS INC |
CREE INC |
CSG SYSTEMS INTERNATIONAL INC |
CUBIC CORP /DE/ |
DIEBOLD NIXDORF, INC |
DIODES INC /DEL/ |
ENDURANCE INTERNATIONAL GROUP HOLDINGS, INC. |
ESCO TECHNOLOGIES INC |
B-5
FAIRCHILD SEMICONDUCTOR INTERNATIONAL INC |
FINISAR CORP |
FIRST SOLAR, INC. |
FITBIT INC |
Fleetmatics Group plc |
FABRINET |
GameStop Corp. |
GIGAMON INC |
GRUBHUB INC. |
HUBSPOT INC |
II-VI INC |
INNOVIVA, INC. |
ITRON INC /WA/ |
IXIA |
InterDigital, Inc. |
LORAL SPACE & COMMUNICATIONS INC. |
KINAXIS INC. |
MANTECH INTERNATIONAL CORP |
METHODE ELECTRONICS INC |
Marketo, Inc. |
MERCURY SYSTEMS INC |
INSIGHT ENTERPRISES INC |
NEUSTAR INC |
NETGEAR, INC |
NIC INC |
OCLARO, INC. |
OMNICELL, Inc |
OSI SYSTEMS INC |
PLEXUS CORP |
POLYCOM INC |
PREMIER, INC. |
REALPAGE INC |
RINGCENTRAL INC |
ROGERS CORP |
SANMINA CORP |
SOLARCITY CORP |
SEMTECH CORP |
SYNCHRONOSS TECHNOLOGIES INC |
SILICON LABORATORIES INC |
SYKES ENTERPRISES INC |
SYNAPTICS INC |
TELEPHONE & DATA SYSTEMS INC /DE/ |
TIVO CORP |
TTM TECHNOLOGIES INC |
B-6
2U, INC. |
VEECO INSTRUMENTS INC |
VERINT SYSTEMS INC |
VISHAY INTERTECHNOLOGY INC |
VONAGE HOLDINGS CORP |
WEST CORP |
WINDSTREAM HOLDINGS, INC. |
WebMD Health Corp. |
XPERI CORP |
Company |
2U, INC. |
AVX Corp |
CALLIDUS SOFTWARE INC |
Cornerstone OnDemand Inc |
FIRST SOLAR, INC. |
GENERAC HOLDINGS INC. |
GIGAMON INC |
INNOVIVA, INC. |
II-VI INC |
FRONTIER COMMUNICATIONS CORP |
InterDigital, Inc. |
MICROSTRATEGY INC |
POLYCOM INC |
PROGRESS SOFTWARE CORP /MA |
ROGERS CORP |
VISHAY INTERTECHNOLOGY INC |
Company |
8X8 INC /DE/ |
ALARM.COM HOLDINGS, INC. |
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC. |
BADGER METER INC |
BENCHMARK ELECTRONICS INC |
CELESTICA INC |
CSG SYSTEMS INTERNATIONAL INC |
DESCARTES SYSTEMS GROUP INC |
FINISAR CORP |
FABRINET |
GRUBHUB INC. |
IXIA |
Inovalon Holdings, Inc. |
KINAXIS INC. |
KINAXIS INC. |
NETGEAR, INC |
PROGRESS SOFTWARE CORP /MA |
Q2 Holdings, Inc. |
QUALYS, INC. |
SEMTECH CORP |
SHUTTERFLY INC |
SILICON LABORATORIES INC |
STRATASYS LTD. |
SYNAPTICS INC |
TIVO CORP |
ZENDESK, INC. |
Company |
ARRIS International plc |
AVX Corp |
BADGER METER INC |
BOINGO WIRELESS INC |
COMMVAULT SYSTEMS INC |
CONNS INC |
Coupa Software Inc |
DST SYSTEMS INC |
DUN & BRADSTREET CORP/NW |
ENCORE WIRE CORP |
ENGHOUSE SYSTEMS LTD. |
EPLUS INC |
ESCO TECHNOLOGIES INC |
ETSY INC |
FINISAR CORP |
MENTOR GRAPHICS CORP |
QUALYS, INC. |
REALPAGE INC |
SENDGRID, INC. |
SHENANDOAH TELECOMMUNICATIONS CO/VA/ |
SYSTEMAX INC |
WEST CORP |
Company |
2U, Inc. |
8X8 INC /DE/ |
AMBARELLA INC |
AMKOR TECHNOLOGY INC |
ARRIS International plc |
AVX Corp |
BADGER METER INC |
Bankrate, Inc. |
BENCHMARK ELECTRONICS INC |
BRADY CORP |
