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SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14APROXY STATEMENT PURSUANT TO SECTION
(Rule 14a-101
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) OF THEof the
Securities Exchange Act of 1934
Amendment No. )SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant ☒ | Filed by a party other than the Registrant o ☐ |
Check the appropriate box:
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☐ | Preliminary Proxy Statement |
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☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒ | Definitive Proxy Statement |
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☐ | Definitive Additional Materials |
o
☐ | Soliciting Material Pursuant to §240.14a-12under § 240.14a-12 |
Marin Software Incorporated
(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):
☒ | No fee required. |
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| ☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1) and 0-11. |
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| (1) | Title of each class of securities to which transaction applies: |
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| (2) | Aggregate number of securities to which transaction applies: |
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| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set(set forth the amount on which the filing fee is calculated and state how it was determined): |
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| (4) | Proposed maximum aggregate value of transaction: |
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| (5) | Total fee paid: |
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| ☐ | Fee paid previously with preliminary materials. |
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| ☐ | 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. |
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| (1) | Amount Previously Paid: |
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April 16, 2020
September 8, 2017
To our stockholders:
You are cordially invited to attend
a special meetingthe 2020 Annual Meeting of
stockholdersStockholders of Marin Software Incorporated (the
“Special Meeting”“Annual Meeting”). The
SpecialAnnual Meeting will be held as a virtual meeting on
October 5, 2017,Wednesday, May 27, 2020, at
10:009:30 a.m. (Pacific
Daylight Time) via a live interactive webcast on the Internet at
www.mrin.onlineshareholdermeeting.com.At the Special Meeting, our stockholderswww.virtualshareholdermeeting.com/MRIN2020, where you will be askedable to considerlisten to the Annual Meeting live, submit questions and vote upon:
| 1. | Approval of an amendment to our certificate of incorporation to effect a reverse stock splitonline. We believe that a virtual stockholder meeting provides greater access to those who may want to attend and therefore have chosen this over an in-person meeting..The matters expected to be acted upon at a ratio not less than 6-to-1 and not greater than 10-to-1, with the exact ratio to be set within that range at the discretion of our board of directors before October 6, 2017 without further approval or authorization of our stockholders; |
| 2. | Approval of an amendment to our certificate of incorporation to decrease our authorized shares of common stock from 500,000,000 to such number determined by calculating the product of 500,000,000 multiplied by two times (2x) the reverse stock split ratio; and |
| 3. | Approval to transact such other business as may properly come before the Special Meeting or any continuation, postponement or adjournment thereof. |
On or about September 8, 2017, the Annual Meeting are described in detail in the accompanying Notice of Annual Meeting of Stockholders and proxy statement. The Annual Meeting materials related toinclude the Special Meeting will be mailed tonotice, proxy statement, our stockholders.
Our boardAnnual Report on Form 10-K for the year ended December 31, 2019, and proxy card, each of directors unanimously believes that (1) the amendment to our certificate of incorporation to effect the reverse stock split and (2) the amendment to our certificate of incorporation to decrease our authorized shares of common stock are in our best interests and that of our stockholders. Accordingly, our board of directors recommends a vote (a) FOR the amendment to our certificate of incorporation to effect the reverse stock split and (b) FOR the amendment to our certificate of incorporation to decrease our authorized shares of common stock.
which is enclosed.
Your vote is important to us. Whether or not you plan to attend the
SpecialAnnual Meeting, please cast your vote as soon as possible by Internet, telephone, or by completing and returning the enclosed proxy card in the postage-prepaid envelope to ensure that your shares will be represented. Your vote by written proxy will ensure your representation at the
SpecialAnnual Meeting regardless of whether or not you attend in person. Returning the proxy does not deprive you of your right to attend the
SpecialAnnual Meeting and to vote your shares in person.
If you attend the
SpecialAnnual Meeting via the live webcast, you will be able to vote and submit questions during the
SpecialAnnual Meeting by using the control number located on your proxy card.
We appreciate your continued support.
| Sincerely, |
|  |
| Christopher Lien |
| Christopher Lien
|
| Chief Executive Officer |
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MARIN SOFTWARE INCORPORATIED
INCORPORATED
123 Mission Street, 27th Floor
San Francisco, California 94105
NOTICE OF SPECIALANNUAL MEETING OF STOCKHOLDERS
To Be Held On October 5, 2017Time and Date: | October 5, 2017Wednesday, May 27, 2020 at 10:009:30 a.m. Pacific Daylight Time
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| Place: | Virtual meeting via a live interactive webcast on the Internet at www.mrin.onlineshareholdermeeting.comwww.virtualshareholdermeeting.com/MRIN2020 (the “Special“Annual Meeting”) |
Items of
Business: | 1. Elect two Class I directors of Marin Software Incorporated, each to serve until the 2023 annual meeting of stockholders and until his successor has been elected and qualified or until his earlier resignation or removal. | Approve an amendment
2. Vote, on a non-binding advisory basis, on the compensation paid by us to our certificatenamed executive officers for the year ended December 31, 2019. 3. Vote, on a non-binding advisory basis, on the frequency of incorporation to effect a reverse stock split at a ratio not less than 6-to-1 and not greater than 10-to-1, withfuture advisory votes on executive compensation. 4. Ratify the exact ratio to be set within that range atappointment of Grant Thornton LLP as our independent registered public accounting firm for the discretion of our board of directors before October 6, 2017 without further approval or authorization of our stockholders;fiscal year ending December 31, 2020. |
| 2.
| Approve an amendment to our certificate of incorporation to decrease our authorized shares of common stock from 500,000,000 to such number determined by calculating the product of 500,000,000 multiplied by two times (2x) the reverse stock split ratio; and
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| 3.
| 5. Transact suchany other business as may properly come before the Special Meetingmeeting or any continuation,adjournment or postponement or adjournment thereof.of the Annual Meeting. |
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| Record Date: | Only stockholders of record at the close of business on September 5, 2017April 8, 2020 are entitled to notice of, and to vote at, the SpecialAnnual Meeting and any adjournments thereof. |
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| Proxy Voting: | Each share of common stock that you own represents one vote. For questions regarding your stock ownership, you may contact the Marin Software Investor Relations Department through our website at http://investor.marinsoftware.com/contact-ir or, if you are a registered holder, our transfer agent, Computershare Trust Company, N.A.Broadridge Corporate Issuer Solutions, Inc., by email through theirits website atwww.computershare.com/contactus www.shareholder@broadridge.com or by phone at (800) 962-4284.(877) 830-4936. |
This Notice of the
SpecialAnnual Meeting, proxy statement and form of proxy are being distributed and made available on or about
September 8, 2017. April 16, 2020. Important Notice Regarding the Availability of Proxy Materials for the Special Stockholder Meeting of Stockholders to Be Held on October 5, 2017May 27, 2020: Our proxy statement and Annual Report on Form 10-K for the year ended December 31,
20162019 are available at
www.proxyvote.com.www.proxyvote.com.
Whether or not you plan to attend the SpecialAnnual Meeting, we encourage you to vote and submit your proxy through the Internet or by telephone or request and submit your proxy card as soon as possible, so that your shares may be represented at the Special Meeting.meeting.
| By Order of the Board of Directors, |
| |
| Christopher Lien |
| Christopher Lien
|
| Chief Executive Officer |
San Francisco, California
April 16, 2020
September 8, 2017
MARIN SOFTWARE INCORPORATED PROXY STATEMENT FOR 2020 ANNUAL MEETING OF STOCKHOLDERS | 1 |
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MARIN SOFTWARE INCORPORATED SPECIAL
123 Mission Street, 27th Floor
San Francisco, California 94105
PROXY STATEMENT FOR THE 2020 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
April 16, 2020
GENERAL INFORMATION CONCERNING VOTING AND SOLICITATIONGeneral
Information about Solicitation and Voting The accompanying proxy is solicited on behalf of Marin Software Incorporated’s board of directors (the “Board”) for use at
a special meetingthe 2020 Annual Meeting of
stockholdersStockholders of Marin Software
IncorporatedIncorporation (“we,” “our,”
“us,”“us” or the “Company”) to be held on
October 5, 2017,May 27, 2020, at
10:009:30 a.m. Pacific
Daylight Time (the
“Special Meeting”“Meeting”), and any
continuation, adjournment or postponement thereof. This
Proxy Statementproxy statement and
the accompanying form of proxy were first mailed to stockholders on or about
September 8, 2017April 16, 2020. Our Annual Report on Form 10-K for the
purposes discussed inyear ended December 31, 2019 is enclosed with this proxy
statement and in the accompanying Notice of Special Meeting and any business properly brought before the Special Meeting. Proxies are solicited to give all stockholders of record an opportunity to vote on matters properly presented at the Special Meeting.statement. An electronic copy of this proxy statement
isand Annual Report on Form 10-K for the year ended December 31, 2019 are available at
www.proxyvote.com.
Information About the Meeting You are receiving this proxy statement because the Board is soliciting your proxy to vote your shares of common stock at the
Special Meeting with respect to the proposals described in this proxy statement. This proxy statement includes information that we are required to provide to you pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and is designed to assist you in voting your shares.
Only holders of record of our common stock at the close of business on
September 5, 2017April 8, 2020 (the “Record Date”), will be entitled to vote at the
Special Meeting. At the close of business on
September 5, 2017,April 8, 2020, we had
39,547,9076,829,677 shares of our common stock outstanding and entitled to vote. For 10 days prior to the
Special Meeting, a complete list of the stockholders entitled to vote at the
Special Meeting will be available for examination by any stockholder for any purpose relating to the
Special Meeting during ordinary business hours at our headquarters.
The holders of a majority of the voting power of the shares of our common stock entitled to vote at the
Special Meeting as of the Record Date must be present at the
Special Meeting in order to hold the
Special Meeting and conduct business.
TheThis presence is called a quorum. Your shares of our common stock are counted as present at the
Special Meeting if you are present and vote in person at the
Special Meeting or if you have properly submitted a proxy.
Voting Rights; Required Vote
In deciding all matters at the
Special Meeting, each holder of shares of our common stock is entitled to one vote for each share of our common stock held at
of the close of business on the Record Date.
We do not have cumulative voting rights for the election of directors. You may vote all shares of our common stock owned by you as of the Record Date, including (1) shares held directly in your name as the stockholder of record, and (2) shares held for you as the beneficial owner in street name through a broker, bank, trustee, or other nominee.
Stockholder of Record: Shares Registered in Your Name.If, on the Record Date, your shares of our common stock were registered directly in your name with our transfer agent,
Computershare Trust Company, N.A.Broadridge Corporate Issuer Solutions, Inc., then you are considered the stockholder of record with respect to those shares. As a stockholder
of record, you may vote at the
Special Meeting or vote by telephone or by Internet, or if you request or receive paper proxy materials by mail, by
filingfilling out and returning the proxy card.
Beneficial Owner: Shares Registered in the Name of a Broker or Nominee. If, on the Record Date, your shares of our common stock were held in an account with a brokerage firm, bank, trustee or other nominee, then you are the beneficial owner of the shares held in street name. As a beneficial owner, you have the right to direct your
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nominee on how to vote the shares of our common stock held in your account, and it has enclosed or provided voting instructions for you to use in directing it on how to vote your shares. However, the organization that holds your shares of our common stock is considered the stockholder of record for purposes of voting at the Special Meeting. Because you are not the stockholder of record, you may not vote your shares of our common stock at the Special Meeting unless you request and obtain a valid proxy from the organization that holds your shares giving you the right to vote the shares at the Special Meeting.
Required Vote.
Proposal 1. Each director will be elected by a plurality of the votes cast for Proposal No. 1, which means that the two individuals nominated for election to our Board at the Meeting receiving the highest number of “FOR” votes will be elected. You may either vote “FOR” all of the nominees, “WITHHOLD” your vote with respect to all of the nominees, or “FOR” all of the nominees except for any of the nominees that you specify.
Proposal No. 2. The affirmative “FOR” vote of the holders of thea majority of the outstandingshares present, represented and entitled to vote on the proposal is required to approve, on an advisory and non-binding basis, the compensation awarded to our named executive officers for the year ended December 31, 2019. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions are deemed to be votes cast and have the same effect as a vote against the proposal. Although this say-on-pay vote is advisory and, therefore, will not be binding on us, our compensation committee and our Board value the opinions of our stockholders. Accordingly, to the extent there is a significant vote against the compensation of our named executive officers, we will consider our stockholders’ concerns and the compensation committee will evaluate what actions may be necessary or appropriate to address those concerns.
Proposal No. 3. The choice of frequency that receives the highest number of affirmative “FOR” votes will be considered the advisory vote of our stockholders. You may vote for “ONE YEAR,” “TWO YEARS” or “THREE YEARS” or “ABSTAIN.” A properly executed proxy marked “ABSTAIN” with respect to the frequency of the stockholder vote on executive compensation will not be voted with respect to such proposal, although it will be counted for purposes of determining whether there is a quorum. Even though your vote is advisory and, therefore, will not be binding on us, our Board and Compensation Committee value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future decisions regarding the frequency of holding future non-binding advisory votes on the compensation program of our named executive officers.
Proposal No. 4. Approval of Proposal No. 4 will be obtained if the number of votes cast “FOR” such proposal at the Meeting exceeds the number of votes “AGAINST” such proposal.
Abstentions (i.e., shares of our common stock
is required for the approval of:Proposal No. 1: To amend our certificate of incorporation to effect a reverse stock split at a ratio not less than 6-to-1 and not greater than 10-to-1, with the exact ratio to be set within that rangepresent at the discretionMeeting and marked “abstain”) are counted for purposes of determining whether a quorum is present, and have no effect on the outcome of the matters voted upon. “Broker non-votes” occur when shares of our Board before October 6, 2017 without further approval or authorization of our stockholders.
Proposal No. 2: To amend our certificate of incorporation to decrease our authorized shares of common stock from 500,000,000 to such number determinedheld by calculating the product of 500,000,000 multiplied by two times (2x) the reverse stock split ratio.
Broker Discretionary Voting
Brokerage firms, banks, trusteesa broker, bank, trustee, or other nominees are entitled to vote shares heldnominee for a beneficial owner on “routine” matters withoutare not voted either because (i) the broker, bank, trustee, or other nominee did not receive voting instructions from the beneficial owner, of those shares. Foror (ii) the purposes of the Special Meeting, Proposal No. 1 and Proposal No. 2 are both considered “routine” matters. This means that your brokerage firm,broker, bank, trustee, or other nominee maylacked discretionary authority to vote in its discretionthe shares. Broker non-votes are counted for purposes of determining whether a quorum is present, and have no effect on the Special Meeting proposals on your behalfoutcome of the matters voted upon. Note that if you haveare a beneficial holder and do not furnishedprovide specific voting instructions. Ifinstructions to your brokerage firm,broker, bank, trustee, or other nominee, doesthe broker, bank, trustee, or other nominee that holds your shares of our common stock will not be authorized to vote on the election of directors (Proposal No. 1). Accordingly, we encourage you to provide voting instructions to your sharesbroker, bank, trustee, or other nominee, whether or not you plan to attend the Meeting.
Recommendations of the Board of Directors on Each of the Proposals Scheduled to be Voted on at the Meeting
The Board recommends that you vote
Proposal 1: FOR each of the Class I directors named in this proxy statement
Proposal 2: FOR the approval of the compensation of our named executive officers as disclosed in this proxy statement
Proposal 3: FOR “ONE YEAR” as the frequency with which stockholders are provided an advisory vote on executive compensation
Proposal 4: FOR the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020.
None of the directors or executive officers has any substantial interest in any matter to be acted upon, other than elections to office with respect to
these “routine” matters, known as a “broker non-vote,” it will have the
effect of a vote against these proposals.directors so nominated.
Voting Instructions; Voting of
Proxies; Counting VotesProxies
If you are a stockholder of record, you may:
| • | vote at the Special Meeting – by following the instructions at www.mrin.onlineshareholdermeeting.com, where stockholders may vote and submit questions during the Special Meeting. The Special Meeting starts at 10:00 a.m. Pacific Time on October 5, 2017. Please have your 16-Digit Control Number to join the Special Meeting. Instructions on how to attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.proxyvote.com; |
| • | vote via telephone or the Internet – in order to do so, please follow the instructions shown on your proxy card; or |
vote at the Meeting—by following the instructions at www.virtualshareholdermeeting.com/MRIN2020, where stockholders may vote and submit questions during the Meeting. The Meeting starts at 9:30 a.m. Pacific Daylight Time on May 27, 2020. Please have your 16-Digit Control Number to join the Meeting. Instructions on how to attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.proxyvote.com;
| • | vote by mail – if you request or receive a paper proxy card and voting instructions by mail, simply complete, sign and date the enclosed proxy card and return it before the Special Meeting in the envelope provided. |
Counting Votes.
vote via telephone or the Internet—in order to do so, please follow the instructions shown on your proxy card; or
vote by mail—if you request or receive a paper proxy card and voting instructions by mail, simply complete, sign and date the enclosed proxy card and return it before the Meeting in the envelope provided.
