Proposal 5: Approval of Compensation and Amended Compensation Terms for our Chief Executive Officer (and Director)The Board of Directors unanimously recommends that you vote FOR this proposal except, Mr. Singolda recused himself from the recommendation.
The shareholder vote on this matter is binding under Israeli law and not advisory, unlike our “say-on-pay” proposal, which is advisory.
Background
At the Meeting, shareholders will be asked to approve amended compensation terms for Mr. Adam Singolda, our Founder, Chief Executive Officer and Director.
Mr. Adam Singolda has been our Chief Executive Officer, as well as Director, since we began operations in 2007. As Chief Executive Officer of the Company, Mr. Singolda’s leadership, extensive experience and business acumen have been critical to our success, and he has been instrumental in the development of the Company’s technology and the execution of our strategy.
Mr. Singolda’s current compensation terms and arrangement, as approved by our shareholders on April 18, 2021, prior to our listing on the Nasdaq Global Market, and as amended with shareholder approval on December 14, 2021, consists of an annual base salary of $590,000. Mr. Singolda is also entitled to receive certain customary social benefits. Mr. Singolda is not compensated for his role as Director.
Mr. Singolda is also entitled to receive an annual target bonus ranging from 50% to 125% of his base salary. His actual annual bonus can be up to 200% of his annual target bonus, payable in the form of cash or equity awards. He is also entitled to an annual equity grant with a grant date fair market value of up to 0.10% of the Company’s 60-day average market value, subject to either time or performance based vesting periods (the “Current Equity Terms”).
As part of a long-term retention plan and in light of Mr. Singolda’s performance and contribution to the Company, in particular during 2022, considering the signing of the Yahoo agreement in November 2022 and the successful closing of the Yahoo transaction in January 2023, it is proposed to approve the following amendments to Mr. Singolda’s compensation terms as our Chief Executive Officer (the “Proposed Compensation Terms”):
a grant of 1,535,610 Restricted Ordinary Shares (“RSUs”), vesting in equal quarterly installments over a 4-year period, unless such RSUs have been canceled in accordance with the compensation terms of Mr. Singolda. The RSUs shall be with a grant date of February 22, 2023, the date the RSUs were approved by the Board (the “RSU Grant”);
an increase in the amount payable to Mr. Singolda for tax advisory services, from $25,000 to $50,000 annually in each case prior to tax gross-up (in addition to his annual base salary) (the “Tax Advisory Services”); and
an amendment to Mr. Singolda’s Current Equity Terms to (a) increase the maximum allowable annual grant which the Compensation Committee and the Board may authorize, from a grant date fair market value of 0.10% of the Company’s 60-day average market value to the higher of (i) 900% of his annual base salary or (ii) 0.50% of the Company’s fair market value at the time of grant calculated on the same basis and (b) authorize the Compensation Committee and the Board to grant a special bonus as an award for special achievements not to exceed 200% annually of Mr. Singolda’s annual base salary (the “Compensation Package Amendment”).
The Proposed Compensation Terms are designed to appropriately incentivize Mr. Singolda as our Chief Executive Officer to realize and maximize the benefits of the Yahoo transaction and to further create shareholder value. As a result, we believe that this structure aligns the compensation of Mr. Singolda with shareholder interests.
Israeli Companies Law Requirement
Executive Officers (other than the Chief Executive Officer)
Under the Companies Law, amendments to the terms of compensation of a public company’s office holders (other than the Chief Executive Officer) must be approved by the Compensation Committee and thereafter by the Board; provided that such compensation arrangement is consistent with the Compensation Policy. If such compensation arrangement is inconsistent with the Compensation Policy, shareholder approval is required, with the approval of the requisite special majority described above in “Additional Voting Information.” The Performance Bonuses for Messrs. Golan, Maniv and Walker require approval by a Special Majority and were approved by our Compensation Committee and Board prior to the date of this Proxy Statement.
Our Compensation Policy addresses our executive officers’ individual characteristics as the basis for compensation variation among our executive officers and considers the internal ratios between compensation of our executive officers and directors and other employees. Pursuant to our Compensation Policy, the compensation that may be granted to an executive officer may include: base salary, target annual cash bonuses, and other cash bonuses, including special bonuses with respect to any special achievements, such as outstanding personal achievement, outstanding personal effort, or outstanding company performance, equity-based compensation, benefits and retirement and termination of service arrangements.
Chief Executive Officer and Director
Under the Companies Law, any arrangement between a company and a CEO who is also a director relating to his or her compensation, must be consistent with the company’s compensation policy, and requires the approval of that company’s compensation committee, board, and shareholders by a simple majority, in that order. If such compensation arrangement is inconsistent with the company’s compensation policy, shareholder approval is required, with the approval of the requisite special majority described above in “Additional Voting Information.” Mr. Singolda’s Closing Bonus requires approval of a simple majority and the Performance Bonus requires approval of a special majority. The Bonuses for Mr. Singolda were approved by our Compensation Committee and Board prior to the date of this Proxy Statement.
Closing Bonuses
For the reasons described above, the Closing Bonus for Mr. Singolda requires shareholder approval under the Companies Law even though it is consistent with our Compensation Policy, which limits special bonuses to 200% of Mr. Singolda’s base salary. Mr. Singolda’s Closing Bonus of $400,000 is 68% of his annual base salary.
The Closing Bonuses for Messrs. Maniv and Walker are consistent with our Compensation Policy, which provides that executive officers, subject to any approvals required by applicable law, may be entitled to receive a special bonus with respect to any special achievements, in an amount not to exceed 200% of such executive