DEF 14A of SPS Commerce Inc
Filed Apr 4, 2024 · FY20230001092699-24-000036
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE The Board conducts its business through meetings of established standing committees. Each of the standing committees has adopted and operates under a written charter, all of which are available within our corporate governance section of our investor relations portion of our website at www.spscommerce.com. We have adopted a code of business conduct and ethics relating to the conduct of our business by our directors, officers (including our principal executive officer and principal financial officer), and employees (our "Code of Conduct"), that can also be found in the same section on our website. We plan to post on our website at the address described above any future amendments or waivers of our Code of Conduct. Additionally, our Corporate Governance Guidelines are also available in the same section on our website.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Board Leadership Structure |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
One of the key responsibilities of the Board is to have a leadership structure that allows it to provide effective oversight of management and maximize the contributions of its members. The Board evaluates its leadership structure on an ongoing basis. The Board does not have a policy as to whether the position of the Chair of the Board and the position of the CEO or other executive position should be separate. Rather, the Board believes it should retain the flexibility to decide what is in the best interest of the Company at any point in time. If the position of Chair is held by a director who is not independent, the Board will appoint a Lead Independent Director from among its members using criteria the Board deems appropriate. If the Chair is an independent director, then the duties of the Lead Independent Director described below shall be part of the duties of the Chair. The Board believes that in the absence of an independent Chair, a Lead Independent Director is an integral part of a governance structure that promotes strong, independent oversight of the Company’s management and affairs. In fulfilling his or her responsibilities, the Lead Independent Director, if any, will: preside at all meetings of the Board when the Chairperson is not present; convene and preside at meetings of the independent directors, including executive sessions; review and provide input on meeting agendas for the Board and its committees; and perform such other duties as may be requested by the Board. Currently: •Chad Collins serves as our CEO, and has done so since October 2, 2023. •Archie Black serves as Executive Chair of the Board, and has done so since October 2, 2023. He will continue as our Executive Chair until the 2024 Annual Meeting of Stockholders when his term as a director ends. •Philip Soran serves as our Lead Independent Director, and has done so since October 2, 2023. He will continue to serve in such capacity until the 2024 Annual Meeting of Stockholders at which time he will become Chair of the Board. He also served as Chair of the Board from 2022 to October 2, 2023, as well as from 2014 to 2017.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| | 15| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Board Committees |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
The Board has established an Audit Committee, a Compensation & Talent Committee, a Governance & Nominating Committee and a Finance & Strategy Committee. The following sets forth the membership of each of our committees as of March 22, 2024.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| | COMMITTEES | | | | | | DIRECTOR1 | | Audit | Compensation & Talent | Governance & Nominating | Finance & Strategy | | James Ramsey | | | l | u | | | Marty Reaume | | | u | l | l | | Tami Reller | | l | | | | | Anne Sempowski Ward | | l | | l | | | Philip Soran | | | l | | l | | Sven Wehrwein | | u | | | u | | u Chair l Member | | | | | |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
1 Neither Mr. Collins nor Mr. Black currently serve on a committee.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| | 16| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
The primary responsibilities, members, and number of meetings in 2023 of each Board committee are discussed in turn below.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Audit Committee | | | Chair: | Among other matters, our Audit Committee: •assesses management's processes for ensuring the quality and integrity of the Company's financial statements through oversight of the accounting and financial reporting process and audits of the financial statements; •evaluates the qualifications, performance and independence of our independent auditor and reviews and approves both audit and non-audit services to be provided by the independent auditor; •discusses with management and our independent auditors any major issues as to the adequacy of our internal controls, any actions to be taken in light of significant or material control deficiencies and the adequacy of disclosures about changes in internal control over financial reporting; •oversees our legal and regulatory compliance process; •oversees management's processes to monitor, control, and report on significant corporate risk exposures; •establishes procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls or auditing matters, including the confidential, anonymous submission by employees of concerns regarding accounting or auditing matters; •oversees our investment and cash management policies; •oversees, reviews and discusses with management: the Company’s cybersecurity, information technology and data security risks and threats; the potential impact of those risks and threats on the Company’s business, operations and reputation; and management’s processes, procedures and actions to identify, assess, monitor, mitigate and remediate such risks and threats; and •prepares the Audit Committee report that SEC rules require to be included in our annual Proxy Statement. Each of the members of our Audit Committee meets the requirements for financial literacy under the applicable rules and regulations of the SEC and the Nasdaq Global Market. Our Board has determined that Mr. Wehrwein is an Audit Committee financial expert, as defined under the applicable rules of the SEC. Each member of our Audit Committee satisfies the Nasdaq Global Market independence standards and the independence standards of Rule 10A-3(b)(1) of the Securities Exchange Act of 1934. | | Sven Wehrwein | | | Additional Members: | | | Tami Reller | | | Anne Sempowski Ward | | | Number of Meetings Held in 2023: | | | 6 | |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| | 17| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Compensation & Talent Committee | | | Chair: | Among other matters, our Compensation & Talent Committee: •reviews and approves, on an annual basis, the goals, and objectives relevant to our executive officers' compensation; •assesses and approves our CEO and other executive officers’ annual compensation, including salary, bonus, incentive and equity-based compensation, based on a review of executive officer performance evaluations, a review of peer company compensation programs, and external consultations; •administers our equity compensation plans; •periodically reviews the compensation paid to our non-employee directors and recommends any adjustments in director compensation to our Board; •oversees and administers our compensation recovery policies; and •reviews and provides guidance to management with respect to our human capital management policies, programs and strategies, including but not limited to those regarding talent recruitment, development and retention, health and safety, organizational culture, diversity, equity and inclusion, and compensation and benefits. | | Marty Reaume | | | Additional Members: | | | James Ramsey | | | Philip Soran | | | Number of Meetings Held in 2023: | | | 5 | |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Governance & Nominating Committee | | | Chair: | Among other matters, our Governance & Nominating Committee: •identifies and recommends individuals qualified to become members of the Board; •determines the composition of the Board and its committees; •oversees the evaluation of our Board and individual directors; •reviews and recommends any modifications to our Corporate Governance Guidelines; •recommends to the Board succession plans for our CEO and other critical, senior management positions; and •provides oversight of, and periodically discusses with management, the Company’s objectives, policies, and efforts related to ESG and other corporate responsibility matters, including with respect to sustainability, environmental, corporate citizenship, social, governance, political, and public policy matters. | | James Ramsey | | | Additional Members: | | | Marty Reaume | | | Anne Sempowski Ward | | | Number of Meetings Held in 2023: | | | 8 | |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Finance & Strategy Committee | | | Chair: | Among other matters, our Finance & Strategy Committee assists the Board in matters involving certain finance and strategic matters, including: •reviewing and monitoring the management of capital; •reviewing dividend and share repurchase policies and practices: and •reviewing proposed merger, acquisition, recapitalization, financing and other similar transactions. | | Sven Wehrwein | | | Additional Members: | | | Marty Reaume | | | James Ramsey | | | Number of Meetings Held in 2023: | | | 4 | |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| | 18| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Meeting Attendance |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our Corporate Governance Guidelines provide that our directors are expected to attend meetings of the Board and of the committees on which they serve, as well as our annual meeting of stockholders. Our Board and the committees held the following meetings during 2023.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Committee | Meetings (#) | | Audit | 6 | | Compensation & Talent | 5 | | Governance & Nominating | 8 | | Finance & Strategy | 4 | | Full Board of Directors | 7 |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Each of our directors attended at least 75% of the meetings of the Board and the committees on which they served during 2023, and each of our directors at the time attended our 2023 annual meeting of stockholders.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Board Involvement in Risk Oversight |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Responsibility of Management | Our management is responsible for identifying the various risks facing us, formulating risk management policies and procedures, and managing our risk exposures on a day-to-day basis. | | Responsibility of the Board | The Board is responsible for monitoring our risk management processes by informing itself concerning our material risks and evaluating whether management has reasonable controls in place to address the material risks; the Board is not responsible, however, for identifying or managing our various risks. | | Responsibility of the Audit Committee | The Audit Committee is primarily responsible for providing oversight in the areas of financial risk, legal and regulatory compliance, and cybersecurity risk. The Board, with the assistance from the Audit Committee, is primarily responsible for monitoring management’s responsibility in all other areas of risk management for the Company. | | Responsibility of the Compensation & Talent Committee | The Compensation & Talent Committee is charged with overseeing risks associated with our variable compensation policies and practices and annually reviews whether risks arising from our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on SPS. |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
The Audit Committee and the full Board focus on the material risks facing us, including financial, operational, market, geographic, liquidity, legal and regulatory, and cybersecurity risks, to assess whether management has reasonable controls in place to address these risks. Accordingly, management regularly reported to the Audit Committee and the Board on the risks described above and related risk management during 2023. The Board believes this division of responsibilities provides an effective and efficient approach for addressing risk management.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| | 19| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Procedures for Contacting the Company, including the Board |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Throughout this Proxy Statement, we identify reasons stockholders may need or wish to contact the Company. All of those communications should be directed to the title of the person indicated at the address below. Stockholders who wish to communicate with the Board may do so by writing to the Board or a particular director in care of the Secretary of the Company. Communications should be delivered to the address below, with attention to “Secretary”. SPS Commerce, Inc. 333 South Seventh Street, Suite 1000 Minneapolis, Minnesota 55402 All communications addressed to the Board will initially be received and processed by the Secretary of the Company, who will then refer the communication to the appropriate Board member (either the director named in the communication, the chairperson of the Board committee having authority over the matter raised in the communication, or the chairperson of the Board in all other cases). The director to whom a communication is referred will determine, in consultation with our counsel, whether a copy or summary of the communication will be provided to the other directors. The Board will respond to communications if and as appropriate.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Director Independence |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
As required under the Nasdaq Global Market rules and regulations, a majority of the members of a listed company’s Board must qualify as “independent,” as affirmatively determined by the Board. The Board consults with our counsel to ensure that the Board’s determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of the Nasdaq Global Market, as in effect from time to time. Consistent with these considerations, after review of all relevant transactions or relationships between each director, or any of his or her family members, and our Company, our management, and our independent registered public accounting firm, the Board has affirmatively determined that all of our Company’s directors are independent directors within the meaning of the applicable listing standards of the Nasdaq Global Market, except for Mr. Collins, our CEO, and Mr. Black, our Executive Chair. As required under the Nasdaq Global Market rules and regulations, our independent directors meet in regularly scheduled executive sessions at which only independent directors are present. All members of each of the Audit Committee, Compensation & Talent Committee, and Governance & Nominating Committee have been determined by the Board to be independent within the meaning of the Nasdaq Global Market rules and regulations and applicable SEC rules.