Votes submitted by telephone or Internet must be received by 11:59 pm Eastern
Daylight Time on
October 4, 2017.May 26, 2020. Submitting your proxy, whether via the Internet, by telephone or by mail if you request or received a paper proxy card, will not affect your right to vote in person should you decide to attend the
Special Meeting. If you are not the stockholder of record, please refer to the voting instructions provided by your nominee to direct it how to vote your shares. For Proposal No. 1, you may
either vote “FOR”
all of the nominees, “WITHHOLD” your vote with respect to all nominees or
“AGAINST” or “ABSTAIN” from voting. “FOR” all nominees except for any of the nominees that you specify. For Proposal No. 2, you may vote “FOR” or “AGAINST” or “ABSTAIN” from voting. For Proposal No. 3, you may vote for “ONE YEAR,” “TWO YEARS” or “THREE YEARS” or “ABSTAIN” from voting. For Proposal No. 4, you may vote “FOR” or “AGAINST” or “ABSTAIN” from voting. Your vote is important. Whether or not you plan to attend the
Special Meeting, we urge you to vote by proxy to ensure that your vote is counted.
Abstentions and broker non-votes will have an effect if a vote against each of these proposals.All proxies will be voted in accordance with the instructions specified on the proxy card. If you sign a physical proxy card and return it without instructions as to how your shares of our common stock should be voted on a particular proposal at the
Special Meeting, your shares of our common stock will be voted in accordance with the recommendations of our Board stated above.
If you do not vote and you hold your shares of our common stock in street name,
and your broker, bank, trustee, or other nominee
has thedoes not have discretionary power to vote your shares,
your shares may constitute “broker non-votes” (as described above) and will
not be counted in determining the number of
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shares necessary for approval of the proposals because both proposals are “routine” as described above. Sharesproposals. However, shares of our common stock that constitute “broker non-votes”broker non-votes will be counted for the purpose of establishing a quorum for the Special Meeting.
If you receive more than one proxy card, your shares of our common stock are registered in more than one name or are registered in different accounts. To make certain all of your shares of our common stock are voted, please follow the instructions included on each proxy card and vote each proxy card by telephone or the Internet. If you requested or received paper proxy materials by mail, please complete, sign and return each proxy card to ensure that all of your shares are voted.
Recommendations of Our Board on Each of the Proposals Scheduled to be Voted on at the Meeting
The Board recommends that you vote:
“FOR” Proposal No. 1: To amend our certificate of incorporation to effect a reverse stock split at a ratio not less than 6-to-1 and not greater than 10-to-1, with the exact ratio to be set within that range at the discretion of our Board before October 6, 2017 without further approval or authorization of our stockholders.
“FOR” Proposal No. 2: To amend our certificate of incorporation to decrease our authorized shares of common stock from 500,000,000 to such number determined by calculating the product of 500,000,000 multiplied by two times (2x) the reverse stock split ratio.
We do not believe that our officers or directors have interests in these proposals that are different from or greater than those of any other of our stockholders.
No Appraisal Rights
No action is proposed herein for which the laws of the State of Delaware, or our certificate of incorporation or bylaws provide a right to our stockholders to dissent and obtain appraisal of, or payment for, such stockholders’ shares of common stock.
Expenses of Soliciting Proxies
We will pay the expenses of soliciting proxies. Following the original mailing of the soliciting materials, the Company and its agents may solicit proxies by mail, electronic mail, telephone, facsimile, by other similar means, or in person. Our directors, officers, and other employees, without additional compensation, may solicit proxies personally or in writing, by telephone, email, or otherwise.
Additionally, we have retained Georgeson LLC to assist in the solicitation of proxies on behalf of the Board for approximately $10,500 plus reimbursement of expenses.Following the original mailing of the soliciting materials, we will request brokers, custodians, nominees and other record holders to forward copies of the soliciting materials to persons for whom they hold shares of our common stock and to request authority for the exercise of proxies. In such cases, we, upon the request of the record holders, will reimburse such holders for their reasonable expenses. If you choose to access the proxy materials through the Internet, you are responsible for any Internet access charges you may incur.
Any person signing a proxy card in the form accompanying this proxy statement has the power to revoke it at any time before it is voted. Registered holders may revoke a proxy by (i)(1) signing and returning a proxy card with a later date, (ii)(2) delivering a written notice of revocation to Broadridge, Financial Solutions, Inc., 5 Dakota Drive, Suite 300, Lake Success,51 Mercedes Way, Edgewood, New York 11042, (iii)11717, (3) voting again by telephone or over the Internet or (iv)(4) attending and voting at the Special Meeting (following the instructions at www.mrin.onlineshareholdermeeting.comwww.virtualshareholdermeeting.com/MRIN2020). The mere presence at the Special Meeting of a stockholder who has previously appointed a proxy will not revoke the appointment. Please note, however, that if a stockholder’s shares of our common stock are held of record by a broker, bank, trustee or other nominee and that stockholder wishes to revoke a proxy, the stockholder must contact that firm to revoke any prior voting instructions. In the event of multiple online or telephone votes by a stockholder, each vote will supersede the previous vote and the last vote cast will be deemed to be the final vote of the stockholder unless such vote is revoked at the Special Meeting.
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Voting results will be tabulated and certified by the inspector of elections appointed for the Special Meeting. The preliminary voting results will be announced at the Special Meeting and posted on our website at http://investor.marinsoftware.com. The final results will be tallied by the inspector of elections and filed with the SEC in a Current Report on Form 8-K within four business days of the Special Meeting.
Information about the Virtual Meeting
You will be able to attend the Annual Meeting virtually at www.virtualshareholdermeeting.com/MRIN2020, where you will be able to vote electronically and submit questions during the Meeting.
You will be able submit a question during the Meeting via our virtual stockholder meeting website, www.virtualshareholdermeeting.com/MRIN2020. If your question is properly submitted during the relevant portion of the meeting agenda, our Chief Executive Officer will lead the Q&A session and a response to your question will be provided during the live webcast. A webcast replay of the Meeting will also be archived on www.virtualshareholdermeeting.com/MRIN2020.
If we experience technical difficulties during the virtual meeting (e.g., a temporary or prolonged power outage), our Chairman will determine whether the Meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the Meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged). In any situation, we will promptly notify stockholders of the decision via www.virtualshareholdermeeting.com/MRIN2020.
If you encounter technical difficulties accessing our Meeting or asking questions during the Meeting, a support line will be available on the login page of the virtual meeting website.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD; 4
CORPORATE GOVERNANCE STANDARDS AND DIRECTOR INDEPENDENCETABLE OF CONTENTS
PROPOSAL NO 1. TO APPROVE AN AMENDMENT TO OUR CERTIFICATE OF
INCORPORATION TO EFFECT A REVERSE STOCK SPLIT
General
On August 28, 2017,We are strongly committed to good corporate governance practices. These practices provide an important framework within which our Board unanimously approved, subject to stockholder approval, an amendmentand management can pursue our strategic objectives for the benefit of our stockholders.
Corporate Governance Guidelines; Share Pledging Policy Our Board has adopted Corporate Governance Guidelines that set forth our expectations for directors, director independence standards, Board committee structure and functions, and other policies regarding our corporate governance. Our Corporate Governance Guidelines are available on the “Investor Relations” section of our website, which is located at http://investor.marinsoftware.com, by clicking on “Corporate Governance Guidelines,” under “Corporate Governance.” Our nominating and corporate governance committee reviews the Corporate Governance Guidelines periodically, and changes are recommended to our certificate of incorporationBoard with respect to effect a reverse stock split of our outstanding common stock by combining outstanding shares of common stock into a lesser number of outstanding shares of common stock by a ratio of not less than 6-to-1 and not more than 10-to-1 at any time prior to October 6, 2017, with the exact ratio to be set within this range bychanges as warranted.
Board Leadership Structure Our Corporate Governance Guidelines provide that our Board
atshall be free to choose its
sole discretion. Upon the effectiveness of the amendment to our certificate of incorporation effecting the reverse stock split, the outstanding shares of our common stock will be reclassified and combined into a lesser number of shares such that one share of our common stock will be issued for a specified number of shares.If Proposal No. 1 is approved by our stockholders as proposed, our Board would have the sole discretion to effect the amendment and reverse stock split atchairman in any time prior to October 6, 2017, and to fix the specific ratio for the reverse stock split, provided that the ratio would be not less than 6-to-1 and not more than 10-to-1. We believe that enabling our Board to fix the specific ratio of the reverse stock split within the stated range will provide us with the flexibility to implement the split in a manner designed to maximize the anticipated benefits for our stockholders. The determination of the ratio of the reverse stock split will be based on a number of factors, described further below under the heading “Criteria to be Used for Decision to Apply the Reverse Stock Split.”
The reverse stock split, if approved by our stockholders, would become effective upon the date and time set forth in the amendment to our certificate of incorporation to be filed with the Secretary of State of the State of Delaware. In addition, our Board reserves the right, notwithstanding stockholder approval and without further action by our stockholders, to abandon the amendment and the reverse stock split if, at any time prior to the effectiveness of the filing of the amendment with the Secretary of State of the State of Delaware, our Board, in its sole discretion, determinesway that it is no longerconsiders in our best interest and the best interests of the Company, and that the nominating and corporate governance committee shall periodically consider the leadership structure of our Board and make such recommendations related thereto to our Board with respect thereto as the nominating and corporate governance committee deems appropriate. Our Corporate Governance Guidelines also provide that, when the positions of chairman and chief executive officer are held by the same person, the independent directors shall designate a “lead independent director.” In cases in which the chairman and chief executive officer are the same person, the chairman schedules and sets the agenda for meetings of our Board, and the chairman, or if the chairman is not present, the lead independent director chairs such meetings. The responsibilities of the chairman or, if the chairman and the chief executive officer are the same person, the lead independent director, include: presiding at executive sessions; serving as a liaison between the chairman and the independent directors; and being available, under appropriate circumstances, for consultation and direct communication with stockholders.
Our Board believes that our stockholders
to proceed.Purpose of Reverse Stock Split
The primary purpose for effectingand the reverse stock split is to increase the per share trading price ofCompany are best served by having Christopher Lien, our common stock. Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “MRIN.” NYSE Listing Rule 802.01C provides that a company will be considered to be below compliance standards if the average closing price of its common stockChief Executive Officer, serve as reported on the consolidated tape is less than $1.00 over a consecutive 30 trading-day period. Upon receipt of a notification from NYSE for failure to meet this listing rule, a company must bring its share price and average share price back above $1.00 by six months following receiptchairman of the notification. A company can regain compliance at any time during the six-month cure period if on the last trading day of any calendar month during the cure period the company has a closing share price of at least $1.00Board and an average closing share price of at least $1.00 over the 30 trading-day period ending on the last trading day of that month. In the event that at the expiration of the six-month cure period, both a $1.00 closing share price on the last trading day of the cure period and a $1.00 average closing share price over the 30 trading-day period ending on the last trading day of the cure period are not attained, NYSE will commence suspension and delisting procedures.
The closing price of our common stock has not been less than $1.00L. Gordon Crovitz serve as of August 28, 2017, and from June 1, 2017 to August 22, 2017 our average closing price of our common stock was $1.20 per share. While this means that we are currently in compliance with the NYSE listing rule, in the event that we were to fail to meet the requirements of NYSE Listing Rule 802.01C and we could not timely cure such deficiency, our common stock would be delisted and we would be forced to seek to be traded on the NYSE MKT.
The Board has determined that, absent approval and implementation of the reverse stock split set forth in this Proposal No. 1, our current common stock price means is sufficiently close to the $1.00 threshold that our common stock could be at risk for failing to meet the $1.00 minimum closing share price requirement for continued listing on NYSE.
In addition to preventing the delisting of our common stock, our Board further believes that an increased stock price may encourage investor interest and improve the marketability of our common stock to a broader range of investors, and thus improve liquidity and lower average transaction costs. Because of the trading volatility often associated with low-priced stocks, many brokerage firms and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from
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recommending low-priced stocks to their customers.lead independent director. Our Board believes that the anticipated higher market price resultingcurrent Board leadership structure, coupled with a strong emphasis on Board independence, provides effective independent oversight of management while allowing the Board and management to benefit from Mr. Lien’s extensive executive leadership and operational experience, including familiarity with our business as the Company’s founder. Our independent directors bring experience, oversight and expertise from outside of the Company, while Mr. Lien brings Company-specific experience and expertise. Our Board believes that this governance structure provides strong leadership, creates clear accountability, and enhances our ability to communicate our message and strategy clearly and consistently to stockholders.
Our Board of Directors’ Role in Risk Oversight Our Board, as a reverse stock split would enable institutional investorswhole, has responsibility for risk oversight, although the committees of our Board oversee and brokerage firmsreview risk areas that are particularly relevant to them. The risk oversight responsibility of our Board and its committees is supported by our management reporting processes, which are designed to provide visibility to the Board and to our personnel who are responsible for risk assessment and information about the identification, assessment and management of critical risks and management’s risk mitigation strategies. These areas of focus include, but are not limited to, competitive, economic, operational, financial (accounting, credit, liquidity, and tax), legal and compliance risks.
Each committee of the Board meets with
key management personnel and representatives of outside advisors to oversee risks associated with their respective principal areas of focus. The audit committee reviews our major financial and legal compliance risk exposures and monitors the steps management has taken to mitigate and control such exposures, including our risk assessment and risk management policies and
practices such as those described above to invest in our common stock.In evaluatingguidelines. The compensation committee reviews risks and exposures associated with compensation programs and arrangements, including incentive plans. The nominating and corporate governance committee reviews the reverse stock split,leadership structure of our Board also took into consideration negative factors associated with reverse stock splits. These factors includeand management team.
Independence of Directors Our Board determines the negative perceptionindependence of reverse stock splits heldour directors by many investors, analystsapplying the applicable rules, regulations and listing standards of The Nasdaq Stock Market LLC (“Nasdaq”) and relevant securities and other laws, rules and regulations regarding the definition of “independent.” These provide that a director is independent only if the Board affirmatively determines that the director does not have a relationship with the company which, in the opinion of the Board, would interfere with the exercise of his or her independent judgment in carrying out the responsibilities of a director.. They also specify various relationships that preclude a determination of director independence. Material relationships may include employment, commercial, accounting, family and other business, professional and personal relationships.
Applying these standards, our Board annually reviews the independence of our directors, taking into account all relevant facts and circumstances. In its most recent review, the Board considered, among other things, the relationships that each non-employee director has with the Company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock market participants,by each non-employee director.
Based upon this review, our Board has determined that all of the members of our Board and nominees, other than Mr. Lien, are currently independent as welldetermined under applicable rules, regulations and listing standards of Nasdaq. All members of our audit committee, compensation committee and nominating and corporate governance committee must be independent directors under the applicable rules, regulations and listing standards of Nasdaq. Members of the audit committee must also satisfy a separate SEC independence requirement, which provides that they may not (i) accept directly or indirectly any consulting, advisory or other compensatory fee from the Company or any of its subsidiaries other than their directors’ compensation (including in connection with such member’s service as a partner, member or principal of a law firm, accounting firm or investment banking firm that accepts consulting or advisory fees from the Company or any of its subsidiaries) or (ii) be an affiliated person of the Company or any of its subsidiaries. Members of the compensation committee also must satisfy a separate SEC independence requirement and a related Nasdaq listing standard relating to their affiliation with the Company and what advisory, consulting or other fees they may have received from us. Our Board has determined that all members of our audit committee, compensation committee and nominating and corporate governance committee are independent and all members of our audit committee satisfy the relevant SEC additional independence requirements for the members of such committee.
Committees of Our Board of Directors Our Board has established an audit committee, a compensation committee and a nominating and corporate governance committee. The composition and responsibilities of each committee are described below. Each of these committees has a written charter approved by the Board. Copies of the charters for each committee are available, without charge, upon request in writing to Marin Software Incorporated, 123 Mission Street, 27th Floor, San Francisco, California 94105, Attn: General Counsel or by clicking on “Corporate Governance” in the “Investor Relations” section of our website, http://investor.marinsoftware.com. Members serve on these committees until their resignations or until otherwise determined by our Board.
Audit Committee
Our audit committee consists of Mr. Kinion, who is the chair of the audit committee, Mr. Crovitz, and Ms. Middleton. The composition of our audit committee meets the requirements for independence under current Nasdaq and SEC rules, regulations and listing standards. Each member of our audit committee is financially literate as required by Nasdaq listing standards. In addition, our Board has determined that each of Messrs. Kinion and Crovitz is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act of 1933, as amended (the “Securities Act”). Our audit committee is directly responsible for, among other things:
selecting a firm to serve as the factindependent registered public accounting firm to audit our financial statements and overseeing their work;
reviewing the continuing independence of the independent registered public accounting firm;
discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and that firm, our interim and year-end operating results;
establishing procedures for employees and others to submit anonymously concerns about questionable accounting or audit matters;
considering and reviewing the stock priceadequacy of some companiesour disclosure controls and internal controls over financial reporting;
reviewing material related party transactions or those that have effected reverse stock splits has subsequently declined backrequire disclosure; and
approving or, as permitted, pre-approving all audit and non-audit services to pre-reverse stock split levels. Our Board, however, determined that these potential negative factors were significantly outweighedbe performed by the potential benefits,independent registered public accounting firm.
Compensation Committee
Our compensation committee consists of Mr. Hutchison, who is the chair of the compensation committee, and
believes that by increasing the per share market priceMs. Middleton. The composition of our
common stockcompensation committee meets the requirements for independence under current Nasdaq and SEC rules, regulations and listing standards. Each member of this committee is also a non-employee director, as
a result of the reverse stock split may encourage greater interest in our common stock and enhance the acceptability and marketability of our common stockdefined pursuant to
the financial community and investing public as well as promote greater liquidity for our stockholders.The form of the proposed amendment to our certificate of incorporation to effect the reverse stock split is attached as Appendix A to this proxy statement. Any amendment to our certificate of incorporation to effect the reverse stock split will include the reverse stock split ratio fixed by our Board, within the range approved by our stockholders.
