DEF 14A of Consensus Cloud Solutions, Inc., Apr 26, 2024

DEF 14A of Consensus Cloud Solutions, Inc.

Filed Apr 26, 2024 · FY20230001140361-24-022428

Open on EDGAR

  1. April 26, 2024

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Total ($) | | Douglas Bech | $100,000 | $200,000 | $300,000 | | Elaine Healy | $80,000 | $200,000 | $280,000 | | Stephen Ross | $70,000 | $200,000 | $270,000 | | Nathaniel (Nate) Simmons | $50,000 | $200,000 | $250,000 | | Pamela Sutton-Wallace | $70,000 | $200,000 | $270,000 |

  2. April 26, 2024

    | (1) These amounts represent the grant date fair value under FASB ASC Topic No. 718, Compensation – Stock Compensation (“ASC 718”) for restricted stock units granted in 2023 As of December 31, 2023, each non-employee director held the following number of unvested restricted stock units: Mr. Bech: 8,000; Ms. Healy: 8,000; Mr. Ross: 8,000; Mr. Simmons: 8,000; and Ms. Sutton-Wallace: 8,000. |

  3. April 26, 2024

    | PROPOSAL 1 | | Election of Directors There are two Class III directors whose term of office expires at the Annual Meeting. Our ESG Committee has recommended, and our Board has approved, Pamela Sutton Wallace and Scott Turicchi as nominees for election as Class III directors at the Annual Meeting. If elected at the Annual Meeting, each nominee will serve until the 2026 Annual Meeting of Stockholders or until his or her successor has been duly elected and qualified, or, if sooner, until his or her earlier death, resignation, retirement, disqualification or removal. Class I directors, which consists of Nathaniel Simmons and Douglas Bech were elected at the 2022 Annual Meeting of Stockholders and will serve until the 2025 Annual Meeting of Stockholders or until his successor has been duly elected and qualified, or, if sooner, until his earlier death, resignation, retirement, disqualification or removal. Class II directors, which consists of Elaine Healy and Stephen Ross were elected at the 2023 Annual Meeting of Stockholders approved and will serve until the 2026 Annual Meeting of Stockholders or until his or her successor has been duly elected and qualified, or, if sooner, until his or her earlier death, resignation, retirement, disqualification or removal. Beginning at the 2026 annual meeting of stockholders, all of our directors will stand for election each year for annual terms, and our Board will thereafter no longer be divided into three classes. Information concerning these nominees and our continuing directors appears below. Each of the nominees has consented to serve as a director, if elected, and all of the nominees are currently directors. We have no reason to believe that any of the nominees will be unavailable or, if elected, will decline to serve. If any nominee becomes unable or unwilling to stand for election as a director, proxies will be voted for any substitute as designated by the Board, or alternatively, the Board may reduce the size of the Board. | | Our Board recommends a vote “FOR” the election of each nominee. |

  4. April 26, 2024

    Director Nominees For each of the two director nominees standing for election, as well as the four other directors with terms expiring at future annual meetings, the following describes certain biographical information and the specific experience, qualifications, attributes or skills that qualify them to serve as our directors and, as applicable, the Board committees on which they serve. Nominees for Election to a Two-Year Term Expiring at the 2026 Annual Meeting of Stockholders

  5. April 26, 2024

    | | Pamela Sutton-Wallace DIRECTOR SINCE: 2021 | | COMMITTEES • Audit • Environmental, Social and Corporate Governance (Chair) | | | BACKGROUND Pamela Sutton-Wallace (age 54) has served as a director of Consensus since October 2021. Ms. Sutton-Wallace served as a director of J2 Global, Inc. from October 2020 through October 2021. As of February 2024, Ms. Sutton-Wallace has been serving as President of Yale-New Haven Health (YNHH), where she began working in July 2022 as the Chief Operating Officer. Prior to her appointment at YNHH, Ms. Sutton-Wallace served as President of New York Presbyterian (NYP) from May 2021 to July 2022, and served as its Senior Vice President and Regional Chief Operating Officer at New York Presbyterian (NYP) from November 2019 to April 2021. Prior to her appointment at NYP, Ms. Sutton-Wallace served as the Chief Executive Officer for the University of Virginia (UVA) Medical Center in Charlottesville, Virginia from 2014 through 2019. Prior to that, Ms. Sutton-Wallace served as Senior Vice President of Hospital Operations at Duke University Hospital, where she also held several leadership positions across the Duke University Health System over a 17-year time span. Ms. Sutton-Wallace has also held positions in the pharmaceutical and insurance industries at Pfizer and Blue Cross & Blue Shield of North Carolina, respectively. She received her undergraduate degree in Political Science and African-American Studies from Washington University in St. Louis, MO. She later graduated from Yale University with a Master of Public Health (MPH) degree. With her 27 years of healthcare experience at some of the world’s most renowned health systems, Ms. Sutton-Wallace brings valuable expertise and perspective to the Board. | |