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| | 20| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Procedures for Selecting and Nominating Director Candidates |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Stockholders may directly nominate a person for election to our Board by complying with the procedures set forth in Article II, Section 2.4(a)(2) of our bylaws, and with the rules and regulations of the SEC. Under our bylaws, only persons nominated in accordance with the procedures set forth in the bylaws will be eligible to serve as directors. In order to nominate an individual for service as a director, you must be a stockholder at the time you give the Board notice of your nomination, and you must be entitled to vote for the election of directors at the 2024 Annual Meeting of Stockholders at which your nominee will be considered. In accordance with our bylaws, director nominations generally must be made pursuant to notice delivered to, or mailed and received at, our principal executive offices at the address above, not later than the 90th day (February 15, 2025), nor earlier than the 120th day (January 16, 2025), prior to the first anniversary of the prior year’s annual meeting of stockholders. Your notice must set forth all information relating to the nominee that is required to be disclosed in solicitations of proxies for the election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934 (including the nominee’s written consent to being named in the Proxy Statement as a nominee and to serving as a director if elected). Your notice also must set forth certain information as set forth in our bylaws. A stockholder who intends to solicit proxies in support of director nominees other than the Company’s director nominees and who has delivered a notice of nomination pursuant to our bylaws shall promptly certify to the Company, and notify the Company in writing, that it has complied with or will comply with the requirements of Rule 14a-19 under the Exchange Act, and upon request of the Company, shall, not later than five business days prior to the date of the applicable meeting of stockholders, deliver to the Company reasonable evidence of such compliance. If a stockholder desires to recommend a candidate for consideration by the Governance & Nominating Committee, instead of nominating that director for election by stockholders, the Governance & Nominating Committee will consider such director candidates recommended to it by stockholders in the same manner that it considers all director candidates. Stockholders who wish to suggest qualified candidates should write to the Company at the address listed above, to the attention of the Chair of the Governance & Nominating Committee, stating in detail the characteristics that make the candidate a suitable person to serve on our Board in light of our Corporate Governance Guidelines. As required by our Corporate Governance Guidelines, when evaluating the appropriate characteristics of candidates for service as a director, the Governance & Nominating Committee takes into account many factors. The Board selects and recommends to stockholders qualified individuals who, if added to the Board, would provide the appropriate mix of director characteristics, experience, perspectives, and skills. Board candidates are considered based on various criteria, including breadth and depth of relevant business and Board skills and experiences, judgment and integrity, reputation in their profession, diversity of background, education, leadership ability, concern for the interests of stockholders and relevant regulatory guidelines. These considerations are made in the context of an assessment of the perceived needs of the Board at the particular point in time. We do not have a policy with respect to Board diversity, however, the Board seeks to have a Board that represents diversity as to gender, race, ethnicity, and background experiences. We are committed to inclusiveness and as such, when searching for director nominees, the Governance & Nominating Committee endeavors to include highly qualified diverse candidates (including gender, race, and ethnicity) in the pool from which nominees are chosen. Directors must be willing and able to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serving on the Board for an extended period of time.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| | 21| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Board Diversity |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
As of April 4, 2024, the diversity of our Board was as follows:
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Board Diversity Matrix | | | | Total number of directors | 8 | | | Part I: Gender Identity | Female | Male | | Directors | 3 | 5 | | Part II: Demographic Background | | | | African American or Black | 1 | — | | White | 2 | 5 |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
| Director Compensation |
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our director compensation program is designed to compensate our non-employee directors fairly for work required for a company of our size and scope and to align their interests with the long-term interests of our stockholders. Director compensation reflects our desire to attract, retain, and use the expertise of highly qualified individuals serving on our Board. The Compensation & Talent Committee reviews the compensation structure and overall level of compensation arrangements for our non-employee directors every two years relative to the midpoint for non-employee directors of our Peer Group, as discussed in the Compensation Discussion & Analysis section below, and makes recommendations to our Board.
2023 Director Compensation Table
2023 Director Compensation Table The table below sets forth the compensation paid to our non-employee directors during 2023.
2023 Director Compensation Table
| | Fees Earned or Paid in Cash | Stock Awards | Option Awards | Total | | Name(1) | ($) | ($)(2) | ($)(2) | ($) | | James Ramsey | 47,635 | 91,096 | 91,203 | 229,934 | | Marty Reaume(3) | 56,454 | 110,967 | 91,203 | 258,624 | | Tami Reller | 42,817 | 91,096 | 91,203 | 225,116 | | Philip Soran(3) | 72,272 | 110,967 | 91,203 | 274,442 | | Anne Sempowski Ward | 46,817 | 91,096 | 91,203 | 229,116 | | Sven Wehrwein(3) | 63,545 | 110,967 | 91,203 | 265,715 |
2023 Director Compensation Table
(1)Mr. Black and Mr. Collins did not receive any separate compensation for their service as directors. Mr. Black's and Mr. Collins' compensation for 2023 are set forth under the “2023 Summary Compensation Table.” (2)Represents the grant date fair value of the stock and option awards granted during the year determined in accordance with ASC Topic 718. For a discussion of the relevant assumptions used to determine the valuation of our equity awards for financial reporting purposes, refer to Note A and Note K to the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. (3)The compensation includes the one-time equity award for service on the CEO Search Committee, as discussed above.
2023 Director Compensation Table
| | 23| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
2023 Director Compensation Table
| INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE | |
2023 Director Compensation Table
Under our stock ownership guidelines, we require our non-employee directors to own shares of our common stock having a fair market value equal to five times the directors’ annual base cash retainer ($175,000 for 2023). Non-employee directors must comply with the stock ownership guidelines within five years of their appointment to the Board. Until a non-employee director has achieved compliance with the ownership guidelines, the director must retain 50% of the net shares acquired upon exercise, vesting or settlement of any equity award. Currently, vested in-the-money options and vested RSUs count toward the ownership level, but effective January 1, 2027, unexercised stock options will not count toward the ownership level. As of March 22, 2024, all of our non-employee directors had met the stock ownership requirement or had served as a director for less than five years. As of December 31, 2023, the non-employee directors held shares of unvested restricted stock, options, and exercisable options as follows:
2023 Director Compensation Table
| | | Options | | | | Unvested Restricted Stock | Total Outstanding | Outstanding and Exercisable | | Name | (#) | (#) | (#) | | James Ramsey | 147 | 23,413 | 23,046 | | Marty Reaume | 265 | 16,846 | 16,479 | | Tami Reller | 147 | 29,468 | 29,101 | | Philip Soran | 265 | 23,416 | 23,049 | | Anne Sempowski Ward | 147 | 11,811 | 11,444 | | Sven Wehrwein | 265 | 10,346 | 9,979 |
2023 Director Compensation Table
| Corporate Responsibility |
2023 Director Compensation Table
SPS Commerce is committed to advancing our efforts around corporate responsibility and environmental, social, and governance ("ESG") practices. We continue to develop our strategies and invest in areas that help us strengthen in the essential areas of diversity, equity, and inclusion as well as environmental sustainability and awareness.