Criteria to be Used for Decision to Apply the Reverse Stock Split
If our stockholders approve the reverse stock split, our Board will be authorized to proceed with the reverse split. In determining whether to proceed with the reverse split and setting the exact amount of split, if any, our Board will consider a number of factors, including our current and expected operating results, market conditions, and existing and expected trading prices of our common stock.
Effect of the Reverse Stock Split
The reverse stock split will be effected simultaneously for all outstanding shares of our common stock. The reverse stock split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership interest in the Company, except to the extent that the reverse stock split results in any of our stockholders owning a fractional share. The reverse stock split will not change the terms of our common stock. After the reverse stock split, the shares of common stock will have the same voting rights and rights to dividends and distributions and will be identical in all other respects to the common stock now authorized, which is not entitled to preemptive or subscription rights, and is not subject to conversion, redemption or sinking fund provisions. The post-reverse stock split common stock will remain fully paid and non-assessable. The reverse stock split is not intended as, and will not have the effect of, a “going private transaction” covered by Rule 13e-316b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Following, an outside director, as defined pursuant to Section 162(m) of the reverseCode and is “independent” as defined pursuant to applicable Nasdaq rules and Rule 10C-1 promulgated under the Exchange Act. The purpose of our compensation committee is to discharge the responsibilities of our Board relating to compensation of our executive officers. Our compensation committee is responsible for, among other things:
reviewing and approving, or recommending that our Board approve, the compensation of our executive officers;
reviewing and approving, or recommending to our Board the compensation of our directors;
reviewing and approving, or recommending to our Board the terms of any compensatory agreements with our executive officers;
administering our stock split, we will continueand equity incentive plans;
reviewing and approving, or making recommendations to our Board with respect to, cash-based and equity-based incentive compensation; and
reviewing our overall compensation strategy.
The compensation committee has the exclusive authority and responsibility to determine all aspects of executive compensation packages for executive officers, including the chief executive officer, and makes recommendations to our Board regarding the compensation of non-employee directors. The compensation committee may take into account the recommendations of the chief executive officer with respect to compensation of the other executive officers.
The compensation committee engaged an external compensation consultant, Compensia, Inc. (“Compensia”), a national compensation consulting firm, to evaluate our executive compensation program and practices and to provide advice and ongoing assistance on executive compensation matters for the fiscal year ended on December 31, 2019. Specifically, Compensia was engaged to:
provide compensation-related data for a peer group of companies to serve as a basis for assessing competitive compensation practices;
review and assess our current executive officer compensation policies and practices and equity profile relative to market practices; and
review and assess our current executive compensation program relative to market to identify any potential changes or enhancements to be brought to the attention of the compensation committee.
During the year ended December 31, 2019 (“fiscal 2019”), Compensia worked for the compensation committee (and not on behalf of management) to assist the committee in satisfying its responsibilities and undertook no projects for management without the committee’s prior approval. The compensation committee has determined that none of the work performed by Compensia during fiscal 2019 raised any conflict of interest.
The compensation committee has delegated, in accordance with applicable law, rules and regulations and our certificate of incorporation and bylaws, to a plan grant administrator, the authority to make certain types of equity awards to service providers under our 2013 Plan pursuant to the terms of such plan and the equity award policy approved by our compensation committee. During fiscal 2019, the plan grant administrator consisted of the chief executive officer and the head of people through mid-February 2019, the chief executive officer and the general counsel from mid-February 2019 through mid-July 2019, and the chief executive officer and the chief financial officer beginning in mid-July 2019. In accordance with our equity award policy, any equity award granted by the plan grant administrator that vests solely based on continuous service, shall vest as follows: (i) with respect to options as to the first twenty-five percent (25%) of the shares subject to the
periodic reporting requirementsoption after the recipient completes twelve (12) months of continuous service from the date of grant and as to an additional 1/48th of the
Exchange Act.If thistotal shares subject to the option when the recipient completes each month of continuous service thereafter and (ii) with respect to all other equity awards as to the first twenty-five percent (25%) of the shares or units awarded after the recipient completes twelve (12) months of continuous service from the date of grant and as to an additional twenty-five percent (25%) of the total shares or units awarded when the recipient completes each year of continuous service thereafter.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of Mr. Crovitz, who is the chair of the nominating and corporate governance committee, and Ms. Middleton. The composition of our nominating and corporate governance committee meets the requirements for independence under current Nasdaq and SEC rules, regulations and listing standards. Our nominating and corporate governance committee is responsible for, among other things:
identifying, evaluating, recruiting, and recommending candidates for membership on our Board;
reviewing and recommending changes to our Corporate Governance Guidelines and Codes of Conduct and Business Ethics for Directors and for Employees;
reviewing proposed waivers of the Code of Conduct for Directors;
overseeing the process of evaluating the performance of our Board; and
assisting our Board on corporate governance matters.
Compensation Committee Interlocks and Insider Participation The members of our compensation committee during 2019 were Mr. Hutchison and Ms. Middleton. None of the members of our compensation committee in 2019 were at any time during 2019 or at any other time an officer or employee of the Company or any of its subsidiaries, and none had or has any relationships with the Company that are required to be disclosed under Item 404 of Regulation S-K, except as provided under the Related Party Transactions section below. None of our executive officers has served as a member of the board of directors, or as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on our Board or compensation committee during 2019.
Board and Committee Meetings and Attendance Our Board and its committees meet throughout the year on a set schedule, and also hold special meetings and act by written consent from time to time. During 2019:
our Board held five meetings and acted by unanimous written consent seven times;
our audit committee held seven meetings;
our compensation committee held three meetings and acted by unanimous written consent two times; and
our nominating and corporate governance committee did not hold any meetings and acted by unanimous written consent one time.
None of the directors attended fewer than 75% of the aggregate of the total number of meetings held by our Board and the total number of meetings held by all committees of the Board on which such director served (during the period that such director served on the Board and any committee thereof).
Director Attendance at Annual Stockholders’ Meeting Our policy is to invite and encourage each director to be present at our annual meetings of stockholders. Messrs. Crovitz, Hutchison, Kinion, and Lien, and Ms. Middleton were present at our 2019 annual meeting of stockholders held on May 1, 2019.
Presiding Director of Non-Employee Director Meetings The non-employee directors meet in regularly scheduled executive sessions without management to promote open and honest discussion. Our lead independent director, currently Mr. Crovitz, is the presiding director at these meetings.
Communication with Directors Stockholders and interested parties who wish to communicate with our Board, non-management directors as a group, a committee of our Board or a specific director (including our chairman or lead independent director, if any) may do so by letters addressed to the attention of our Corporate Secretary or by sending an email to our Board at Board@marinsoftware.com.
All communications are reviewed by the Corporate Secretary and provided to the directors consistent with a screening policy providing that unsolicited items, sales materials, abusive, threatening or otherwise inappropriate materials and other routine items and items unrelated to the duties and responsibilities of our Board not be relayed on to directors. Any communication that is not relayed is recorded in a log and made available to our Board. The address for these communications is:
Marin Software Incorporated
c/o Corporate Secretary
123 Mission Street, 27th Floor
San Francisco, California 94105
Codes of Business Conduct and Ethics We have adopted Codes of Business Conduct and Ethics that apply to all of our directors, officers and employees. Our Codes of Business Conduct and Ethics are posted on the “Investor Relations” section of our website located at http://investor.marinsoftware.com by clicking on “Corporate Governance.” We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Codes of Business Conduct and Ethics by posting such information on our website at the address and location specified above.
NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS Nomination to the Board of Directors Candidates for nomination to our Board are selected by our Board based on the recommendation of the nominating and corporate governance committee in accordance with the committee’s charter, our certificate of incorporation and bylaws, our Corporate Governance Guidelines, and the criteria adopted by the Board regarding director candidate qualifications. In recommending candidates for nomination, the nominating and corporate governance committee considers candidates recommended by directors, officers, employees, stockholders and others, using the same criteria to evaluate all candidates. Evaluations of candidates generally involve a review of background materials, internal discussions and interviews with selected candidates as appropriate and, in addition, the committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees.
Additional information regarding the process for properly submitting stockholder nominations for candidates for membership on our Board is set forth below under “Stockholder Proposals to Be Presented at Next Annual Meeting.”
With the goal of developing a diverse, experienced and highly-qualified Board, the nominating and corporate governance committee is responsible for developing and recommending to our Board the desired qualifications, expertise and characteristics of members of our Board, including the specific minimum qualifications that the committee believes must be met by a committee-recommended nominee for membership on our Board and any specific qualities or skills that the committee believes are necessary for one or more of the members of our Board to possess.
Since the identification, evaluation and selection of qualified directors is a complex and subjective process that requires consideration of many intangible factors, and will be significantly influenced by the particular needs of the Board from time to time, our Board has not adopted a specific set of minimum qualifications, qualities or skills that are necessary for a nominee to possess, other than those that are necessary to meet U.S. legal, regulatory and Nasdaq listing requirements and the provisions of our certificate of incorporation, bylaws, Corporate Governance Guidelines, and charters of the committees of our Board. In addition, neither our Board nor the nominating and corporate governance committee has a formal policy with regard to the consideration of diversity in identifying nominees. When considering nominees, the nominating and corporate governance committee may take into consideration many factors including, among other things, a candidate’s independence, integrity, skills, financial and other expertise, breadth of experience, experience serving on public company boards, and knowledge about our business or industry and ability to devote adequate time and effort to responsibilities of the Board in the context of its existing composition. Through the nomination process, the nominating and corporate governance committee seeks to promote Board membership that reflects a diversity of business experience, expertise, viewpoints, personal backgrounds and other characteristics that are expected to contribute to the Boards’ overall effectiveness. The brief biographical description of each director and director nominee set forth in Proposal No. 1 is approvedbelow includes the primary individual experience, qualifications, attributes and skills of each of our directors that led to the conclusion that each director should serve as a member of our Board elects to effectat this time.
ELECTION OF DIRECTORS
Our Board currently consists of five directors and is divided into three classes. Each class serves for three years, with the
reverse stock split, the numberterms of
outstanding shares of common stock will be reduced in proportion to the ratiooffice of the
split chosen by our Board.Asrespective classes expiring in successive years. Directors in Class I will stand for election at the Meeting. The terms of office of directors in Class II and Class III do not expire until the annual meetings of stockholders to be held in 2021 and 2022, respectively. At the recommendation of the effective timenominating and governance committee, our Board proposes that the two Class I nominees named below, each of whom is currently serving as a director in Class I, be elected as a Class I director for a three-year term expiring at the reverse stock split, we will adjust2023 annual meeting of stockholders and proportionately decrease the number of sharesuntil such director’s successor is duly elected and qualified or until such director’s earlier resignation or removal. Shares of our common stock reservedrepresented by proxies will be voted “FOR” the election of each of the two nominees named below, unless the proxy is marked to withhold authority to so vote. If any nominee for issuance upon exerciseany reason is unable to serve or for good cause will not serve, the proxies may be voted for such substitute nominee as the proxy holder might determine. Each nominee has consented to being named in this proxy statement and to serve if elected.
Nominees to the Board of
Directors The nominees, and adjusttheir ages, occupations and proportionately increase the exercise pricelength of all options and restricted stock units and other rights to acquire our common stock. In addition,Board service as of February 15, 2020, are provided in the effective timetable below. Additional biographical descriptions of each nominee are set forth in the text below the table. These descriptions include the primary individual experience, qualifications, qualities and skills of each of our nominees that led to the conclusion that each director should serve as a director at this time.
Name of Director/Nominee
| | Age | | Principal Occupation | | Director Since
|
L. Gordon Crovitz(1) (2) | | 61 | | Founder, Journalism Online | | 2012 |
Daina Middleton(1) (2) (3) | | 54 | | Partner, Enact Agency | | 2014 |
| (1) | Member of audit committee. |
| (2) | Member of nominating and corporate governance committee. |
| (3) | Member of compensation committee. |
L. Gordon Crovitz. Mr. Crovitz has served as a member of our Board since May 2012. In February 2018, Mr. Crovitz co-founded and currently serves as the co-CEO of NewsGuard Technologies, a provider of information about the news brands consumers access online. Between September 2016 and April 2017, Mr. Crovitz served as the Interim CEO of Houghton Mifflin Harcourt Company, a global learning company. In 2009, Mr. Crovitz became a partner at NextNews Ventures, which invests in early-stage news and information companies. Mr. Crovitz also co-founded Journalism Online, LLC, a provider of e-commerce solutions for publishers, in April 2009. From 2008 until April 2009, Mr. Crovitz was an active angel investor in, and advisor to, privately held media and technology companies. Prior to that, Mr. Crovitz worked at Dow Jones & Company, Inc. from 1980 until 2007 in a variety of positions, most recently as a publisher of The Wall Street Journal and executive vice president. Mr. Crovitz is a member of the reverse stock split, we will adjustboards of directors of Houghton Mifflin Harcourt Company, which he joined in 2012, and proportionately decreaseof Next Digital (Hong Kong), a media company, which he joined in 2018. He is also a member of the totalboards of directors of Association of American Rhodes Scholars, Blurb, Inc., and Business Insider, Inc., each of which is a privately held entity. Mr. Crovitz holds an A.B. in Politics, Economics, Rhetoric and Law from the University of Chicago, a B.A. in Jurisprudence from the University of Oxford and a J.D. from Yale Law School. Mr. Crovitz brings to our Board a diversity of distinguished experiences and seasoned business acumen, particularly extensive experience in the media and publishing industries. His service on a number of sharesboards of directors provides an important perspective on corporate governance matters, including best practices established at other companies.
Daina Middleton. Ms. Middleton has served on our Board since October 2014. Since September 2019, Ms. Middleton has been a board member, advisor and a Partner at the Enact Agency, a strategic consultancy that helps brands ignite growth by enabling them to discover, define, articulate and amplify their Challenger strategy. Prior to her current role, Ms. Middleton was the CEO of Ansira, an independent marketing technology and services company, from October 2017 until April 2019. She also spent time as a leadership development and organization effectiveness coach with the Larcen Consulting Group and, from May 2014 until January 2016, was the Head of Business Marketing at Twitter, Inc., a social media and communications platform. Before joining Twitter, she was Chief Executive Officer of Performics, Inc., a performance marketing agency, from January 2010 to May 2014. Prior to that, Ms. Middleton served as Senior Vice President at Moxie Interactive, a digital creative agency. Ms. Middleton began her marketing career at Hewlett-Packard, where she worked for 16 years in advertising and marketing roles of increasing responsibility. Ms. Middleton received a B.S. in Technical Journalism from Oregon State University. Ms. Middleton brings to our Board her expertise in the digital marketing space built over more than 20 years in the industry as well as her experience in general management and executive leadership.
The directors who are serving for terms that end following the Meeting, and their ages, occupations and length of Board service as of February 15, 2020, are provided in the table below. Additional biographical descriptions of each such director are set forth in the text below the table. These descriptions include the primary individual experience, qualifications, qualities and skills of each of our nominees that led to the conclusion that each director should continue to serve as a director at this time.
| Name of Director | | Age | | Principal Occupation
| | Director Since
|
| Class II Director: | | | | | | |
Donald Hutchison(1) | | 63 | | Investor | | 2006 |
| Class III Directors: | | | | | | |
Brian Kinion(2) | | 53 | | CFO, Upwork | | 2017 |
Chris Lien | | 53 | | Founder, CEO, Marin Software Incorporated | | 2006 |
(1) | Member of compensation committee. |
| (2) | Member of audit committee. |
Donald P. Hutchison. Mr. Hutchison has served on our Board since April 2006. Since 2002, Mr. Hutchison’s principal employment has been as an angel investor in start-up technology companies. From 2006 to 2008, Mr. Hutchison was the Co-Founder and Chairman of the Board of Directors of Recurrent Energy LLC, a solar energy provider. Prior to that, Mr. Hutchison served as the Chief Executive Officer and Chairman of the Board of work.com, a joint venture established by Dow Jones and Excite@Home. Mr. Hutchison previously served in senior positions at Excite@Home (At Home Corporate), a former Internet broadband provider acquired by Ask Jeeves, and NETCOM On-Line Communications Services, Inc., a former Internet services provider acquired by ICG Communications. Mr. Hutchison previously served as a member of the board of directors of many privately-held companies, including W&W Communications, Inc., a fabless semiconductor company, which was acquired by Cavium, Inc. Mr. Hutchison holds a B.A. in Economics from the University of California, Santa Barbara, and an M.B.A. in Finance and Organizational Development from Loyola Marymount University. Mr. Hutchison brings to our Board significant experience analyzing and investing in other technology companies, as well as management and leadership experience as a former founder and executive of technology companies.