  6. April 26, 2024

    | | Scott Turicchi AND DIRECTOR SINCE: 2021 | | COMMITTEES • Executive | | | BACKGROUND Scott Turicchi (age 60) was appointed as a director of Consensus in September 2021 and the Chief Executive Officer in October 2021. He also served as Consensus’s Interim Chief Financial Officer from October 2021 through January 2022. Prior to joining Consensus, Mr. Turicchi held various positions at J2 Global Inc. from March 2000 - October 2021, including serving as the President and Chief Financial Officer from August 2014 to October 2021. Mr. Turicchi also served as a member of the J2 Global, Inc. Board of Directors from 1998 through 2000. From 1990 to 2000, he was with Donaldson, Lufkin & Jenrette Securities Corporation’s investment banking department, holding various positions, including Managing Director. Mr. Turicchi is a member of the Board of Directors of Greenhills Software, Inc., a privately held company that develops real-time operating systems. He is Chairman of the Board of Governors of Thomas Aquinas College. Mr. Turicchi also serves as a Chair of the Board’s Finance and Facilities Committee for the Lumen Christi Institute and is a board member of Sanctuary of Culture. Mr. Turicchi’s extensive management experience and familiarity with the company provides valuable insight to the Board | |

  7. April 26, 2024

    Directors Continuing in Office Until the 2026 Annual Meeting of Stockholders

  8. April 26, 2024

    | | Elaine Healy DIRECTOR SINCE: 2021 | | | COMMITTEES • Audit (Chair) • Compensation • Executive | | OTHER PUBLIC COMPANY BOARDS • OFS Capital Corp. • Hancock Park Corporate Income | | BACKGROUND Elaine Healy (age 61) has served as a director of Consensus since October 2021 and is chair of the Audit Committee. Ms. Healy is Co-Founder and Co-CEO of NexGen Venture Partners, LLC, dba Aura, a provider of wireless infrastructure technology. Prior to co-founding NexGen, Ms. Healy was Co-Founder, President and Chief Operating Officer of Accel Networks, LLC, a fixed wireless broadband service provider featuring patented technology founded in November 2002 and acquired in June 2015. Prior to becoming an entrepreneur in 2002, Ms. Healy spent 18 years as a private equity manager during which time she gained a broad background investing in operating companies ranging from start-ups to emerging growth to publicly traded entities and serving as a director of companies in a wide range of industries. Ms. Healy is currently Chair of the Audit Committees and Lead Director for OFS Capital Corp, and Hancock Park Corporate Income. Ms. Healy’s background has enabled her to cultivate an enhanced understanding of operations and strategy with an added layer of risk management. Ms. Healy graduated from The Florida State University in 1984 with a Bachelor of Science in Finance | | |

  9. April 26, 2024

    | | Stephen Ross DIRECTOR SINCE: 2021 | | COMMITTEES • Audit • Compensation (Chair) | | | BACKGROUND Stephen Ross (age 76) has served as a director of Consensus since September 2021. Mr. Ross served as a director of J2 Global Inc. from July 2007 through October 2021. From 1989 to August 31, 2017, he served in various positions with Warner Bros Entertainment, Inc., a broad-based entertainment company (“WBE”). His last position with WBE was Executive Vice President – Recreational Enterprises. Until 2009, Mr. Ross also served as a director of Grill Concepts, Inc., a restaurant company. Mr. Ross’ more than 20 years of broad experience with one of the world’s premier entertainment companies provides the Board a unique perspective. | |

  10. April 26, 2024

    Directors Continuing in Office Until the 2025 Annual Meeting of Stockholders

  11. April 26, 2024

    | | Nathaniel Simmons DIRECTOR SINCE: 2021 | | COMMITTEES • Environmental, Social and Governance | | | BACKGROUND Nathaniel (Nate) Simmons (age 47) has served as a director of Consensus since October 2021. Mr. Simmons has served as President of the Cybersecurity and Martech division (formerly the Cloud Services division) at Ziff Davis, Inc. (formerly J2 Global, Inc.) since September 2019. Before joining Ziff Davis, Mr. Simmons was Senior Vice President and Chief Operating Officer of Norton LifeLock, the Consumer Division of Symantec Corp, from 2017-2019. He also served as Norton’s Senior Vice President and Chief Marketing Officer from 2015-2017. Prior to Symantec, Mr. Simmons was Senior Vice President of Consumer Marketing at Time Inc., where he held a variety of leadership positions. Mr. Simmons began his career as a consultant at McKinsey & Company. Mr. Simmons’s extensive experience in subscription-based technology businesses and familiarity with the Historical Consensus business provides valuable insight to the Board. | |