Named Executive Officers
Named Executive Officers Our NEOs, who constitute all of our executive officers, for 2023 were the following:
Named Executive Officers
| Chad Collins | Kimberly Nelson | James Frome | Archie Black | | | | | | | Chief Executive Officer(1) | Executive Vice President & Chief Financial Officer | President & Chief Operating Officer | Executive Chair; Former Chief Executive Officer(1) | | Executive since 2023 | Executive since 2007 | Executive since 2001 | Executive since 1998 | | Age 48(2) | Age 56(2) | Age 59(2) | Age 61(2) |
Named Executive Officers
(1)See 'Chief Executive Officer Transition and Compensation' section on page 27-28 (2)Age as of December 31, 2023
Named Executive Officers
| | 26| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Named Executive Officers
| EXECUTIVE COMPENSATION | |
Chief Executive Officer Transition and Compensation
Chief Executive Officer Transition and Compensation As previously disclosed, on October 2, 2023, Chad Collins was appointed as our CEO. At that time, Archie Black became our Executive Chair of the Board in order to support a smooth transition of the CEO role and to provide for Mr. Black’s leadership of the Board. In July 2023, we also announced the planned retirement of James Frome, President and Chief Operating Officer, effective December 31, 2024. The Board believes Mr. Frome's continued service through fiscal year 2024 also supports a smooth transition for Mr. Collins and our executive team. Mr. Collins’ compensation was determined through negotiations with him and his representatives prior to his hire. In order to understand market compensation levels, our Compensation & Talent Committee (the "Committee") engaged its third-party compensation consultant, Compensia, Inc. ("Compensia") to provide market data from our compensation peer group as well as examples of recent new hire CEO compensation packages from similarly sized technology companies. The Committee considered this market data, Mr. Collins' prior experience, internal pay equity, and our other compensation determination factors (as described in “Factors Considered in Compensation Deliberations” on page 33) to determine the total direct compensation and other compensation elements that would attract and retain Mr. Collins as our CEO. The details of Mr. Collins' 2023 total compensation package are as follows: •Base Salary: An initial annualized base salary of $525,000, of which he received a pro-rata amount for his three months as CEO in fiscal year 2023. •Bonus/MIP: A cash bonus payment in the amount of $131,250, payable on the same date as the payouts under the Company’s Management Incentive Plan (“MIP”) for fiscal year 2023. The Committee believed this was an important component of the overall package designed to attract Mr. Collins and create alignment upon his onboarding with the executive team. Mr. Collins will participate in the MIP for the 2024 fiscal year performance period. •One-Time Supplemental Equity Award: In order to incentivize Mr. Collins to leave his prior employment and offset the value of the equity awards forfeited by Mr. Collins in connection with that departure, the Committee granted Mr. Collins a one-time supplemental equity award consisting of RSUs and PSUs. ◦The RSU award, with a value of approximately $6,500,000, was granted on November 2, 2023, with the number of RSUs determined by dividing the value by the closing stock price on the grant date. Of the award, RSUs with a value approximately $4,500,000 will vest as to one-fourth of the RSUs on the first anniversary of the grant date and the remaining RSUs will vest pro-rata over the following 36 consecutive months provided that Mr. Collins remains employed by the Company. The remaining approximately $2,000,000 of the RSUs subject to this award will vest as to half of the RSUs on the first anniversary of the date of grant with the remaining RSUs vesting pro-rata over the following 12 consecutive months provided that Mr. Collins remains employed by the Company. ◦The PSU award, with a value of approximately $2,000,000, was granted in 2024, at the same time and on the same terms as the 2024 annual PSU awards. •Finally, in connection with the initial compensation package agreed to between the Company and Mr. Collins, in early 2024, Mr. Collins received an equity award, consisting of the 2024 annual equity award and a pro-rated 2023 annual equity award, consisting of RSUs and PSUs, as further described below. Mr. Black served as our CEO until October 2, 2023, and then transitioned to Executive Chair. In connection with this transition, he continued to receive the same level of compensation and benefits as he did as CEO for the remaining three months of 2023. In 2024, Mr. Black will continue to serve as executive chair until our 2024 Annual Meeting of Stockholders and will receive a reduced compensation package reflective of his continued services during this period. The Board believed Mr. Black’s role as Executive Chair, and his commensurate level of compensation, was crucial in providing for the smooth transition of the CEO role to Mr. Collins, and Mr. Black’s leadership to the Board.
Fiscal 2023 Executive Compensation Highlights
Fiscal 2023 Executive Compensation Highlights During the first quarter of 2023, the Committee took the following key compensation actions with respect to our NEOs: •Base Salaries: We increased the base salaries of Messrs. Black and Frome and Ms. Nelson between 3% and 6% in order to appropriately compensate them given their performance and experience, as well as to maintain market competitiveness. •Management Incentive Plan: We maintained our formula-based target incentive cash bonus opportunity. Ms. Nelson received an increase in her target percentage opportunity from 75% to 80% of her base salary, and Messrs. Black and Frome's target percentage opportunity remained consistent with the prior year. Based on our strong operating results for fiscal year 2023, the formula-based bonus was paid at 140% of target amounts. •Equity Awards: We approved RSU equity awards and performance-based PSU equity awards, each representing approximately 50% of Mr. Black's, Mr. Frome's, and Ms. Nelson's equity awards for fiscal year 2023. As in prior years, the PSUs are based on our relative TSR performance against the Russell 2000 Index measured over a three-year period. The equity awards had a target value of $3.5 million to Ms. Nelson, $3.7 million to Mr. Frome, and $8.3 million to Mr. Black, in order to ensure total direct compensation was competitive considering the significant increases in the total direct compensation of similar roles in the market data, and to continue to drive long term performance and stockholder alignment. This represented an increase of between 9% and 57% of each of these executive's total equity award opportunity over the prior fiscal year. •Successful Hiring and Transition of a new CEO: We successfully hired and transitioned to a new CEO in October 2023.
Compensation Objectives
•Promote Accountability and Discourage Excessive or Inappropriate Risk-Taking: Discourage excessive risk-taking by maintaining stock ownership guidelines, anti-hedging prohibitions, and clawback policies. The Committee also engaged Compensia to complete an executive compensation risk assessment, which has determined that our compensation programs do not create inappropriate or excessive risk that is likely to have a material adverse effect on our Company. To achieve these objectives, we have designed an executive compensation program that is significantly weighted towards long-term compensation. This approach aids us in the retention of executive officers and assures that the interests of our executive officers and stockholders are aligned. As previously mentioned, we provide compensation to our NEOs through a combination of base salary, incentive compensation, and equity awards (RSUs and PSUs under our 2010 Equity Incentive Plan). While we have identified particular compensation objectives that each element of executive compensation serves, our compensation program is designed to be flexible and complementary and to collectively serve all of the executive compensation objectives described above. Accordingly, we believe that as a part of our overall executive compensation approach, each individual element, to a greater or lesser extent, serves each of our objectives.