BROADSOFT, INC. |
BROOKS AUTOMATION INC |
CACI INTERNATIONAL INC /DE/ |
CALLIDUS SOFTWARE INC |
CIENA CORP |
Cloudera, Inc. |
COMMVAULT SYSTEMS INC |
CORELOGIC, INC. |
Coupa Software Inc |
CRITEO S.A. |
CSG SYSTEMS INTERNATIONAL INC |
CUBIC CORP /DE/ |
DESCARTES SYSTEMS GROUP INC |
DIODES INC /DEL/ |
DST SYSTEMS INC |
DUN & BRADSTREET CORP/NW |
ENCORE WIRE CORP |
Endurance International Group Holdings, Inc. |
ENGHOUSE SYSTEMS LTD. |
EPLUS INC |
ESCO TECHNOLOGIES INC |
GameStop Corp. |
Groupon, 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. |
INTERSIL CORP/DE |
ITRON INC /WA/ |
JABIL INC |
KEMET CORP |
LORAL SPACE & COMMUNICATIONS INC. |
Mellanox Technologies, Ltd. |
MERCURY SYSTEMS INC |
MICROSTRATEGY INC |
MongoDB, Inc. |
Morningstar, Inc. |
NETGEAR, INC |
NEUSTAR INC |
NEW RELIC INC |
NOVANTA INC |
OCLARO, INC. |
OMNICELL, Inc |
PLANTRONICS INC /CA/ |
PLEXUS CORP |
Q2 Holdings, Inc. |
QUEBECOR, INC. |
RAMBUS INC |
REALPAGE INC |
SANMINA CORP |
SEMTECH CORP |
SENDGRID, INC. |
SILICON LABORATORIES INC |
SOLAREDGE TECHNOLOGIES INC |
SPS COMMERCE INC |
SYKES ENTERPRISES INC |
SYSTEMAX INC |
TECH DATA CORP |
TIVO CORP |
TrueCar, Inc. |
TTM TECHNOLOGIES INC |
B-7
VIASAT INC |
VISHAY INTERTECHNOLOGY INC |
VONAGE HOLDINGS CORP |
WebMD Health Corp. |
WORKIVA INC |
XPERI CORP |
ZYNGA INC |
Company |
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC. |
BOX INC |
DESCARTES SYSTEMS GROUP INC |
DUN & BRADSTREET CORP/NW |
FireEye, Inc. |
HUBSPOT INC |
Inovalon Holdings, Inc. |
J2 GLOBAL, INC. |
JABIL INC |
MANTECH INTERNATIONAL CORP |
MENTOR GRAPHICS CORP |
Morningstar, Inc. |
NEW RELIC INC |
Pure Storage, Inc. |
Quotient Technology Inc. |
Sailpoint Technologies Holdings, Inc. |
VIASAT INC |
WEST CORP |
Company |
2U, Inc. |
ACI WORLDWIDE, INC. |
AVX Corp |
BOINGO WIRELESS INC |
CABOT MICROELECTRONICS CORP |
CALLIDUS SOFTWARE INC |
CIENA CORP |
Casa Systems Inc |
Cornerstone OnDemand Inc |
DUN & BRADSTREET CORP/NW |
ETSY INC |
FINISAR CORP |
Gigamon Inc. |
Gigamon Inc. |
INNOVIVA, INC. |
Inovalon Holdings, Inc. |
MICROSTRATEGY INC |
MINDBODY, Inc. |
PEGASYSTEMS INC |
Presidio, Inc. |
Q2 Holdings, Inc. |
ROGERS CORP |
SILICON LABORATORIES INC |
Straight Path Communications Inc. |
UNITED STATES CELLULAR CORP |
VISHAY INTERTECHNOLOGY INC |
VONAGE HOLDINGS CORP |
Company |
2U, Inc. |
BOINGO WIRELESS INC |
BROADSOFT, INC. |
CABOT MICROELECTRONICS CORP |
MENTOR GRAPHICS CORP |
GameStop Corp. |
TrueCar, Inc. |
Company |
8X8 INC /DE/ |
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC. |
Groupon, Inc. |
HEALTHEQUITY INC |
INTERSIL CORP/DE |
KINAXIS INC. |
MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. |
Annex C
2016
2016
20162016.