  12. April 26, 2024

    | | Douglas Bech CHAIRMAN OF THE BOARD AND DIRECTOR SINCE: 2021 | | | COMMITTEES • Compensation • Environmental, Social and Corporate Governance • Executive | | OTHER PUBLIC COMPANY BOARDS • Create Media & Community | | BACKGROUND Douglas Y. Bech (age 78) has served as a director of Consensus Cloud Solutions Inc. since October 2021. He previously served as a director for J2 Global Inc., the former parent company of Consensus Cloud Solutions, Inc., from November 2000 - October 2021. From August 1988 through November 2000, he served as a director of eFax.com, a company J2 Global, Inc. acquired in November 2000. Since August 1997, Mr. Bech has served as Chairman and Chief Executive Officer of Raintree Resorts International, a company that owns and operates vacation ownership resorts throughout North America. Mr. Bech practiced securities and corporate finance law from 1970 until 1997. Mr. Bech also served as independent presiding director of HollyFrontier Corporation (now HF Sinclair) from July 2011 to May 2021 and was a director of Frontier Oil Corporation from May 1993 until it merged with Holly Corporation in July 2011. Mr. Bech has also been serving as an independent director of Creative Media & Community Trust since March 2014. Mr. Bech’s previous work as a securities and corporate finance lawyer, as a director of other public companies and his current experience as a chief executive officer of a private enterprise engaged in hospitality, resort management services, and sales and marketing in three different countries, provide expertise on corporate governance and a unique perspective to the Board of Directors. | | |

  13. April 26, 2024

    ENVIRONMENTAL SUSTAINABILITY Consensus is a cloud solution-based business and our direct operations generate relatively light greenhouse gas emissions. Nonetheless, we strive further to create a climate friendly culture at our headquarters in downtown Los Angeles (“HQ”). We are mindful of our carbon footprint and strive to make choices to lessen our impact on the environment. Our HQ is within a Leadership Energy Environmental Design (“LEED”) building. LEED, sponsored by the United States Green Building Council (“USGBC”), is a globally recognized symbol of sustainability and the most widely used green building rating system in the world. Further, we are located within walking distance to a primary downtown Los Angeles Metro Center to reduce and encourage use of public transportation, which we further emphasize by offering monthly stipends for those employees who elect this method of transportation. Additionally, we continue to evaluate the need for airline travel and encourage virtual meetings, fully remote and/or hybrid remote and in-office work schedules whenever possible. We will continue to find ways to be environmentally responsible. The Company has also transitioned to all but 2 of its co-location data centers to the cloud with AWS. Cloud based products offer greater energy efficiency when compared to onsite data centers. HUMAN CAPITAL MANAGEMENT The Chief People Officer reports directly to the CEO and partners with the Executive Team and the Board of Directors to focus on the strategic direction necessary to attract qualified candidates on a global scale and develop and retain our current global workforce. As of December 31, 2023, we had 559 employees, with just over one-third of the employees located outside of the United States. We are committed to driving strong employee engagement to motivate our highly qualified workforce as we believe their professional development and success is key to our Company’s continued success. Our Culture We have a strong enterprise-wide culture that focuses on our core values – strive for excellence, demonstrate empathy, embrace innovation, foster open communication, focus on solutions, and be driven by data as we make decisions – and in turn, deliver solid business results. Our mission is to be the trusted global source for the transformation, enhancement and secure exchange of digital information. Our vision is to deliver life’s essential data when, where and how you need it. Community Outreach The Company provides 24 paid hours per calendar year for our employees to volunteer their time to support their local communities. We have many employees who volunteer on a monthly basis serving their communities through local community service days in neighborhoods, packing and/or delivering food boxes, serving in homeless shelters and building projects for Habitat for Humanity. We launched Consensus Cares which is a global volunteer program and aligns with our Diversity, Equity and Inclusion (“DEI”) initiatives of community outreach. “Investing in the Future” is the current theme used by our DEI Council with an emphasis to serve within the communities in which we live. We launched the Do-Good Challenge which provides opportunities for employees to join teams which are actively serving the community. In 2023, the teams are volunteered to support the following causes - Education, Cleaner Living, Wellness, Food Banks and Shelters. During our first ever volunteer event in 2023, over 600 total volunteer hours were completed for the challenge and $2,000 in charitable contributions were provided on behalf of the winning teams and individuals. Diversity, Equity & Inclusion Consensus is focused on creating and maintaining a work environment in which people are treated with dignity, decency and respect. Our customers and employees are diverse in traits including but not limited to professional background, gender, race, ethnicity, age, national origin, sexual orientation, geography, and education. The Executive Team works closely with the ESG Committee to review programing as we address DEI initiatives and training. We believe that for our business to succeed over the long term, maintaining and enhancing this diversity is crucial. As of December 31, 2023, our US workforce is 37% female and 63% male. The ethnic breakdown for our US workforce is 22% Asian, 7% Black or African American, 12% Hispanic or Latino, 5% two or more races (not Hispanic or Latino) and 53% White. The Company conducts Diversity, Equity and Inclusion training for all our global employees on an annual basis which includes training vignettes on Definitions of Diversity, Equity and Inclusion, Implicit Bias and Microinequities, Ways to Support an Inclusive Workplace, Best Practices for Taking a Proactive Approach to Diversity, Equity & Inclusion, How to Respond to Inappropriate Workplace Behavior, The Prohibition on Retaliation and an opportunity to review key policies and certify understanding. The Company’s DEI Council is comprised of employees with varied backgrounds to promote thoughtful discussion and organize trainings and events to foster respectful awareness of belonging, diversity, equity, and inclusion in our workplace environment, with the overall intent to create a community where each employee feels they belong and feels they can contribute to the overall success of the Company. Hiring We reinforce our culture and our values by providing equal employment opportunities to candidates who will uphold our organizational priorities, values, mission, and vision. Our diversity recruiting initiatives include posting jobs on specialized job boards focusing on under-represented candidates and creating internships. All job descriptions are reviewed to ensure a focus on equity and inclusivity to attract qualified and interested candidates. We have a robust employee referral program to encourage our employees to refer their network as we seek to attract and retain the top talent. In 2023, 14% of our hires were a result of employee referrals. Talent Pipeline Strategy We source for evergreen positions within our Technology, Sales and Customer Support families to build a pipeline of qualified candidates as we cultivate relationships with prospective candidates. We have a robust employee referral program, an internal mobility program and continue to source candidates through various specialized groups and programs which provide an opportunity to cultivate networking relationships. We continue to have our hiring managers network and post jobs via multiple social media outlets. We also continue to review job requirements and reach out to qualified candidates within our competitive landscape. Employee Compensation & Benefits Compensation is an important consideration for all of our employees and we strive to pay competitive compensation packages that reflect the success of the business and the individual contributions of each colleague. We are committed to fair pay practices; roles are periodically benchmarked to help inform where adjustments may be needed.