Brian Kinion. Mr. Kinion has served as a member of our Board since June 2017. Mr. Kinion is currently the Chief Financial Officer at Upwork, since November 2017. From March 2016 to April 2017, Mr. Kinion was the chief financial officer at Marketo, a marketing software automation platform. Prior to that role, Mr. Kinion served as a Vice-President and Group Vice President of Finance at Marketo from June 2013 to March 2016. From June 2002 to June 2013, Brian held a variety of finance leadership roles at SuccessFactors, a SaaS human resources management platform acquired by SAP; CoTherix, Inc., a biopharmaceutical company acquired by Actelion Pharmaceuticals, ClearSwift, an information security company; and DigitalThink, an elearning enterprise solutions company acquired by Convergys Corporation. He began his career as an auditor at KPMG LLP. Mr. Kinion holds a B.S. in accounting and an M.B.A. from St. Mary’s College of California. Mr. Kinion brings to our Board his 25 years of experience in leading finance organizations in public and private companies during periods of rapid growth and cash constraints, and expertise in SaaS and cloud business models, reporting and planning at high growth subscription businesses.
Christopher Lien. Mr. Lien is our founder, Chief Executive Officer, and chairman of our Board. From May 2014 until September 2015, Mr. Lien served as executive chairman, and from the founding of the Company in 2006 to May 2014, he served as our Chief Executive Officer. Mr. Lien returned to serve as our Chief Executive Officer in August 2016. Mr. Lien has been a member of our Board since 2006. Previously, Mr. Lien served as Chief Operating Officer of Adteractive, Inc., an online performance marketing company, from 2004 to 2005. In 2001, Mr. Lien co-founded and served as Chairman and Chief Financial Officer of Sugar Media, Inc., a broadband services platform, until its acquisition in 2003 by 2Wire, Inc., a leading supplier of DSL equipment and services, which was subsequently acquired by Pace plc in 2010. Prior to that, Mr. Lien served in various capacities at BlueLight.com, LLC, Kmart Corporation’s e-commerce and Internet service provider subsidiary from 2000 to 2001, including as Chief Financial Officer and acting Chief Executive Officer. Prior to BlueLight.com, Mr. Lien spent 10 years at various investment banks, including Morgan Stanley and Evercore Partners, with his last role as Managing Director. Mr. Lien is a member of the Board of Directors of SocialChorus, Inc., a private SaaS platform for employee engagement. Mr. Lien holds an A.B. from Dartmouth College, where he was elected as a member of Phi Beta Kappa, and an M.B.A. from the Stanford Graduate School of Business. Mr. Lien’s presence as a director brings his thorough knowledge of our company into our Board’s strategic and policy-making discussions. He brings his extensive experience in finance, digital marketing and executive roles in the information technology industry into deliberations regarding our strategy and operations.
There are no familial relationships among our directors and officers.
The following table provides information for the fiscal year ended December 31, 2019 regarding all compensation awarded to, earned by or paid to each person who served as a non-employee director for some portion or all of fiscal 2019. Christopher Lien, our Chief Executive Officer, is not included in the table below as he is an employee and thus received no compensation for his services as a director for the fiscal year ended December 31, 2019. The compensation received by Mr. Lien as an employee is shown in the “Summary Compensation Table” below.
Pursuant to our prior director compensation policy, on the date of the annual stockholder’s meeting, non-employee directors are eligible to receive an option to purchase our common stock
that may be the subject to future issuance pursuant to our 2013 Equity Incentive Plan and our 2013 Employee Stock Purchase Plan.Assuming reverse stock split ratios of 6-to-1, 8-to-1 and 10-to-1, which reflect the low end, middle and high end of the range that our stockholders are being asked to approve, the following table sets forth (1) the number of shares of our common stock that would be issued and outstanding, (2) the number of shares of our common stock that would be reserved for issuance pursuant to outstanding options and restricted stock units (“RSUs”) under our 2013 Equity Incentive Plan (“2013 EIP”) and our 2006 Equity Incentive Plan (“2006 EIP”) and, (3) the weighted-average exercise price of the outstanding options under our 2013 EIP and 2006 EIP, and (4) the number of shares of our common stock that would be reserved and available for future issuance under the 2013 EIP and 2013 Employee Stock Purchase Plan (“2013 ESPP”), each giving effect to the reverse stock split and based on securities outstanding as of August 22, 2017. Such amounts listed below are approximate as no fractional shares will be issued and share amounts shall be rounded down on a book entry-by-book entry basis.
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| Number of Shares Before
Reverse Stock Split | Reverse Stock Split
Ratio of 1-for-6 | Reverse Stock Split
Ratio of 1-for-8 | Reverse Stock Split
Ratio of 1-for-10 |
Number of Shares of Common Stock Issued and Outstanding | | 39,547,907 | | | 6,591,317 | | | 4,943,488 | | | 3,954,790 | |
Number of Shares of Common Stock Reserved for Issuance Pursuant to Outstanding Options and RSUs under the 2013 EIP and 2006 EIP | | 5,806,108 | | | 967,684 | | | 725,763 | | | 580,610 | |
Number of Shares of Common Stock Reserved and Available for Issuance under the 2013 EIP and 2013 ESPP | | 15,849,939 | | | 2,641,656 | | | 1,981,242 | | | 1,584,993 | |
Weighted Average Exercise Price of Options under the 2013 EIP and 2006 EIP | $ | 5.42 | | $ | 32.52 | | $ | 43.36 | | $ | 54.20 | |
Additionally, if this Proposal No. 1 is approved and our Board elects to effect the reverse stock split, we would communicate to the public, prior to the effectivehaving an aggregate full grant date of the stock split, additional details regarding the reverse split, including the specific ratio selected by our Board. If the Board does not implement the reverse stock split by October 6, 2017, the authority granted in this Proposal No. 1 to implement the reverse stock split will terminate.
Certain Risks and Potential Disadvantages Associated with the Reverse Stock Split
The Board expects that the reverse stock split will increase the market price of our common stock. However, we cannot be certain whether the reverse stock split would lead to a sustained increase in the trading price or the trading market for our common stock. The history of similar stock split combinations for companies in like circumstances is varied. There can be no assurance that:
the market price of the common stock per share will remain in excess of the $1.00 minimum closing bid price as required by NYSE rules or that we will otherwise meet the requirements for continued listing on NYSE;
the market price per share of our common stock after the reverse stock split will rise in proportion to the reduction in the number of shares of common stock as a result of the reverse stock split;
the reverse stock split will result in a per share price that will attract brokers and investors, including institutional investors, who do not trade in lower priced stocks;
the reverse stock split will result in a per share price that will increase our ability to attract and retain employees and other service providers; and
the reverse stock split will increase the trading market for the common stock, particularly if the stock price does not increase as a result of the reduction in the number of shares of common stock available in the public market.
In addition, a reduction in number of shares outstanding may impair the liquidity for our common stock, which may reduce thefair value of our common stock. Also, some stockholders may consequently own less than 100 shares of our common stock. A purchase or sale of less than 100 shares may result$150,000, with such option vesting in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own less than 100 shares followingfull on the reverse stock split may be required to pay modestly higher transaction costs should they then determine to sell their shares.
Although the reverse stock split will not, by itself, impact our assets or prospects, the reverse stock split could result in a decrease in the aggregate market value of the common stock, if the market price per share of our common stock after the reverse stock split does not rise in proportion to the reduction in the number of shares of common stock
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as a result of the reverse stock split. The Board believes that this risk is outweighed by the benefits of increasing the likelihood of continued listing of the common stock on NYSE. However, we expect that the market price of the common stock immediately after the reverse stock split will increase substantially above the market price of the common stock immediately prior to the reverse stock split.
Procedure for Effecting the Reverse Stock Split and Exchange of Stock Certificates
If our stockholders approve the proposal to effect the reverse stock split, and if our Board still believes that a reverse stock split is in the best interests of us and our stockholders, our Board will determine the ratio of the reverse stock split to be implemented and we will file the certificate of amendment with the Secretary of State of the State of Delaware. As soon as practicable after the effective date of the reverse stock split, stockholders will be notified that the reverse stock split has been effected.
Beneficial Owners of Our Common Stock. Upon the implementation of the reverse stock split, we intend to treat shares held by stockholders in “street name” (i.e., through a broker, bank, trustee, or other nominee), in the same manner as registered stockholders whose shares are registered in their names. Brokers, banks, trustees, or other nominees will be instructed to effect the reverse stock split for their beneficial holders holding our common stock in street name. However, these brokers, banks, trustees, or other nominees may have different procedures than registered stockholders for processing the reverse stock split and making payment for fractional shares. If a stockholder holds shares of our common stock with a broker, bank, trustee, or other nominee and has any questions in this regard, stockholders are encouraged to contact their broker, bank, trustee, or other nominee.
Registered Holders of Common Stock. Certain of our registered holders of common stock hold some or all of their shares electronically in book-entry form with our transfer agent, Computershare Trust Company, N.A. These stockholders do not hold physical stock certificates evidencing their ownership of our common stock. However, they are provided with a statement reflecting the number of shares of our common stock registered in their accounts. If a stockholder holds registered shares in book-entry form with our transfer agent, no action needs to be taken to receive post-reverse stock split shares or payment in lieu of fractional shares, if applicable. If a stockholder is entitled to post-reverse stock split shares, a transaction statement will automatically be sent to the stockholder’s address of record indicating the number of shares of our common stock held following the reverse stock split.
Holders of Certificated Shares of Common Stock. Asfirst anniversary of the date of this proxy statement, nonegrant. For fiscal 2019, our compensation committee revised the director compensation policy to provide that, on the date of the annual stockholder’s meeting, non-employee directors are eligible to receive an option to purchase our shares of common stock were heldhaving an aggregate full grant date fair value of $40,000, with such option vesting in certificated form. Infull on the event any stockholders of record at the timefirst anniversary of the reverse stock split holddate of grant. Pursuant to the revised policy, each non-employee director was granted an option to purchase 16,900 shares of our common stock in certificated form, they will be sentfiscal 2019, which option had a transmittal letter bygrant date fair value of $34,837 as indicated in the transfer agent aftertable below.
| Name | | Fees Earned or Paid in Cash ($) | | | Option Awards ($)(1) | | | All Other Compensation ($) | | | Total ($) | |
| L. Gordon Crovitz | | | — | | | | 34,837 | | | | — | | | | 34,837 | |
| Donald P. Hutchison | | | — | | | | 34,837 | | | | — | | | | 34,837 | |
| Brian Kinion | | | — | | | | 34,837 | | | | — | | | | 34,837 | |
| Daina Middleton | | | — | | | | 34,837 | | | | — | | | | 34,837 | |
| (1) | Amounts shown in this column reflect the aggregate full grant date fair value calculated in accordance with ASC 718 for stock option awards granted during the fiscal year. The assumptions used in calculating the grant date fair value of the stock options reported in this column are set forth in Notes 11 and 12 to the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”). Note that the amounts reported in this column reflect the accounting cost for these stock options, and do not correspond to the actual economic value that may be received by the non-employee directors from the options. For information regarding the number of stock options held by each non-employee director as of December 31, 2019, see the table below. |
Our non-employee directors held the
effective time that will contain the necessary materials and instructions on how a stockholder should surrender his, her or its certificates, if any, representing shares of our common stock to the transfer agent.Fractional Shares
We will not issue fractional shares in connection with the reverse stock split. Instead, stockholders who otherwise would be entitled to receive fractional shares because they hold afollowing number of shares not evenly divisible by the reverseoutstanding stock split ratio will be entitled, upon surrender to the exchange agentoptions as of certificates representing such shares, to a cash payment in lieu thereof at a price equal to the fraction to which the stockholder would otherwise be entitled multiplied by the closing priceDecember 31, 2019.
| Name | | Grant Date | | Option Awards(1) |
| L. Gordon Crovitz | | 5/13/19(2) | | 16,900 |
| | 4/12/18(2) | | 8,572 |
| | 5/8/17(2) | | 8,572 |
| | 5/10/16(2) | | 8,572 |
| | 4/22/15(2) | | 6,943 |
| | 5/12/14(2) | | 4,177 |
| Donald P. Hutchison | | 5/13/19(2) | | 16,900 |
| | 4/12/18(2) | | 8,572 |
| | 5/8/17(2) | | 8,572 |
| | 5/10/16(2) | | 8,572 |
| | 4/22/15(2) | | 6,986 |
| | 5/12/14(2) | | 4,220 |
| | 9/14/12(3) | | 2,858 |
| | 1/31/13(4) | | 4,286 |
| | 1/31/13(5) | | 100 |
| Brian Kinion | | 5/13/19(2) | | 16,900 |
| | 4/12/18(2) | | 8,572 |
| | 8/15/17(2) | | 7,444 |
| Daina Middleton | | 5/13/19(2) | | 16,900 |
| | 4/12/18(2) | | 8,572 |
| | 5/8/17(2) | | 8,572 |
| | 5/10/16(2) | | 8,572 |
| | 4/22/15(2) | | 6,886 |
| | 10/13/14(6) | | 4,286 |
| (1) | All stock options expire 10 years after the date of grant. These stock options also provide that, in the event of a “change of control,” all of the shares of our common stock subject to such stock option will immediately vest, and the right of repurchase with respect to any unvested shares shall lapse, in full as of the effectiveness of the change of control. All historic stock option awards listed in this table have been adjusted to reflect our 1-for-7 reverse stock split effectuated on October 5, 2017. |
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| (2) | The stock option was granted pursuant to the 2013 Plan and vested or will vest in its entirety on the first anniversary of the vesting commencement date. |
This discussion is based upon current U.S. tax law, which is subject to change, possibly with retroactive effect, and differing interpretations. Any such change may cause the U.S. federal income tax consequences of a reverse stock split to vary substantially from the consequences summarized below.
This summary does not address all aspects of U.S. federal income taxation that may be relevant to stockholders in light of their particular circumstances or to stockholders who may be subject to special tax treatment under the Internal Revenue Code of 1986, as amended (the “Code”), including, without limitation, dealers in securities, commodities or foreign currency, persons who are treated as non-U.S. persons for U.S. federal income tax purposes, certain former citizens or long-term residents of the United States, insurance companies, tax-exempt organizations, banks, financial institutions, small business investment companies, regulated investment companies, real estate investment trusts, retirement plans, persons whose functional currency is not the U.S. dollar, traders that mark-to-market their securities, persons subject to the alternative minimum tax, persons who hold their shares of our common stock as part of a hedge, straddle, conversion or other risk reduction transaction, or who acquired their shares of our common stock pursuant to the exercise of compensatory stock options, the vesting of previously restricted shares of stock or otherwise as compensation.
The state and local tax consequences of a reverse split may vary as to each stockholder, depending on the jurisdiction in which such stockholder resides. This discussion should not be considered as tax or investment advice, and the tax consequences of a reverse stock split may not be the same for all stockholders. Stockholders should consult their own tax advisors to understand their individual federal, state, local and foreign tax consequences.
Tax Consequences to the Company
| (3) | The stock option was granted pursuant to the 2006 Equity Incentive Plan (the “2006 Plan”) and was immediately exercisable in full upon grant. In the event the grantee exercised unvested shares subject to the option, the unvested shares would be subject to a right of repurchase in our favor at the option exercise price. The stock option vested ratably each month over a 48-month period from the vesting commencement date. |
| (4) | The stock option was granted pursuant to the 2006 Plan and was immediately exercisable in full upon grant. In the event the grantee exercised unvested shares subject to the option, the unvested shares would be subject to a right of repurchase in our favor at the option exercise price. The stock option vested over a three-year period with one-third vesting on each anniversary of the vesting commencement date and is fully vested. |
| (5) | The stock option was granted pursuant to the 2006 Plan and was immediately exercisable in full upon grant. In the event the grantee exercised unvested shares subject to the option, the unvested shares would be subject to a right of repurchase in our favor at the option exercise price. The stock option vested in its entirety on the first anniversary of the vesting commencement date. |
| (6) | The stock option was granted pursuant to the 2013 Plan and vests over a three-year period with one-third vesting on each anniversary of the vesting commencement date. |
Cash Compensation.
We believe that a reverse stock split will constitute a reorganization under Section 368(a)(1)(E) of the Code. Accordingly, we should not recognize taxable income, gain or loss in connection with a reverse stock split. In addition, we do not expect a reverse stock split to affect our ability to utilize our net operating loss carryforwards.Tax Consequences to Stockholders. Stockholders should not recognize any gain or loss for U.S. federal income tax purposes as a result of a reverse stock split, except to the extent of any cash received in lieu of a fractional share of our common stock. Each stockholder’s aggregate tax basis in shares of common stock received in a reverse stock split should equal the stockholder’s aggregate tax basis in the shares of common stock exchanged in the reverse stock split, reduced by the amount of any tax basis allocable to a fractional share for which cash is received. In addition, each stockholder’s holding period for the shares of common stock it receives in a reverse stock split should include the stockholder’s holding period for the shares of common stock exchanged in the reverse stock split.
In general, a stockholder who receives cash in lieu of a fractional share of common stock pursuant to a reverse stock split should generally recognize capital gain or loss equal to the difference between the amount of cash received and the stockholder’s tax basis allocable to the fractional share. Any capital gain or loss will be treated as long term capital gain or loss if the stockholder’s holding period in the fractional share is greater than one year as of the effective date of the reverse stock split.
Interests of Certain Persons
We do not believeprovide cash retainer fees to our non-employee directors for their services as a member of our Board or any committee thereof or any cash meeting fees for attendance at any meetings of our Board or committees thereof.
Other Compensation. Non-employee directors receive no other form of remuneration, perquisites or benefits, but are reimbursed for their expenses in attending meetings, including travel and other expenses.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ELECTION
OF EACH OF THE NOMINATED DIRECTORS
PROPOSAL NO. 2 - NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION
As required pursuant to Section14A of the Exchange Act, we are providing our stockholders with an opportunity to vote, on a non-binding advisory basis, on the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules. This non-binding advisory vote is commonly referred to as a “say-on-pay” proposal.
