The experience of our lead independent director, L. Gordon Crovitz, brings an important independent perspective on risk oversight for our board. Our lead independent director ensures that the Board is fulfilling its responsibilities in risk oversight by assisting the Board to identify risk and provide independent guidance to our CEO and members of our Board.
Independence of Directors
Our Board determines the independence of our directors by applying 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 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 determined 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.Mann. Ms. Middleton previously served as a member of the Audit Committee at the beginning of 2022 until her resignation from the committee in the first quarter of 2022. 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”“Securities Act”). Our audit committee is directly responsible for, among other things:
selecting a firm to serve as the independent registered public accounting firm to audit our financial statements and overseeing their work;
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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 adequacy of our disclosure controls and internal controls over financial reporting;
reviewing material related party transactions or those that require disclosure; and
approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm.
Compensation Committee
Our compensation committee consists of Mr. Hutchison, who is the chair of the compensation committee, Ms. Middleton and Ms. Middleton.Mann. The composition of our compensation 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 defined pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), an outside director, as defined pursuant to Section 162(m) of the Code 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 and 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 Equity Incentive Plan (the “EIP” or “2013 Plan”) pursuant to the terms of such plan and the equity award policy approved by our compensation committee. During fiscal 2019,2022, 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.officer. 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 option after the recipient completes twelve (12) months of continuous service from the date of grant and as to an additional 1/48th of the total 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.