  14. April 26, 2024

    We provide our employees with benefits we believe are effective at attracting and retaining the talent critical for our success and, more importantly, promoting their day to day well-being. Those benefits include comprehensive health insurance coverage and covering an average of 84% of health insurance premiums for covered U.S. employees and their families, an employee stock purchase program, equity grants for all qualifying employees as part of the annual merit cycle, flexible time off, up to 16 weeks of paid parental leave for birth parents and up to 10 weeks parental leave for non-birthing parents, up to 10 days of bereavement, 10 days for jury duty, and 24 hours annually of fully paid Volunteer Time Off. We also have a robust Employee Assistance program which offers face to face sessions with a counselor for employees or their family members for matters such as: job pressures, legal, divorce, anxiety, depression, substance abuse, and grief. Health and Wellness Creating a culture where all colleagues feel supported and valued is paramount to our corporate mission. We continue to evolve our programs to meet our colleagues’ health and wellness needs, which we believe is essential to attract and retain employees of the highest caliber, and we offer a competitive benefits package focused on fostering work/life integration. Wellness resources are provided through our medical carriers - Kaiser Permanente and Cigna, including Ginger, Calm, Happify, Recovery One and Omada. Additionally, we held multiple wellness related seminars, financial wellness and multiple 401(k) seminars on a variety of topics for our employees. We also launched an internal wellness website focused on employee mental health. Annually, we participate in a Company-wide wellness challenge and as a group in 2023, the Consensus employees clocked a total of over 75,000 minutes of wellness activity and over 1,200 wellness activities logged for the six-week challenge. Employee Development The Company continues to work with employees on their professional development. As part of the onboarding program, there is a 30-60-90 day feedback tool to assist the employee and their manager to determine the milestones necessary for success. The Company invested in a people success platform which includes survey tools, goal setting, manager performance reviews, self-evaluations and upward manager feedback. From these semi-annual reviews, employee training programs are developed including employee coaching, manager training, presentation skills training and other skill-based learning tools. An Employee Tuition Reimbursement Program was launched in April 2022 to encourage ongoing education with our employees to assist in their professional development. DATA PRIVACY & CYBERSECURITY As noted in the Risk Oversight section above, the Company has a Cybersecurity and Governance Council that meets regularly to oversee the Company’s privacy program, cybersecurity risks, risk management, and relevant legislative, regulatory, and technical developments relevant to privacy and data security matters on a global scale. The Company is also engaged with a third party Data Protection Officer to oversee and ensure compliance with the General Data Protection Regulation (GDPR) and third party auditors for HITRUST, PCI Level 1 (as both a Service Provider and a Merchant), and SOC 2 Type 2, as further detailed below. The Consensus Cloud Solutions security platform is a key focus of the Company. Our Company’s cybersecurity practices include programs for HIPAA compliance, HITRUST, FedRAMP, SOC2, and GDPR. The Company uses the HiTrust cybersecurity framework, an externally audited solution, to manage its HIPAA compliance. HITRUST has more than 370 different controls to ensure that your system is as secure and protected as possible. The Federal Risk and Authorization Management Program (“FedRAMP”) has a risk profile standard featuring three levels of security impact: low impact, moderate impact and high impact. FedRAMP high impact has more than 570 different controls. Consensus Cloud Solutions has been certified FedRAMP High. Our systems are SOC2, type two certified. There are trust principles that the SOC2 system embodies having to do with data privacy, process and security, physical security, infrastructure security. All of those trust principles are what we are externally audited on an annual basis and certified. In addition, the Company is certified for PCI compliance (the payment card industry compliance standards) on an annual basis by an external auditor as both a merchant and as a service provider. We’re evaluated at level one because of the size and scope that we operate at, which is the highest of levels. All Company employees must complete trainings at least annually on various kinds of security threats and best practices including but not limited to trainings on: the Company’s Information Security Policy; Information Security Incident Response Plan; HIPAA, PCI Compliance; GDPR and CCPA; Security Awareness and Incident Response Training covering Social Engineering Phishing (identification and common red flags), Social Media safety best practices, Internet Security best practices, and Incident response training for end-users; and Phishing. In addition, our developers must complete Secure Code / Secure Application Development Training based on OWASP top 10 standards.