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. See the sections later in this press release 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, 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.
2015 GAAP income from operations included $17.2 million of non-cash stock-based compensation expense, $3.6 million of non-cash amortization of acquired intangibles, $17.2 million of expenses including litigation settlements and expenses related to the acquisition of Endicia and $46.1 million of non-cash contingent consideration charge which resulted from changes in the fair value of the contingent consideration related to the ShipStation acquisition that was driven primarily by the increase in the Company's stock price during 2015. 2015 GAAP net income also included $2.8 million of non-cash income tax benefit. Excluding the non-cash stock-based compensation expense, non-cash amortization of acquired intangibles, legal settlement expense and acquisition related expenses and non-cash contingent consideration charge, 2015 non-GAAP income from operations was $78.8 million. Also excluding non-cash income tax expense, 2015 non-GAAP adjusted income was $77.2 million or $4.43 per share based on 17.4 million fully diluted shares outstanding.
For the Year Ended December 31, 2017 | Stock-Based | Intangible | Executive | One-time | Debt | |||||||||||
All amounts in millions except | GAAP | Compen-sation | Amorti-zation | Consulting | Insurance | Amorti-zation | 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 | ||||||||
C-1
C - 2
For the Year Ended December 31, 2016 All amounts in millions except per share data: | GAAP Amounts | Stock-Based Compensation Expense | Intangible Amortization Expense | Acquisition Related Expenses | Debt Amortization Expense | Income Tax Benefit (Expense) | Non-GAAP Amounts | ||||||||||||||
Cost of Revenues | $ | 62.97 | $ | 1.83 | $ | — | $ | — | $ | — | $ | — | $ | 61.14 | |||||||
Research & Development | 35.16 | 6.63 | — | — | — | — | 28.52 | ||||||||||||||
Sales & Marketing | 78.83 | 7.19 | — | — | — | — | 71.64 | ||||||||||||||
General & Administrative | 67.12 | 18.29 | 14.56 | 1.08 | — | — | 33.20 | ||||||||||||||
Total Expenses | 244.08 | 33.95 | 14.56 | 1.08 | — | — | 194.50 | ||||||||||||||
Income (Loss) from Operations | 120.22 | (33.95 | ) | (14.56 | ) | (1.08 | ) | — | — | 169.80 | |||||||||||
Interest and Other Income (Loss) | (3.25 | ) | — | — | — | (0.37 | ) | — | (2.87 | ) | |||||||||||
Benefit (Expense) for Income Taxes* | (41.74 | ) | — | — | — | — | (33.62 | ) | (8.12 | ) | |||||||||||
Adjusted Income (Loss) | 75.23 | (33.95 | ) | (14.56 | ) | (1.08 | ) | (0.37 | ) | (33.62 | ) | 158.81 | |||||||||
On a diluted per share basis | $ | 4.12 | $ | (1.86 | ) | $ | (0.80 | ) | $ | (0.06 | ) | $ | (0.02 | ) | $ | (1.84 | ) | $ | 8.70 |
* For 2016, the Company incurred approximately $33.6 million in deferred income tax expense based on its GAAP income measures. In addition, the Company would have incurred an additional approximately $14 million |
Reconciliation of Non-GAAP to GAAP Financial Measures (2015)
For the Year Ended December 31, 2015 All amounts in millions except per share data: | GAAP Amounts | Stock-Based Compensation Expense | Intangible Amortization Expense | Acquisition Related Expenses | Contingent Consideration Charge | Debt Amortization Expense | Litigation Settlement Expense | Income Tax Benefit (Expense) | Non-GAAP Amounts | ||||||||||||||||||
Cost of Revenues | $ | 43.94 | $ | 0.99 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 42.94 | |||||||||
Research & Development | 20.71 | 3.15 | — | — | — | — | — | — | 17.56 | ||||||||||||||||||
Sales & Marketing | 56.14 | 4.55 | — | — | — | — | — | — | 51.60 | ||||||||||||||||||
General & Administrative | 88.49 | 8.53 | 3.60 | 7.22 | 46.09 | — | — | — | 23.04 | ||||||||||||||||||
Litigation Settlement | 10.00 | — | — | — | — | — | 10.00 | — | — | ||||||||||||||||||
Total Expenses | 219.28 | 17.23 | 3.60 | 7.22 | 46.09 | — | 10.00 | — | 135.14 | ||||||||||||||||||