Peer Group
Peer Group Our Committee determines executive compensation, in part, by reference to market data for the executives of a peer group of comparable companies. This market data from our compensation peer group is valuable to the Committee because it provides insight into competitive pay practices for each of the elements of total direct compensation as well as confirms the reasonableness of its compensation decisions. The Committee, with the assistance of Compensia, reviews and approves our compensation peer group annually to ensure it reflects industry or economic changes and our selection criteria. Our current selection criteria include U.S.-based software companies with trailing four quarters revenue between 50% and 200% of our trailing four quarters revenue and with a market capitalization between 50% and 300% of our market capitalization at the time of review. For purposes of 2023 compensation decisions, our Committee reviewed a formal compensation study and executive compensation market assessment prepared by Compensia in 2022, which included the following peer group companies:
Peer Group
| Alteryx | PagerDuty | | AppFolio | Paylocity Holding | | Appian | Q2 Holdings | | Asana | Qualys | | Blackline | Rapid7 | | Fastly | SailPoint Technologies | | Health Catalyst | Smartsheet | | Jamf Holding | Varonis Systems | | LivePerson | Workiva | | nCino | Zuora |
Peer Group
In comparison to the prior year peers, we replaced three companies. We removed 8x8 and PROS Holdings as those companies had market capitalization values below our comparison range and we also removed Talend as the company was acquired. We added Alteryx, AppFolio, Asana, Jamf Holding, and nCino because they met our selection criteria. We generally aim to have approximately 20 peer group members to ensure a proper level of data analysis.
Peer Group
| | 32| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Peer Group
| EXECUTIVE COMPENSATION | |
Management Incentive Plan
Management Incentive Plan Our NEOs participate in our Management Incentive Plan, which provides them with an opportunity to receive a formula-based cash bonus. The bonus is intended to motivate our executives to achieve specific financial goals that will drive the growth and success of our business. The formula-based bonus is determined by a target bonus opportunity (relative to the NEO's base salary) for each NEO established by the Committee at the beginning of each year. The Committee establishes the target bonus opportunity at an amount it believes is necessary to: •provide competitive overall total cash compensation in light of each NEO's base salary; •motivate our executives to achieve an aggressive level of growth; and •promote our pay for performance compensation objective. For 2023, target bonus opportunities for each of Messrs. Black and Frome remained the same as 2022. Ms. Nelson's percentage opportunity increased from 75% to 80% of base salary to remain competitive with the total cash compensation level for similar roles within the market data. The amount of the bonus, if any, actually paid to executives after the end of the year is determined by the matrix approved by the Committee. The matrix takes into account our revenues and earnings before interest, taxes, depreciation and amortization and stock-based compensation, and other adjustments (“Adjusted EBITDA”)(1). The formula-based bonus is based in part on revenues because, given the scalability of our current core business, the Committee believes revenue growth has the most significant impact on our financial results. The Committee also believes the bonus should be based in part on Adjusted EBITDA, because Adjusted EBITDA is a useful measure of our operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets. The matrix approved for 2023 provided that each executive would receive a percentage of their target formula-based bonus, between zero and 195%, based on our actual revenues and Adjusted EBITDA performance for the year. In line with our pay-for-performance objective, if either the minimum revenue or Adjusted EBITDA threshold was not achieved, zero bonus would have been earned. Per the Management Incentive Plan, the Committee has the ability to adjust the established thresholds for revenues and Adjusted EBITDA in the event we completed any acquisitions during the year to reflect the Company's operating performance. The Committee exercised such discretion for 2023 and adjusted thresholds for both revenue and Adjusted EBITDA based on the financial results of the TIE Kinetix Holding B.V. acquisition. The Committee approved the matrix with the intent that achieving 100% of an executive’s target bonus will be a difficult but achievable goal in light of the prior year’s results of operations and anticipated growth for 2023. As a result of 2023 operating results, the formula-based bonus for Messrs. Black and Frome and Ms. Nelson was determined to be earned at 140% of the target amount, paid in 2024. (1) Adjusted EBITDA is a non-GAAP financial measure. Refer to Appendix A in this Proxy Statement for a reconciliation of this non-GAAP financial measure to the corresponding GAAP measure.
Management Incentive Plan
| | 34| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Management Incentive Plan
| EXECUTIVE COMPENSATION | |
Management Incentive Plan
See below for the summary of the incentive factor thresholds, actual results, and corresponding earned incentive for 2023:
Management Incentive Plan
| Incentive Factors | Minimum Incentive Threshold (2) | Target Incentive Threshold | Maximum Incentive Threshold | Actual Results | | Revenue | $524,100,000 | $531,300,000 | $539,400,000 | $536,910,000 | | Adjusted EBITDA(1) | $153,800,000 | $153,800,000 | $162,800,000 | $157,630,000 | | Name | Minimum Incentive{B} | Target Incentive | Maximum Incentive | Earned Incentive | | Kimberly Nelson | $192,000 | $320,000 | $624,000 | $448,000 | | James Frome | $255,000 | $425,000 | $828,750 | $595,000 | | Archie Black | $322,800 | $538,000 | $1,049,100 | $753,200 | | 2023 Proportion of Target | 60% | 100% | 195% | 140% |
Management Incentive Plan
(1) Adjusted EBITDA is a non-GAAP financial measure. Refer to Appendix A in this Proxy Statement for a reconciliation of this non-GAAP financial measure to the corresponding GAAP measure. (2) If either the minimum revenue or Adjusted EBITDA threshold was not achieved, zero bonus would have been earned.
Equity Awards
Equity Awards The equity awards granted to our NEOs reflect the pay levels our Committee believes are appropriate relative to the market data, each executive’s individual performance, and maintaining an overall competitive compensation package. We believe equity awards are an important element of compensation because they align our NEOs' interests with those of our shareholders. Equity awards make up a significant portion of our NEOs' total compensation package and we anticipate that equity compensation will remain a significant part of our executive compensation program in the future. Our equity awards will continue to be granted on an annual basis to ensure a continued unvested equity component remains as a long-term incentive for each of our executives. When determining the size of the equity award for our NEOs, our Committee considers the executive’s position and responsibilities, internal pay equity, competitive market data, CEO recommendations for the other NEOs, and the anticipated future contribution the executive will make to our growth and success. The Committee increased the total value of the equity awards granted to Messrs. Black and Frome by 57% and 9%, respectively, and Ms. Nelson by 28% in 2023. The Committee believed these increases were necessary to ensure competitiveness with our compensation peer group considering significant increases in the market data. In addition, the Committee considered individual performance and continued strong financial performance of the Company when determining the equity award amounts. See below for the amount and mix of equity awards types granted to our NEOs.