  15. April 26, 2024

    | PROPOSAL 2 | | Ratification of Appointment of Independent Registered Public Accounting Firm Deloitte & Touche, LLP (“Deloitte”) has served as the Company’s independent registered public accounting firm since June 2023. Representatives of Deloitte are expected to be present at the Annual Meeting online and will have an opportunity to make a statement if they wish and be available to respond to appropriate questions from stockholders. We are asking stockholders to ratify the Audit Committee’s selection of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2024. While such ratification is not required, the Board is submitting the selection of Deloitte to our stockholders for ratification as a matter of good corporate practice. If stockholders do not ratify the selection of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2024, our Audit Committee may reconsider the selection of Deloitte as our independent registered public accounting firm. Even if the selection is ratified, the Audit Committee may, in its discretion, select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders. | | Our Board recommends a vote “FOR” the ratification of the selection by the Audit Committee of Deloitte as our independent registered public accounting firm. |

  16. April 26, 2024

    Independent Public Accountant The following is a summary of fees paid or to be paid to BDO USA, LLP (“BDO”) for services rendered for the Company in fiscal 2022 and Deloitte for services rendered for the Company in fiscal 2023. All such services were pre-approved by our Audit Committee in accordance with the “Pre-Approval Policy” described below.

  17. April 26, 2024

    | | FOR THE YEAR ENDED December 31, 2022 (BDO) | FOR THE YEAR ENDED December 31, 2023 (Deloitte) | | Audit Fees(1) | $3,753,122 | $2,225,619 | | Audit-Related Fees(2) | $0 | $0 | | Tax Fees(3) | $0 | $23,129 | | All Other Fees(4) | $0 | $0 | | Total | $3,753,122 | $2,248,748 |

  18. April 26, 2024

    | (1) Audit Fees included amounts billed or to be billed for professional services rendered for the audit of the annual consolidated financial statements and the review of financial statements included in quarterly reports for the applicable year. In addition, fiscal year 2022 includes audit fees for professional services rendered in relation to the review of our secondary offering and other documents filed with the SEC, amounts billed for incremental procedures performed in connection with the acquisition of Summit Healthcare, Inc. |

  19. April 26, 2024

    | (2) Audit Related Fees included amounts billed for assurance and related services, including but not limited to international statutory audits (as applicable). |

  20. April 26, 2024

    | (3) Tax Fees, if any, consist of professional services rendered for tax compliance and tax planning for each applicable year. |

  21. April 26, 2024

    | (4) All Other Fees, if any, include amounts billed for all other fees not related to the categories presented above. |