Income (Loss) from Operations | (5.32 | ) | (17.23 | ) | (3.60 | ) | (7.22 | ) | (46.09 | ) | — | (10.00 | ) | — | 78.82 | ||||||||||||
Interest and Other Income (Loss) | (0.25 | ) | — | — | — | — | (0.03 | ) | — | — | (0.22 | ) | |||||||||||||||
Benefit (Expense) for Income Taxes * | 1.37 | — | — | — | — | — | — | 2.82 | (1.44 | ) | |||||||||||||||||
Adjusted Income (Loss) | (4.20 | ) | (17.23 | ) | (3.60 | ) | (7.22 | ) | (46.09 | ) | (0.03 | ) | (10.00 | ) | 2.82 | 77.15 | |||||||||||
On a diluted per share basis ** | $ | (0.26 | ) | $ | (1.05 | ) | $ | (0.22 | ) | $ | (0.44 | ) | $ | (2.80 | ) | $ | (0.00 | ) | $ | (0.61 | ) | $ | 0.17 | $ | 4.43 |
C-2
20162017 GAAP Net Income and Non-GAAP Adjusted EBITDA
2016
20162016.
2016.
All amounts in millions | Twelve Months ended December 31, | |||||
2016 | 2015 | |||||
GAAP Net Income (Loss) | $ | 75.23 | $ | (4.20 | ) | |
Depreciation and Amortization expense | $ | 19.17 | $ | 7.70 | ||
Interest & Other Expense (Income), net | $ | 3.25 | $ | (0.07 | ) | |
Income Tax Expense (Benefit), net | $ | 41.74 | $ | (1.37 | ) | |
Stock-based Compensation Expense | $ | 33.95 | $ | 17.23 | ||
Contingent Consideration Charge | $ | — | $ | 46.09 | ||
Acquisition Related Expenses | $ | 1.08 | $ | 17.22 | ||
Adjusted EBITDA | $ | 174.41 | $ | 82.59 |
Twelve Months ended | |||||
All amounts in millions | December 31, | ||||
2017 | 2016 | ||||
GAAP Net Income (Loss) | $150.60 | $75.23 | |||
Depreciation and Amortization expense | $21.44 | $19.17 | |||
Interest & Other Expense (Income), net | $3.26 | $3.25 | |||
Income Tax Expense (Benefit), net | $9.65 | $41.74 | |||
Stock-based Compensation Expense | $40.83 | $33.95 | |||
Executive Consulting Expense | $6.00 | $ -- | |||
One-time Insurance Expense (Proceeds) | ($1.86) | $ -- | |||
Acquisition Related Expenses | $ -- | $1.08 | |||
Adjusted EBITDA | $ 229.92 | $ 174.41 | |||
Type of Award | Multiplier | |||
Award of Restricted Stock or Restricted Stock Units that delivers the full value of the underlying shares of Stock | 2.0 | |||
Award of Options or Stock Appreciation Rights that delivers the value of the underlying shares of Stock in excess of 100% of the Fair Market Value of the underlying shares of Stock (e.g., Options with an exercise price of at least 100% of such price) on the date of grant | 1.0 |
C-3
(i) | To interpret this Plan and to apply its provisions; |
(ii) | To adopt, amend, or rescind rules, procedures, agreements and forms relating to this Plan; |
(iii) | To authorize any person to execute, on behalf of the Company, any instrument (including, but not limited to any Award Agreement) required to carry out the purposes of this Plan; |
(iv) | To determine when Awards are to be granted under this Plan; |
(v) | To select the Participants; | |
(vi) | To determine the number of shares of Stock or Stock equivalents to be made subject to each Award; |
(vii) | To prescribe the terms and conditions (including vesting and acceleration) of each Option and SAR on the Grant Date, including (without limitation) the Exercise Price, to determine whether each such Option is to be classified as an ISO or as a Nonstatutory Option, to determine whether each such SAR is to be settled in Stock or in cash, and to specify the provisions of the Award Agreement relating to such Option or SAR; |
(viii) | To prescribe the terms and conditions (including vesting and acceleration) of each Restricted Stock Award and RSU Award on the Grant Date, including (without limitation) restrictions (if any), to specify whether each such Restricted Stock Awards and RSU Award is to be settled in Stock or in cash, and to specify the provisions of the Award Agreement relating to such Restricted Stock Award or RSU Award; |
(ix) | To amend any outstanding Award Agreement (including vesting and acceleration), subject to applicable legal restrictions, the provisions of this Plan and the terms and conditions of such Award Agreement; |
(x) | To prescribe the consideration for the grant of each Award under this Plan and to determine the sufficiency of such consideration; and |
