United States securities and exchange commission logo
May 6, 2022
Glenn W. Welling
Founder and Chief Investment Officer
Engaged Capital, LLC
610 Newport Center Drive, Suite 250
Newport Beach, California 92660
Re: Quotient Technology
Inc.
Revised Preliminary
Proxy Statement on Schedule 14A dated May 5, 2022
Filed by Glenn W.
Welling, Engaged Capital Flagship Master Fund, LP et. al
Dear Mr. Welling:
We have reviewed your revised preliminary proxy statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we may
better understand your disclosure.
Please respond to these comments by providing the requested
information or advise us as
soon as possible when you will respond. If you do not believe our
comments apply to your facts
and circumstances, please tell us why in your response.
After reviewing your
response to these comments, we may have additional comments.
Revised Preliminary Proxy Statement on Schedule 14A filed May 5, 2022
Cover Page
1. We note footnote 1
indicating that Engaged Capital may file and disseminate a definitive
proxy statement that
will not include the information required by Items 1(a) and 6(b) of
Schedule 14A. Refer to
prior comment 1 of our letter dated April 22, 2022. Please advise
how Engaged Capital
intends to disseminate the referenced supplement that will be filed
as revised definitive
material and why it believes such method will satisfy its obligations
to furnish such
materials to each person solicited and from whom it obtains a proxy, as
required by Exchange
Act Rules 14a-3(a) and 14a-12(a)(2).
Proposal No. 2 Advisory Vote on Executive Compensation, page 24
2. Please provide support
for the following statements or revise as appropriate to ensure that
a reasonable basis
exists for such claims:
"We believe the
Compensation Committee was very flexible in its evaluation and
Glenn W. Welling
Engaged Capital, LLC
May 6, 2022
Page 2
question whether this was the correct decision."
"However, instead of relying on the actual GAAP results, the
Compensation
Committee used its discretion to increase the achieved revenue
figure by $5 million
to $526 million."
"Had the Compensation Committee not adjusted the revenue
figures, management
would have missed hitting the threshold and would not have
received any
compensation under the AIP."
Additionally, management was able to hit the threshold levels
with the benefit of
rounding performance figures."
"...rather than rounding up to $41 million, the combined
achievement would have
been below the required 75% threshold and would not merit a
payout."
3. Refer to the preceding comment. Such statements appear to suggest that
Quotient
manipulated its annual incentive plan bonus calculations through
discretionary
adjustments and rounding to arrive at a threshold payout. However,
disclosure in
Quotient's proxy statement indicates that the Company was required to
change accounting
methods during 2021 with respect to a portion of its offering, and
such change reduced the
amount that is characterized as "revenue." Refer to pages 66-67 of the
Company's
preliminary proxy statement which appears to indicate that the
Compensation Committee
adjusted the performance results to reflect the mid-year change in
accounting methods by
measuring the effect of the change in accounting methods on its
reported revenue. Please
advise or revise.
4. Refer to the following statement:
[W]e have concerns that the primary performance metric is
gross margin
dollars, which could potentially allow management to be paid out
for unprofitable
growth or benefit from risky acquisitions which may increase
gross margin
dollars but not create value for stockholders. (emphasis
added)
The Company appears to have a two-metric plan, the second metric being
a stock price
modifier. Please refer to page 68 of the Company's preliminary proxy
statement. Please
revise the above statement to clarify that gross margin dollars is one
metric in a two-
metric calculation and supplement the disclosure to explain why, in
light of such two-
metric calculation, a reasonable basis still exists for making such
assertion.
Proposal No. 4 Ratification of the Tax Benefits Preservation Plan, page 26
5. Disclosure states "[n]otwithstanding the Board s purported
justification for adopting the
NOL Pill (i.e. to protect against a possible limitation on the Company
s ability to use its
FirstName LastNameGlenn W. Welling
net operating losses ( NOLs ) and certain other tax attributes to
reduce potential future
Comapany
U.S.NameEngaged
federal incomeCapital, LLC
tax obligations)..." (emphasis added). Please
expand the disclosure to
May 6,clarify why 2the disclosure uses the term "possible."
2022 Page
FirstName LastName
Glenn W. Welling
FirstName LastNameGlenn W. Welling
Engaged Capital, LLC
Comapany
May 6, 2022NameEngaged Capital, LLC
May 6,
Page 3 2022 Page 3
FirstName LastName
Please direct any questions to Perry Hindin at 202 551-3444.
Sincerely,
Division of
Corporation Finance
Office of Mergers
& Acquisitions
cc: Ryan Nebel, Esq.