  22. April 26, 2024

    Additional Information Regarding Change of Auditor As reported on the Company’s Current Report on Form 8-K, dated June 5, 2023, BDO served as the Company’s independent registered public accounting firm until May 30, 2023, when the Audit Committee dismissed BDO. In consideration of a potential audit firm rotation, the Audit Committee conducted a competitive process to determine the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023. The Audit Committee considered multiple registered public accounting firms to participate in this process. On May 31, 2023, following the review and evaluation of the proposals from the participating firms, the Audit Committee selected Deloitte as the Company’s new independent registered public accounting firm for the Company’s fiscal year ending December 31, 2023. BDO’s audit reports on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2021 and December 31, 2022 did not contain any adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended December 31, 2021 and December 31, 2022, and in the subsequent interim periods through May 30, 2023, there were no (1) disagreements (within the meaning of Item 304(a)(1)(iv) of Regulation S-K (“Regulation S-K”) of the rules and regulations of SEC) with BDO on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which if not resolved to BDO’s satisfaction, would have caused BDO to make reference to the subject matter of such disagreement in connection with its report, or (2) reportable events (within the meaning of Item 304(a)(1)(v) of Regulation S-K of the rules and regulations of the SEC), except for the material weaknesses disclosed in Item 9A of the Company’s Annual Reports on Form 10-K for the fiscal years ended December 31, 2022 and 2021 relating the Company’s internal control over financial reporting. For the fiscal year ended December 31, 2022, these material weaknesses related to (1) entity-level controls impacting the control environment and monitoring of controls; (2) accounting for revenue recognition and related controls; (3) accounting for significant unusual transactions; (4) balance sheet account reconciliations; and (5) user access and segregation of duties related to systems that track employee related costs. For the fiscal year ended December 31, 2021, the material weakness related to accounting for certain elements of the spin-off transaction. During the Company’s two most recent fiscal years ended December 31, 2021 and December 31, 2022, and for the subsequent interim periods through May 31, 2023, neither the Company nor anyone on its behalf consulted Deloitte regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, and neither a written report nor oral advice was provided to the Company that Deloitte concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions; or (iii) any reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K. Pre-Approval Policy The Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy, under which the Audit Committee annually reviews and pre-approves the services that are expected to be provided by the outside auditor. Any engagement to provide audit or non-audit services that has not been pre-approved through that process must be specifically pre-approved by the Audit Committee if it is to be provided by the outside auditor. The Audit Committee may delegate its pre-approval responsibilities to one or more subcommittees as the Audit Committee may deem appropriate, provided that any pre-approval of services by such subcommittees pursuant to this delegated authority must be presented to the full Audit Committee at its next scheduled meeting. Audit Committee Report* The Audit Committee has reviewed and discussed our audited financial statements with management, and has discussed with our independent registered public accounting firm the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and SEC. Additionally, the Audit Committee has received the written disclosures and the letter from our independent registered public accounting firm, as required by the applicable requirements of the PCAOB, and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence. Based upon such review and discussion, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the last fiscal year for filing with the SEC. Submitted by: Audit Committee of the Board of Directors

  23. Performance Incentive Cash Compensation (“PIC”)

    Performance Incentive Cash Compensation (“PIC”) The annual bonus program, also known as Performance Incentive Compensation (“PIC”), for our NEOs is intended to reward strategic deliverables, drive organic revenue growth and minimize expenses. The PIC is broken into two components: Organic Revenue and Non-GAAP Net Income targets. Design of the plan has been with insight from FW Cook and reviewed against the Company’s peer group based on guidance from the Chairman of the Compensation Committee and Management. The Organic Revenue and Non-GAAP Net Income targets are reviewed and approved by the Compensation Committee in conjunction with the Board of Directors approval of the annual budget. For 2023, 50% of the PIC payout is based on target achievement of Organic Revenue. Below 95% target attainment, there is no payout. At 95%, the plan will pay 15% of target; this payout accelerates to 100% when the target revenue is achieved at goal. Above 100% achievement, there is a linear relationship between 100%-104% attainment of the target which pays out linearly between 100%-200%. By way of example, if we attain 102.5% of targeted Organic Revenue, payout for this component would be 158%. Organic Revenue is defined as revenues, as calculated on a GAAP basis, exclusive of revenue contribution from acquisitions made within the fiscal year. For 2023, the Organic Revenue target for purposes of the PIC was set at $380,000,000. For 2023, 50% of the PIC payout is based on target achievement of Non-GAAP Net Income. Below 90%, the payout is $0; between 90%-110%, the payout is linear up to 200% of target. By way of example, if we attain 102% of targeted Non-GAAP Net Income, payout for this component would be 120%. Non-GAAP Net Income for the purposes of the PIC is defined as revenues less cost of revenues, operating expenses, income taxes, and interest expenses, excluding expenses related to share-based compensation, amortization of patents and acquired intangible assets, and other one-time non-recurring expenses related to operation of the business. For 2023, the Non-GAAP Net Income target for purposes of the PIC was set at $102,839,000. The 2023 PCIP calculation for the payment was based on the achievement percentage of the budgeted Organic Revenue and Non-GAAP Net Income for the 2023 fiscal year. Based on the calculations, the payout percentages are noted as follows:

  24. Performance Incentive Cash Compensation (“PIC”)

    | • | 50% Organic Revenue - 2023 achievement was 95.41% overall (within the targeted range of 95% - 104%). Consequently, the payout for Organic Revenue was 19.93%. |

  25. Performance Incentive Cash Compensation (“PIC”)

    | • | 50% Non-GAAP Net Income - 2023 achievement was 97.04% (within the targeted range of 90-108.5%). Consequently, the payout for Non-GAAP Net Income was 70.38%. |

  26. CEO and COO Long-Term Equity Incentive Compensation

    CEO and COO Long-Term Equity Incentive Compensation In connection with their appointments as Chief Executive Officer and Chief Operating Officer of the Company, Mr. Turicchi and Mr. Nebergall, respectively, were each awarded an upfront long-term equity award (“Long Term Equity Award”) on December 15, 2021 (“Grant Date”) under the Company’s 2021 Equity Incentive Plan. It is the Compensation Committee’s current intent that this upfront, Long Term Equity Award will be the only stock based compensation awarded to Mr. Turicchi and Mr. Nebergall over the five years following the Grant Date, or until the awarded stock units have substantially vested. The time-based restricted stock unit awards will vest over 5 years and the performance-based restricted stock awards have 6 years to satisfy the performance goals or expire. The Compensation Committee, with the assistance of FW Cook, emphasized long-term performance and retention by weighting the compensation of Mr. Turicchi (CEO) and Mr. Nebergall (COO) toward long-term equity incentives. Mr. Turicchi received 266,667 performance-based restricted stock units (“PSUs”) and 80,000 time-based restricted stock awards (“RSUs”). Mr. Nebergall received 177,778 PSUs and 53,333 RSUs. One-fifth of the RSUs vest on the first anniversary of the Grant Date and one-tenth vest every 6 months thereafter, subject to continued employment except as described below. The PSUs vest in one-fifth increments only if the Company’s common stock price remains at or above the following five stock prices for at least 20 trading days in any 25 consecutive trading day period and the average closing price for such 30 day period is equal to or exceeds such stock price threshold: $62.87, $69.15, $76.07, $83.67, and $92.04; provided that no PSUs may vest before the first anniversary of the Grant Date. The stock price thresholds were based on the compounded annual growth rate in the Company’s common stock price from the date of its initial public offering until the Grant Date, as applied to each of the five successive stock price thresholds. The recipients have a total of six years to achieve the performance targets with respect to the PSUs. Any unvested PSUs generally are forfeited upon termination of employment except as described below. The RSUs and PSUs are otherwise subject to the terms and conditions of the 2021 Equity Incentive Plan, and the individual award agreements thereunder corresponding to the awards.

  27. Tax and Accounting Considerations

    | Name and Principal Position(1) | Year | Base Salary ($)(2) | Non-Equity Incentive Plan Compensation ($) | Stock Awards ($)(3) | All Other Compensation ($)(4) | Total ($) | | Scott Turicchi Chief Executive Officer | 2023 | $750,000 | $372,529 | $0 | $33,922 | $1,156,451 | | | 2022 | $750,000 | $166,125 | $0 | $32,045 | $948,170 | | | 2021 | $175,481 | $274,500 | $16,769,349 | $110,566 | $17,329,896 | | Jim Malone Chief Financial Officer | 2023 | $375,000 | $101,599 | $1,233,563 | $24,810 | $1,734,972 | | | 2022 | $336,539 | $46,515 | $1,418,167 | $23,600 | $1,824,821 | | Vithya Aubee Chief Legal Officer | 2023 | $360,000 | $97,535 | $781,550 | $7,014 | $1,246,099 | | | 2022 | $300,000 | $39,870 | $533,140 | $6,719 | $879,729 | | John Nebergall Chief Operating Officer | 2023 | $450,000 | $152,398 | $0 | $24,942 | $627,340 | | | 2022 | $450,000 | $66,450 | $0 | $23,733 | $540,183 | | | 2021 | $115,769 | $109,800 | $11,179,547 | $5,480 | $11,410,334 | | Jeffrey Sullivan Chief Technology Officer | 2023 | $375,000 | $101,599 | $973,700 | $16,676 | $1,466,975 | | | 2022 | $350,000 | $46,515 | $872,475 | $8,001 | $1,276,991 | | | 2021 | $91,538 | $76,860 | $850,807 | $1,470 | $1,020,675 |