RSUs Granted
RSUs Granted
RSUs Granted
| Named Executive Officer | 2023 NEO Grant Date Value | 2023 NEO Grant Shares/Units (#) | 2023 Equity Award Package Proportion | | Kimberly Nelson | $1,644,942 | 10,911 | 48% | | James Frome | 1,780,476 | 11,810 | 48% | | Archie Black | 3,964,988 | 26,300 | 48% | | Average | $2,463,469 | 16,340 | 48% |
RSUs Granted
| | 35| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
RSUs Granted
| EXECUTIVE COMPENSATION | |
PSUs Granted
PSUs Granted
PSUs Granted
| Named Executive Officer | 2023 NEO Target Grant Date Value | 2023 NEO Target Grant Shares/Units (#) | 2023 Equity Award Package Proportion | | Kimberly Nelson | $1,804,911 | 12,850 | 52% | | James Frome | 1,953,658 | 13,909 | 52% | | Archie Black | 4,350,608 | 30,974 | 52% | | Average | $2,703,059 | 19,244 | 52% |
RSUs
RSUs RSUs generally vest over four years and are intended to provide a strong retention component to the compensation program as they require the executives to maintain continuous employment with us in order for the awards to vest.
PSUs
PSUs PSUs are earned over a three-year performance period depending on the Company’s performance during such performance period and the award recipient’s continued employment. We believe PSUs further align our executives’ interests with those of our stockholders because the executives only earn the PSUs if certain performance goals are achieved. The PSUs granted in 2023 will be earned contingent upon successful attainment of predetermined TSR targets, relative to Russell 2000 companies (the “Index”) over the course of the applicable performance period. PSUs vest in the quarter following the end of the performance period, upon the Committee's certification of the level of performance and number of PSUs earned. The Index was selected because it is a major, broad index of stocks of which we are a component and many members are similar in size to SPS. The three-year period was designed to provide a long-term performance period to align NEO compensation with long-term stockholder returns. The following table sets forth the TSR targets for PSUs granted to our NEOs in each of 2021, 2022, and 2023:
PSUs
| Company TSR as Compared to Index TSR | Percentage of Target PSUs Earned | | Company TSR is more than 10% less than Index TSR | 0% | | Company TSR is 10% less than Index TSR | 40% (threshold) | | Company TSR is equal to Index TSR | 80% | | Company TSR is 5% greater than Index TSR | 100% (target) | | Company TSR is 30% greater than Index TSR | 200% (maximum) |
PSUs
If the Company’s TSR is greater than the Index TSR but is negative, the percentage of PSUs earned is capped at 100%. If the comparison of the Company’s TSR against the Index TSR falls between the levels specified in the above table, the corresponding PSUs earned will be determined by a linear interpolation. In early 2024, the Committee certified results for the 2021 – 2023 performance period for PSUs granted in 2021. Based on the Company’s TSR achieved relative to the Index TSR, the maximum performance was achieved, the maximum number of PSUs were earned, and the earned PSUs vested in 2024. See below for the calculation of the earned PSUs.
PSUs
| Performance Period: 2021 – 2023 | | | Company TSR | 83% | | Index TSR | 1% | | Company TSR in Excess of Index TSR | 82% | | Percent of Target PSUs Earned | (maximum) 200 % |
PSUs
The earned but unvested PSUs are included in the “Outstanding Equity Awards at Fiscal Year-End” Table.
PSUs
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PSUs
| EXECUTIVE COMPENSATION | |
Severance, Change in Control, and Retirement Benefits
Severance, Change in Control, and Retirement Benefits We have entered into employment agreements with each of our NEOs that require us to provide certain payments and benefits to them in the event of specified events, including termination of employment, a change in control of the Company, and retirement, with certain conditions. Our employment agreements require double-trigger vesting of equity in the event of a change in control. We believe that these payments and benefits are necessary to attract and retain our executives to join our Company and that they are in the best interests of the Company and our stockholders as they ensure that because they help assure us that we will have the continued dedication and objectivity of our executives, notwithstanding the possibility or occurrence of a change in control or planned retirement. See further discussion on these agreements in the "Potential Payments Upon Termination, Retirement, or Change in Control" below.
Severance, Change in Control, and Retirement Benefits
| | 38| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Severance, Change in Control, and Retirement Benefits
| EXECUTIVE COMPENSATION | |
Accounting Implications
| 2023 Summary Compensation Table* |
Accounting Implications
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(3) | Total ($) | | Chad Collins | 2023 | 121,000 | 131,250 | 6,499,877 | — | — | 6,752,127 | | Chief Executive Officer(4) | | | | | | | | | Kimberly Nelson | 2023 | 400,000 | — | 3,449,853 | 448,000 | 9,900 | 4,307,753 | | Executive Vice President and | 2022 | 385,000 | — | 2,588,439 | 245,438 | 9,150 | 3,228,027 | | Chief Financial Officer | 2021 | 385,000 | — | 2,821,974 | 508,200 | 8,700 | 3,723,874 | | James Frome | 2023 | 425,000 | — | 3,734,134 | 595,000 | 9,900 | 4,764,034 | | President and | 2022 | 400,000 | — | 3,286,927 | 340,000 | 9,150 | 4,036,077 | | Chief Operating Officer | 2021 | 400,000 | — | 2,821,974 | 704,000 | 8,700 | 3,934,674 | | Archie Black | 2023 | 538,000 | — | 8,315,596 | 753,200 | 9,900 | 9,616,696 | | Former Chief Executive Officer(4) | 2022 | 523,000 | — | 5,089,381 | 444,550 | 9,150 | 6,066,081 | | | 2021 | 523,000 | — | 5,241,434 | 920,480 | 8,550 | 6,693,464 |
Accounting Implications
| 2023 Grants of Plan-Based Awards Table |
Accounting Implications
| Outstanding Equity Awards at Fiscal Year-End Table |
Accounting Implications
| 2023 Options Exercised and Stock Vested Table |
Accounting Implications
| Pension Benefits |
Accounting Implications
| Non-Qualified Deferred Compensation |
Accounting Implications
| Potential Payments Upon Termination, Retirement, or Change in Control |
Potential Payments Schedule
Potential Payments Schedule The following table lists the potential payments and benefits upon a retirement, termination of employment, or change in control of the Company for our NEOs. The tables assume the triggering event for the payments or provision of benefits occurred on December 31, 2023, the last day of our last completed fiscal year. Amounts in the table for the acceleration of unvested stock options are calculated based on the number of shares of our common stock subject to accelerated stock options multiplied by the difference between the closing price for a share of our common stock on the Nasdaq Global Market on the last trading day of our last completed fiscal year, and the per share exercise price. The amounts in the table for the acceleration of RSUs and PSUs are determined by multiplying the number of accelerated units by the closing price for our common stock on December 29, 2023, the last trading day of 2023. Because Mr. Black had not yet retired as of December 31, 2023, the following table sets forth the potential payments and benefits to him upon the circumstances set forth in the table. However, as previously disclosed, Mr. Black is not standing for re-election, and will retire, at the 2024 Annual Meeting of Stockholders, at which time he will receive the benefits under the retirement provisions of his employment agreement as described above.