(xi) | To take any other actions deemed necessary or advisable for the administration of this Plan. |
(i) | The Exercise Price is at least one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the Grant Date; and |
(ii) | Such ISO by its terms is not exercisable after the expiration of five (5) years from the Grant Date. |
(i) | As a result of such Optionee's death or Disability, the Option shall expire twelve (12) months (or such other period specified in the Award Agreement) after such death or Disability, but not later than the original expiration date specified in the Award Agreement. |
(ii) | By the Company for Cause, the Option shall expire immediately after the Company's notice or advice of such Termination of Service is dispatched to the Optionee, but not later than the original expiration date specified in the Award Agreement. |
(iii) | For any reason other than the Optionee's death or Disability or by the Company for Cause (except in connection with the events specified in Section 16, which will be governed by that section), the Option shall expire ninety (90) calendar days (or such other period specified in the Award Agreement) after such Termination of Service, but not later than the original expiration date specified in the Award Agreement. |
(i) | As a result of such Participant's death or Disability, the SAR shall expire twelve (12) months (or such other period specified in the Award Agreement) after such death or Disability, but not later than the original expiration date specified in the Award Agreement. |
(ii) | By the Company for Cause, the SAR shall expire immediately after the Company's notice or advice of such Termination of Service is dispatched to the Participant, but not later than the original expiration date specified in the Award Agreement. |
(iii) | For any reason other than the Participant's death or Disability or by the Company for Cause (except in connection with the events specified in Section 16, which will be governed by that section), the Option shall expire ninety (90) calendar days (or such other period specified in the Award Agreement) after such Termination of Service, but not later than the original expiration date specified in the Award Agreement. |
(i) | As a result of Grantee's death or Disability, then, except as otherwise specified in the Award Agreement, the restrictions on the Restricted Stock subject to the Award shall lapse as to a pro rata portion of the shares of such Restricted Stock (net of any shares as to which the restrictions previously have lapsed), with such pro rata portion based on the ratio of the number of days between the Grant Date and the date of Termination of Service to the number of days between the Grant Date and the date on which all such restrictions were scheduled to lapse under the Award Agreement. In such event, the Grantee shall forfeit the balance of such Restricted Stock as to which the restrictions have not yet lapsed, and the Restricted Stock so forfeited shall be returned to the Company. |
(ii) | By the Company for Cause, or as a result of any other event not specified in Section 9.4(i) (except in connection with the events specified in Section 16, which will be governed by that section), the portion of the Restricted Stock Award for which the restrictions have not lapsed as of the Termination of Service shall be forfeited immediately after the Company's notice or advice of such Termination of Service for Cause is dispatched to Grantee or on the date of Termination of Service for any other reason, except as otherwise specified in the Award Agreement. |
(i) | As a result of Grantee's death or Disability, then, except as otherwise specified in the Award Agreement, the restrictions on the shares of Stock or Stock equivalents subject to the Restricted Stock Units shall lapse as to a pro rata portion of such Restricted Stock Units (net of any Restricted Stock Units as to which the restrictions previously have lapsed), with such pro rata portion based on the ratio of the number of days between the Grant Date and the date of Termination of Service to the number of days between the Grant Date and the date on which all such restrictions were scheduled to lapse under the Award Agreement. In such event, the Grantee shall forfeit the right to earn the balance of such Restricted Stock Units as to which the restrictions have not yet lapsed. |