  28. Tax and Accounting Considerations

    | STOCK AWARD POTENTIAL PAYMENTS UPON TERMINATION DUE TO DEATH OR DISABILITY | | | | | | NAME | OUTSTANDING TIME-BASED RESTRICTED SHARES AS OF DEC 31, 2023 (#) | MARKET VALUE OF OUTSTANDING TIME-BASED RESTRICTED SHARES AS OF DEC 31, 2023 ($)(1) | OUTSTANDING PERFORMANCE- BASED RESTRICTED SHARES AS OF DEC 31, 2023 (#) | MARKET OR PAYOUT VALUE OF OUTSTANDING PERFORMANCE- BASED RESTRICTED SHARES AS OF DEC 31, 2023 ($)(2) | | Scott Turicchi | 84,932 | $2,226,068 | 287,361 | $0 | | Jim Malone | 46,307 | $1,213,706 | 25,091 | $0 | | Vithya Aubee | 22,423 | $587,707 | 21,452 | $0 | | John Nebergall | 33,455 | $876,856 | 179,121 | $0 | | Jeffrey Sullivan | 32,631 | $855,259 | 34,357 | $0 |

  29. Tax and Accounting Considerations

    | (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Turicchi, as computed in accordance with Item 402(v) of Regulation S-K and do not reflect the total compensation actually realized or received by Mr. Turicchi. In accordance with these rules, these amounts reflect “Total Compensation” as set forth in the Summary Compensation Table for each year, adjusted as shown below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |

  30. Tax and Accounting Considerations

    | (5) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Scott Turicchi), as computed in accordance with Item 402(v) of Regulation S-K. In accordance with these rules, these amounts reflect “Total Compensation” as set forth in the Summary Compensation Table for each year, adjusted as shown below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of the grant. |

  31. Tax and Accounting Considerations

    | COMPENSATION ACTUALLY PAID TO PEO | 2023 | 2022 | 2021 | | Summary Compensation Table Total | $1,156,451 | $948,170 | $17,329,896 | | Less, value of “Stock Awards” and “Option Awards” reported in Summary Compensation Table | $0 | $0 | $16,769,349 | | Less, Change in Pension Value reported in Summary Compensation Table | $0 | $0 | $0 | | Plus, year-end fair value of outstanding and unvested equity awards granted in the year | $0 | $0 | $24,876,684 | | Plus, fair value as of vesting date of equity awards granted and vested in the year | $0 | $0 | $0 | | Plus (less), year over year change in fair value of outstanding and unvested equity awards granted in prior years | $(11,163,321) | ($1,146,770) | $0 | | Plus (less), change in fair value from prior year to the vesting of equity awards granted in prior years that vested in the year | $(930,167) | ($36,033) | $0 | | Less, prior year-end fair value for any equity awards forfeited in the year | $0 | $0 | $0 | | Plus, pension service cost for services rendered during the year | $0 | $0 | $0 | | Compensation Actually Paid to Scott Turicchi | ($10,937,037) | $(234,633) | $25,437,231 |

  32. Tax and Accounting Considerations

    | AVERAGE COMPENSATION ACTUALLY PAID TO NON-PEO NEOs | 2023 | 2022 | 2021 | | Average Summary Compensation Table Total | $1,268,847 | $1,213,998 | $6,215,505 | | Less, average value of Stock Awards reported in Summary Compensation Table | $747,203 | $763,547 | $6,015,177 | | Less, average Change in Pension Value reported in Summary Compensation Table | $0 | $0 | $0 | | Plus, average year-end fair value of outstanding and unvested equity awards granted in the year | $774,932 | $686,717 | $6,575,710 | | Plus, average fair value as of vesting date of equity awards granted and vested in the year | $0 | $0 | $0 | | Plus (less), average year over year change in fair value of outstanding and unvested equity awards granted in prior years | ($1,996,677) | ($142,837) | $0 | | Plus (less), average change in fair value from prior year to the vesting date of equity awards granted in prior years that vested in the year | ($145,121) | ($10,072) | $0 | | Less, prior year-end fair value for any equity awards forfeited in the year | $0 | $0 | $0 | | Plus, average pension service cost for services rendered during the year | $0 | $0 | $0 | | Average Compensation Actually Paid to Non-PEO NEOs | $(845,223) | $984,259 | $6,776,038 |

  33. Description of Certain Relationships between Information Presented in the Pay versus Performance Table

    Description of Certain Relationships between Information Presented in the Pay versus Performance Table As described in more detail in the section “Compensation – Discussion and Analysis” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with SEC rules) for a particular year. In accordance with SEC rules, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table.