Potential Payments Schedule
| | 48| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Potential Payments Schedule
| EXECUTIVE COMPENSATION | |
Potential Payments Schedule
| | Retirement(4) ($) | Involuntary Termination Without Cause Outside of the Change in Control Period ($) | Resignation For Good Reason Outside of the Change in Control Period ($) | Involuntary Termination Without Cause or Resignation For Good Reason During the Change in Control Period ($) | Change in Control Without Award Continuance/ Assumption/Replacement (No Termination or Resignation) ($) | | Chad Collins | | | | | | | Salary/Bonus | — | 1,050,000 | 1,050,000 | 1,575,000 | — | | Health Benefits (1) | — | 9,105 | 9,105 | 18,210 | — | | Value of Accelerated RSUs | — | — | — | 7,721,617 | 7,721,617 | | Value of Accelerated PSUs (2)(3) | — | — | — | — | — | | Total | — | 1,059,105 | 1,059,105 | 9,314,827 | 7,721,617 | | Kimberly Nelson | | | | | | | Salary/Bonus | — | 720,000 | 360,000 | 720,000 | — | | Health Benefits (1) | — | 13,657 | 6,829 | 13,657 | — | | Value of Accelerated RSUs | — | — | — | 3,927,392 | 3,927,392 | | Value of Accelerated PSUs (2)(3) | — | — | — | 2,696,121 | 5,392,242 | | Total | — | 733,657 | 366,829 | 7,357,170 | 9,319,634 | | James Frome | | | | | | | Salary/Bonus | — | 850,000 | 425,000 | 850,000 | — | | Health Benefits (1) | — | 13,657 | 6,829 | 13,657 | — | | Value of Accelerated RSUs | 4,381,559 | — | — | 4,381,559 | 4,381,559 | | Value of Accelerated PSUs (2)(3) | 4,443,588 | — | — | 2,221,794 | 4,443,588 | | Total | 8,825,147 | 863,657 | 431,829 | 7,467,010 | 8,825,147 | | Archie Black | | | | | | | Salary/Bonus (5) | 538,000 | 538,000 | 538,000 | 1,345,000 | — | | Health Benefits (1) | — | 12,542 | 12,542 | 18,813 | — | | Value of Accelerated RSUs | 8,578,582 | — | — | 8,578,582 | 8,578,582 | | Value of Accelerated PSUs (2)(3) | 15,334,682 | — | — | 7,667,341 | 15,334,682 | | Total | 24,451,264 | 550,542 | 550,542 | 17,609,736 | 23,913,264 |
Potential Payments Schedule
(1)The amounts for health benefits were determined via employer paid health and dental benefits incurred in 2023 for the NEO. (2)Upon retirement, outstanding PSUs will continue to vest on each originally scheduled vesting date in an amount equal to the number of units subject to the awards that would otherwise have been determined to have been earned if the grantee remained continuously employed by the Company through the originally scheduled vesting dates. Because these performance determinations cannot be made until after December 31, 2023, the amount included in the Retirement column reflects the value of estimated performance level at December 31, 2023. (3)Upon a change in control, the PSU performance period for outstanding PSUs will be truncated and will end as of the end of the Company’s most recently completed fiscal quarter prior to the date of change in control. Vesting will be as of the date of change in control and based on actual performance over the truncated performance period. The amount noted in the 'Change in Control Without Award Continuance/Assumption/Replacement (No Termination or Resignation)' column reflects the value of the outstanding PSUs based on an estimated performance level at December 31, 2023.
Potential Payments Schedule
| | 49| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Potential Payments Schedule
| EXECUTIVE COMPENSATION | |
Potential Payments Schedule
(4)NEOs (other than Mr. Collins) become retirement eligible when the sum of the executive officer’s age plus years of service as an employee of the Company is 78. Mr. Collins becomes retirement eligible when Mr. Collins is at least 57 years old and has completed eight years of continuous service with the Company, or Mr. Collins is at least 63 years old (without regard to years of service). Each of our executive officer’s age and years and service as of December 31, 2023 was as follows:
Potential Payments Schedule
| Name | Age | Years of Service | Total | | Chad Collins | 48 | — | 48 | | Kimberly Nelson | 56 | 16 | 72 | | James Frome | 59 | 23 | 82 | | Archie Black | 61 | 25 | 86 |
Potential Payments Schedule
(5)In connection with his retirement upon conclusion of our 2024 Annual Meeting of Stockholders, Mr. Black will not receive pro-rata cash incentive bonus payment as he did not receive an annual cash incentive opportunity in 2024.