Our Board believes that our officers or directors havecurrent executive compensation program has been effective at aligning our executive officers’ interests in this Proposal No. 1 that are different from or greater thanwith those of any other of our stockholders. SomeStockholders are urged to read the “Executive Compensation” section of this proxy statement, which contains tabular information and narrative discussion about the compensation of our directorsnamed executive officers.
The compensation committee and our Board are
affiliated with, or were appointed as directors by, entities that own sharesasking our stockholders to indicate their support for the compensation of
common stockour named executive officers as described
above under the Section titled “Security Ownership of Certain Beneficial Owners and Management.”Vote Required and Board Recommendation
The affirmative votein this proxy statement by voting in favor of the holdersfollowing resolution:
“RESOLVED, that the stockholders approve, on a non-binding advisory basis, the compensation of a majorityMarin Software Incorporated’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the outstanding sharescompensation tables and the accompanying narrative disclosures set forth in the proxy statement relating to Marin Software Incorporated’s 2020 annual meeting of stockholders.”
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.
PROPOSAL NO. 3 - NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
As required by the Dodd-Frank Act, we also are asking our
common stock will be requiredstockholders to
approve this proposal.The Board recommends that stockholders vote “FOR” the amendmentprovide their input with regard to the certificatefrequency of incorporation to effectfuture stockholder advisory votes on the reverse stock split.
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PROPOSAL NO. 2 TO APPROVE AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO DECREASE OUR AUTHORIZED SHARES OF COMMON STOCK
General
On August 28, 2017,compensation program for our Board unanimously approved, subject to stockholder approval and the effectiveness of the reverse stock split described in Proposal No. 1, an amendment to our certificate of incorporation to (1) decrease the authorized number of shares of our common stock from 500,000,000 tonamed executive officers, such number determined by calculating the product of 500,000,000 multiplied by two times (2x) the reverse stock split ratio and (2) change the authorized number of shares of all classes of stock to which we have authority to issue to equal the number of authorized shares of our common stock from (1) above plus 10,000,000 authorized but undesignated preferred stock. Ifas Proposal No. 2 is approved then, effectively,of this proxy statement. In particular, we are asking whether the numberadvisory vote on executive compensation should occur once every year, every two years or every three years. This non-binding advisory vote as to whether the advisory vote on executive compensation should occur once every year, every two years or every three years must be submitted to stockholders at least once every six years.
After careful consideration of
authorized shares of common stock will be decreased proportionally to the
reverse stock split, and then such decreased amount will be multiplied by two.Ourfrequency alternatives, our Board has determined that such proportional decrease and then 2x increase in our authorized common stockan annual advisory vote on executive compensation is in ourthe most appropriate alternative for us and our stockholders’stockholders at this time. Our Board’s determination was influenced by the fact that the compensation of our named executive officers is evaluated, adjusted and approved on an annual basis. As part of the annual review process, our Board believes that stockholder sentiment should be a factor that is taken into consideration by our Board and the compensation committee in making decisions with respect to executive compensation. By providing an advisory vote on executive compensation on an annual basis, our stockholders will be able to provide us with direct input on our compensation policies and practices as disclosed in the proxy statement every year. We understand that our stockholders may have different views as to what is the best interests because it will (1) maintain alignment with market expectationsapproach for us and we look forward to hearing from our stockholders on this agenda item every year.
Stockholders are not voting to approve or disapprove our Board’s recommendation. Instead, stockholders may indicate their preference regarding the
numberfrequency of
authorized shares of our common stock in comparison to the number of shares issuedfuture non-binding advisory “say-on-pay” votes by selecting one year, two years or
reserved for issuance following any reverse stock split and ensurethree years. Stockholders that
we do not have
what certain stockholders might view as an unreasonably high numbera preference regarding the frequency of
authorized shares whichfuture advisory votes may abstain from voting on the proposal. For the reasons discussed above, we are
not issued or reserved for issuance, (2) provide us with the ability to pursue financing and corporate opportunities involving our common stock, which may include private or public offerings of our equity securities or convertible debt securities, and (3) provide us with the ability to grant appropriate equity incentives for our employees over time.As previously disclosed in our periodic reports filed with the SEC, we will from time to time need to raise additional capital and may elect to do so through the issuance of equity securities or convertible debt securities in the future. At present, our Board has no immediate plans, arrangements or understandings to issue the additional shares of common stock. However, we desire to have the shares available to provide additional flexibility to use our common stock for business and financial purposes in the future as well to have sufficient shares available to provide appropriate equity incentives for our employees.
Proposal No. 2 is subject to approval of the amendment to our certificate of incorporation effecting the reverse stock split in Proposal No. 1. If the reverse stock split pursuant to Proposal No. 1 and the amendment pursuant to this Proposal No. 2 are approved by the requisite vote of our stockholders, the decrease in authorized shares of common stock would become effective upon the date and time set forth in the amendment to our certificate of incorporation to be filed with the Secretary of State of the State of Delaware. In addition, our Board reserves the right, notwithstanding stockholder approval and without further action byasking our stockholders to abandonvote to hold advisory votes on the amendment if, at any time priorcompensation for our named executive officers every year.
You may cast your vote by choosing the option of one year, two years, three years, or abstain from voting in response to the effectivenessresolution set forth below:
“RESOLVED, that the option of
once every year, two years or three years that receives the
filinghighest number of
votes cast for this resolution will be determined to be the
amendmentpreferred frequency with
the Secretary of State, our Board, in its sole discretion, determines that itwhich Marin Software Incorporated is
no longer in our best interest and the best interests of ourto hold an advisory vote by stockholders to
proceed. Our Board does not anticipate receiving further authorization from stockholder forapprove the
issuancecompensation of
any newly authorized shares, except as required by applicable laws, rules and regulations.The form of the proposed amendment to our certificate of incorporation to effect the reverse stock split and reduction in authorized shares of common stock is attached as Appendix A to this proxy statement. Any amendment to our certificate of incorporation to effect the reduction in authorized shares of common stock will be based on the reverse stock split ratio fixed by our Board, within the range approved by our stockholders pursuant to Proposal No. 1. However, such text is subject to amendment to include such changes as may be required by the office of the Secretary of State of the State of Delaware.
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Effect of the Reduction in Authorized Common Stock
We currently have a total of 510,000,000 shares of capital stock authorized for issuance under our certificate of incorporation, consisting of 500,000,000 shares of common stock and 10,000,000 shares of preferred stock. Assuming the number of our authorized shares of common stock is reduced proportionally to the reverse stock split ratios of 6-to-1, 8-to-1 and 10-to-1, which represent the low end, middle and high end of the range that our stockholders are being asked to approve in Proposal No. 1, and then subsequent 2x increase, the number of authorized shares of (i) our common stock and (ii) all classes of stock, based on information as of August 22, 2017, would have beenMarin Software Incorporated named executive officers as set forth in the table below.
| Number of Shares
Reserved Before
Reverse Stock Split | Reverse Stock Split
Ratio of 6-to-1 | Reverse Stock Split
Ratio of 8-to-1 | Reverse Stock Split
Ratio of 10-to-1 |
Number of Shares of Common Stock Authorized | 500,000,000 | 250,000,000 | 125,000,000 | 100,000,000 |
Number of Shares of Capital Stock Authorized | 510,000,000 | 260,000,000 | 135,000,000 | 110,000,000 |
Asproxy statement relating to Marin Software Incorporated’s Annual Meeting of August 22, 2017, 39,547,907 sharesStockholders under the caption “Executive Compensation,” including the tabular disclosure regarding executive compensation and the accompanying narrative disclosure.”
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” “ONE YEAR” AS THE FREQUENCY WITH WHICH STOCKHOLDERS ARE PROVIDED AN ADVISORY VOTE ON EXECUTIVE COMPENSATION
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Our audit committee has selected Grant Thornton LLP as our principal independent registered public accounting firm to perform the audit of our
common stock, consisting of:3,125,767 sharesconsolidated financial statements for fiscal year ending December 31, 2020. As a matter of common stock issuable upongood corporate governance, our audit committee has decided to submit its selection of its principal independent registered public accounting firm to stockholders for ratification. In the exerciseevent that Grant Thornton LLP is not ratified by our stockholders, the audit committee will review its future selection of stock options underGrant Thornton LLP as our principal independent registered public accounting firm.
Grant Thornton LLP audited our financial statements for fiscal 2019. Representatives of Grant Thornton LLP are expected to be present at the 2013 EIP and 2006 EIP outstanding as of August 22, 2017;
2,680,341 shares of common stock issuable uponMeeting, in which case they will be given an opportunity to make a statement at the settlement of restricted stock units outstanding as of August 22, 2017;
8,571,788 shares of common stock reserved and available for future issuance under our 2013 Equity Incentive Plan; and
1,472,043 shares of common stock reserved and available for future issuance under our Employee Stock Purchase Plan.
Each additional authorized share of common stock would have the same rights and privileges as each share of currently authorized common stock. All shares of common stock will have the same voting rights and rightsMeeting if they desire to dividends and distributionsdo so, and will be identical inavailable to respond to appropriate questions.
Principal Accountant Fees and Services
We regularly review the services and fees from our independent registered public accounting firm. These services and fees are also reviewed with our audit committee annually. In accordance with standard policy, Grant Thornton LLP periodically rotates the individuals who are responsible for our audit.
In addition to performing the audit of our consolidated financial statements, Grant Thornton LLP provided various other services during fiscal 2018 and 2019.
Our audit committee has determined that Grant Thornton LLP’s provision of these services, which are described below, does not impair Grant Thornton’s independence from the Company. During fiscal 2018 and fiscal 2019, fees for services provided by Grant Thornton LLP were as follows:
| Fees Billed to Marin | | Fiscal 2018 | | | Fiscal 2019 | |
Audit fees(1) | | $ | 982,500 | | | $ | 741,900 | |
| Audit-related fees | | | — | | | | — | |
Tax fees(2) | | | 75,200 | | | | 5,200 | |
| Total fees | | $ | 1,057,700 | | | $ | 747,100 | |
| (1) | “Audit fees” include fees for audit services primarily related to the audit of our annual consolidated financial statements; the review of our quarterly consolidated financial statements; comfort letters, consents, and assistance with and review of documents filed with the SEC; and other accounting and financial reporting consultation and research work billed as audit fees or necessary to comply with the standards of the Public Company Accounting Oversight Board (United States). |
| (2) | “Tax fees” include fees for tax compliance and advice, and encompass a variety of permissible tax services, including technical tax advice related to federal and state income tax matters, assistance with sales tax, and assistance with tax audits. In fiscal 2018 and 2019, “tax fees” included analysis related to our corporate tax structure. |
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm Our audit committee’s policy is to pre-approve all
audit and permissible non-audit services provided by our independent registered public accounting firm, the scope of services provided by our independent registered public accounting firm and the fees for the services performed. These services may include audit services, audit-related services, tax services and other
respectsservices. Pre-approval is detailed as to the
common stock now authorized, which is not entitled to preemptiveparticular service or
subscription rights,category of services and is
notgenerally subject to
conversion, redemption or sinking fund provisions.Interestsa specific budget. Our independent registered public accounting firm and management are required to periodically report to the audit committee regarding the extent of Certain Persons
We do not believe that our officers or directors have interestsservices provided by the independent registered public accounting firm in accordance with this Proposal No. 2 that are different from or greater than thosepre-approval, and the fees for the services performed to date.
All of
any other of our stockholders. Some of our directors are affiliated with, or were appointed as directors by, entities that own shares of common stock asthe services relating to the fees described
above under the Section titled “Security Ownership of Certain Beneficial Owners and Management.”Certain Risks and Potential Disadvantages Associated with the Reduction in Authorized Common Stock
The issuance of additional shares of our common stock in the future will have the effect of diluting earnings per share, voting power and common holdings of stockholders. It could also have the effect of making it more difficult for a third party to acquire control of our company. The shares will be available for issuancetable above were approved by our Board for proper corporate purposes, including but not limited to, financings, acquisitions, stock dividends and equity compensation plans. Our management believes the increase in authorized share capital is in our best interests and the best interestsaudit committee.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL NO. 4
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS MANAGEMENT AND RELATED STOCKHOLDERS
MANAGEMENT
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of August 22, 2017,February 15, 2020, by:
each stockholder known by us to be the beneficial owner of more than 5% of our common stock;
each of our current directors;directors or director nominees;
each of our named executive officers during fiscal 2016;2019; and
all of our current directors, director nominees and current executive officers as a group.
Percentage ownership of our common stock is based on
39,547,9076,817,682 shares of our common stock outstanding on
August 22, 2017.February 15, 2020. We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws where applicable. We have deemed shares of our common stock subject to options and restricted stock units that are currently exercisable or subject to settlement or that will become exercisable or subject to settlement within 60 days of
August 22, 2017February 15, 2020 to be outstanding and to be beneficially owned by the person or entity for the purpose of computing the percentage ownership of that person. We did not deem these as outstanding for the purpose of computing the percentage ownership of any other person.
Unless otherwise indicated, the address of each of the individuals and entities named below that owns 5% or more of our common stock is c/o Marin Software Incorporated, 123 Mission Street, 27
th Floor, San Francisco, California 94105.