(ii) | By the Company for Cause, or as a result of any other event not specified in Section 10.4(i) (except in connection with the events specified in Section 16, which will be governed by that section), the portion of the Restricted Stock Units for which the restrictions have not lapsed as of the Termination of Service shall be forfeited immediately after the Company's notice or advice of such Termination of Service for Cause is dispatched to Grantee or on the date of Termination of Service for any other reason, except as otherwise specified in the Award Agreement. |
(i) | Options. Payment of the Exercise Price of an Option shall be made pursuant to the express provisions of the applicable Award Agreement. However, the Committee (in its sole discretion) may specify in the Award Agreement that payment may (either with or without Committee approval) be made pursuant to Sections 14.2, 14.3 or 14.4, or any combination thereof. |
(ii) | Restricted Stock Awards and RSU Awards. Payment (if any) for Restricted Stock and RSUs shall be made pursuant to the express provisions of the applicable Award Agreement, as determined by the Committee in its sole discretion. |
(i) | The maximum number of shares of Stock and Stock equivalents available under Section 3.1 for future grants of Awards and of specified types of Awards; |
(ii) | The limitations set forth in Section 3.3; | |
(iii) | The number and kind of shares of Stock or Stock equivalents (or other securities) covered by each outstanding Award; |
(iv) | The Exercise Price under each outstanding Option and SAR, but without changing the aggregate Exercise Price (i.e., the Exercise Price multiplied by the number of shares of Stock subject to the Option or SAR) as to which such Option or SAR remain exercisable; and |
(v) | In the event of a Material Dividend, (A) the Exercise Price, including the aggregate Exercise Price (i.e., the Exercise Price multiplied by the number of shares of Stock subject to the Option or SAR), under each outstanding Option or SAR necessary to compensate for the loss of intrinsic value of such Award as a result of the Material Dividend and (B) other adjustments or actions appropriate to compensate for the loss of intrinsic value of such Award as a result of the Material Dividend; provided that any such adjustments or other actions described in subsections (A) or (B) shall be made in compliance with the Code (including Section 409A thereof) and the Treasury Regulations thereunder and any other applicable tax laws or regulations. |
STAMPS.COM INC. | |||
By: | /s/ Ken McBride | ||
Title: | Chief Executive Officer |
STAMPS.COM INC. | |||
By: | /s/ Ken McBride | ||
Title: | Chief Executive Officer |
STAMPS.COM INC. | |
By: __/s/ Ken McBride___________________ | |
Title: __Chief Executive Officer____________ |
1. | To elect one Class I director to serve for a three-year term ending at the Company’s 2021 annual meeting of stockholders or until his successor is duly elected and qualified; | |||||
G. Bradford Jones | FOR o | WITHHOLD o | ||||
2. | To approve, on a non-binding advisory basis, the Company’s executive compensation; | |||||
FOR o | AGAINST o | ABSTAIN o | ||||
3. | To approve the 2018 Amendment to the Stamps.com Inc. 2010 Equity Incentive Plan; | |||||
FOR o | AGAINST o | ABSTAIN o | ||||
4. | To ratify the appointment of Ernst & Young LLP as independent auditors of the Company for 2018. | |||||
FOR o | AGAINST o | ABSTAIN o |
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. | ||||
(Print name(s) exactly as on certificate) | ||||
Please sign your name and date: | Date: | |||
(Authorized Signature) | ||||
Date: | ||||
(Authorized Signature) |