Potential Payments Schedule
| CEO Pay Ratio |
Potential Payments Schedule
We are providing the following information about the annual compensation relationship between our median employee and our CEO for 2023: •the median total compensation of all employees of our Company (other than our CEO) was $88,579; and •the total compensation of Mr. Collins, our CEO for part of 2023, was $7,549,877. Based on this information, the ratio of Mr. Collins' total compensation to the median employee's total compensation was 85:1. We believe this pay ratio to be a reasonable estimate, calculated in a manner consistent with Item 402(u) of Regulation S-K. For 2023, we identified our median employee based on the total cash and equity compensation paid during 2023 to all 2,487 members of our workforce (including full-time, part-time and temporary employees as well as certain independent contractors), other than our CEO, who were employed on December 31, 2023. For purposes of determining the total cash and equity compensation of each employee, we included the contractual amount of annual base salary, the annual target bonus and commission cash incentives, and the grant date fair value of equity awards granted during 2023. We did not include any adjustments for the value of benefits provided. Once we determined the median employee, we determined the median employee's total compensation for 2023 in the same manner that we determine the total compensation of our NEOs for purposes of the 2023 Summary Compensation Table. For the purpose of the CEO pay ratio, we identified Mr. Collins as the CEO given he served in that role on December 31, 2023, the date we used to identify our median employee, as described above. We calculated the total compensation of Mr. Collins as his salary and cash bonus, as noted in the 2023 Summary Compensation Table, annualized, plus his equity compensation (which was not annualized as this would not have changed had he served in the role for the entire year).
Potential Payments Schedule
| | 50| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Potential Payments Schedule
| EXECUTIVE COMPENSATION | |
Potential Payments Schedule
| Pay Versus Performance |
Potential Payments Schedule
The following table sets forth certain information regarding the compensation of our NEOs in comparison to different financial performance measures.
Potential Payments Schedule
| | Summary Compensation Table Total for PEO (1) ($) | | Compensation Actually Paid to PEO (2) ($) | | Average Summary Compensation Table Total for Non-PEO NEOs(1) ($) | Average Compensation Actually Paid to Non-PEO NEOs(2) ($) | Value of Initial Fixed $100 Investment Based On(3) | | Net Income ($) | Company Selected Measure: Adjusted EBITDA(5) ($) | | Year | Former PEO (Black) | Current PEO (Collins) | Former PEO (Black) | Current PEO (Collins) | | | Company TSR ($) | Peer Group TSR(4) ($) | | | | 2023 | 9,616,696 | 6,752,127 | 26,705,325 | 7,973,866 | 4,535,894 | 16,538,822 | 350 | 221 | 65,824,000 | 157,630,000 | | 2022 | 6,066,081 | — | 4,501,154 | — | 3,632,052 | 2,919,066 | 232 | 133 | 55,134,000 | 132,268,000 | | 2021 | 6,693,464 | — | 14,052,465 | — | 3,829,274 | 7,227,613 | 257 | 207 | 44,597,000 | 107,015,000 | | 2020 | 4,810,804 | — | 18,046,825 | — | 2,283,243 | 8,625,426 | 196 | 150 | 45,586,000 | 86,994,000 |
Potential Payments Schedule
(1)Archie Black served as our PEO through October 2, 2023 and upon his retirement as CEO, Chad Collins served as our PEO. For all periods presented, Kimberly Nelson and James Frome served as our non-PEO NEOs. (2)Compensation Actually Paid, as defined and in accordance with Item 402(v) of Regulation S-K, is calculated as noted in the table below. The amounts noted do not reflect the actual amount of compensation earned by or paid to the individuals in the applicable year. The fair values and changes in fair values were determined in accordance with ASC Topic 718, consistent with the methods used for grant date fair valuation, exclusive of date of measurement. For a discussion of the relevant assumptions used to determine the value, refer to Note A and Note K to the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Potential Payments Schedule
| | | Base | Less | Plus | Plus or (Less) | Plus or (Less) | Total | | | Year | Summary Compensation Table - Total Compensation ($) | Grant Date Fair Value of Stock Awards and Option Awards Granted in Fiscal Year ($) | Fair Value at Fiscal Year-End of Outstanding and Unvested Stock Awards and Option Awards Granted in Fiscal Year ($) | Change in Fair Value of Outstanding and Unvested Stock Awards and Option Awards Granted in Prior Fiscal Years ($) | Change in Fair Value as of Vesting Date of Stock Awards and Option Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year ($) | Compensation Actually Paid ($) | | Former PEO (Black) | 2023 | 9,616,696 | (8,315,596) | 14,299,748 | 4,395,649 | 6,708,828 | 26,705,325 | | | 2022 | 6,066,081 | (5,089,381) | 5,376,891 | (835,723) | (1,016,714) | 4,501,154 | | | 2021 | 6,693,464 | (5,241,434) | 7,196,040 | 5,349,429 | 54,966 | 14,052,465 | | | 2020 | 4,810,804 | (3,892,234) | 10,643,528 | 5,921,853 | 562,874 | 18,046,825 | | Current PEO (Collins) | | | | | | | | | | 2023 | 6,752,127 | (6,499,877) | 7,721,616 | — | — | 7,973,866 | | Non-PEO NEO Average | 2023 | 4,535,894 | (3,591,994) | 10,151,683 | 4,752,143 | 691,096 | 16,538,822 | | | 2022 | 3,632,052 | (2,937,683) | 3,103,639 | (295,785) | (583,157) | 2,919,066 | | | 2021 | 3,829,274 | (2,821,974) | 3,874,330 | 2,301,858 | 44,125 | 7,227,613 | | | 2020 | 2,283,243 | (1,658,387) | 4,317,603 | 3,379,146 | 303,821 | 8,625,426 |
Potential Payments Schedule
(3)TSR is the change from an original $100 investment at the close of market on December 31, 2019, and the value of the investment as of the last trading day of each respective year, assuming that dividends, if any, were reinvested. The comparison is based on historical data and are not intended to forecast or be indicative of future performance of our common stock. (4)Our selected Peer Group is the Nasdaq Computer Index, an independently prepared market capitalization weighted index, and which is the same industry index used in our stock price performance graph in our Form 10-K for the fiscal year ended December 31, 2023. (5)We consider our TSR our most important financial performance measure used to link compensation actually paid to our Company performance. As TSR is already disclosed, our next most important measure, Adjusted EBITDA, is selected. Adjusted EBITDA is a non-GAAP financial measure. Refer to Appendix A in this Proxy Statement for a reconciliation of this non-GAAP financial measure to the corresponding GAAP measure.
Potential Payments Schedule
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Potential Payments Schedule
| EXECUTIVE COMPENSATION | |
Compensation Actually Paid versus Financial Performance
Compensation Actually Paid versus Financial Performance
Compensation Actually Paid versus Financial Performance
| | 52| | Proxy Statement for the 2024 Annual Meeting of Stockholders |
Compensation Actually Paid versus Financial Performance
| EXECUTIVE COMPENSATION | |