Name of Beneficial Owner | Number of Shares
Beneficially Owned | Percent Owned |
Directors and Named Executive Officers
| | | | | | |
James J. Barrese(1) | | 167,035 | | | | * |
L. Gordon Crovitz(2) | | 256,703 | | | | * |
Donald P. Hutchison(3) | | 497,422 | | | 1.3 | % |
Brian Kinion | | 0 | | | | * |
Allan Leinwand(4) | | 167,035 | | | | * |
Daina Middleton(5) | | 138,197 | | | | * |
David A. Yovanno(6) | | 34,114 | | | | * |
Christopher Lien(7) | | 2,247,806 | | | 5.6 | |
Stephen E. Kim(8) | | 14,823 | | | | * |
Catriona M. Fallon(9) | | 3,584 | | | | * |
All officers and directors as a group (9 persons)(10) | | 3,866,431 | | | 9.7 | |
5% or Greater Stockholders
| | | | | | |
Benchmark Capital Partners VI, L.P(11) | | 3,874,492 | | | 9.8 | |
Entities affiliated with DAG Ventures(12) | | 3,801,169 | | | 9.6 | |
Raging Capital Management, LLC(13) | | 3,220,233 | | | 8.1 | |
ESW Capital, LLC(14) | | 4,489,927 | | | 11.4 | |
Entities affiliated with Temasek Capital(15) | | 2,528,205 | | | 6.4 | |
| Name of Beneficial Owner | | Number of Shares Beneficially Owned | | Percent Owned |
| Directors and Named Executive Officers | | | | |
L. Gordon Crovitz(1) | | 53,819 | | * |
Donald P. Hutchison(2) | | 88,205 | | 1.3 |
Brian Kinion(3) | | 16,016 | | * |
Christopher Lien(4) | | 326,584 | | 4.7 |
Daina Middleton(5) | | 36,888 | | * |
Wister Walcott(6) | | 117,031 | | 1.7 |
| Robert Bertz | | — | | * |
Bradley Kinnish(7) | | 62,147 | | * |
All officers and directors as a group (7 persons)(8) | | 638,543 | | 9.1 |
| 5% or Greater Stockholders | | | | |
Benchmark Capital Partners VI, L.P(9) | | 553,502 | | 8.1 |
Entities affiliated with DAG Ventures(10) | | 543,024 | | 8.0 |
ESW Capital, LLC(11) | | 579,000 | | 8.5 |
| * | Represents beneficial ownership of less than 1% of our outstanding shares of common stock. |
| (1) | Consists of 167,035(a) 16,982 shares of our common stock and (b) 36,837 shares of our common stock issuable upon exercise of stock options exercisable within 60 days of August 22, 2017.February 15, 2020. |
| (2) | Consists of (a) 118,868 shares of our common stock and (b) 137,835 shares of our common stock issuable upon exercise of stock options exercisable within 60 days after August 22, 2017. |
| (3) | Consists of (a) 259,08737,011 shares of our common stock held directly by the Hutchison Family Trust, of which Mr. Hutchison is a co-trustee, (b) 49,2007,028 shares of our common stock held by Glasgow Investments, LLC and (c) 189,13544,166 shares of our common stock issuable to Mr. Hutchison upon exercise of stock options exercisable within 60 days after August 22, 2017.of February 15, 2020. Mr. Hutchison is a managing member of Glasgow Investments, LLC and possesses the power to direct the voting and disposition of the shares held by Glasgow Investments, LLC and as such may be deemed to beneficially own the shares of our common stock held by Glasgow Investments, LLC. |
TABLE OF CONTENTS
| (4)(3) | Consists of 167,03516,016 shares of our common stock issuable upon exercise of stock options exercisable within 60 days of August 22, 2017.February 15, 2020. |
| (5) | Consists of 138,197 shares of our common stock issuable upon exercise of stock options exercisable within 60 days of August 22, 2017. |
| (6) | Represents shares beneficially owned as of the last day Mr. Yovanno was an executive officer of the Company subject to Section 16 of the Securities Exchange Act of 1934. Mr. Yovanno resigned on August 22, 2016. |
| (7)(4) | Consists of (a) 1,649,500235,643 shares of our common stock held directly by the Lien Revocable Trust dated 7/8/2003, of which Mr. Lien is a co-trustee, (b) 25,6153,658 shares of our common stock held individually by Mr. Lien, (c) 402,14562,919 shares of our common stock issuable to Mr. Lien upon exercise of stock options exercisable within 60 days after August 22, 2017,of February 15, 2020, (d) 85,27312,182 shares of our common stock held by the Chris Lien 2013 Annuity Trust, and (e) 85,27312,182 shares of our common stock held by the Rebecca Lien 2013 Annuity Trust. |
| (5) | (8) | Represents shares beneficially owned asConsists of the last day Mr. Kim was an executive officer of the Company subject to Section 16 of the Securities Exchange Act of 1934. Mr. Kim resigned on March 7, 2017. |
| (9) | Ms. Fallon was an executive officer of Marin Software during the fiscal year ended on December 31, 2016 and resigned on March 24, 2017. |
| (10) | Includes 392,23336,888 shares of our common stock.stock issuable upon exercise of stock options exercisable within 60 days of February 15, 2020. |
| (6) | (11)Consists of (a) 76,346 shares of our common stock, (b) 29,435 shares of our common stock issuable upon exercise of stock options exercisable within 60 days of February 15, 2020, and (c) 11,250 restricted stock units subject to vesting within 60 days of February 15, 2020. |
| (7) | Mr. Kinnish resigned as our Chief Financial Officer as of December 5, 2019. Consists of (a) 9,079 shares of our common stock, and (b) 53,068 shares of our common stock issuable upon exercise of stock options exercisable within 60 days of February 15, 2020. |
| (8) | Includes (a) 401,032 shares of common stock, (b) 226,261 shares issuable upon exercise of stock options exercisable within 60 days of February 15, 2020, and (c) 11,250 shares of our common stock subject to vesting of restricted stock unit awards within 60 days of February 15, 2020. |
| (9) | Based on information contained in a Schedule 13G13G/A filed with the SEC by Benchmark Capital on February 14, 2017.12, 2020. Consists of (a) 3,198,393456,916 shares of our common stock held by Benchmark Capital Partners VI, L.P. (“BCP VI”) and (b) 200,03228,576 shares of our common stock held by Benchmark Founders’ Fund VI, L.P. (“BFF VI”), (c) 131,28018,754 shares held by Benchmark Founders’ Fund VI-B L.P. (“BFF VI-B”) and (d) 344,78749,256 shares of our common stock held in nominee form for the benefit of persons associated with Benchmark Capital Management Co. VI, L.L.C. (“BCMC VI”). BCMC VI is the general partner of BCP VI, BFF VI and BFF VI-B and hasmay be deemed to have sole voting and investment power over the shares.shares held by BCP VI, BFF VI and BFF VI-B. Certain individual members of BCMC VI, including Bruce W. Dunlevie, a member of our Board until February 2017, may be deemed to have shared voting and investment power over the shares held by BCP VI, BFF VI and BFF VI-B. The address for each Benchmark reporting entity is 2965 Woodside Road, Woodside, California 94062. |
| (12)(10) | Based on information contained in a Schedule 13G filed with the SEC by DAG Ventures IV-QP, L.P. and its affiliates on February 11, 2014.2014 and adjusted here for the 1-for-7 reverse stock split effectuated on October 5, 2017. Consists of 3,112,719444,674 shares of our common stock held by DAG Ventures IV-QP, L.P. (“DAVG IV-QP”), (b) 359,49251,356 shares of our common stock held by DAG Ventures IV-A, LLC (“DAG IV-A”) and (c) 328,95846,994 shares of our common stock held by DAG Ventures IV, L.P. (“DAG IV”). DAG Ventures Management IV, LLC (“DAG IV LLC”) serves as the general partner of DAG IV-QP and DAG IV. As such, DAG IV LLC possesses power to direct the voting and disposition of the shares of our common stock owned by DAG IV-QP and DAG IV and may be deemed to have indirect beneficial ownership of the shares of our common stock held by DAG IV-QP and DAG IV. DAG IV LLC does not own any of our securities directly. R. Thomas Goodrich, John J. Caddo, Greg Williams, Young J. Chung and Nick Pianism are managing directors of DAG IV LLC and DAG IV-A and possess power to direct the voting and disposition of the shares owned by DAG IV-QP, DAG IV and DAG IV-A and may be deemed to have indirect beneficial ownership of the shares held by DAG IV-QP, DAG IV and DAG IV-A. The address for DAG IV-QP, DAG IV, DAG IV-A and DAG IV LLC is 251 Lytton Avenue, Suite 200, Palo Alto, CA 94301. |
| (13) | Based on information contained in a Schedule 13G filed with the SEC by Raging Capital Management, LLC (“Raging Capital”) on February 14, 2017. Raging Capital is the Investment Manager of Raging Capital Master Fund, Ltd. (“Raging Master”). William C. Martin is the Chairman, Chief Investment Officer and Managing Member of Raging Capital. Raging Master has delegated to Raging Capital the sole authority to vote and dispose of the securities held by Raging Master pursuant to an Investment Management Agreement, dated November 9, 2012, as amended and restated on December 21, 2016 (the “IMA”). The IMA may be terminated by any party thereto effective at the close of business on the last day of any fiscal quarter by giving the other party not less than sixty-one days’ written notice. As a result, each of Raging Capital and William C. Martin may be deemed to beneficially own the Shares held by Raging Master. The address for Raging Capital Management, LLC is Ten Princeton Avenue, P.O. Box 228, Rocky Hill, NJ 08553. |
| (14)(11) | Based on information contained in a Schedule 13G filed with the SEC by ESW Capital, LLC (“ESW”) on August 22, 2017.December 28, 2018. ESW owns 4,489,927579,000 shares. Joseph A. Liemandt is the sole voting member of ESW and may be deemed to have indirect beneficial ownership of the shares held by ESW. The address for ESW and Mr. Liemandt is 401 Congress Avenue, Suite 2650, Austin, TX 78701. |
The names of our executive officers, their ages as of February 15, 2020, and their positions are shown below.
Name
| (15) | BasedAge | | Position
|
Christopher Lien | | 53 | | Chief Executive Officer |
Robert Bertz | | 56 | | Chief Financial Officer |
Wister Walcott | | 53 | | EVP, Product and Technology |
Our Board chooses executive officers, who then serve at the board’s discretion. There is no familial relationship between any of the directors or executive officers and any other director or executive officer of the Company.
For information regarding Mr. Lien, please refer to the Continuing Directors section of Proposal No. 1 – “Election of Directors,” above.
Robert Bertz. Mr. Bertz has served as our Chief Financial Officer since December 5, 2019 and as our as our Vice President and Corporate Controller from April 2019 until December 2019. Before joining us, Mr. Bertz served in various positions at Enphase Energy, Inc., a supplier of solar microinverters, from October 2014 to April 2019, including as the Corporate Controller of Enphase Energy from June 2015 to April 2019. Prior to Enphase Energy, Mr. Bertz served as the Chief Financial Officer and Controller of Civitas Media/Heartland Publications LLC, a newspaper publisher, from May 2011 to April 2014, and as the Chief Financial Officer of Ensenda, Inc., a transportation and logistics company, from December 2008 to May 2011. Prior to this, Mr. Bertz served as the Vice President of Finance and Corporate Controller of ServiceSource International, Inc., a customer journey experience company, from December 2006 to November 2008, as the Corporate Controller of Cost Plus, Inc., a specialty retail store and subsidiary of Bed Bath & Beyond Inc., from 2003 to 2006, and as the Vice President and Corporate Controller of PeoplePC, an internet service provider and subsidiary of EarthLink, Inc., from 1999 to 2002. Mr. Bertz is a licensed Certified Public Accountant (inactive) and received his Bachelor of Business Administration in Accounting from the University of Texas Austin.
Wister Walcott. Mr. Walcott has served as our Executive Vice President, Product and Technology since September 2016. From February 2015 to July 2016, Mr. Walcott was a principal at Proxita, advising technology companies on product and marketing strategy. From 2006 to March 2012, Mr. Walcott served as our Vice President of Products and Platform, and from March 2012 to January 2015, he served as our Executive Vice President of Products and Platform. From 2004 to 2005, Mr. Walcott was the Vice President of Marketing at Composite Software, an enterprise data integration software provider. Prior to that, Mr. Walcott served as Senior Director of Product Management at Siebel Systems, a CRM software provider, from 1999 to 2004, when it was acquired by Oracle Corporation, an enterprise software company. Prior to Siebel, from 1996 to 1999, Mr. Walcott was the Vice President of Marketing at Pilot Network Services, Inc., an Internet security provider. From 1993 to 1995, and from 1988 to 1991, Mr. Walcott worked at Oracle Corporation, where he held a variety of technical and management positions. Mr. Walcott holds a B.S. in Computer Science (with honors) from Harvard University and an M.B.A. from Harvard Business School.
This section provides an overview of the material components of our executive compensation program for each person who served as our principal executive officer and our two executive officers (other than our principal executive officer) who were our most highly-compensated executive officers during fiscal 2019 and who we refer to as our “named executive officers.” This section also provides an overview of the material components of our executive compensation program for our former Chief Financial Officer, who resigned in December 2019 and who would have been a named executive officer but for the fact that we was not serving as an executive officer at the end of 2019.
Our named executive officers for fiscal 2019 were:
Christopher Lien, our founder and Chief Executive Officer;
Wister Walcott, our Executive Vice President, Product and Technology;
Robert Bertz, our Chief Financial Officer; and
Bradly Kinnish, our former Chief Financial Officer.
On December 5, 2019, Mr. Kinnish resigned as our Chief Financial Officer and Mr. Bertz became our Chief Financial Officer. The compensation earned or paid to our named executive officers for fiscal 2018 and fiscal 2019 is set forth in detail in the Summary Compensation Table and other tables that follow this section, as well as the accompanying footnotes and narratives relating to those tables.
Summary Compensation Table The following table provides information regarding all plan and non-plan compensation awarded to, earned by or paid to each of our named executive officers for all services rendered in all capacities during fiscal 2018 and fiscal 2019:
| Name and Principal Position | | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)(1) | | | | Option Awards ($)(2) | | | Non-Equity Incentive Plan Compensation ($)(3) | | | All Other Compensation ($) | | | | Total ($) | |
| Christopher Lien | | 2019 | | | 400,000 | | | | — | | | | — | | | | | 123,682 | | | | 300,000 | | | | 32,651 | | (7) | | | 856,333 | |
| Founder, Chief Executive Officer | | 2018 | | | 400,000 | | | | — | | | | — | | | | | — | | | | 288,000 | | | | 32,617 | | (8) | | | 720,617 | |
| Wister Walcott | | 2019 | | | 300,000 | | | | — | | | | 180,000 | | (4) | | | — | | | | 112,500 | | | | 3,283 | | (9) | | | 595,783 | |
| EVP, Product & Technology | | 2018 | | | 300,000 | | | | — | | | | 297,000 | | (5) | | | — | | | | 108,000 | | | | 2,837 | | (10) | | | 707,837 | |
| Robert Bertz* | | 2019 | | | 169,861 | | | | — | | | | 143,200 | | (6) | | | — | | | | 35,859 | | | | 15,488 | | (11) | | | 364,408 | |
| Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Bradley Kinnish** | | 2019 | | | 262,018 | | | | — | | | | 120,000 | | (14) | | | — | | | | — | | | | 9,447 | | (12) | | | 391,465 | |
| Former Chief Financial Officer | | 2018 | | | 275,000 | | | | — | | | | — | | | | | 238,651 | | | | 99,000 | | | | 9,016 | | (13) | | | 621,667 | |
| * | Mr. Bertz was appointed as our Chief Financial Officer as of December 5, 2019. |
| ** | Mr. Kinnish resigned as our Chief Financial Officer as of December 5, 2019. |
| (1) | The amount shown in this column represents the grant date fair value of restricted stock units (“RSUs”) granted, as computed in accordance with ASC 718. For fiscal 2018, the assumptions used in calculating the grant date fair value are set forth in Notes 10 and 11 to the audited consolidated financial statements included in our Annual Report on information containedForm 10-K for the year ended December 31, 2018 (the “2018 Form 10-K”). For fiscal 2019, the assumptions used in calculating the grant date fair value are set forth in Notes 11 and 12 to the audited consolidated financial statements included in our 2019 Form 10-K. Note that the amount reported in this column reflects the accounting cost for these RSUs and do not correspond to the actual economic value that may be received. |
| (2) | The amounts shown in this column represent the grant date fair value of the stock options granted to the named executive officers during 2018 and 2019, as computed in accordance with ASC 718. For fiscal 2018, the assumptions used in calculating the grant date fair value are set forth in Notes 10 and 11 to the audited consolidated financial statements included in the 2018 Form 10-K. For fiscal 2019 amounts, the assumptions used in calculating the grant date fair value are set forth in Notes 11 and 12 to the audited consolidated financial statements included in our 2019 10-K. Note that the amounts reported in this column reflect the accounting cost for these stock options, and do not correspond to the actual economic value that may be received by the named executive officers from the options. |
| (3) | The amounts in this column represent total performance-based bonuses earned for services rendered in fiscal 2018 and fiscal 2019 pursuant to the terms of our Executive Bonus Plan. For fiscal 2018, our Executive Bonus Plan funded at 72% attainment based on our revenue performance and ending cash balance. As a Schedule 13G filedresult, Messrs. Kinnish and Walcott received cash bonus amounts equal to 72% of their respective target level of annual bonus, where the target was 50% of their respective annual base salaries. Mr. Lien received a cash bonus amount equal to 72% of his target level of annual bonus, where the target was 100% of his annual base salary. Each of these bonuses was paid in fiscal 2019. For fiscal 2019, our revenue performance and ending cash balance resulted in 72% attainment of the goals originally established under the Executive Bonus Plan. In June 2019, the Board approved a modification to the Executive Bonus Plan for 2019 (the “Modified Plan”), which applied to certain participants, including Mr. Kinnish (our then-current Chief Financial Officer) and Mr. Walcott (the “Included Personnel”), but excluded Mr. Lien. The Board approved the Modified Plan to provide for a minimum payout percentage of 75% of each Included Personnel’s target annual bonus amount, regardless of the Company’s revenue and ending cash balance as of December 31, 2019. Mr. Lien’s eligibility for a cash bonus would be determined in accordance with the SECExecutive Bonus Plan for 2019, in its unmodified form. Messrs. Walcott and Kinnish had a target cash bonus amount equal to 50% of his base salary. Mr. Robert Bertz, the Company’s current Chief Financial Officer, has had a target cash bonus amount equal to 50% of his base salary since his appointment as Chief Financial Officer on December 5, 2019. To assist with retention, in February 2020, the compensation committee funded the Modified Plan at 75% of the target level of funding for Messrs. Lien, Walcott and Bertz. Although Messrs. Lien and Bertz were not subject to the Modified Plan providing for a minimum payout percentage of 75%, the Committee determined for retention purposes to grant cash bonuses to Messrs. Lien and Bertz at the same 75% of annual bonus target level as agreed for the Included Personnel. Mr. Bertz’s cash bonus amount equaled 75% of his target level of annual bonus, prorated based on the partial year of service as Chief Financial Officer during fiscal 2019. Each of these bonuses was paid in fiscal 2020. |
| (4) | Represents an RSU award with respect to 45,000 shares made at the discretion of the compensation committee on May 13, 2019, which vests as follows: 25% of the shares vest on May 13, 2020 and the remainder vest annually over the next three years thereafter subject to Mr. Walcott continuing to provide services to the Company, such that the shares subject to this RSU would be fully vested in May 2023. The compensation committee awarded Mr. Walcott the RSU grant to promote retention. |
| (5) | Represents an RSU award with respect to 45,000 shares made at the discretion of the compensation committee on April 12, 2018, which vests as follows: 25% of the shares vested on April 12, 2019 and the remainder vest annually over the next three years thereafter subject to Mr. Walcott continuing to provide services to the Company, such that the shares subject to this RSU would be fully vested in April 2022. The compensation committee awarded Mr. Walcott the RSU grant to promote retention. |
| (6) | Represents two RSU awards made to Mr. Bertz in 2019. The first RSU award with respect to 20,000 shares was made at the discretion of the compensation committee on May 7, 2019. This RSU is subject to vesting, with 25% of the shares vesting on May 7, 2020 and the remainder vesting annually over the next three years thereafter subject to Mr. Bertz continuing to provide services to the Company, such that the shares subject to this RSU would be fully vested in May 2023. The compensation committee awarded Mr. Bertz this RSU grant in connection with his joining the Company as Vice President and Corporate Controller in April 2019. The second RSU award with respect to an additional 20,000 shares was made at the discretion of the Board of Directors December 9, 2019. This RSU is subject to vesting, with 25% of the shares vesting on December 9, 2020 and the remainder vesting annually over the next three years thereafter subject to Mr. Bertz continuing to provide services to the Company, such that the shares subject to this RSU would be fully vested in December 2023. The Board of Directors awarded Mr. Bertz this RSU grant in connection with his promotion to Chief Financial Officer in December 2019. |
| (7) | Includes $29,368 in medical insurance premiums coverage that we paid on Mr. Lien’s behalf, $2,863 in premiums paid by Temasek Holdings (Private) Limitedus for long-term disability benefits, and $420 in premiums paid by us group term life insurance benefits. |
| (8) | Includes $27,777 in medical insurance premiums coverage that we paid on Mr. Lien’s behalf, $2,460 in parking reimbursement, and $2,381 in premiums paid by us for long-term disability benefits. |
| (9) | Includes $2,863 in premiums paid by us for long-term disability benefits, and $420 in premiums paid by us group term life insurance benefits. |
| (10) | Includes $456 in reimbursement for travel expenses incurred by Mr. Walcott and $2,381 in premiums paid by us for long-term disability benefits. |
| (11) | Includes $13,911 in medical insurance premiums coverage that we paid on Mr. Bertz’s behalf, $995 in premiums paid by us for life insurance, and $582 in premiums paid by us for long-term disability benefits. |
| (12) | Includes $7,896 in medical insurance premiums coverage that we paid on Mr. Kinnish’s behalf, $403 in premiums paid by us for life insurance, and $1,149 in premiums paid by us for long-term disability benefits. |
| (13) | Includes $7,753 in medical insurance premiums coverage that we paid on Mr. Kinnish’s behalf, $540 in premiums paid by us for life insurance, and $723 in premiums paid by us for long-term disability benefits. |
| (14) | Represents an RSU award with respect to 30,000 shares made at the discretion of the compensation committee on May 13, 2019, which vests as follows: 25% of the shares were to vest on May 13, 2020 and the remainder were to vest annually over the next three years thereafter subject to Mr. Kinnish continuing to provide services to the Company. The compensation committee awarded Mr. Kinnish the RSU grant to promote retention. The award stopped vesting when Mr. Kinnish resigned in December 2019. |
The following table provides information regarding each unexercised stock option and outstanding restricted stock units held by our named executive officers as of December 31, 2019.
Outstanding Equity Awards as of December 31, 2019
| | | Option Awards | | Stock Awards | |
| | | Number of Securities Underlying
Unexercised Options (#)(1) | | | | Option Exercise Price ($) | | Option Expiration Date | | Number of Restricted Stock Units That Have Not Vested (#) | | | | Market Value of Restricted Stock Units That Have Not Vested ($)(2) | |
| Name | | Exercisable | | | Unexercisable | | | | | | | | | | | | | |
| Christopher Lien | | | 7,143 | | | | — | | | | | 68.18 | | 5/11/24 | | | — | | | | | — | |
| | | | 10,428 | | | | — | | | | | 45.36 | | 3/8/25 | | | — | | | | | — | |
| | | | 8,572 | | | | — | | | | | 15.05 | | 5/9/26 | | | — | | | | | — | |
| | | | 36,776 | | | | — | | | | | 49.35 | | 5/7/22 | | | — | | | | | — | |
| | | | — | | | | 60,000 |
| (3) | | | 4.00 | | 5/13/29 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Wister Walcott | | | 26,697 | | | | 6,161 |
| (4) | | | 17.15 | | 9/6/26 | | | 33,750 |
| (5) | | | 46,575 | |
| | | | | | | | | | | | | | | | | | 45,000 |
| (6) | | | 62,100 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Robert Bertz | | | | | | | | | | | | | | | | | 20,000 |
| (7) | | | 27,600 | |
| | | | | | | | | | | | | | | | | | 20,000 |
| (8) | | | 27,600 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Bradley Kinnish | | | 19,048 | | | | 9,524 |
| (9) | | | 13.30 | | 4/6/27 | | | — | | | | | — | |
| | | | 34,020 | | | | 36,980 |
| (10) | | | 7.40 | | 3/6/28 | | | — | | | | | — | |
| (1) | Outstanding equity awards granted prior to March 21, 2013 were granted under our 2006 Plan. Outstanding equity awards granted after March 21, 2013 were granted under our 2013 Plan. All stock options expire 10 years after the date of grant. In general, the unvested shares subject to a stock option will expire prior to the stock option’s stated expiration date in the event of the optionee’s termination of employment. See “Potential Payments upon Employment Termination and Change in Control Events” for additional information. |
| (2) | The market value of the unvested shares subject to the RSU awards were computed using $1.38, which was the closing price of our common stock on The Nasdaq Global Market on December 31, 2019. |
| (3) | The stock option award was granted in May 2019 with a vesting commencement date of May 13, 2019. 25% of the shares of our common stock subject to the stock option will vest on May 13, 2020 with the remaining shares subject to the stock option vesting on an equal annual basis on each anniversary thereafter so long as Mr. Lien continues to provide services to the company, such that the shares subject to the stock option will be fully vested on May 13, 2023. |
| (4) | The stock option award was granted in September 2016 with a vesting commencement date of September 7, 2016. 25% of the shares of our common stock subject to the stock option vested on September 7, 2017 with the remaining shares subject to the stock option vesting monthly over the following three years, such that the shares subject to the stock option will be fully vested on September 7, 2020. |
| (5) | The shares of our common stock subject to the RSU award vested as to 11,250 of the shares subject to the RSU award on April 12, 2019. The remaining shares subject to the RSU award will vest each quarter thereafter on an equal quarterly basis over the next three years so long as Mr. Walcott continues to provide services to the company, such that the RSU award will be fully vested on April 12, 2022. |
| (6) | The shares of our common stock subject to the RSU award will vest as to 25% of the shares subject to the RSU award on May 13, 2020 and the remaining shares subject to the RSU award vest on an equal annual basis on each anniversary thereafter over the next three years so long as Mr. Walcott continues to provide services to the company, such that the RSU award will be fully vested on May 13, 2023. |
| (7) | The shares of our common stock subject to the RSU award will vest as to 25% of the shares subject to the RSU award on May 7, 2020 and the remaining shares subject to the RSU award will vest on an equal annual basis on each anniversary thereafter over the next three years so long as Mr. Bertz continues to provide services to the company, such that the RSU award will be fully vested on May 7, 2023. |
| (8) | The shares of our common stock subject to the RSU award will vest as to 25% of the shares subject to the RSU award on December 9, 2020 and the remaining shares subject to the RSU award will vest on an equal annual basis on each anniversary thereafter over the next three years so long as Mr. Bertz continues to provide services to the company, such that the RSU award will be fully vested on December 9, 2023. |
| (9) | The stock option award was granted in April 2017 with a vesting commencement date of April 7, 2017. 25% of the shares of our common stock subject to the stock option vested on April 7, 2018 with the remaining shares subject to the stock option vesting monthly over the following three years so long as Mr. Kinnish continues to provide services to the company. Mr. Kinnish resigned from the Company as of December 13, 2019 and the stock option ceased to vest as of such date. |
| (10) | The stock option award was granted in March 2018 with a vesting commencement date of March 7, 2018. 25% of the shares of our common stock subject to the stock option vested on March 7, 2018 with the remaining shares subject to the stock option vesting monthly over the following three years so long as Mr. Kinnish continues to provide services to the company. As a result of Mr. Kinnish’s resignation, the stock option ceased to vest as of the date of resignation. |
Offer Letters and Arrangements We have entered into employment offer letters with each of our named executive officers.
Christopher Lien. We entered into an offer letter agreement with Mr. Lien, our Chief Executive Officer, in August 2016. Pursuant to the offer letter, Mr. Lien’s initial base salary was established at $400,000 per year. He was eligible to receive a bonus targeted at 100% of his base salary, prorated for the portion of fiscal 2016 that he was employed at the Company. Mr. Lien’s employment is at will and may be terminated at any time, with or without cause, subject to the severance obligations described below.
Wister Walcott. We entered into an offer letter agreement with Mr. Walcott, our Executive Vice President, Product and Technology, in August 2016. Pursuant to the offer letter, Mr. Walcott’s initial base salary was established at $300,000 per year. He was eligible to receive a bonus targeted at 50% of his base salary, prorated for the portion of fiscal 2016 that he was employed at the Company. On September 7, 2016, in accordance with the terms of his offer letter, Mr. Walcott was granted a stock option to purchase 32,858 shares of our common stock at an exercise price of $17.15 per share, which was equal to the fair market value of our common stock on the date the option was granted as determined by our Board. This option is subject to vesting, with 25% of the shares vesting on the first anniversary of the vesting commencement date and the remainder vesting monthly over the remaining three years, such that the shares subject to the option would be fully vested in October 2020. Mr. Walcott’s employment is at will and may be terminated at any time, with or without cause, subject to the severance obligations described below.
Robert Bertz. We entered into an offer letter agreement with Mr. Bertz, our Chief Financial Officer, in December 2019 upon his promotion to Chief Financial Officer. Pursuant to the offer letter, Mr. Bertz’s initial base salary was established at $300,000 per year. He was eligible to receive a bonus targeted at 50% of his base salary, prorated for the portion of fiscal 2019 that he was employed at the Company. On May 7, 2019, in accordance with the terms of his original offer letter to serve as our Controller, Mr. Bertz was granted a RSU award with respect to 20,000 shares. This RSU is subject to vesting, with 25% of the shares vesting on May 7, 2020 and the remainder vesting annually over the next three years thereafter subject to Mr. Bertz continuing to provide services to the Company, such that the shares subject to the RSU would be fully vested in May 2023. On December 9, 2019, in accordance with the terms of his December 2019 offer letter to serve as our Chief Financial Officer, Mr. Bertz was granted an additional RSU award with respect to 20,000 shares. This RSU is subject to vesting, with 25% of the shares vesting on December 9, 2020 and the remainder vesting annually over the next three years thereafter subject to Mr. Bertz continuing to provide services to the Company, such that the shares subject to the RSU would be fully vested in December 2023. Mr. Bertz’s employment is at will and may be terminated at any time, with or without cause, subject to the severance obligations described below.
Bradley Kinnish. We entered into an offer letter agreement with Mr. Kinnish, our Chief Financial Officer, in March 2017. Pursuant to the Offer Letter, Mr. Kinnish was to serve as the Vice President of Finance and Acting Chief Financial Officer with an initial base salary established at $240,000 per year. In addition, Mr. Kinnish was eligible to receive a bonus targeted at 30% of his annual base salary, prorated for the portion of fiscal 2017 that he was employed at the Company. On April 7, 2017, in accordance with the terms of his offer letter, Mr, Kinnish was granted a stock option to purchase 28,572 shares of our common stock at an exercise price of $13.30 per share, which was equal to the fair market value of our common stock on the date the option was granted as determined by our Board. This option is subject to vesting, with 25% of the shares of our common stock vesting on the first anniversary of the vesting commencement date and the remainder vesting monthly over the remaining three years, such that the shares subject to the option would be fully vested in August 2021. In addition, on April 7, 2017, Mr. Kinnish was granted 14,286 RSUs, which are subject to vesting, with 25% of the RSUs vesting on each anniversary of the vesting commencement date, such that the RSUs would be fully vested on April 7, 2021. In June 2017, our Board appointed Mr. Kinnish to serve as our Chief Financial Officer. In December 2017, the compensation committee resolved to increase Mr. Kinnish’s base salary to $275,000 per year with eligibility to receive a bonus targeted at 50% of his base salary. Mr. Kinnish resigned as our Chief Financial Officer in December 2019.
Potential Payments upon Employment Termination and Change in Control Events Messrs. Lien, Walcott and Bertz are each party to Severance and Change in Control Agreements with the Company that provide for potential payments and benefits in the event of employment termination. In connection with Mr. Kinnish’s resignation in December 2019, no payments and benefits were paid to Mr. Kinnish other than his accrued salary through the date of his resignation.
Mr. Lien’s Severance and Change in Control Agreement provides as follows:
| • | Term: Pursuant to its affiliatesterms, such agreement became effective on February 13, 2015. April 12, 2018 and terminates upon the earlier of April 12, 2021 or the date Mr. Lien’s employment is terminated for a reason other than a “qualifying termination.” A “qualifying termination” is defined as (1) a “change in control qualifying termination”, or a separation occurring within three months preceding or 12 months following a change in control resulting from termination of Mr. Lien’s employment for any reason other than cause or Mr. Lien voluntarily resigning his employment for good reason; or (2) a separation that is not a “change in control qualifying termination” resulting from termination of Mr. Lien’s employment for any reason other than cause or Mr. Lien voluntarily resigning his employment for good reason. |
| • | Termination other than in connection with a change in control. In the event of a termination without cause other than in connection with a change in control, Mr. Lien would be entitled to receive severance benefits equal to nine months of his then current annual base salary, 75% of his annual target bonus at the then-current rate, and the monthly benefits premium under COBRA for nine months. |
| • | Termination in connection with a change in control. In the event of a qualifying termination, following a change in control (as defined in the severance agreement) of our Company, Mr. Lien would be entitled to receive severance benefits equal to 18 months of his then-current annual base salary, 150% of his annual target bonus at the then-current rate, and the monthly benefits premium under COBRA for 18 months. In addition, the shares underlying all unvested equity awards held by him or her immediately prior to such termination will become vested and exercisable in full. |
Mr. Walcott’s Severance and Change in Control Agreements provides as follows:
| • | Term: Pursuant to its terms, such agreement was effective on April 12, 2018 and terminates upon the earlier of April 12, 2021 or the date employment is terminated for a reason other than a “qualifying termination.” A “qualifying termination” is defined as (1) a “change in control qualifying termination”, or a separation occurring within three months preceding or 12 months following a change in control resulting from termination of the individual’s employment for any reason other than cause or the individual voluntarily resigning his employment for good reason; or (2) a separation that is not a “change in control qualifying termination” resulting from termination of the individual’s employment for any reason other than cause or the individual voluntarily resigning his employment for good reason. |
| • | Termination other than in connection with a change in control. In the event of a termination without cause other than in connection with a change in control, the executive would be entitled to receive severance benefits equal to six months of his then current annual base salary, 50% of the executive’s annual target bonus at the then-current rate, and the monthly benefits premium under COBRA for six months. |
| • | Termination in connection with a change in control. In the event of a qualifying termination, following a change in control (as defined in the severance agreement) of our Company, the executive would be entitled to receive severance benefits equal to 12 months of his then-current annual base salary, 100% of the executive’s annual target bonus at the then-current rate, and the monthly benefits premium under COBRA for 12 months. In addition, the shares underlying all unvested equity awards held by him immediately prior to such termination will become vested and exercisable in full. |
Mr. Bertz’s Severance and Change in Control Agreements provides as follows:
| • | Term: Pursuant to its terms, such agreement was effective on December 5, 2019 and terminates upon the earlier of December 5, 2022 or the date employment is terminated for a reason other than a “qualifying termination.” A “qualifying termination” is defined as (1) a “change in control qualifying termination”, or a separation occurring within three months preceding or 12 months following a change in control resulting from termination of the individual’s employment for any reason other than cause or the individual voluntarily resigning his employment for good reason; or (2) a separation that is not a “change in control qualifying termination” resulting from termination of the individual’s employment for any reason other than cause or the individual voluntarily resigning his employment for good reason. |
| • | Termination other than in connection with a change in control. In the event of a termination without cause other than in connection with a change in control, the executive would be entitled to receive severance benefits equal to three months of his then current annual base salary, 25% of the executive’s annual target bonus at the then-current rate, and the monthly benefits premium under COBRA for three months. |
| • | Termination in connection with a change in control. In the event of a qualifying termination, following a change in control (as defined in the severance agreement) of our Company, the executive would be entitled to receive severance benefits equal to six months of his then-current annual base salary, 50% of the executive’s annual target bonus at the then-current rate, the pro rata portion of his unpaid annual target bonus for the period of completed service, and the monthly benefits premium under COBRA for six months. In addition, the shares underlying all unvested equity awards held by him immediately prior to such termination will become vested and exercisable in full. |
We believe that these protections assisted us in attracting these individuals to join our Company. We also believe that these protections serve our executive retention objectives by helping the named executive officers maintain continued focus and dedication to his responsibilities to maximize stockholder value, including in the event that there is a potential transaction that could involve a change in control of our Company. The terms of these agreements were determined after review by our Board or the compensation committee, as applicable, of our retention goals for each executive officer.
The table below presents estimated payments and benefits that would have been provided to Messrs. Lien, Walcott and Bertz, assuming their respective qualifying terminations as of December 31, 2019. As a condition of receiving any severance benefits in connection with the change in control agreements, each named executive officer must execute a full waiver and release of all claims in our favor. In addition to the benefits described in the tables below, upon termination of employment each executive officer may be eligible for other benefits that are generally available to all salaried employees, such as life insurance, long-term disability, and 401(k) benefits.
| | | Chris Lien | | | Wister Walcott | | | Robert Bertz | |
| Termination after Change of Control: | | | | | | | | | |
Cash Severance(1) | | $ | 1,200,000 | | | $ | 450,000 | | | $ | 254,063 | |
Post-termination COBRA Reimbursement(2) | | | 48,160 | | | | — | | | | 11,098 | |
Acceleration of Stock Options and RSUs(3) | | | — | | | | 108,675 | | | | 55,200 | |
| Total | | $ | 1,248,160 | | | $ | 558,675 | | | $ | 320,361 | |
| | | | | | | | | | | | | |
| Termination not in connection with Change of Control: | | | | | | | | | | | | |
Cash Severance(4) | | $ | 600,000 | | | $ | 225,000 | | | $ | 103,125 | |
Post-termination COBRA Reimbursement(5) | | | 24,080 | | | | — | | | | 5,549 | |
| Total | | $ | 624,080 | | | $ | 225,000 | | | $ | 108,674 | |
| (1) | Mr. Lien would receive 18 months of base salary and 150% of his annual target bonus. Mr. Walcott would receive 12 months of base salary and 100% of his annual target bonus. Mr. Bertz would receive six months of base salary, 50% of his annual target bonus and the pro rata portion of his unpaid annual target bonus for the period of completed service. |
| (2) | Mr. Lien would receive 18 months of COBRA benefits reimbursement and Mr. Bertz would receive six months of COBRA benefits reimbursement. Mr. Walcott elected not to receive benefits from the Company that would be eligible for continuation under COBRA. As a result, Mr. Walcott would not be eligible for post-termination COBRA benefits reimbursement. |
| (3) | As of December 31, 2019, Mr. Walcott held a stock option with 13,006 unvested shares subject to such option with an exercise price of $17.15 per share. The exercise price of each of these stock options is greater than $1.38, the closing price of our common stock on The Nasdaq Global Market as of December 31, 2019. As of December 31, 2019, Mr. Walcott had 78,750 unvested RSUs and Mr. Bertz had 40,000 unvested RSUs. |
| (4) | Mr. Lien would receive nine months of base salary and 75% of his annual target bonus; Mr. Walcott would receive six months of base salary and 50% of his target bonus; Mr. Bertz would receive three months of base salary and 25% of his target bonus. |
| (5) | Mr. Lien would receive nine months of COBRA benefits reimbursement and Mr. Bertz would receive three months of COBRA benefits reimbursement. Mr. Walcott elected not to receive benefits from the Company that would be eligible for continuation under COBRA. As a result, Mr. Walcott would not be eligible for post-termination COBRA benefits reimbursement. |
In addition to the arrangements described above, upon a termination of employment Mr. Walcott is eligible to receive any benefits accrued under our broad-based benefit plans in accordance with those plans and policies.
Other Compensation Policies Stock Ownership Guidelines
Currently, we have not implemented a policy regarding minimum stock ownership requirements for our executive officers, including the named executive officers.
Compensation Recovery Policy
Currently, we have not implemented a policy regarding retroactive adjustments to any cash or equity-based incentive compensation paid to our executive officers and other employees where the payments were predicated upon the achievement of financial results that were subsequently the subject of a financial restatement. We intend to adopt a general compensation recovery (clawback) policy covering our annual and long-term incentive award plans and arrangements after the SEC adopts final rules implementing the requirement of Section 954 of the Dodd-Frank Act.
Derivatives Trading and Hedging Policy
Our insider trading policy prohibits the use of puts, calls or shorts related to our shares by our directors, officers and employees.
Share Pledging Policy
Our insider trading policy provides that no employee, officer or director may purchase Company securities on margin, borrow against any account in which Company securities are held, or pledge Company securities as collateral for a loan. Notwithstanding the foregoing, an employee who is not an officer or director may pledge Company securities as collateral for a loan (not including margin debt) if such employee can clearly demonstrate the financial capacity to repay the loan without resort to the pledged securities. An employee who is not an officer or director wishing to pledge Company securities as collateral for a loan must: (i) submit a request for pre-clearance to our compliance officer at least two weeks prior to the proposed execution of documents evidencing the proposed pledge and (ii) provide evidence of the financial capacity to repay the loan without resort to the pledged securities. Our compliance officer, in his or her sole discretion, shall make the determination as to whether the necessary financial capacity has been demonstrated.
EQUITY COMPENSATION PLAN INFORMATION The following table presents information as of December 31, 2019 with respect to compensation plans under which shares of our common stock may be issued. The category “Equity compensation plans approved by security holders” in the table below consists of the 2006 Equity Incentive Plan (the “2006 Plan”), 2013 Equity Incentive Plan (the “2013 Plan”) and 2013 Employee Stock Purchase Plan (the "2013 ESPP").
| Plan category | | Number of securities to be issued upon exercise of outstanding options and restricted stock units(#) | | | Weighted- average exercise price of outstanding options ($) | | | Number of securities remaining available for future issuance under
equity compensation
plans (excluding securities reflected in column(a))(#) | |
| | | (a) | | | (b) | | | (c) | |
| Equity compensation plans approved by security holders | | | 1,604,595 | (1) | | | 23.38 | (2) | | | 856,095 | (3) |
| Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | |
| Total | | | 1,604,595 | | | | 23.38 | | | | 856,095 | |
| (1) | Excludes purchase rights accruing under the 2013 ESPP. |
| (2) | The weighted average exercise price relates solely to shares subject to outstanding stock options, as shares subject to restricted stock units have no exercise price. |
| (3) | Consists of 2,528,205137,713 shares directly owned by Sennett Investments (Mauritius) Pte Ltd (“Sennett”), a wholly-owned subsidiarythat remain available for purchase under the 2013 ESPP and 718,382 shares of Dunearn Investments (Mauritius) Pte Ltd (“Dunearn”). Dunearn iscommon stock that remain available for grant under the 2013 Plan. Any such shares of common stock that are subject to outstanding awards under the 2006 Plan that are issuable upon the exercise of options that expire or become unexercisable for any reason without having been exercised in turn wholly-owned by Seletar Investments Pte Ltd (“Seletar”), which is in turn wholly-owned by Temasek Capital (Private) Limited (“Temasek Capital”), which is in turn wholly-owned by Temasek Holdings (Private) Limited (“Temasek Holdings”). Accordingly,full will be forfeited and will be available for future grant and issuance under the 2013 Plan. In addition, the number of shares reserved for issuance under our 2013 Plan will increase automatically on the first day of January of each of Temasek Holdings, Temasek Capital, Seletar2021 through 2023 by the number of shares equal to the lesser of 5% of the total outstanding shares of our common stock as of the immediately preceding December 31st and Dunearn may be deemeda number of shares approved by our Board. Similarly, the number of shares reserved for issuance under our 2013 ESPP will increase will increase automatically on the first day of January of each of 2021 through 2023 by the number of shares equal to have beneficially owned the 2,528,205 Shares owned directlylesser of 1% of the total outstanding shares of our common stock as of the immediately preceding December 31st (rounded down to the nearest whole share) and a number of shares approved by Sennett. The address for Seletar, Temasek Capital and Temasek Holdings is 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891. The address for Dunearn and Sennett is c/o International Management (Mauritius) Limited, Les Cascades, Edith Cavell Street, Port Louis, Mauritius.our Board or our compensation committee. |
TABLERELATED PARTY TRANSACTIONS
Other than compensation arrangements, including employment, termination of employment and severance and change in control arrangements, since January 1, 2019, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or will be a party in which the amount involved exceeds $120,000 and in which any director, nominee for director, executive officer, holder of more than 5% of our common stock, or any member of their immediate family had or will have a direct or indirect material interest.
Review, Approval or Ratification of Transactions with Related Parties
Our Board has adopted a written related person transactions policy. Under this policy, the audit committee reviews transactions that may be “related-person transactions,” which are transactions between us and related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. For purposes of the policy, a related person is a director, executive officer, nominee for director, or greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed fiscal year, and their immediate family members. The audit committee has adopted a related party transactions policy to set forth the procedures for the identification, review, consideration and approval or ratification of these transactions.
REPORT OF
CONTENTSTHE AUDIT COMMITTEE The information contained in the following report of our Audit Committee is not considered to be “soliciting material,” “filed” or incorporated by reference in any past or future filing by the Company under the Exchange Act or the Securities Act unless and only to the extent that we specifically incorporate it by reference.
The Audit Committee has reviewed and discussed with our management and Grant Thornton LLP our audited consolidated financial statements for the year ended December 31, 2019. The Audit Committee also has discussed with Grant Thornton LLP the matters required to be discussed by Auditing Standard No. 1301, “Communications with Audit Committees” issued by the Public Company Accounting Oversight Board.
The Audit Committee has received and reviewed the written disclosures and the letter from Grant Thornton LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with Grant Thornton LLP its independence from us.
Based on the review and discussions referred to above, the Audit Committee recommended to the board of directors that our audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2019 for filing with the Securities and Exchange Commission.
Submitted by the Audit Committee
Brian Kinion, Chair
L. Gordon Crovitz
Daina Middleton
ADDITIONAL INFORMATION ABOUT US
Stockholder Proposals
for Specialto be Presented at Next Annual Meeting
Our bylaws provide that, for stockholder
nominations to the Board or other proposals to be considered at an annual meeting, the stockholder must give timely notice thereof in writing to the Corporate Secretary at Marin Software Incorporated, 123 Mission Street, 27
th Floor, San Francisco, California 94105, Attn: Corporate Secretary.
To be timely for the 2020 annual meeting, a stockholder’s notice must be delivered to or mailed and received by our Corporate Secretary at our principal executive offices not earlier than 5:00 p.m. Pacific Time on February 11, 2021 and not later than 5:00 p.m. Pacific Time on March 13, 2021. A stockholder’s notice to the Corporate Secretary must set forth as to each matter the stockholder proposes to bring before the annual meeting the information required by our bylaws.
Stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended to be presented at our
Special Meeting2021 annual meeting must be received by us not later than
August 29, 2017December 17, 2020 in order to be considered for inclusion in our proxy materials for
the Special Meeting.If you would like to receive information about us, you may use onethat meeting.
Delinquent Section 16(a) Reports Section 16(a) of the
following methods: | • | Our main Internet site, located at www.marinsoftware.com. A link to our investor relations site can be found at http://investor.marinsoftware.com/Investor-home/default.aspx. Our investor relations site contains, among other things, management presentations, financial information, stock quotes and links to our filings with the SEC. |
Exchange Act requires our directors, executive officers and any persons who own more than 10% of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulation to furnish us with copies of all Section 16(a) forms that they file. Based solely on its review of the copies of such forms furnished to us and written representations from the directors and executive officers, we believe that all Section 16(a) filing requirements were timely met in 2019. | • | You may read and copy the Proxy Statement at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, DC 20549. You may obtain further information about the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. Our filings are also available to the public on the SEC’s website located at www.sec.gov. |
| • | To have information such as our latest quarterly earnings release, Annual Report on Form 10-K or Quarterly Reports on Form 10-Q mailed to you, please contact investor relations at (415) 906-8179 or http://investor.marinsoftware.com/contact-ir. If you request a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, it will be furnished without charge. |
We will mail without charge, upon written request, a copy of our Annual Report on Form 10-K for the year ended December 31, 2019, including the financial statements and list of exhibits, and any exhibit specifically requested. Requests should be sent to:
Marin Software Incorporated
123 Mission Street, 27th Floor
San Francisco, California 94105
Attn: Investor Relations
Electronic Delivery of Stockholder Communications
We encourage you to help us conserve natural resources, as well as significantly reduce printing and mailing costs, by signing up to receive your stockholder communications electronically via e-mail. With electronic delivery, you will be notified via e-mail as soon as future Annual Reports and proxy statements are available on the Internet, and you can submit your stockholder votes online. Electronic delivery also can eliminate duplicate mailings and reduce the amount of bulky paper documents you maintain in your personal files. To sign up for electronic delivery:
| • | Registered Owner (you hold our common stock in your own name through our transfer agent, Computershare, or you are in possession of stock certificates): visit www.computershare.com/investor to enroll. |
| • | Beneficial Owner (your shares are held by a brokerage firm, a bank, a trustee or a nominee): If you hold shares beneficially, please follow the instructions provided to you by your broker, bank, trustee, or nominee. |
Registered Owner (you hold our common stock in your own name through our transfer agent, Broadridge Corporate Issuer Solutions, Inc., or you are in possession of stock certificates):please visit www.shareholder@broadridge.com.
Beneficial Owner (your shares are held by a brokerage firm, a bank, a trustee or a nominee): If you hold shares beneficially, please follow the instructions provided to you by your broker, bank, trustee, or nominee. Your electronic delivery enrollment will be effective until you cancel it. Stockholders who are record owners of shares of our common stock may call
Computershare, our
new transfer agent
Broadridge Corporate Issuer Solutions, Inc. at
(800) 733-5001(877) 830-4936 or visit
www.us.computershare.com/investor/Contactwww.shareholder@broadridge.com with questions about electronic delivery.
“Householding”—Stockholders Sharing the Same Last Name and Address
The SEC has adopted rules that permit companies and intermediaries (such as brokers) to implement a delivery procedure called “householding.” Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our
2019 Form 10-K and proxy materials, unless the affected stockholder has provided contrary instructions. This procedure reduces printing costs and postage fees, and helps protect the environment as well.
This year, a number of brokers with account holders who are our stockholders will be “householding” our
2019 Form 10-K for and proxy materials.
OurA set of our 2019 Form 10-K and other proxy materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. Stockholders may revoke their consent at any time by contacting Broadridge, either by calling toll-free (800) 542-1061, or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York, 11717.
TABLE OF CONTENTS
Upon written or oral request, we will promptly deliver a proxy statement, proxy card, our 2019 Form 10-K and other proxy materials to any stockholder at a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the proxy statement, proxy card, 2019 Form 10-K and other proxy materials at no charge, you may write our Investor Relations department at 123 Mission Street, 27th27th Floor, San Francisco, California 94105, Attn: Investor Relations, visit http://investor.marinsoftware.com/contact-ir or call (415) 906-8179.
Any stockholders who share the same address and currently receive multiple copies of our
2019 Form 10-K and other proxy materials who wish to receive only one copy in the future can contact their bank, broker or other holder of record to request information about householding or our Investor Relations department at the address or telephone number listed above.
Our Board does not presently intend to bring any other business before the Special Meeting and, so far as is known to our Board, no matters are to be brought before the Special Meeting except as specified in the notice of the Special Meeting. As to any business that may arise and properly come before the Special Meeting, however, it is intended that proxies, in the form enclosed, will be voted in respect thereof in accordance with the judgment of the persons voting such proxies.
MARIN SOFTWARE INCORPORATED
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATIONMarin Software Incorporated (the “Corporation”), a corporation duly organized 123 MISSION STREET 27TH FLOOR SAN FRANCISCO, CA 94105 VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and existing under the General Corporation Lawfor electronic delivery of the State of Delaware (the “General Corporation Law”), does hereby certify that:
| 1. | The name of the corporation is Marin Software Incorporated, and the corporation was originally incorporated pursuant to the General Corporation Law on March 16, 2006. |
| 2. | Section 1 of Article IV of the Restated Certificate of Incorporation (the “Certificate”) is hereby amended and restated in its entirety to read as follows: |
The total number of shares of all classes of stock which the Corporation has authority to issue is [] ([]) shares, consisting of two classes: [] ([]) shares of Common Stock, $0.001 par value per share (“Common Stock”), and Ten Million (10,000,000) shares of Preferred Stock, $0.001 par value per share (“Preferred Stock”).
Effective at 5:00information up until 11:59 p.m. Eastern Time on October 5, 2017 (the “Effective Time”), every [] ([]) shares of Common Stock issuedthe day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and outstanding priorfollow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/MRIN2020 You may attend the Effective Time shall, automaticallyMeeting via the Internet and without any further actionvote during the Meeting. Have the information that is printed in the box marked by the Corporationarrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the stockholders thereof, be combinedinstructions. VOTE BY MAIL Mark, sign and converted into one (1) sharedate your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D08936-P37034 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY MARIN SOFTWARE INCORPORATED For All Withhold All For All Except The Board of Common Stock (the “Reverse Split”). No fractional share shall be issuedDirectors recommends you vote FOR each of the Class I directors: 1. Election of Directors Nominees: 01) L. Gordon Crovitz 02) Daina Middleton To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends you vote FOR proposal 2: 2. Advisory vote to approve 2019 named executive officer compensation. For Against Abstain The Board of Directors recommends you vote ONE YEAR for proposal 3: 3. Advisory vote on the frequency of future advisory votes on executive compensation. One Year Two Years Abstain The Board of Directors recommends you vote FOR proposal 4: 4. To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020. For Against Abstain NOTE: Such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in connectionfull corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com. D08937-P37034 MARIN SOFTWARE INCORPORATED Annual Meeting of Stockholders May 27, 2020 9:30 AM Pacific Time This proxy is solicited by the Board of Directors The stockholder(s) hereby appoint(s) Christopher Lien and Robert Bertz, or either of them, as proxies, each with the
foregoing combinationpower to appoint his substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares
pursuantof MARIN SOFTWARE INCORPORATED that the stockholder(s) is/are entitled to
vote at the
Reverse Split. The Corporation will pay in cash the fair valueAnnual Meeting of
such fractional shares basedStockholders to be held at 9:30 AM, Pacific Time on May 27, 2020 virtually via a live interactive webcast on the
closing priceInternet at www.virtualshareholdermeeting.com/MRIN2020 and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed. If no such direction is made, this proxy will be voted in accordance with the Board of
one share of Common Stock on October 5, 2017, without interest.The Reverse Split shall occur automatically without any further action by the holders of Common Stock,Directors' recommendations. Continued and whether or not the certificates representing such shares have been surrendered to the Corporation; provided, that, the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable as a result of the Reverse Split unless the existing certificates evidencing the applicable shares of stock prior to the Reverse Split are either delivered to the Corporation, or the holder notifies the Corporation that such certificates have been lost, stolen or destroyed, and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates.”
| 3. | The foregoing amendment to the Certificate have been duly approved by the Corporation’s Board of Directors in accordance with Sections 141 and 242 of the General Corporation Law. |
| 4. | The foregoing amendment to the Certificate have been duly approved by the Corporation’s stockholders in accordance with Sections 211 and 242 of the General Corporation Law. |
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its duly authorized officer as of this day of , 2017.
| on reverse side | MARIN SOFTWARE INCORPORATED
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| | |
| By:
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| | Christopher Lien
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| | Chief Executive Officer
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